AIA Engineering Ltd Initiating Coverage - India Infolinecontent.indiainfoline.com/wc/archives/sect/AIA Engineering.pdf · February 16, 2006 3 AIA Engineering Ltd - Well Cast for Value

AIA Engineering Ltd

Rating: Market performerMarket Cap: Rs10.9bnCMP: Rs600Target Price: Rs688Avg. Volumes (1 mth): 350869

52 week H/L: Rs645/391BSE Code: 532683NSE Code: AIAENGBloomberg Code: AIAE@ INReuters Code: AIAE.BO

Share holding pattern

Share price chart

AnalystVikash Kumar. M

[email protected] 1760

Retail SalesBiren Patel

022-5677 5900

Institutional SalesSandeepa Arora022-5549 1776

February 16, 2006

(as on 31-Dec-2005) (%)Promoters 73.7MFs & UTI 10.8Banks & FIs 0.2FIIs 5.7Public & Others 9.6

AIA Engineering Ltd (AIAEL) is a niche player in the value added, impact,abrasion and corrosion high chrome metallurgy segment. The company’sproducts find application in the crushing and grinding operations mainly inmills of cement, mining and utility industries. We are initiating coverage onthe company with a Market performer rating.

Ø AIAEL is well placed to take advantage of the demand arising from therobust growth in the end user segments (Cement, Mining and Utility), whichare on their growth trajectory. The company is testing waters in internationalmining market which is 15 times larger than the cement market and Chinesecement market which is the largest cement market in the world with 37% ofthe world production, hence has tremendous growth potential.

Ø AIAEL’s chrome products help the end user segments to increase productivity,maintain consistent end product quality, reducing power cost and fewer millstoppages due to lower wear rate. Hence, more companies in the end userindustries are expected to shift to high chrome products.

Ø Strong technical knowledge and dominant market position, poses a stiffentry barrier for new entrants. It has a market share of 65% in the domesticmill internals market with 90% share in the domestic cement market. In thechrome mill internal domestic market, the company has a virtual monopoly.

Ø A major concern is the high cash conversion cycle (CCC) due to high inventoryrequirements and long credit cycle.

Ø We expect revenues and earnings to witness a CAGR of 31.7% and 42.6%respectively over FY05-08. In FY08, revenues are expected to grow by 50%,as the full effect of the new capacity will be felt in this period.

Ø At CMP (600), the stock trades at 21.1x FY07P EPS of Rs.28.4 and 14x FY08PEPS of Rs.43. We are initiating coverage on the company with Market performerrating.

Financial Highlights Period FY04 FY05 FY06P FY07P FY08P

(12) (12) (12) (12) (12)Sales (Rs mn) 2143 2937 3700 4468 6712Growth (%) 29.3 37.0 26.0 20.7 50.2Operating profit (Rs mn) 326 389 729 844 1255OPM (%) 15.2 13.2 19.7 18.9 18.7APAT (Rs mn) 229 263 444 505 764NPM (%) 10.7 9.0 12.0 11.3 11.4ROCE (%) 33.2 31.5 25.4 24.9 29.5ROE (%) 49.4 30.1 16.5 15.7 19.1EPS (Rs) 70.4 16.3 25.0 28.4 43.0PE (x) @ Rs600 8.5 36.9 24.0 21.1 14.0

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Initiating Coverage

February 16, 2006 2

AIA Engineering Ltd - Well Cast for Value

Investment rationale

Total solution providerThe company is a total solution provider and not just a supplier of high chromeparts to tube and vertical mills. Mill internals are very essential for continuousproduction, as any disruption in crushing and grinding activity adversely affectsproduction activity. Mill internals form a small part of total costs for the userindustries but any disruption would result in very high financial loss for the userindustries. Hence, user industries are looking for dependable partners who wouldbe able to maintain consistency in the products supplied in terms of quality, design,functionality and supply.

