Rolex Rings: Forging Industry Leader Driving Automotive and Industrial Growth

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well welcome everyone to this one of the most awaited series of a company where we have been

investors for a long time we are talking about rolex uh it gives me a great pleasure that today we are

joined by the management and of course devesh from our umkara team is also there uh of course as always disclaimer

first omkara capital or varendermansel has no economic uh business relationship with either

rolex rings company or even the management uh the exercise what we do is purely for

educational purpose uh second yes we are investors in rolex uh omkara kapi on the prop book has

investments in products but that is only for a long foreign

foreign foreign brazil

and europe france italy this way we started

for 2019 foreign

foreign [Music] [Music]

[Music] right [Music]

foreign see till 2003 it was a private limited company held by entire madika family

only and thereafter in 2007 as sir has just informed that we had a private equity uh from new silk route and there

we have issued certain uh you know ccps and uh within certain condition of post conversion and in

2010 uh the promoters equity who never hold 100 percent it was diluted and 44.5 uh 45 almost it has been

diluted to the promoters uh private equity owner and thereafter uh

you know with the support of private equity and the certain family members because the

elder brothers of maneshwai they were uh today they are almost 73 74 years who age of 7374 who has started this

activity so now they are almost retired and the young generation has already started taking up the main key areas and

they are you know monitoring and reviewing the uh overall operations with the support of senior management team

got it got it no thanks thanks thanks management or business

because the entire energy of the entire family is only over this business or there is any other business apart from

the rolex links only only we don't have any other people okay the entire new generation also just

so [Music] foreign

95 percent foreign construction

volume see to give you more details into that uh but

we have installed 22 kind of different forging lines in this 22 forging lines we have five

high speed hot former forging lines which are from the world the best forging equipment manufacturer that is

from sakamura japan and hateful switzerland what sir is trying to tell you that under one roof a company having

these kind of versatile forging facility plus various value-added process till the final machining heat treatment

grinding etc that kind of entire facility with this versatile range of product bearing rings

as well as auto components it's not available with any forging player in our addressable segment

under one so the competition is there are there are few players but you

know the gap or rather the uh differentiation between rolex rings and my couple of competitors it's quite huge

say for example if you give me uh if you put me on the scale of 10 they would be at 2 or 3

not more than that today as servo styling we have highly equipped cnc vmg

machine shop wherein we have installed 550 cnc spindles maybe my competitor might be having not

more than 50 60 kind of thing yes sir yes i understood the capabilities so just to

understand what is supposed to [Music] up

[Music] foreign global sourcing

support taiwan china [Music]

foreign you know 50 70 80 kind of different components and with the certain

value-added process which third party may not be able to give but rolex will be able to give them a say a higher

volume size product may be in the quantum of 10 20 50 and a smaller component in the batch size of more than

25 50 000 and particularly see they are with rolex because of the

facility and capability wars rolex has installed the forging lines itself is a

recognition that what kind of output would be and the component what we are giving them they further process they

assembled and then again it would be going to some certain sub assemblies of auto wherein it's a quite you know a

highly precision requirement and it is having a critical require in terms of vehicles also so there they

need these kind of quant uh precision level of high quality components which

we are able to produce and we do not need to market for that because will

no that would not be a big question because you know we are getting good engineers over

[Music] then we try to upgrade his skills and we try to give them certain kind of

training so he will he will be performing more efficiently so that is not an issue at our place so

understood thank you so much can you help us to explain the the ring bearing industry

um [Music] how important or what is the percentage

contribution of bearing in the total ring in the total bearing sequence

foreign and see we are producing our bearing rings through a forging route

uh what sir is telling that through a forging route the domestic market would be somewhere about 1200 odd crore

bearing ring market now coming to the bearing ring contribution towards battering it is costing in the range of

say 15 to 20 percentage of overall bearing cost treatment

uh not 40 50 but definitely more than 30 or in between 30 to 35 percentage of

overall bearing ring market in our addressable segment rolex is there and the remaining of course you know

comes from the global markets uh global market and few unorganized players are there

um here foreign

foreign yes yes yes they have you know but skf long back they had already closed down

their forging plant couple of other uh big multi-nationals they are also winding up our other closure of their

forging plant and another thing what you know say for example skf they need uh say more than 100 types of different

bearing or bearing they are producing more than say hundred types of different bearing wherein they need hundred types

of wearing ring now to produce a hundred kind of different bearing rings in-house by skf they need to create our structure

like rolex now the capacity of that structure would be you know hardly the requirement of fifteen twenty percent

where the skf is going to sell their balance requirement because they are not basically into the

four uh ring business they are into the bearing uh sales um

the arrangement with the customer uh same with all the customers you know say in

overseas the ocean free tester was telling it has been just uh you know exaggerated or uh sharply rised in last

