Atlas Copco has been forced by a prolonged slowdown to restructure its operations and rejig its product portfolio. Recent statements by the company have had a positive effect on its share price which has risen from Rs 139 to Rs 150 this week.
Atlas Copco will rely more on indent sales in the domestic market and export sales of certain products to drive sales growth.
A part of the Atlas Copco group of Sweden, it operates in the markets of air and gas compressors, construction and mining equipment, water well drilling equipment, and electric and pneumatic tools.
The company had decided to discontinue production of compressor elements, and instead concentrate on assembly of compressors from imported components. The compressor manufacturing facility has been sold for Rs 12 crore, and this amount will be reflected in the current year's figures.
Atlas Copco will lay more emphasis on indent sales of products from its parent's portfolio, and earn commission and service income on the same.
Indent sales are already playing a greater role with commission income having increased to Rs 2.48 crore from Rs 1.36 crore in the previous year. This year, indent sales are expected to account for about 30 per cent of sales.
However, it will be a sourcing base for the parent for certain products, the production of which is being shifted to its facilities at Pune. Rock drills, chipping hammers and lubricators are being sourced from the plant. The company's relocated compressor technique division will make a new series of centrifugal air compressors which will contribute to sales in the second half. New products are expected to contribute about Rs 15 crore to sales by 2000.
Exports, new products and a revival in infrastructure in the domestic market will contribute to sales growth in the years to come while its bottomline will benefit from lower overheads.