AIAEL uses its extensive knowledge in design, metallurgy and application processof various industries to provide total and dependable solutions to its clients likeball charge management, process optimization, supervision of initialization,retrofitting, periodic maintenance and process audit to assess the residual life ofliners supplied to optimize the grinding function, control wear rate and maintainthe profile of the products. This helps clients to have increased production volumes,consistent end product quality and reduced process cost. Thus it becomes moreof a serious partner to customers than just a supplier.

Dominant market positionWith a market share of around 65% in the domestic market, AIAEL is a leader inthe domestic mill internals industry. The company has a virtual monopoly in thedomestic cement industry segment with close to 90% market share. It also hastie up with leading OEMs, thus almost all the new thermal plants set up in Indiain the last five years are fitted with the company’s products.

In the chrome mill internal domestic market, the company has monopoly withhardly any competition. All the major players in the cement industry have convertedto chrome mill internals, as this cost as a % of total grinding costs are very low,at 1.5% for this industry. In the mining segment, as mill internals cost close to10% of the total grinding costs, the change to chrome mill internals is happeningat a much slower pace.

Given the company’s diverse product portfolio, its effective service network andlack of major competition, the company would be able to maintain its leadershipin the domestic market.

Table: Major clientsSegment Major clientsCement Domestic-ACC Ltd, Gujarat Ambuja Cement Ltd, Ultra-tech

Ltd, Grasim Industries and JK CementsInternational- Holcim, Lafarge and Cemex

Mining Kudremukh Iron Ore Company Ltd, Hindustan Zinc, BharatAluminium Company

Utility (Thermal power) All State electricity boards and NTPCOEM’s Bharat Heavy Electronics Ltd and other major OEMsSource: Company

A serious partner tocustomers

Markets share of 90%in the cement segment

In chrome mill internalmarket Vertualmonopoly

February 16, 2006 3


Increasing presence in international marketsThe company currently supplies its mill internals only to cement manufacturers inthe international markets (cement majors such as Holcim and Lafarge are amongits international clients) due to capacity constraints and has a market share ofaround 12% outside China in the international cement segment. The company issetting up of a new 100% EOU plant in Changodar with an installed capacity of46000 TPA, which is expected to become operational in Q3 FY07. The new capacitywould help the company to improve its share in the international cement segment.The company is also in the process of entering the Chinese cement markets,which currently produces around 37% of the total world production, thus makingit the largest cement market in the world. AIAEL is in talks with a leading OEMF.L.Smith for this purposes hence no time frame has been indicated for the entryinto the Chinese market.

The company plans to utilize at least 25000 TPA of the new capacity to cater theinternational mining industry and have already started talks will few mines inAustralia and other parts of the world. Requirements for mill internals in mining interms of volume are as high as 15 times in comparison to the cement industry asa single mining site may require anywhere in between 2000 to 5000 TPA, wereas cement companies require between 150 to 300 TPA. The company is testingwaters in the mining segment and will be able to capture only around 1% marketshare by using the full earmarked capacity. Hence, there is a huge growthopportunity for the company in the international mining segment.

Currently, the company gets around 39% (Rs1443mn) of its revenues in FY06Pfrom its international sales. We expect this to go up to 55% (Rs3692mn) byFY08P. This increasing presence in international markets will provide higher marginsand geographical diversity in the future.

Table: Domestic vs. exports sales

Source: India Infoline estimates

Strong technological baseThe company has a strong technological base in the high chrome metallurgy millinternal industry, posing a stiff entry barrier to new entrants. It has a technicalcollaboration with South Western Corporation UK for process improvementsrelating to Vertical mills. It had also benefited from its previous collaboration withM/S Magotteaux International SA (1991 –2000), which enabled it to improve itsmanufacturing processes and designing capabilities. Due to this it currently enjoysits reputation as a quality supplier of mill internals.

