abhishreshthaa
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HERE ARE SOME STRATEGIES ADOPTED BY SKF BEARING FOR
TURNAROUND MANAGEMENT...
Investment Basis
Strong Existence
SKF Bearings has strong presence in the Indian bearing industry, commanding highest share of 12.3% in total 23mn industry.
It serves to almost each and every segment of the industry. Automobile industry accounts for 35% of its total revenue.
SKFs strong presence coupled with growth in automobile industry is likely to improve company’s growth.
Innovation in Products
Company is planning to launch a series of new products in the Indian replacement market, which accounts for 40% of total market. The company has successfully launched a new wheel-bearing kit for Maruti 800.
In order to further increase it presence in the same segment, it is planning to introduce similar kits for Sumo Model. Simultaneously, it plans to offer imported wheel bearing kits, clutch release bearing kits, timing belt kits and other products from its groups overseas plant in Indian market.
This move will prove instrumental in increasing its revenue share in the market for automobile spare parts.
Debt Re-Structuring
In order to retire high cost debt instruments, SKF Bearing made right issue in the FY01.This move resulted in significant reduction of interest burden.
The debt/equity ratio for the company has decreased from 2.1:1 in 1999 to 0.5:1 in 2002, which is likely to reduce further. Secured redeemable non convertible debentures of Rs200mn were due to retire in August 2003.
Capital restructuring resulting in reduction of interest cost burden is likely to improve the company’s profitability.
Valuation
At the current price of Rs87, the stock is trading at P/E of 15x FY03E earnings of Rs5.7. We expect the company to exhibit better results, on account of its strong presence and implementation of growth strategies.
:SugarwareZ-284:
TURNAROUND MANAGEMENT...
Investment Basis
Strong Existence
SKF Bearings has strong presence in the Indian bearing industry, commanding highest share of 12.3% in total 23mn industry.
It serves to almost each and every segment of the industry. Automobile industry accounts for 35% of its total revenue.
SKFs strong presence coupled with growth in automobile industry is likely to improve company’s growth.
Innovation in Products
Company is planning to launch a series of new products in the Indian replacement market, which accounts for 40% of total market. The company has successfully launched a new wheel-bearing kit for Maruti 800.
In order to further increase it presence in the same segment, it is planning to introduce similar kits for Sumo Model. Simultaneously, it plans to offer imported wheel bearing kits, clutch release bearing kits, timing belt kits and other products from its groups overseas plant in Indian market.
This move will prove instrumental in increasing its revenue share in the market for automobile spare parts.
Debt Re-Structuring
In order to retire high cost debt instruments, SKF Bearing made right issue in the FY01.This move resulted in significant reduction of interest burden.
The debt/equity ratio for the company has decreased from 2.1:1 in 1999 to 0.5:1 in 2002, which is likely to reduce further. Secured redeemable non convertible debentures of Rs200mn were due to retire in August 2003.
Capital restructuring resulting in reduction of interest cost burden is likely to improve the company’s profitability.
Valuation
At the current price of Rs87, the stock is trading at P/E of 15x FY03E earnings of Rs5.7. We expect the company to exhibit better results, on account of its strong presence and implementation of growth strategies.
:SugarwareZ-284: