Date:20/07/2004 URL: http://www.thehindubusinessline.com/2004/07/20/stories/2004072001250200.htm

Back Kirloskar Oil Engines aims for higher exports

Our Bureau

Pune , July 19

HIGHER spending on capital expenditure and increase in exports is what the Pune-based Kirloskar Oil Engines Ltd (KOEL) is planning for in the current fiscal.

Speaking to newspersons after the annual general meeting of the company, Mr Atul C. Kirloskar, Chairman and Managing Director, said that the company's strategy would be to tap the OEM markets against the traditional approach of generating orders from dealers, distributors and against tenders.

He added that some of the OEMs had already placed orders for samples and initial lots have been despatched. These would be for all products - engines, engine bearings and valves.

The company has earmarked about Rs 70 crore for capital expenditure on plant and machinery. Of this amount, about 20 per cent would go into the bearings and valves while the rest would be utilised for engines.

The break-up of investments could be about 50 per cent for replacing the old machinery and addressing quality issues, 18 per cent on R&D for developing new products and the rest for capacity expansion.

Mr Kirloskar said that there would be about 15 per cent capacity expansion in the engine segment and added that the company was targeting usage of the additional capacity by the end of the current fiscal. Currently the company is utilising close to 100 per cent.

Sales for the year ended March 2004 were Rs 1,041 crore (Rs 881.3 crore) . Exports touched Rs 61 crore (Rs 37.8 crore), registering a compounded annual growth rate (CAGR) of 31 per cent over the past three years.

The company is targeting exports of more than Rs 100 crore for the current fiscal. Profit before tax crossed the Rs 100-crore mark and PBT was 2.8 times that of last year's figure of Rs 38.3 crore.

Giving the sector break-up, Mr Kirloskar said that the engine segment turnover was higher at Rs 780.7 crore (Rs 641.3 crore), an increase of 22 per cent, while in the auto component segment, sales were higher at Rs 96.7 crore (Rs 85.4 crore).

For the first quarter of the current year, KOEL's net sales stood at Rs 249.40 crore (Rs 229.30 crore). This included exports of Rs 24.9 crore (Rs 8.8 crore) and the profit before tax stood at Rs 21.10 crore (Rs 19.52 crore).

The board of directors has recommended a final dividend of 100 per cent, including the S. L. Kirloskar birth centenary special year interim dividend of 50 per cent and a final dividend of 50 per cent.