DISA India Ltd - AGM notes

Hello..
DISA India Ltd held its AGM on 6th May, 2011 in Bangalore. Following are some notes from the AGM. This is only a FYI kinda post!

The AGM was attended by the entire Board, the auditor and senior officials. About 20 odd shareholders were present. Other than me, there was only one other professional investor, who had come from Mumbai.
I got a chance to interact with the senior management (they didnt run away asap, as has happened in some AGMs I attended).

Management Perception: Well informed, professional and no-nonsense people. Their answers were plain, to-the-point statements. No beating around the bush, no tall claims.

• DISA is currently looking at increasing the Wheelabrator range in the country over the next 3 years. The range of machines they plan to introduce will not be limited just to the foundry/casting industries, but will cater to a host of other industries such as railways, defence, construction, ship-building, etc. The management looks at Wheelabrator as a big growth driver. Margins in Wheelabrator products are as high as 30%+. 
• The management is very clear that all business in India will be done through the listed entity. No Timken-giri here (i.e. no 100% subsidiary of the parent and stuff.) This is beneficial for them too, since they would like to utilise DISA's existing network to promote Wheelabrator products too. DISA Technologies Pvt Ltd will remain a R&D entity only.
• Currently, the company is working close to full capacity. Capacity, in this case, cannot be measured in usual sense, since what DISA does is mostly assembly. A large number of parts are supplied by its vendors. But the management says that about 20% more turnover is possible with the existing capacity and infra. Due to this, the company is undertaking expansion at both its Hosekote and Tumkur units. Capex in CY11 estimated to be Rs.8-10 cr.
• Order book as on 30th April 2011 was Rs.103 cr. The company is not at all focusing on exports, since they feel that the opportunity size in India itself is huge. So India would not be made just a low-cost manufacturing hub of the parent or something. Management does not talk about future numbers. (which I think is a good practice.)
• The management admitted that they were facing problems on the raw material price front (which was evident in the March quarter results, which were declared much after the AGM). There is a 6-9 month lag between the raw material price hike and passing it on to the client. So, in the intermittent period, the company has to take a hit due to increase in raw material price rise. Management considers 18-20% as realistic and achievable operating margins.
• The company is also keenly looking at inorganic growth (surprising!). No details were given on the same.
• Company is also looking at increasing filters business and spare parts/after sales service business, which is a higher margin area. 
• The case with SEBI is pending with the Supreme Court. Currently its in a 'tareekh-pe-tareekh' mode. Until this case is resolved, there are no chances of delisting .Management did not comment or give any clue about delisting or the intention of the promoters.
• On being quizzed about competitors like Sinto, Koyo, some Indian manufacturers, etc., the management admitted that competition is there and some established competitors are looking at the Indian markets. But the management is quite comfortable, given the headstart and the future plan they have for the company.

Shareholders were extremely vocal (i am putting it mildly!) about non-declaration of dividend. The usual stuff which happens at most AGMs happened. A bit of entertainment.

Do get in touch in case you think i have missed some point or you have any questions.

Cheers and happy investing!