Exports to driverevenues

Mining segment will bethe key growth driver

Strong technologicalknowledge

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February 16, 2006 4


Strong Demand potentialGiven the buoyancy in the end user segments such as cement, mining and utilitiesdue to the government’s initiatives and robust economic growth, the domesticmill internals market is expected to remain robust. The export markets also remainstrong on back of the company starting to cater the mining companies, whoseconsumption volumes of mill internals are very high, at 2000 to 5000 TPA permine.

Chart: Demand overview

Demand for Mill Internals

Project requirementMaintenance requirement

Greenfield expansionprojects

• Monthly replacement• Annual replacement

During crushing and grinding operations, mill internals gradually wear out andthese worn out parts need to be replaced in order to maintain efficiency. The timeinterval and the quality to be replaced depend on various factors like input materialand its quality, severity of usage and the environment in which it is used. Thecompany, currently, gets around 70% of their revenues from the maintenancemarket and we expect it to contribute close to 80% of the revenues in the future.

Project requirements depend on the new green field projects and capacityadditions done by the user industries. Project market is based on the OEM sales.OEMs undertake projects from the user industries to develop mills according totheir specification and mill internal requirements are outsourced to their vendors(AIAEL). AIAEL has tie up will most of the OEMs in India (BHEL etc.). Here, thedemand is for the entire set of mill internals unlike replacement markets wheredemand depends on the wear of the products.

Table: Empirical wear rate of mill internals

Source: company, India Infoline research

User segments at theirgrowth trajectory

Demand frommaintenance market togrow

Project market demanddepends on OEMs

Industry Wear rate(Per tonne of material grinded/ per MWhr generated)

Cement - Grinding media 80-100Cement - mill internals 20 - 23Mining 150 - 1000Utility (thermal power) 10 - 15

February 16, 2006 5


Susceptibility to volatile raw material pricesIncrease in the raw material prices may adversely affect its operating margins asthe company depends on the local market for procuring ferro chrome and scrap,its main raw materials. The company does not have any long-term contacts withany suppliers for its raw material requirements. In the past during FY05, itsoperating margins were adversely affected due to increase in raw material prices,operating margins dropped to 13.2 per cent from an average of 16 to 17 percent as the company was not able to entirely pass on the increase in prices to itscustomers. Though the company has added an escalation clause to a majority ofits existing contracts and all new contracts are entered with an escalation clauseattached to it, the threat exists. The company bids for tenders floated by thegovernment for the supply of mill internals on a fixed price basis; this will exposethe company to raw material price volatility.

Highly capital intensiveThe company is expanding its presence in the global markets. Hence the collectiondays in the export markets are expected to remain high. Also, its clients in thedomestic markets include utility companies, which are essentially public sectorunits, which are known for delayed payments. The company will not have muchcontrol over this. All this leads to a long credit cycle for the company. The companyhas large inventory requirements also, as normal business cycle for the companyis around 6 to 8 months and grinding media one of the product of AIAEL is a lowmargin high volume product. The company has three warehouses in USA to caterto its clients in a timely manner and has plans to increase it. This will lead to anincrease in inventory requirements further.

We expect the cash conversion cycle days (CCC) of the company to be around136days in FY06E and increase to 137days by FY08E and stabilize at these levels.This increase is mainly attributed to increase in receivables from the currentlevels of 111 days to 114 days and inventory requirements as the companystarts to cater more to the international markets in the future. This increase inreceivable days is partly offset by the increase in payable period offered to thecompany by its suppliers.

Chart: Cash conversion cycle

Investment concerns


Table: Working capital ratios FY04 FY05 FY06P FY07P FY08PReceivable days 115.5 116.9 110.5 112.7 114.2Inventory days 69.4 52.1 62.6 63.3 63.1Payable days 43.4 41.1 37.5 38.8 40.8Source: India Infoline estimates

Volatility in raw materialprices can hit margins

High cash conversioncycle

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February 16, 2006 6


Valuation

We expect the company to witness a CAGR of 31.7% in topline backed by highgrowth in the export market, particularly in the international mining market. Duringthe same period, we estimate profits to witness a CAGR of 42.6%. The stock istrading at 14x its FY08P EPS of Rs43 and a P/BV of 2.6x, which does not fullyfactor in the expected growth. Due to a strong expected growth in top line andbottom line, past performance and dominant market share in the domestic marketand increasing presence in the international market, we feel the stock shouldtrade at a target multiple of 16x its FY08 EPS of Rs43 thus giving us a 12 monthprice target of Rs688.

