Do not expect to see growth in this year: Ranbir Singh of GNA Axles

In an interview with ET Now Ranbir Singh, President & CEO of GNA Axles spoke exclusively about the listing of the company and how it plan to grow faster in the next five years.

ET Now: Now that you will be a lot more okay with talking about the future, tell your investors and viewers about how is it that GNA Axles growth is likely to shape up for the current year, arguably for the FY18 as well.

Ranbir Singh: Today is the first day of listing and first of all I would like to thank the investors and in IPO, people they have shown the interest investing in our company and it has overscribed by 54 times and definitely now we will work very hard so that company should grow much faster than last five years and even this year is going very well. And we are short of capacities. Now with the fresh capex, in other one-and-a-half years time the capacities will be enhanced and definitely our growth will be much better and we are targeting over two-digit growth that is over 10% in next five years.

ET Now: Almost 55% is via exports in your revenue pie. Tell us a little bit more about how the environment is, what is it that you are sensing from some of your large clients, is the demand scenario absolutely okay when it comes to some of the European region in particular?

Ranbir Singh: Actually, we are into CV and segment in export also, in domestic market also. This year domestic is performing much better but export is also stable and in future, we are with the fresh capex, we are entering into new markets and new segments also which will definitely we believe and we are going to add lot of capacities which will give us good growth rate in export also simultaneously.

ET Now: Exports, the environment is not that conducive. Economic growth is concern in Europe, economic growth is a concern in US as well. If I look at the Bharat Forge data which comes on a monthly basis, where they talk about the truck demand, it is not a very rosy picture. So do you think that this year export will be a problem and rather than growth, you could actually see de-growth?

Ranbir Singh: But this year, there would not be any growth in export but we will match our last year numbers but growth will be there in the domestic market and overall growth will be around 8% to 10% this year also.

ET Now: How many more quarters before one can actually see some growth coming in in exports?

Ranbir Singh: Export is stable. It is at par with last year last two quarters and domestic demand has gone up because of monsoons and all. We are into.

Do not expect to see growth in this year: Ranbir Singh of GNA Axles

Ranbir Singh: From January onwards, we are having very good visibility in the fourth quarter, so our export will be better and there will be increase in the export.

ET Now: You are saying that you will grow at a CAGR of 10% for the next five years but you have a large capacity coming on stream one-and-a-half years down the line. You do think that will add to your revenue growth in the years ahead?

Ranbir Singh: Actually one-and-a-half years is total investment plan to utilise these capex and there is some lead time for the commissioning and the plant and machinery. Immediately, we are using 30% of the funds for removal of the bottlenecking and which will take place in six to eight months time and which will enhance our capacity by half a million of components and after that it will take another one year to add another half a million of components capacity and the maximum return and the jump in the sales will come in 2018 onwards and those particular two years the growth will be much higher than 10%, could be 15% to 20% for two years so that whatever capex we have planned for initial one million components, that will accomplish after one-and-a-half years time, this is the whole target.

ET Now: What about debt-equity, what does that stand at and what do you think it will be in a couple of years’ time?

Ranbir Singh: Our company is in very comfortable situation. As on 30th of September, our long-term debt will be less than 50 crores and which will be paid in next two years time in due course of time. Whatever fresh capex is there, that is totally out of that 80% crores we are going to utilise for the capital enhancement, for the capacity enhancement and rest 35 to 40 crores of rupees are for the working capital because in export the cycle time is pretty long. So these are the plans and after taking this equity, our debt-equity ratio has touched 0.4 which is in a very comfortable situation.