Story:Vejlan Denison manufactures engineered fluid power products such as hydraulic motors, pumps, valves, etc. that cater to the infrastructure, construction and other manufacturing industries.The company reported reasonably good growth in operating profits and revenues in the last five years – reporting over 20cr in operating profits on revenues of over 80cr in the year ended 31st March, 2012. It operated with a very modest debt load as at the end of the last financial year.The demand for the company’s products is exposed to the infrastructure and construction cycles, which are linked to the economic cycles. Therefore, being a relatively small player, its revenues are potentially exposed to disturbing declines during economic slowdowns.The company is subject to competition from both domestic and foreign competitors – who are both entering as well as expanding in the Indian market.The operations are adversely impacted by high steel/pig iron prices, which are the primary raw materials – and by unreliable supply of castings from vendors. Moreover, it faces general cost increases in power, human resources, etc. resulting from inflation. It is a net importer of machinery (albeit an infrequent one) as well as some raw materials - and is therefore adversely affected by a weakening INR.