Table: Growth matrix FY04 FY05 FY06P FY07P FY08PNet sales 29.3 37.0 26.0 20.7 50.2EBIDTA 30.9 18.5 76.2 13.7 43.2Net profit - 15.3 68.7 13.6 51.4Net worth 23.2 3.5 216.5 18.2 23.3Gross block 18.7 18.9 100.4 70.5 0.0Net working capital 29.3 26.6 42.2 23.0 48.1Capital employed 32.0 24.7 118.6 15.9 21.1Source: India Infoline estimates

February 16, 2006 7


Company background

Promoted by Mr. Bhadresh Shah (a graduate in metallurgy engineering from IITKanpur) AIA Engineering Ltd is an Ahmedabad based ISO 9001 – 2000 certifiedcompany, which manufactures parts for tube and vertical mills using high chromemetallurgy. It started as Ahmedabad Induction Alloys (P) Ltd in 1978 and engagedin the manufacturing and supply of steel, alloy steel and alloy iron castings. AIAELentered into the high chrome grinding media segment in 1989 and signed atechno-cum-commercial agreement with M/S Magotteaux International SA (MI),which is a world leader in special steel products and grinding media for the miningand cement industries. In 1991, MI became an equity partner by acquiring 51%stake, while Mr. Bhadresh Shah retained the rest. This partnership was terminatedin 2000 and the promoters bought back MI’s stake. Currently the company hasa technical collaboration with South Western Corporation UK for processimprovements relating to Vertical mills.

Subsidiaries & associatesAIAEL has seven subsidiaries, of which three are in India. All the companiesmanufacturing assets are only present in India. All the international subsidiariesare marketing arms of the company and they market AIAEL’s products under thebrand name Vega.

Welcast Steels Ltd (WSL): AIAEL holds 72% of WSL’s equity. It became asubsidiary of AIAEL as of September 2005 and has a manufacturing facility inBangalore exclusively for production of grinding media. It has an installed capacityof 35,000MT and will be increased to 42,000MT by the end of FY06. WSL exportsgrinding media via Vega industries.Reclamation Welding Ltd (RWL): AIAEL holds 98% of RWL’s equity but theother shareholders have an option to increase their share from 2% to 30%. Itproduces tube mill and vertical mill parts on conversion or job work basis for thecompany.Paramount Centrispun Casting (P) Ltd (PCCL): AIAEL holds 72% of this foundryin Nagpur that produces various castings.Vega, ME: It is a 100% subsidiary of AIAEL. It is a marketing arm doing directsales to Middle East, South East Asia and South America.Vega, UK: Vega, ME owns 100% of this company. It is a marketing arm doingdirect sales to European region, Russia, Africa, Turkey and other erstwhile CISCountries.Vega. USA: Vega, UK owns 100% of this company. It is a marketing arm doingdirect sales to North America and parts of Central America.Vega, Canada: It was started with an intension to start a plant in Canada butthis plan has been shelved. The company currently has two employees stationedthere, who will be transferred to other subsidiaries once all formalities arecompleted for the closure of this company.

Associates:Centricast Enterprises (P) LtdGray Cast Foundry WorksKeyur Financial Services (P) LtdVrindavan Alloys (P) Ltd

February 16, 2006 8


Key management

Name Designation BackgroundMr. Bhadresh K Shah Managing director A graduate in metallurgy

engineering from IIT Kanpur andhas over 27 years of experienceis manufacturing and design ofvarious kinds of high chromecastings.

