ANG Auto Ltd - 95.00 Rs
ANG Auto Ltd (ANG) was established in 1991, primarily as a merchant exporter in the name of ANG Exports, to market automotive component to some of the USA based companies. Subsequently, it set up a plant to manufacture brake pins & rollers, camshafts, brake shoes and other critical components like dummy axles, gear sets, slack adjusters etc. Later in 2005, it further widened its product portfolio by merging two of the group companies namely ANG Auto pvt ltd and ANG Automotive Industries pvt ltd with itself. Today, under the dynamic leadership of Mr. Premjit Singh, ANG is among the few companies in the world to be completely integrated – from the manufacture of components to sub-assemblies and assemblies and finally to vehicles. It boasts of having a portfolio as vast as 15 different products with expertise in two critical auto-component families i.e. braking system and transmission system for heavy commercial vehicles, trailers and other vehicles. Notably, with the commencement of its trailer plant in April 2007, ANG has become the largest trailer manufacturing company in India with a capacity of 3600 trailers per year, against a cumulative competing capacity of 600 trailers per year.
As on today, ANG has eight world class manufacturing facilities with five units in Noida, one in Nalagarh-HP, one in Faridabad-Haryana and latest trailer manufacturing unit in Sitarpur-Uttranchal. From July 2007, company started producing trailer axles based on a new friction welding technology which is first of its kind in India. Off late, it also launched two unique products viz. the automatic slack adjuster and the single piece dummy axle which have become the major growth drivers for the company. Its automatic slack adjusters offers a continuous running life of 75,000 km (before adjustment) compared with the prevailing industry standard of about 20,000 km and has even got a US patent for that. Now, ANG is among the selected companies in the world, having a patented Auto Slack that too developed and engineered by its in-house technical team. However the biggest achievement by the company is its trailer manufacturing plant set up by ANG Auto Tech, a 75% subsidiary in collaboration with FUWA Engineering of China. Unbelievably the entire trailer, except for the tyre, rim and spring leaf is manufactured in-house, enhancing asset utilization, cost management, quality control and superior return on employed capital. Hence, within four months of the commencement of operations, ANG possesses the expertise to offer 18 trailer variants in multiple configurations (24 ft, 32 ft, 36 ft and 40 ft) and customized around different payloads with different structures and attachments for diverse applications. In order to be the largest trailer manufacturer in Asia, ANG is augmenting its capacity to 6000 trailers per year with an investment of 36 cr and is expected to operating in the current year. This product commitment resulted in Ashok Leyland selecting the company for an alliance partnership whereby ANG would manufacture trailers and Ashok Leyland would market them as a co-branded product. This five year contract is valued at 1500-1800 cr, which is a huge breakthrough for ANG.
Currently 70% of revenue, ANG derives from exports to quality conscious US and European markets in addition to Australia, Brazil and Mexico, among others. Going ahead, company has drawn out a blueprint to extend one step further to the manufacture of suspension systems and is also looking for backward integration to set up a forging unit at Bhiwadi, Rajasthan at capex of Rs 37. To consolidate its operations further, company has decided to merge ANG Auto Tech also with itself. Incidentally, the market for trailers in India is virtually unexplored although it forms a major mode of logistic solution in developed economies due to cost and various other factors. Therefore with the massive investment & rapid developments taking place in road infrastructure, the future prospect of trailers is mind boggling. Earlier in May 2007, company raised around 50 cr thru FCCB route to be converted into equity shares @ 325 Rs per share. However due to industrial slow down & rising input cost, it may end FY08 with sales of Rs 120 cr and PAT of Rs 16 cr on standalone basis. This translates into EPS of Rs 13 on current equity of 11.90 cr where diluted EPS works to Rs 12. Meanwhile, as ANG Autotech has started commercial production of trailers from last fiscal only, future prospects looks promising. Finding the valuations very cheap, management has taken the approval for buy back of equity shares up to 24.30% of the total paid up equity capital at a maximum price of Rs 215 per share, but is yet to begin the actual buying. Hence, investors are recommended to buy at current levels as scrip has the potential to appreciate 50% from hereon in a year’s time.
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