Promising new addition in Smallcap Compounders could benefit from Budget 2023’s Railway and EV incentives!

We rebalanced our Smallcap Compounders smallcase on 2nd February 2023 and added: Kirloskar Electric Company Limited: (NSE : KECL)

Kirloskar Electric Company Ltd. is one of the leading Indian electrical engineering companies. Established in 1946 currently having global presence in 13 countries namely India, USA, Europe, Singapore, South Africa, Malaysia, Japan, Korea, Indonesia, Philippines, Thailand, Vietnam and Bangladesh.

Kirloskar Electric, in its past seven decades of existence, has established itself as one of the major players in the domestic electric equipment industry and has been a pioneer in the export of Electrical and Electronic goods for the last four decades.

What businesses is the company engaged in?

KECL is engaged in manufacturing of alternating current (AC) motors, AC Generators, direct current (DC) Motors, diesel generator (DG) sets, electronics, switchgear, traction, transformers, and projects and systems through 9 manufacturing units and catering to various industries including sugar, cement, steel, oil and gas, power, agriculture, refineries and nuclear.
Its R&D facilities include testing labs which have achieved certification from leading organizations of the world, and even the hard to get NVLAP Accreditation from the US Federal Government.

Kirloskar Electric Company is one of the leading manufacturers in India, supplying motors which are used in electric vehicles.
The Company provides tailor made customized electrical equipment to its customers. Major companies, PSUS as well as EPCS are among its customers.

The company is also in business with the Indian Railways and has delivered traction electrics, power car generators and batteries to the railways.

Financial Health of the company

Company’s consolidated revenue in FY22 was Rs. 334.67 crores while it stood at Rs.110.49 for Q2FY23.

H1FY23 Performance (Consolidated Fig. in Crores)

Movement in borrowing (Fig. in Crores)

The company has been using a major part of sales proceeds from properties it owns, to repay its dues to the financial institutions. The management has succeeded in making the company debt free, except for working capital and bill discounting limits, as also mentioned in the AGM for FY22.

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