Mr. Judes Spede Director A civil engineer from LiegeUniversity and is a veteran of thehigh chrome industry. He was onthe board of a global wear partsmanufacturer before joiningAIAEL.

Mr. Marc Brunelle Group sales Director Joined AIAEL in 2004 and has abachelor’s degree in chemicalengineering from EcolePolytechique, Montreal, Canada.He has over 19 years ofexperience in the cementindustry. Prior to joining AIAEL hewas Corporate processengineer with Lafarge, one of thebiggest cement companies inthe world.

Mr. David Hurlock Commercial director Joined AIAEL in the year 2000and has over 29 yearsexperience in cement industry.He has a bachelor’s degree inengineering from VanderbiltUniversity, USA.

Mr. Richard Drouin Group Technical Manager A graduate in mechanicalengineering, from university ofMontreal. He has over 20 yearsof experience with a global wearparts manufacturer in variouscapacities.

Mr. Sudhir Vaman Bhide Controller – Quality Assurance A Ph.D in engineering from IIT,Mumbai and has over 30 yearsof experience in the industry. Hehas been with AIAEL since 1982and before that he wasemployed as works manager atStainless Foundry (P) Ltd.

February 16, 2006 9


AIA Engineering Ltd is a niche player in the value added, impact, abrasion andcorrosion, high chrome metallurgy segment. The company’s products findapplication in the crushing and grinding operations mainly in mills of cement,mining and utility industries. The company supplies mill internals for various tubeand vertical mills.

High chrome metallurgy offers a verity of benefits for the user industries likereduced operation cost due to reduction in power consumption, lesser millstoppages and better wear rate, compared to conventionally used parts ofmanganese steel, nihard iron, hyper steel and forging.

Chart: Manufacturing process

Source: Company

Business Details

February 16, 2006 10


Tube millsThese kinds of mills are basically used to grind clinker in the cement plants, coalin thermal power plants and mineral ore in mines. The company produces all theparts that are fitted into the mills.

Source: Company

Grinding Media (or balls) are spheres of high chrome metallurgy that are used inBalls Mills (or Tube Mills) in Cements Plants, Mines and Thermal Power Plants. Asthe Grinding Mill rotates, the balls fall over each other and impact is createdwhereby the feed material (clinker, coal or mineral ore) is ground. The efficiencyand productivity of the ball mills depends to a large extent on the quality of thegrinding media and its size distribution. Grinding Media have very high degree ofharness hence liners are used to protect the shell of the mill.

Liners not only help to protect the shell of the mills they also help and controlthe lifting action of the grinding media so that the ball charge is expanded enoughto enable coarse material to ender it and to minimize the dead zone of the ballcharge. The company has designed various types of liners for different kinks ofapplications and also designs new once according to the application.

Chart: Grinding Media and Liners

Source: Company



Chart: Diaphragms

Source: company

Vertical millsIn these types of mills grinding takes place when the feed material passesbetween the rotating table liners and rollers. AIAEL supplies monoblock rolls forLoesche and Polysius mills, segmented rolls for Atox and Polysius mills, segmentedtables for Loesche, Atox and Polysius mills, grinding rings and hollow balls foremills etc.

Polysius mill parts Loesche mill parts E-mill parts

Source: company

Diaphragms are like gates that screen the materials from the granulometry pointof view. AIAEL uses its extensive process knowledge to develop different typesof diaphragms.

Drying chamber diaphragms function is to prevent grinding media from enteringdrying chamber from the grinding chamber and to provide maximum area for airpassage for drying purpose.

Intermediate diaphragms function is to keep charges of the two adjacent chambersseparate and allow specific sized particles to go to the downstream chamberand to ensure retention of the material in the 1st chamber till it is effectivelyprepared to meet the 2nd chamber requirements.

Outlet diaphragms function is to allow fee passage for the material present in thelast chamber towards the mill outlet and to prevent the grinding media fromescaping through the mill outlet.



