Company details: Bharat Seats
Basically the company is a seating systems manufacturing company running by auto mammoths Suzuki,Maruthi and sharda motors.
Company & Background details:
Bharat Seats Ltd is a seating systems manufacturing company mainly for two and four whelers. It is a joint Venture of auto mammoths Suzuki Motor Corporation(14.8%), Japan, Maruti Suzuki India Ltd(14.8%),Sharda motor (28.7%)and the Relans family16%, all together holding 74% of control in the company.
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Products & Clients:-
Company has three manufacturing plants existed in gurgaon and produces Four-Wheeler)Two-Wheeler Seating System,Railway Seats & Berths,Moulded Carpets andTwo-Wheeler Frames.The company got my attention after seeing it’s strong client base.
It’s client base includesMaruti Udyog Ltd,Suzuki Motorcycles Ltd,Indian Railways ,Hyundai Motor Industries Ltd,Mahindra & Mahindra Ltd,Mahindra Renault Ltd,Mahindra International,Tata Motors Ltd,General Motors,Samsung India Ltd,Fleetguard Inc,John Deere andCarrier Air conditioning & Refrigeration Ltd.
Financial Performance (Figures are in Crores except EPS)
FY Mar’2014 Mar’-2013 March-2012
Sales 631 681 432
Interest 6.25 6.47 3.35
Net Profit 6.7 5.3 5.6
EPS 2.13 1.7 1.8
Positives:
- Company direct beneficial of auto segment growth. It’s proxy play for many who missed the bull journey of AUTO companies.
- Company reported better number in the last FY despite lower sales but by better utilization of inventory and reducing the costs.
- Company reported good set of numbers for September results with increase of Sales to 173cr from 153cr and correspondingly EPS also changed from 0.42 rs to 0.71 rs.
- Being owned by auto major helps in several aspects such as order flow,promoter integrity and meeting the industry expectation with latest technical changes in the sector.
- Company providing the seating systems,moulded floor carpet and luggage carpets for Maruthi Suzuki india.
- Company is providing the seating system and frame assembly for Suzuki Motor cycle.
- Company providing extruded roof mould for RITZ,WAGONER previously which are imported and also started supplying new seating system for SWIFT model.
- Company plans in manufacturing expansion by two more units in Manesar(2014) and Gugaon(2015). Manesar plant started the production and is supplying four wheeler seating systems to maruthi suzuki india ltd.
- Company product divergence from seating system to moulded carpets to two-wheeler frames and Railway seats & Berths.
- Company’s plans to become a complete interior systems supplier with own R&D centre approved by Ministry of Science and Technology. Already company has technical collaboration with Suzuki motor corporation,Japan and Toyo Seat,Japan in different products.It spent 2.76 cr(0.5% of total turnover or 45% of net profit) under R&D activities.
- Company has regular dividend payment history, currently the face value is 2rs.
- Recent Govt tax changes in excise duty is good for company(Excise duty last year @72 crores)
Negatives:
- Company over dependence on auto sector, this can overcome to certain extent by getting big orders from Indian Railways.
- Company debt levels are increased in the previous year because of expansion but they are slightly down this year.
Disclaimer: Planning to invest in a SIP manner.