Ongoing Slowdown in Auto Sector is a Correction; says Ranbir Singh, GNA Axles
It was last month when I signalled that slowdown has started in the Indian market, said Ranbir Singh, GNA Axles.
Ranbir Singh, Wholetime Director & CEO, GNA Axles, spoke to Zee Business’s Swati Khandelwal about the company's business plans and shared outlook on its growth. Excerpts:
Q: The ups and downs of the auto sector would have had impacted the ancillary segment too. So, how will you end the year? Will you be able to meet the targets or will face some challenges in doing so?
A: It was last month when I signalled that slowdown has started in the Indian market. It struck the commercial vehicle segment and tractors in the month of December and January respectively. In fact, their overall production has been cropped by 25-30 per cent. Our export percentage is around 50 per cent of the total sales and North American market is very strong for us. Interestingly, the investments that we made in the last two years is flexible and we are using that capacity for the export purposes. It will help us in achieving the targets of the year. We will report more than 35 per cent growth in the fiscal year.
Q: Exports has a contribution of around 50 per cent to your revenues. Let us know the momentum of the North American market? Update us on your plans to increase the export capacity by 25 per cent?
A: We can term the short-term recession or slowdown that struck the Indian market as a correction over the overproduction that was made till December 2018. As sales haven’t seen such a dip and have gone down by just 7 per cent in January and February. But, the OEMs have reduced productions to correct the stocks. The slowdown will continue in the first quarter of the next fiscal as well as because this is an election year. However, domestic sales will catch momentum after the new government is appointed. I would like to inform that the slowdown hasn’t had any impact on the top line of GNA Axles and it is running at that pace that we saw in the third quarter.
Q: GNA Axles has entered LCV and SUV axle shaft segment. Tell us about the expected/targeted revenue from this segment and a timeline for the same?
A: When it comes to our capacity addition, then we are modernising our plant and have also added half a million axel shafts capacity in the commercial vehicle segment. When it comes to the SUV’s light LCV and LV division, then the first phase of the plant will come into production by the end of the first quarter. In coming years, the plant will be supported by a top line addition of around Rs40-50 crores.
Q: Steel prices are up by almost Rs2000/ton and further upside in anticipated, which will also impact on your margin. Will you be able to maintain the margins?
A: We have an engagement, agreement and understanding under which the variations in steel are directly passed on to them and it helps in correcting our sales prices. Our margins are going to stand between 15-16 per cent and our bottom line is totally intact.
Q: Let us know about the order intake on monthly levels and are you expecting some big orders in the near future?
A: We don’t expect anything from the domestic market between January and June as nothing is visible in the market. The visibility will be restored after the elections are over. When it comes to export business then the European market is quite stable and is running at the same level while demand is very strong in the North American market.
Watch This Zee Business Video
Q: Are you expecting some big orders from there?
A: Negotiations are on with our customers, new and existing customers, as they are launching new programs and we are participating in them. We are expecting 10% plus growth in the next fiscal.