Kirloskar Pneumatic Circles Kg Khosla

Kirloskar Pneumatic, the Rs 196.70-crore Kirloskar group company, is all set to increase its stake in KG Khosla Compressors (KGKCL) from the current level of 8.71 per cent.

In a faxed response, Sanjay S Soman, vice-president (finance), said that the number and pricing of the shares to be acquired would depend upon Sebi regulations.

"We intend to increase our equity holding in KGKCL subject to Sebi approval. We have the Centre's nod under section 372 of the Companies Act, 1956 for investment of upto Rs 6 crore in KGKCL's equity," he added.

KGKCL has an equity capital of Rs 10.25 crore. Further acquisitions by Kirloskar Pneumatic would trigger the takeover code and the company will have to be make an open offer to acquire another 20 per cent as per Sebi regulations. KGKCL's share prices have moved up from Rs 15.80 on March 11 with a daily volume of 1,500 shares to Rs 22.50 with a volumes of 20,500 shares. Stock market sources say the company is likely to pick up at least another 22 per cent at a premium of Rs 40-45 per share, giving it a controlling stake in KGKCL. KGKCL's promoters hold around 43.24 per cent, financial institutions hold 15.18 per cent and the balance is held by the public.

 

KGKCL manufactures high pressure compressors, air and gas compressors, refrigeration compressors, and hydraulic pressure vacuum pumps. It had not been able to recover after it suffered a setback due to industrial unrest when its plant was locked out between September 1991 and October 1992.

It had incurred a loss of Rs 1.89 crore in 1992-93 and a loss of Rs 1.66 crore in 1993-94. However, the company was able to bounce back only recently. KGKCL recorded a turnover of Rs 46.01 crore in 1996-97 as against Rs 38.05 crore in 1995-96. Its net profit was Rs 3.53 crore (a loss of Rs 0.47 lakh in 1995-96). The company has been grossly underutilising its capacity. It produced 1,330 high pressure compressors on a installed capacity of 2,760 in 1996-97.

Kirloskar Pneumatic has been eyeing this company for quite some time now as it suits its product profile. It manufactures various types of air compressors and other air-conditioning, refrigeration and transmission equipment.

Analysts opine that the total market size of the compressor industry in India is around Rs 300 crore and is likely to grow at the rate of 6-8 per cent over the next few years.