Outstanding results posted by TARIL today. Simply superb. A clear indication of the demand. This demand should apply to all the players in the space, and KECL is one such player.
Holding, and waiting.
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Please share notes if Anyone attended recent AGM ?
Focus Segments
- EV: 3phase motors. Targeting the 4wheeler segment on & off highway. Pushing to get a drive train so they can sell a complete package.
- Transformers: Not focused on the electricity board, but focus is on private companies. Acknowledges transformer supply shortage.
- Defence: Navy orders exist. Approaching army & air-force.
- Nuclear power: Motors for Zone 1 & 2, and pump motors.
Ambitions
- 1000cr top line in 2-3 years
- Debt free
- Minimum working capital
- Minimize monetisation
20-30cr CAPEX per year. Modernising all the plants. Hiring.
Above are AGM notes from 14-8-2023 for FY 22-23.
The focus segments are the ones with tailwinds.
Don’t anticipate hockey stick growth, but do smell a great opportunity.
Regular updates are hard to come by - so it makes the study a tad difficult.
Everything remains to be seen. Take your seats, or wait a while.
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Recent noise around Kirloskar Electric Company (KEC) one of India’s leading manufacturers’ has lead to raising a few concerns regarding its operations:
- Profit decline despite sales growth: Despite maintaining consistent sales growth over the past 5 years, KEC has witnessed a significant decline in profits during the same period which raises questions about the company’s cost management, operational efficiency, or other underlying factors affecting profitability.
(Image Source: Finology Ticker)
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Reduced Reliance on Other Income: The common size income statement in the image above shows that KEC’s profitability has been impacted by a reduced dependence on other income sources(such as interest, dividends, and gains from investments).
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Promoter share pledging: Promoter holding is strong (49.51%), but 75.68% of their shares are pledged which means promoters have used their shares as collateral for loans. It is also a sign of financial stress or liquidity needs.
(Image Source: Finology Ticker’s Shareholding Table) -
Auditor’s Qualified Opinion: KEC received a qualified opinion from auditors due to material misstatements related to trade receivables from certain subsidiaries, raising corporate governance concerns.
What do you think about this?
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Pls. eliminate other income which is mainly from disposal of land and then u will see a good turnaround in the performance of the company . Interest cost is declining and may be on account of interest payment to vendors which may be funding the operations .Almost free of long term debt . Balance sheet clean up takes a few year. The Auditor qualification is immaterial and once the Hosur lproposed and deal pending for want of civic authorities approval is finished it will be closed.
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To add to that, you’re getting a 80yr old business, a legacy brand, that’s going through some restructuring, and has a product basket with good domestic tailwinds, for a 1200cr market cap.
Yes it’s not hockey stick growth at the moment and a lot remains to be seen. But, that is how turnarounds are and while the journey can be unclear & painful, if executed well, the outcome can be portfolio altering.
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This is big news. Transformative changes going on at KECL.
What that means? can you please help me to understand.
Results view:
These results reflect a company in transition, and how effectively Kirloskar executes its restructuring will significantly impact corporate health.
Positive progress in debt reduction and asset monetization will fuel the turnaround, while any setbacks could derail the process.
I see resilience with strategic restructuring efforts, and the future depends heavily on successful asset monetization, liability management, and cost controls. Legacy business and decades of experience should bring them increases in order inflow.
Potential Q3/Q4 candidate. Very high risk. If it performs, then the next few years belong to KECL.
The dip at 1pm offered a good opportunity, and today, it’s become my largest holding.
Will hold. Will wait. May rejoice.
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About 80k CR of thermal power projects sanctioned this evening by NTPC.
KECL worked with NTPC several times in the past on thermal projects. Walchandnagar too.
I am hopeful this will be positive for KECL.
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Overview of Permanent Magnet Motors (PMMs)
Permanent magnet motors (PMMs) use magnets to generate magnetic fields instead of relying on external excitation like traditional motors. They are highly efficient, compact, and widely used in electric vehicles (EVs), renewable energy systems, and industrial automation. These motors offer better performance in terms of torque, energy efficiency, and durability compared to other motor types, making them a preferred choice for electric mobility and advanced industrial applications.
Market Size in India
The Indian market for PMMs is growing rapidly due to industrialization, the push for EV adoption, and government initiatives supporting clean energy. Globally, the PMM market is expected to reach $49.05 billion in 2024, growing at a compound annual growth rate (CAGR) of 10.1% from 2024 to 2031. India, being part of the fast-growing Asia-Pacific market, is seeing significant investments in EV production and renewable energy, contributing to local demand for PMMs.
Key Manufacturers
Several global and local companies are producing PMMs for various applications:
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Global Leaders: Nidec Corporation, Siemens AG, ABB Ltd., and Mitsubishi Electric are dominant players with operations in India.
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Indian Players: Bharat Heavy Electricals Limited (BHEL) and local subsidiaries of multinational corporations are actively involved in PMM production.
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Emerging Manufacturers: Startups in India’s EV ecosystem are also partnering with PMM suppliers to scale production for two-wheelers and commercial vehicles.
Trends and Drivers in India
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EV Revolution: India’s EV market, supported by government schemes like FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), is a key driver for PMM demand.
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Industrial Automation: The adoption of PMMs in automation and robotics for consistent and efficient industrial output is increasing.
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Renewable Energy: The integration of PMMs in wind turbines and solar inverters is also boosting their demand.
Kirloskar Electric Company Limited, a key player in the Indian electrical equipment industry, has ventured into the development of permanent magnet motors (PMMs) to cater to the growing demand in the electric vehicle (EV) market. Here are detailed insights:
Kirloskar’s Focus on Permanent Magnet Motors
Market Opportunity:
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The company is targeting India’s expanding EV sector, anticipating a significant increase in EV adoption. Current estimates suggest that EVs could make up 20-25% of vehicles on Indian roads in the next few years (up from less than 3% today)
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They are developing PMMs for diverse EV applications, including commercial vehicles like the Tata ACE
Development Efforts:
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Kirloskar Electric is conducting trials for PMMs, aligning with advanced EV technologies.
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The company is exploring partnerships with Indian vehicle manufacturers to integrate these motors into EVs, aiming to solidify its position in this growing market
Applications:
Besides EVs, Kirloskar’s PMMs are likely to find use in industrial automation and renewable energy systems, leveraging their expertise in high-efficiency motors
Advantages of Kirloskar’s PMMs
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Compact Design: Ideal for EVs and industrial machinery, ensuring efficient space utilization.
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Energy Efficiency: Reduces operational costs and aligns with sustainability goals.
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Durability: Longer lifespan compared to traditional motors.
Kirloskar’s Legacy and Expertise
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Kirloskar Electric has been a leader in motor manufacturing for over six decades, supplying to sectors like power generation, railways, and industrial automation
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The company’s strong R&D focus positions it well to innovate and meet the challenges of the growing e-mobility ecosystem.
Future Outlook
Kirloskar Electric is poised to become a significant contributor to the EV ecosystem in India. With increasing demand for efficient motor systems and governmental support for e-mobility, their investment in PMM technology could drive substantial growth in their market share.
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