Industry overview

Mill internals, as an industry is highly fragmented. It is characterized by manysmall and very few large players who normally manufacture to the customersspecifications. Majority of the players manufacture using conventionally usedmaterials such as manganese steel, nihard iron, hyper steel and forging.

The three major user industries are Cement, Mining and utilities and all are ontheir growth trajectory due to robust growth in the economy and the favorablegovernment initiatives.

Cement IndustryGlobal Cement industry is expected to grow at an annul rate of 3.6% and theIndian cement industry is expected to maintain a growth rate of 7 – 8% for thenext few years due to the robust growth in economy. As per CMA, as of March 31,2005, the Indian cement industry has an average installed capacity of 153.6 MTand actual cement production in the year end March 31, 2005 was 127.6 MT,compared to 117.5 MT in the year ended March 31, 2004, at a growth rate of8.6%

World cement production

Estimated cement production Incremental cement production(MMT) (MMT)

2003-04 1937 672004-05 2007 702005-06 2079 722006-07 2154 75 Source: World cement

UtilitiesThe generating capacity in India stands at 123,000 MW and governmentcompanies dominate this segment in India. Thermal power plants at presentaccounts 69% (84870 MW) of the total capacity. The industry is expected to adda further 100,000MT of capacity by FY12E to bridge the current supply demandgap.

Electricity Act 2003 has reduced the license requirements and the generatingcompany will be free to enter distribution business and visa versa. Currentlyprivate sector accounts for only 11% of the total power generation capacity andthe two major private players in the distribution business are Tata Power andReliance Energy. Though the Electricity Act 2003 allows private participation inthe distribution business, in reality it is still not very attractive.



Financial analysis

RevenueAIAEL had grown at a CAGR of 29.1% from FY02-05. Going forward, we expectthe topline to grow at a CAGR of 31.7%. Topline growth will be driven by a 43%CAGR in the international market sales.

Chart: Sales and sales growth


MarginsMargins hit an all time low due to the unprecedented rise in raw material pricesduring FY05, as the company was not able to pass on the increase in prices to itscustomers. The company has started to add escalation clauses in all the contractsit enters now except for the bid for government tenders, which are on fixed pricebasis. We expect a slight decline in the margins due to the addition of WelcastSteels Ltd (WSL) as its subsidiary from Q3 FY06. WSL produces grinding media, alow margin high volume product. Going forward we expect the margins to stabilizearound 18%.

EBITDA and EBITDA Margins


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PAT and PAT Margins


TaxationTax paid by the company during FY05 was 33.9% of PBT. The effective tax rate forcompanies for FY06 is 33.6% and the company is expected to pay the full applicabletax for FY06 as there are no exemptions available for the company as of now.The company’s new capacity which is expected to commence operations from Q3FY07 will be a 100% EOU thus enabling the company to save on tax outgo.Lower tax outgo will increase the earnings growth for the company from FY 07.

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Due to one time capitalloss from amalgamationof AIA Expots (P) Ltd forRs371mn



Financials

Consolidated Income Statement

Consolidated Balance Sheet

Period to FY04 FY05 FY06P FY07P FY08P(Rs in mn) (12) (12) (12) (12) (12)Source of FundsShare capital 24 131 178 178 17813% cum redeemablePref. share capital 383 0 0Reserves & surplus 439 745 2593 3098 3862Net Worth 846 876 2771 3276 4040Minority interest 24 32 68 75 75Loan funds 302 555 376 376 376Deferred tax liability 20 24 35 40 70Capital Employed 1192 1487 3250 3767 4561

Application of fundsGross fixed assets 440 523 1049 1788 1788Less: Depreciation (235) (252) (568) (676) (816)Add: Capital WIP 27 20 445 0 0Net fixed assets 232 290 926 1112 972Investments 33 22 576 543 507Current assets 1305 1571 2165 2652 3927Current liabilities (381) (401) (500) (605) (895)Net working capital 924 1170 1665 2047 3032Misc. Expenditures 0 0 75 56 37Deferred tax asset 2 3 8 9 13Total 1192 1487 3250 3767 4561

