JBM Auto will complete delivery of 116 BS-VI buses to DIMTS by Q3FY21: Nishant Arya, ED
Nishant Arya, Executive Director (ED), JBM Group, talks about COVID-19 impact in Q1FY21, fund-raising plans, bus order from Delhi, expected demand during the festive season and issues the company is facing including supply-chain issue among others during a candid chat with Zee Business' Mansee Dave,
Nishant Arya, Executive Director (ED), JBM Group, talks about COVID-19 impact in Q1FY21, fund-raising plans, bus order from Delhi, expected demand during the festive season and issues the company is facing including supply-chain issue among others during a candid chat with Mansee Dave, Zee Business. Edited Excerpts:
Q: Corona has had an impact on every sector and industry. Let us know about the impact that Corona has had on your numbers in this quarter?
A: Corona had a huge impact on our company because all our plants were closed for more than 2 months. After opening, the plants were running in low capacity and efficiency level after they were opened due to supply-chain and customers challenges. Even though the automotive industry has been 86% down in terms of production in Q1FY21 but our company’s top line has gone down by 75%. Lot of work has been done to reduce the operating cost, achieve the breakeven point and increase organisational efficiency. So, the quarter was used for this purpose but we have seen a trend in July, August and September that suggest that that the market’s momentum is good and our company is performing well and we will see that the company’s performance will be at par when compared to the last year’s performance, despite COVID.
Q: The board in the recent past has approved a fund-raising plan of Rs 500 crore. The proceeds will be used for?
A: We have taken approval because the company has its CapEx and investment plans. But now it has been put on a hold for next 2-3 months and will see the way the market improves in this period and then will finalize the investment plans and based on it will take up the capital raising plans. So, the company has a clear perspective because it has a strong order book with about 500 buses. As you said in the beginning that the company will launch around 116 buses on the roads of Delhi, which is going to be the country’s first BS-VI low-floor buses. It is a state-of-the-art product in itself and we wish to provide the best products in different metro cities to STUs, government organizations and operators.
Q: JBM Auto has bagged an order to supply 116 buses from Delhi Integrated Multi-Modal Transit System (DIMTS). Can we say that the inflow of buses order has started from here?
A: Of course, because public transportation is very important for a common man and it is not a luxury product and belongs to comfort, safety and affordability areas to which we cater. We focus is on common man who needs to use the public transport facility to move from one place to another. All the buses will be delivered in Q2FY21 and Q3FY21 and the other order of 500 buses will also be completed by the end of the year.
Q: Your revenue primarily comes from auto component division. With gradual unlocking happening, have you reached pre-COVID levels now or it will be reached soon?
A: 80% of our capacity is being utilized at present, which is likely to go up to 88-89% in the coming months. But if compared with the pre-COVID levels then year 2019-20 was a bad year for the automotive sector that’s why we don’t consider it as the base year. So, if 2018-19 is considered as the base year then we haven’t reached around it, we are below it. But due to the arrival of the festive season, pent-up demand and improvement in the economy the demand is likely to improve and it will pick-up in the coming months.
Q: Festive season is around the corner so update us about the kind of demand that is coming from the OEMs and what is your view on the festive demand?
A: Festive demand will be a great booster. At the same time, the rural economy has seen a boost earlier, which is very important because the rural economy is the growth engine for the whole country. In the rural economy, agriculture and farm equipment have done well due to good monsoon and people are making good purchases. The urban economy and people in urban cities are likely to follow-up in the festive season. Therefore, we have great expectations from the festive season and our capacity utilization, as I said, will go up to 88-90%, which will greatly enhance the fixed cost absorption for the companies. It will also motivate and boost us to make new investments and bring new projects.
Q: Are you still facing issues related to supply-chain?
A: Supply-chain challenges are there because there are many areas where the plants are located and there are different issues, like manpower issues, availability of raw material and logistics. There are certain places which were located under the containment zone but are slowly opening under the process of unlocking. So, we are facing challenges and there is a need to meet with the challenges through proper planning and providing an integrated perspective to each, it is very important.
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Thus, as far as the Atmanirbhar Bharat is concerned, it needs to have an integrated perspective and we are carrying it due to which our company is slowly coming back on track and we are adopting a new normal.
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