15 18 months prior to that it was almost stable or something like that now 50 of my export

business where i do have a fob kind of terms so where the freight is uh not my capacity and the remaining you know as

uh sir told you correctly that customers have now realized that this is the something issue it's not only for india

even uh it's there in globally so they have addressed this particular issue for the time being and that is why it has

not you know hit to us and uh again raw material we have a hundred percent pass through with our overseas as well as

domestic story because

globally market says what india is

yeah again you know we do have rather we need to approach many more

european markets for the auto segments uh we have a production uh spare capacity over here which we would like

to utilize in next three to four year plan and definitely the margin sustainability is there because of my

scale of economy and the cost reduction measures what we are implementing so that would be a volume growth as well as

margin growth what we are expiring for next capacity available here

foreign [Music] going ahead

[Music] yes yes definitely because it's not just because of increasing price or as i told

you it's the scale of economy and cost reduction measures which will give me boost up in my market

definitely [Music] is a kind of continuous process you know

say we are producing various kind of gear blanks now one customer want a gear blank for the five-speed gear

transmission for the 8-speed gear transmission maybe other one wants for a 12-gear kind of transmission so

every time it's a new kind of gear blank what we are producing so product development is a continuous process over

here apart from that you know our facility as server was telling you it is very much suitable to produce uh more

auto components which may use for the hybrid car as well as electric vehicles so that is also a good avenue for us or

rather down the line in future we will be adding you more components for usage of this

kind of vehicle yeah yes sir uh so photo

foreign we can make auto component and bearing ring both

okay and so uh auto components of bearing ring so auto component

foreign [Music] is

would be adding you know customer for both the segments whether it is bearing ring or auto components and as sir was

telling in a bearing ring we have versatile usage of our uh products say for example one of the customers which

we recently started before three months back uh they were completely non-automotive bearing manufacturers you

know so we are supplying bearing wings for the industrial segments and so on so sometimes

it is having a critical operations and having the same kind of or rather better margin with compared to traditional auto

components so it depends what kind of the volume what kind of we've been approached

accordingly we are deciding and but we are very much open to develop on both the segments

okay so sir uh you're up now so now uh everyone is concerned about the european slowdown or possible recession in europe

so up now so what are we seeing there yeah whatever

so [Music] and

very very good in terms of the work they do heavy

foreign all things are very very good right now okay what can get disrupted in this

industry [Music] recession only which is completely

beyond out of uh you know our control where we could not otherwise uh uh we are you know expanding our product

portfolio as well as customer base and we have a quite strong or rather long association with the various

customers with the few of the customers having multiple plans across the globe we have a relationship of more than two

decades so and you know consistently as i was

mentioning that we are developing new products as per the demand of the existing customer and even for the new

customers what it uh hit us or rather what it uh disrupted definitely it would be an

economic recession and that is what we had before 10 years back whatever

they are giving us five to seven year program once if the customer wants to uh start business today they are giving us

five years seven-year program and after that they will renew that contract customers

2011 they've extended their contract up to 2031

then one more customer in usa who can be contact 2031

the business starts that's to remain competitive

[Music] foreign now we are supplying them in germany

slovakia italy romania usa

foreign more than 900 is

foreign which i'll update to more than 150 60 crore something what we have spent for

the capex but it's not the expansion it is something you know my existing uh facility with certain adding more value

which my customer is asking so it is not expanding my capacity but it is giving value addition to a particular product

that is there earlier we were giving you know say for example heat treatment facility to certain customers now few

more customers have approached us with these kind of facilities so i have to increase my hate treatment facility

accordingly business with accordingly foreign

but the good thing is that for these kind of expansion in last five years where we had a huge uh you know burden

of repayment also we didn't borrow single rupee so entire all these things have been managed from my internal

accruals in terms of uh quantum as far as metric ton is concerned what we can produce

with the current product mix with the number of products what we are producing say sk use more than 700 kind of

different skus what we are producing considering current uh pattern it would be somewhere about a hundred thousand

two hundred and ten thousand metric ton what we can produce in a year and we are doing 65 of that

as of now it is 65 percent yes what the future sir looking at what is happening now globally in all india

see we expect to utilize the balance capacity in down the line uh two to three years

not in a huge way but definitely we need to start thinking something from 24 onwards

because it uh if i want to either expand my forging capacity it will require at least one and a half to two year from

the date of order to the final installation because these are quite huge equipments and those are not

readily available so it's a need to order kind of thing you know the land and infrastructure

available to us so we do not require to incur on that frontier foreign

see definitely uh uh we expect in the range of 17 to 20 yoy growth but uh as you better know that who you know

estimate or to forecast beyond three years from now it would be a bit difficult

[Music] in terms of capital in terms of the new product development in terms

yes yes so you mean to say from 24 onwards gradual capex for the next two years say from 24 to 25 mid of 25 or 26

definitely it would be to the tune of 250 odd cross because there we need to expand forging

as well as machining and other value-added facilities also so

what are we doing industrial so what are we doing to increase the

industrial part so that the cyclicality is reduced overall a bearing rings versus auto component

business now when i say bearing rings those are having multiple applications out of my bearing rings and auto

components all put together 40 percent which is goes to the passenger vehicle segment and that thing but

beyond that it is having versatile applications like you know industrial applications uh uh

of highway vehicles heavy commercial vehicles windmills railways so on so but if you say my overall automobile

contribution it would be touching to 40 something like that which is used in a two wheeler three wheeler or

passenger car or maybe certain uh kind of lcds but beyond that of highway heavy commercial vehicle industrial

applications all put together it would be somewhere about you know more than 50 percent

that is from the non-automotive only what i was mentioning before a few minutes back the new customer what we

have added and uh that is the one plant what we have started they are also a very big group and having um many

plants across the globe so we expect a good turnaround from there also because our products what we have

supplied those are very much well accepted and with the quite uh you know satisfactory level uh as the quality is

concerned not gradual gradually it would be added sir

foreign me [Music]

foreign import [Music]

