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Apart from manufacturing power as well as distribution transformer a wide range up to 50 MVA in 200 kV class Kirloskar Electric (20.00) also produces several types of special transformers like furnace, flame proof as well as conventional dry type, earthing, special converter, high voltage testing, short circuit testing, nitrogen gas cushioned, cast resin etc. It is also one of the leading manufacturers of AC/DC motors, AC generators, DG sets, tractions etc. At the same time, its Switchgear division manufactures high voltage switchgear in the range of 3.3 to 36kV for indoor as well as outdoor applications. Recently, it has setup up a new plant at Maharashtra & Haryana for transformer & rotating machine respectively. In order to consolidate and integrate its operation, company has recently merged Kaytee Switchgear Ltd (KSL) & Kirsloskar Power Equipments Ltd (KPEL) with itself. Post merger, company has reported an OPM of more than 9% for the latest Dec’08 which is quite encouraging. At the same time higher interest cost has dented the bottomline. For FY09 it may clock a turnover of Rs 850 cr and net profit of Rs 28~30 cr. This works out to an EPS of Rs 6 on expanded equity of Rs 50.50 cr. Due to drastic fall in metal prices and synergies of merger, KECL has the potential to improve its margin going forward and can report an EPS of more than Rs 8 in FY10.

HBL Power (100.00) is a technology focused manufacturer of several ranges of specialized application batteries i.e. nickel cadmium (pocket, fibre, and sintered plate), lead acid (VRLA, Tubular, LMLA), silver oxide zinc, lithium, thermal, etc. Infact it is the market leader in VRLA (valve regulated lead acid) and NCPP (nickel cadium pocket plate) batteries and enjoys 50% market share of domestic telecom market. Infact it is the world’s second largest player in nickel cadium alkaline batteries and stands 3rd for Nicad Passenger aircraft batteries. It also manufactures other power electronics such as thyristor controlled battery chargers, earth leakage monitors, battery monitoring systems, industrial chargers, uninterrupted power systems, distribution boards etc. It even has a dedicated railway division to execute end-to-end turnkey railway signaling works, starting from yard design, estimation, procurement, installation and commissioning. Recently it has put up two new factories at Vizianagaram and SEZ Vizag in Visakhapatnam under a capex of Rs 150 cr and is wow setting up a small facility in Mahape, New Mumbai. It is also planning to set up of JV Company in Saudi Arabia to manufacture Industrial Batteries. For the nine months ending Dec 2008 it has recorded 40% growth in sales to Rs 958 cr whereas PAT zoomed up 65% to Rs 73 cr thereby surpassing the entire FY08 net profit of Rs 67 cr by decent margin. Of late prices of lead, nickel, copper, tin and other metals has fallen considerably which may improve the operating margin of company in coming quarters. Still on a conservative basis, it may end FY09 with sales of Rs 1250 cr and PAT of Rs 80 cr i.e. EPS of Rs 33 on equity of Rs 24.30 cr

Sujana Tower (10.00) is basically into designing and manufacturing of telecommunication and hi-tension transmission towers. Its main products include power transmission line towers (from 11 KV to 400 KV) and telecom towers such as selfsupporting lattice towers upto 100 metres height, triangular/square cross-section, hybrid towers, angular/tubular towers, lattice Guyed masts and monopoles. Thru joint venture with EPC companies like Deepak Cables, Annapurna Const, company is also executing turnkey EPC projects in power segment and aims to emerge as turnkey contractor in next couple of years. Apart from having galvanized tower manufacturing capacity of 128,125 MTPA and heavy structural steel product capacity of 70,000 MTPA, company is in the midst of setting up a Greenfield plant in Chennai with an installed galvanized tower manufacturing capacity of 100,000 MTPA. For the trailing twelve months ending June 2008, it earned a NP of Rs 46 cr on sales of Rs 582 cr leading to an EPS of Rs 11 on current equity of Rs 20.80 cr having a face value of Rs 5/- per share. However, company has recently taken the extension to end the financial year in Sept 2008 with 15 months performance. Worth a punt

Vakrangee Software (22.00) is a leading provider of complete document and data management solutions encompassing large-scale data capturing & management, scanning, digitization and printing. To maintain its growth momentum, VSL is focusing more on private sector and is constantly adding large companies to its list from the banking and financial service, retail, power and telecom sector. It competently manages the printing of statements (monthly/quarterly/yearly), bills and mass communication collaterals of these private service providers. Its service matrix includes secured data hosting in the Data Centre, data composition/mining from the data dump like CRM data, transaction data, billing data, design of a one-to-one communication layout and superimposing the relevant text data of each customer of the client to make an effective and efficient personalized communication statement, followed by printing the data stream so prepared in a physical format or SMS/e-mail it to the end customer. At the same time it will continue to execute government projects and is soon expected to manage all the inbound documents related to passport issue. Currently its also busy in managing and printing new voting lists as well as voters' cards and slips as it being the election season. Since last three years, company’s topline and bottomline has been growing at an impressive CAGR of 90% and 160% respectively. Moreover, company has been consistently registering an OPM of more than 40% & NPM of 20%. Although company reported disappointing nos for the Dec’08 quarter it can end FY09 with topline of Rs 275 cr and bottomline of Rs 40 cr i.e. EPS of Rs 19 on current equity of Rs 21.40 cr. But before the March qtr nos are out.

