Monday, November 16, 2009

Rico Auto Ltd....cmp...25.60....fundamentally sound co...

I usually do not look at Cos which are already splitted but I am going to write on Rico Auto this time even though it is a splitted stock.
Rico Auto is fundamentally very sound Co with Japanese collobaration and have clientele names like Hero Honda, Honda Car,Suzuki, Bajaj,Maruti Suzuki,Ford, GM,Volvo,Jaguar, Tata,Landrover,Nissan.
In commercial vehical segment it has a very great customer list like CaterPillar,Cummins,Tata , Detriot Deisel,Perkins,Komatsu etc and as system supplier they have clients like Honeywell,QP Pump,Magna etc.....
These client list says that they have great products.

Rico Auto is having 4 joints ventures which are as under:

F.C.C. RICO is a joint venture company of F.C.C. Co. Ltd Japan and Rico Auto Industries Ltd. India established in February 1997 with 50:50 share equity.
The company is exclusively into manufacturing & supplying of automobile clutch assemblies to O.E.M's of Two Wheelers and Four Wheeler. The co. is also in to manufacturing of Clutch Friction Disc with Cellulose (Paper) and Cork base.
With F.C.C. RICO coming into existence, it has joined the group of overseas companies of F.C.C. having operations spread all over the world.
Now F.C.C. RICO can avail any kind of Technical & Operational Support from its overseas base companies, it will have an additional advantage of exposure to the latest development taking place Worldwide of different bases & same can be incorporated to improve upon local operations facility & efficiencies in India.

Hydraulic Brake Products and Services for Vehicles of all Classes for OEMs in IndiaSub Products
Brake Calipers for Front and Rear Axles : 2 Million Units
Drum Brakes : 1.5 Million Units
Master Cylinders : 1 Million Units
Actuation Units & Brake Boosters : 1 Million Units
LSPV Load Sensing Proportioning Valves : 0.5 Million UnitsLaunch Plan : Gurgaon Start of Production 4th Quarter 2008

3)RICO JINFEIProducts :
Aluminum Alloy Wheels for Two WheelersLaunch Plan
Start of Production: Early 2008
Planned Capacity: 1 Million (First Phase)JINFEI Introduction
Established in 1959, started production of Two Wheeler Aluminum Alloy Wheels in 1995
Among top three motorcycle Al Alloy Wheel Manufacturer in China
Main customers: Honda, Yamaha, Suzuki, Piaggio
Sales US $ 280 million (2006), Exports $ 43 million (US, Japan, Europe, Middle East)

4)MAGNA Powertrain RICO -JV HighlightsShareholding :
Magna Powertrain-Rico 50-50Products : Oil & Water Pump (with Aluminum Housings) for Automotive Engines – India & EuropeLaunch Plan : Gurgaon Start of Production 2009

They have 33 products which are as under:

Oil Pump Assembly
Annual Volumes - 500,000
Fuel System Parts
Annual Volumes - Annual Volumes - 400,000
Lube Oil Filters Heads
Annual Volumes - 200,000
Exhaust Manifolds
Annual Volumes - 500,000
Turbine Housings
Center Housings
Back Plates
Crank Cases & Covers
Annual Volumes - 1 Million
Cylinder Head Covers
Annual Volumes - 100,000
Oil Pan
Intake Manifold Covers
Annual Volumes - 150,000
Front Cover
Valve Cover
Annual Volumes - 60,000
Side Cover
Annual Volumes - 400,000
Balance Shafts Assembly
Annual Volumes - 120,000
Gear Housing
Annual Volumes - 1,20,000
Main Bearing Caps
Annual Volumes - 1 Million
Water, Air Connections and Pressure Plates
Annual Volumes - 250,000
Timing Cases
Annual Volumes - 400,000
Oil Filter Adaptor
Annual Volumes - 400,000
Engine Brackets
Annual Volumes - 4.2 Million
Cylinder Block (Ferrous)
Cylinder Head (Aluminum)
Clutch Assembly
Annual Volumes - 3.5 Million
Automatic Transmission Bracket Assembly
Annual Volumes - 1 Million
Differential Case Housings
Annual Volumes - 600,000
Gear Shifts Forks
Wheel Hubs Assembly
Annual Volumes - 7 Million Sets
Brake Panel Assembly
Annual Volumes - 7 Million Sets
Brake Discs
Annual Volumes - 1.2 Million
Annual Volumes - 1.2 Million
Steering Knuckles
Annual Volumes - 250,000

Rico Auto has following divisions:

1)Aluminum Casting:
Rico has over 76 HPDC (High Pressure Die Casting Machines) from 135 tns to 1800 tns locking force.
Rico would be the largest high pressure die casting capacity in India.
Rico is currently producing 45 million high pressure die cast components per annum.
Current HPDC machines are from Buhler, Toshiba, UBE etc.
Alloys produced today : ADC 12,14, LM24, A 380, A 383 and ENAC46500Future Plans
Gravity Process
Low Pressure Process
Aluminum Cylinder Block
Aluminum Cylinder Head

2)Ferrous Casting :
4 Automatic Moulding Lines
(2 Disamatic size 650 * 535)
(2 Horizontal size 610 * 510)
Gray Iron (FC) , Ductile Iron (FCD), SiMo, SiMo Cr
Core making
Rico has in house core making facility with over 17 machines(Cold box and Shell process)
Continuous Shot Blasting and Real time X Ray

3)Machining & Assembly :
Rico has over 1000 machines (CNCs & SPMs).
Rico is one of the largest machining facility in India.
Rico has implemented a mix of state of art CNCs (Mazak, Kitamuras, Daewoos, Emags, Fanucs, Pitlers, Stama, Chiron etc) & low cost automation to meet its customer requirements.
Rico currently manages over 40 sub suppliers covering a vast range of parts e.g. Sintered, Rubber & Seals, Sheet metal, Friction Material, Precision Machined Components, Bearings, Springs and Fabricated Parts.

