RISHI LASER

Rishi laser is a leader in the usage of Laser Cutting for manufacturing components and assemblies.Ris(RLCL) set up its first Laser Cutting facility in 1995. Even though Laser Cutting was very popular in Western Countries at that time, Laser Cutting of metals was very new to India.The progress in the first five years was very slow because Laser Cutting was still looked as a very expensive method of processing steel. Also the Indian Engineering Capital Goods Industry was passing through a very difficult period in later nineties.

The scenario has completely changed today for the sector and the company. The Engineering and Capital Goods sector is booming in India and Laser Cutting is fast becoming a very standard method of processing flat steel. RLCL now has 5 LCM spread over four locations and the Company is now embarking on major growth path to add further facilities to enhance capacity.

According to the management,"Rishi does not export anything directly till now. However we see this as the most exciting opportunity today". During the past months RLCL has had a continuous steam of visitors from Europe looking to outsource Laser Cut and fabricated components / assemblies from India. The visitors include the Global Purchasing people from Companies with turnover in excess of $ 1 billion and are the most famous names in the Engineering World. The management adds,"They were very surprised and delighted to see these kinds of facilities in India. Negotiations are at a very advanced stage with two large multi billion dollar groups and we expect export business to start in a small way this year fy05-06". Rishi now has planned to focus on exports and is therefore adding substantial capacity mainly targeted at exports.

Expansions.........Rishi last fiscal completed its expansion at Bangalore with the construction of new facilities and addition of CNC Bending facilities.The Company added new CNC Plasma Cutting and CNC Punching facilities at its Pune Works and with the addition of these machines the Company now has the widest range of flat steel processing machines in the country.RLCL also recently set up a Sheet Metal Processing facility in Nashik.Futher the Company has embarked a major expansion at Pune to cater to the export markets. The expansion would include facilities for Laser Cutting, Bending, Welding and Assembly.The benefit of all these expansions will start to reap exponential growth in the coming years for rishi laser cutting.

Outsourcing Oppurtunity=Due to increasing cost pressures,the European Companies are increasingly being forced to outsource components and assemblies. RLCL is well placed to supply light and medium fabrications because of its modern facilities, good Engineering base and experience of similar supplies in domestic industry.We beleive,In the current global economic scenario the trend towards outsourcing will increase. Also it would important to note that,India has a tremendous cost advantage where the items have a high Engineering content. RLCLs products are not mass produced items and require Engineering inputs at all stages.Thus Outsourcing can become a huge growth provider for the company in future.

Outlook=The demand has grown for the sector and the company all round as the Engineering Industries have revived and are booming. As per CMIE the ongoing CAPEX by India Inc will be over Rs. 8,00,000 crores.The demand in Electrical Switchgear Industry and the Earth Moving sector has exploded due to increased spending on infrastructure. We believe that this process will get accentuated as India will have to spend increasingly large sums of money on infrastructure if GDP has to grow at 7% to p.a.The Company has moved towards more value addition to cut steel. By doing this the potential market that the Company can cater to has increased by 100 times. This has also opened opportunities for RLCL to move from light fabrication to medium fabrication.The management says," We believe that the opportunities in the medium fabrications are substantially higher - especially from the Earth Moving Industry".Thus all things are looking up for rishi laser and this all will take the companyto new heights.

Conclusion.................Rishi has been consistently perfoming well over the last 3years or so and the same trend is expected to continue in the coming years as well.We expect RLCL to deliver a topline of aound 36crs and a bottomline of about 3.6crs for fy06 respectievely.With a low equity base of 5.6crs the bottomline results in an EPS about 6.5rs.Further it is trading at a P/E of 8x its expected EPS of Rs 11 for FY07.

WAIT FOR DECLINE N CAN BE BOUGHT ARND 75 LEVELS