[Music] foreign um

foreign foreign yeah that is what you know the value uh

group quantum growth is somewhere about uh 35 percentage uh which has actually gone up and uh almost 20 25 uh value

growth is there so volume growth is ten percent no no no thirty to thirty five

percentage i'm i'm talking about overall say if you see it has increased by almost uh

if you compare my uh this numbers it has increased by 60 65 percentage from 600 to 1000

yeah yes 35 percent is volume growth and uh

balance uh 25 30 percent would be of uh value growth because the way of commodity it has

increased yeah and when you say that we will keep on growing 18 to 20 that means volume right

obviously sir obviously i'm considering the current value price and uh obviously we are expecting growth

that would be an additional kind of thing which is actually my it's not my growth

exactly exactly that is which will be looking at this in last couple of years

one of the bearing uh ring custom bearing manufacturer who was not there in india and we were supplying few kind

of bearing rings to them but when they started aggressively we started supplying certain auto components to

them and which in turn they are supplied to the korean vehicle manufacturers so that growth has completely you know

driven by these kind of new entrants so [Music]

is so those facilities can be used for uh the other customers

sir any business metrics you internally use to evaluate the group js or anything else

so that is always there you know the per tonnage we generally our barometer is per tonnage evita what we are looking

for whenever we are just you know for tapping a new business quartering for the new business or finalizing the new

business there is some kind of you know minimum barometer what we have fixed that we need to have this much emitter

part on per kg kind of thing and again let me tell you sometimes there are certain business calls what we

need to take say for example one of my equipment is very much idle and i am getting certain business over there with

a long term and with a volume and etc so maybe with some kind of lesser margin we would like to do that so what is that

optimum a bit about kg yes what is that

quantum do upload it should be in the range of 22 to 26 27 percentage kind of thing

again as i told you depend on the product and on the facility on which it is going to be produced accordingly

and obviously the number or quantum or volume [Music]

and see as of now we are among top five forging players in the country our expedition our vision is to you know

maybe in among top two or top three we would like to upgrade ourselves over

there and we are looking ourself over there but

foreign as i as we told you the capabilities of equipments are such wherein our would

not be because the output volume uh quality level it could be there and uh

you know where we stuck something like that when a customer asked us to produce a certain kind of components

those which are not able to produce in our existing facility and for that we need to go for an

expansion and very frankly prior to two years prior to three years we were not in a position to think for a big

expansion because as we were getting good amount of long-term debt so but the things what is restricting us

to you know the it was the capex what we cannot increase the capacity uh very instinctly and now but

will be able to do that so gradually we are also want to you know diversified into

certain other components certain other higher volume size of components more value the more value-added processes

so those are the things can you outsource your manufacturing or some

parts of the world no we are not outsourcing few of the couple of processes which are

intermediate process that partially we are outsourcing otherwise forging we cannot outsource but our customers do

not allow us to understand so having making cnc machines in-house is that an advantage

no no we are not producing also to make a machine is not easy and it is not our core business so

for our requirements there are many suppliers in europe japan india

why we should invest in making the muslims say yes we have tried

what we would like to convey our stakeholders or maybe our future investors that you know as a company uh

uh we are dedicated to expand our core capabilities product portfolio and very much you know

keeping a quite good transparency and good governance in our state of affairs uh as you people are

very much aware that esg would be one of the main area where the companies are looking into but i would like to tell

the investor that your company rolex rings are very much you know actively involved each parameter of esg and we

are always focusing or rather doing our social responsibility towards

that and definitely our aspiration to have 15 to 20 percent but that will not restrict and now as your company is

almost you know long-term debt-free my short-term working capital the way i am increasing the operation my utilization

of short-term funds have been uh reduced so in that way we are very much comfortable for the new capex and

meeting certain obligations so we would be expecting same kind of good margin and volume growth subject to overall

economic situation which is beyond our control that is what i would like to convey

foreign is under discussion or under development and then we are expecting the revenue

from 2024 foreign foreign

uh you know even when we have just started turnarounding somewhere about in 2012 13 13 14 where my margins were even

less than 15 but uh there were because of you know the high cost

at what we have borrowed high costs inventory what we have there and which we need to real or rather we got it

realized at a very low level so those kind of thing capacity utilization has gone down drastically my fixed costs

were not fully absorbed so those were hit us uh quite devastatingly and my margins were gone down to below 15

percentage also yes i told you the numbers say what in terms

of tonnage foreign thank you very much

thank you sir thank you [Music]