4)Engineering and R & DEngineering :
CAD CAM CAERico has over 60 seats and all the required engineering CAD CAM CAE software's.CAD & CAM : Unigraphics, Pro Engineer, Catia, C3P, Ideas, Vericut, Solidedge, AutoCAD, AnsysCAE : Magma soft, FEA, CFD, Ansys, FCX, GT Suite, MSC Fatigue R & D Capabilities
Design & analysis: Structural, Thermal, Fatigue, NVH (noise, vibration, harshness)
Material research & development
Testing & validation

5)Dies, Patterns and Tooling :
Rico has in house dies and pattern design and manufacturing.
Rico manufacture over 200 dies and patterns and 600 die inserts annually.Facilities and EquipmentsCNC Machining CenterMikron HSM 700, Mikron VCP 710, Deckel FP 50 CCP, Makino S33L, Haas VF6, Haas VF2CNC - EDMCDM Rovella BF 600, CDM Rovella BF800, CHMER 50 NCNC Wire cut (EDM)Electronica Euro cut Mark 2, Fanuc Rob cut a - 1ICCNC - CMMDIE SPOTTING PRESS TUS 130

My Comments:

There was labour unrest at Rico Auto factory but it is now amicably setteled and that was the reason the price was not going up.
Rico Auto is fundamentally very sound co with Japanese collobartion.They have almost all type of companies as clients.
If I compare Motherson Sumi's price which is Rs 138 and 1 paidup means 1380 on 10 paid up then Rico Auto Ltd is going very cheap at 25 with 1 paid up FV means, Rs 250 on 10 paid up.
This is my view and DD is a must for everyone.One can accumalate it for multibagger return in long run......but I think Rico Auto offers value and hence I have recomended it here.....


  1. Dear Rajeev,

    there is a typo in your post.Rico auto is 1 rs paid up and not 2 rs paid up as mentioned by you.would surely study the stock though.

    thank u

  2. Dear natraj,
    Thanks for noting it.I have corrected it....thanks again..

  3. Hi Rajeev,
    Again a good gem - Rico Auto by you. Looks promising.
    By the way I am Copying here the link from moneycontrol about interview of Marc faber by CNBC-TV-18. It looks good and in detail.

    With Regards,

  4. Vikas,
    I do not read Marc Faber much.It is not because he speaks Dooms but because he always speaks Dooms....He is a Dooms sayer...
    He has never been correct in predicting the Indian market all through past 6 yrs from 2003 onwards.I have heard him umpteen times in India and is not at all impressed by his view.
    So reading him makes no sense to me and hence I do not read him nor do I read Jim Rogers who also never proved correct ever regarding Indian Stock Market.
    I also do not hear or read Ridham Desai who speaks for Morgan Stanley.I use to hear S Nagnath when I was in India.I use to hear Jaykumar of Prime sec,now Jaykumar is with whom I don't know.But apart from RJ and RD, I only use to hear or read this person and no one else.
    Offlate, RD has also been going wrong , sticking to bearish view untill we crossed 14500, he changed his view.

  5. Rajeev,

    Any thoughts on announcement made by Telecanor Globalent today about warrant allotments

  6. Dear Rajeev,

    What is your call on take solution.
    or Any stock from ethanol side.

  7. TT, no idea on Take not track...

  8. Minar,
    Looking at the annoucement ,it seems that there was some personal issue between the manangement and HKG which the MD of TeleCanor has addressed.....Hope this will bring cheers to the counter again...

  9. Dear Rajeev,

    Any view on Sical Logistics. Any picks of yours from Logistics space.

  10. Amit,
    Sical Logistc is looking good.I also like ITH Ltd.In high price I am very bullish on AlCargo Ltd....

  11. Dear Rajeev,
    I am not sure whether i am correct or not.But i noticed these about Rico auto.Sales growth rate is very less in the last couple of years.Even the operating profit is coming down.Debt is high when compared to equity.Book value is at 21 because of new equity in 2006, otherwise it would have been very low.Operating profit margin is coming down at an alarming rate.Even interest coverage is less than 1 in 2009.Current ratio is less than 1, debt equity ratio is more than 1.Earnings per share is coming down from 2005 onwards.When there are so many observations how can you suggest it to be a multi bagger.

  12. rama,
    If you feel that there are so many negatives then you can ignore it.Just forgive me ....

  13. Dear Rajeev,
    Its not about negatives or finding faults with you.You have mentioned that this one is with good fundamentals.I would like to know how this one is with good fundamentals

  14. This comment has been removed by the author.