Period to FY04 FY05 FY06P FY07P FY08P(Rs in mn) (12) (12) (12) (12) (12)Revenue 2143 2937 3700 4468 6712Operating expenses (1818) (2548) (2971) (3623) (5457)Operating profit 326 389 729 844 1255Other Income 70 80 97 95 90EBIDTA 396 469 826 939 1345Financial charges (21) (28) (60) (45) (45)Depreciation/Amortization (29) (33) (68) (108) (140)PBT 346 407 698 786 1160Tax Provisions (115) (139) (235) (258) (363)PAT 231 269 463 528 797Prior period items (1) (3) (1) (1) (1)Share of (profit)/losstransferred to minority (2) (3) (18) (23) (32)APAT 229 263 444 505 764



Key Ratios FY04 FY05 FY06P FY07P FY08P (12) (12) (12) (12) (12)Per shareEPS 70.4 16.3 25.0 28.4 43.0BVPS 345.3 67.0 155.9 184.3 227.3DPS 10.0 0.2 0.0ValuationP/E 8.5 36.9 24.0 21.1 14.0P/BV 1.7 9.0 3.8 3.3 2.6EV/EBIDTA 5.1 17.7 13.2 11.5 8.0EV/Sales 0.9 2.8 2.9 2.4 1.6Profitability ratioOPM% 15.2 13.2 19.7 18.9 18.7PBT% 16.2 13.9 18.9 17.6 17.3PAT% 10.7 9.0 12.0 11.3 11.4Returns%ROCE 33.2 31.5 25.4 24.9 29.5ROE 49.4 30.1 16.5 15.7 19.1ROTA 27.4 25.6 20.1 20.0 24.7Turnover ratio Net sales to fixed assets 9.2 10.1 4.0 4.0 6.9Net sales to total assets 1.8 2.0 1.2 1.2 1.5Net sales to working capital 2.3 2.5 2.2 2.2 2.2Growth%Sales 29.3 37.0 26.0 20.7 50.2EBIDTA 30.9 18.5 76.2 13.7 43.2PAT 31.6 16.2 72.3 14.0 50.8APAT - 15.3 68.7 13.6 51.4Leverage ratioDebt / total equity 0.65 0.63 0.14 0.12 0.09Liquidity ratio Debtors days 115.5 116.9 110.5 112.7 114.2Creditors days 43.4 41.1 37.5 38.8 40.8Inventory days 69.4 52.1 62.6 63.3 63.1Current ratio 3.4 3.9 4.3 4.4 4.4Component ratioRaw material 44.8 49.3 44.9 44.9 45.0Staff cost 6.9 5.4 5.9 6.2 5.8Other expenditure 37.8 32.3 29.5 30.0 30.5

it’s all about money, honey!

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Published in February 2006. All rights reserved. © India Infoline Ltd 2005-6.This report is for information purposes only and does not construe to be any investment, legal or taxation advice. It is not intendedas an offer or solicitation for the purchase and sale of any financial instrument. Any action taken by you on the basis of theinformation contained herein is your responsibility alone and India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries orits employees or directors, associates will not be liable in any manner for the consequences of such action taken by you.

We have exercised due diligence in checking the correctness and authenticity of the information contained herein, but do notrepresent that it is accurate or complete. IIL or any of its subsidiaries or associates or employees shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in thispublication. The recipients of this report should rely on their own investigations. IIL and/or its subsidiaries and/or directors,employees or associates may have interests or positions, financial or otherwise in the securities mentioned in this report.

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Documents

AIA Engineering Ltd Initiating Coverage - India Infolinecontent.indiainfoline.com/wc/archives/sect/AIA Engineering.pdf · February 16, 2006 3 AIA Engineering Ltd - Well Cast for Value