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SEAMEC Ltd - Rs 48.00

South East Asia Marine Engineering & Construction (SEAMEC) is a 75% subsidiary of Coflexip Stena Offshore Mauritius Ltd which in turn is owned by Technip S.A of France, the largest oilfield engineering, construction and service group in Europe. SEAMEC operates multi-purpose support vessels (MSV) for diving and provides underwater/subsea engineering and construction, maintenance, inspection of under-water structures, rescue-operations and fire-fighting and other support services for offshore oil/gas installations located in India or abroad. Hence it is a pure play of charter hiring of MSVs, which are more specialized vessels than Offshore Supply Vessels (OSV) as they are equipped with Dynamic Positioning (DP) system and can go underwater for repair & maintenances of underwater pipelines. Notably, there are just about 30-35 MSVs operating in the world and Technip is the undisputed leader with 17 of them. In India, SEAMEC is a leader with 4 out of 6 vessels whereas the balance two are with ONGC. To conclude, SEAMEC specializes in vessel management, marine management, dive support, fire fighting, subsea construction, ROV support, pipelaying, rescue operations, logistics, mooring & de-mooring, cranage etc.

Earlier, SEAMEC owned three vessels viz., Seamec-I with 1700 DWT, Seamec-II with 2100 DWT, Seamec-III with 2100 DWT. In June 2006 it acquired a cable lay vessel named Seamec Princess (Ex Oceanic Princess) from M/S James Fisher Logistics Ltd. Post acquisition vessel was modified to DP-II Diving Support Vessel at Dubai dry-dock and put on charter with effect from 1st March 2008. This vessel is quite huge and technically more advanced compared to the existing three vessels. The current status of deployment of all the vessels is as follows:

SEAMEC-I - Hired out to M/s Dolphin Offshore Enterprises (India) Ltd
@ US$ 23,425 per day until 10th March 2010

SEAMEC-II - Hired out to Rana Diving Marine Contactors, Italy
@ US$ 95,000 per day until 30th April 2009

SEAMEC III - Hired out to Condux SA de CV, Mexico
@ US$ 59,000 per day until 3rd August 2009

PRINCESS - Hired out to M/s. Workboat International FZCO, Dubai
@ US$ 68,333 per day until 12th June 2009

From the above charter rates it can be concluded that company has still not felt the heat of recession or slowdown as all its vessels are given out at lucrative rates. So the key to company’s performance will be charter rates at which it will enter the future contracts. Due to the drastic fall in crude oil prices, the oil exploration and production activities have come down sharply and accordingly the rental charges for oil rigs, support vessels and other ancillary services also dropped due to fall in demand. To worsen the situation, most of the developed countries went into recession and liquidity crises also hit the world simultaneously. SEAMEC also faced some payment delays / early cancellation of contract etc with couple of its international customer but everything is settled now. Incidentally earlier, due to dry docking, minor accidents, repair etc some or the other vessel of the company was always out of work. But in the last quarter all its four vessels were deployed full time leading to the bumper performance by the company.

Most importantly, no vessel is planned for dry dock in the current fiscal and barring unforeseen circumstance like cancellations, accidents etc all the vessels are expected to be continuously employed. Even if company charters out it vessels at 30% lower rate, still it will do reasonably well. Earlier company was planning to acquire one more vessel but looking at the current scenario it has been dropped. It was also contemplating to bid for exploration and pipe laying engineering contracts on its own but again it has been put to back burner. Interestingly, despite being in a capital-intensive industry, this MNC is a debt free company. To comply with the listing agreement, foreign promoters have last quarter only brought down their stake to 75% from above 78%. It seems majority of promoter selling was taken over by Sundaram Mutual Fund. Financially, with a rocking performance for the last Dec’08 quarter company was able to end CY08 on quite a buoyant note. Total revenue increased by whopping 60% to Rs 269 cr whereas PAT improved by 30% to Rs 47 cr leading to an EPS of Rs 14 on the equity of Rs 33.90 cr. With huge reserves of Rs 275 cr and gross block of Rs 375 cr this debt free company is trading extremely cheap at an EV of Rs 175 cr. For year ending Dec 2009, it is roughly estimated to clock a turnover of Rs 325 cr and PAT of Rs 65 cr i.e. EPS of Rs 19 on current equity. Investors are recommended to buy at current levels, as share price can double within a year. However, it’s a non dividend paying company despite of making handsome profits.

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