Expansion ambitions of KEW Industries

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Expansion ambitions of KEW Industries

KEW Industries has plans to raise funds to buy casting, forging and machining facility in Punjab. The company supplies to Tata Motors and Ashok Leyland. Director of KEW Industries, Ashok Kumar says the company is planning to increase exports and also make savings of about 4-5% from its new units.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS KEW Industries up on buying interest Stocks in news: ANG Auto, IDFC, KEW Ind, Wanbury, Britannia ALSO READ See latest News about KEW Industries See previous management interviews See what other Experts & Brokerages are saying about KEW Industries BSE | NSE 01/01/70 Are Mutual Funds betting on ?

KEW Industries has plans to raise funds to buy casting, forging and machining facility in Punjab. The company supplies to Tata Motors and Ashok Leyland.

Director of KEW Industries , Ashok Kumar says the company is planning to increase exports and also make savings of about 4-5% from its new units.

Excerpts from CNBC - TV18's exclusive interview with Ashok Kumar:

Q: There are three different forms of fund raising that you had - you are issuing about 5 million non-convertible debentures, a fair amount of equity shares on preferential allotment basis and there are some convertible warrants as well. So how much are you totally looking to raise and will this all be useful for the funding of this acquisition?

A: Before that, I would like to explain that we had gone for a public issue for Rs 21 crore. In September 2006, the money was received by us and up till now we have completed substantial part of the company's modernization cum expansion scheme. The expenses incurred on this modernization and expansion scheme up till now is around Rs 16 crore.

Other salient features would be that during the period April to September 2006, we made sales of around Rs 19 crore and up till now that is a quarter after the funds were released to us and working capital funds were augmented during the quarter October to December, the sales are of the order of Rs 20 crore.

Therefore up till now we have made sales of Rs 40 crore. Our order book is full and in this year, we want to achieve a sales turnover of around Rs 54-55 crore and PAT should be about 10%, in the vicinity of Rs 4-5 crore.

However, in view of the demand being ever increasing and also looking for the replacement markets and to increase the profit margins and to have all facilities under one umbrella, which is proposed to go in for the casting, forging and machining units as well, in KEW, though we have machining facilities, we want to increase, augment and take some units possible which can give us the casting facility and forging facilities of about 1000 tonnes per month and 600-700 tonnes per month.

So the funds will be utilized for this activity and the profits will be considerably higher because all facilities will be under one roof.

Q: When you say considerably higher, how much can we see in terms of benefit from these two domains - casting and forging?

A: At least 4% savings would be achieved. As a matter of fact, now we are purchasing casting and forging from outside and minimum of 4-5% savings could be done. All things being under our control, the timely delivery to customers and exports will be the essential hallmark of our activities.

We are already a tier I supplier to Ashok Leyland  and Tata Motors , which means our assemblies are straight away taken and fitted in the multi-utility vehicle sector there.