akar tools

Akar Tools is a part of the Akar group, which has three companies including R L Steel, Ajanta Auto and Akar Tools, out of which AjantaAuto will be merged into Akar Tools. Akar tools is into the business of hand tools with customers such as Bajaj Auto, Kirloskar, M&M and select importers. In FY05 it had net revenues of Rs306mn out of which exports contributed Rs225mn. Its competitors include Taparia Tools and Hind Everest

akar tool is in process of expanding capacity from rs 2400 to 3600 tonnes per anum which will be over by march 2006 being done with term loan of rs 4 crs with interest rate of rs 9/9.5 %. this take up the sales to rs 60 crs in next year there Will be addition to sales from ajanta around 25 crs.

The merged entity would have a capex of Rs20crs in FY07E, which would be financed by Rs15 crs term loan from Canara Bank and rest through internal accruals. This capex would be in current for setting up a new unit formanufacture of Parabolic Springs. This new unit would have capacity of14,000 MT, and commercial production would begin from Oct06. At fullc apacity it would give revenues of Rs150-160crs. Currently there ismonthly demand of 2,500 MT for Parabolic Spring, with Jamna Group (JaiParabolic Springs and Jamna Auto)being the market leader with 25% marketshare. It also has good export potential. It had also got a trail order worth Rs10mn from Wal-Mart which has been executed, company expects to get repeat business from them and apart from Wal-Mart it has also been working with a Fortune 500 companywhich is into similar business and so far it has had a very good relationship with them and we feel that there are chances that it may get some big orders from them.With promoter holding being 84-85% (against the stipulated limit of 74%by SEBI) we feel that the company may dilute equity in favour of any stategic investor.
company is targeting 50 % turnover from exports.

projections for 0506 are sales around rs 60 crs & profit of around rs 2.25 crs.06 07 will be sales of around 90 crs & profit of around rs 4.5 crs on capital of rs 5 crs

MYTAKE :THE COMPANY IS QUITE SMALL....SO ONE SHLD INVEST VERY SMALL AMOUNT IN IT....ONE SHLD WAIT FOR CORRECTION N SHLD BUY ARND 34 LEVELS SINCE IT HAS GOOD SUPPORT OVER THERE.