14 September, 2016
GNA Axles is a leading manufacturer of rear axle shafts and spindles with domestic market share of 50 percent. The products are used in light commercial vehicles (LCVs), medium and heavy commercial vehicle (M&HCVs), tractors and construction equipments.
The company has opened its Rs 130 crore public issue with a price band of Rs 205-207 per share.
"We are having a good visibility for next five years so we are going for IPO", Ranbir Singh, CEO of GNA Axles told CNBC-TV18.
He further mentioned, "By 2020 market will be double the size. So, definitely we will grow double in three to four years time".
Below is the verbatim transcript of Ranbir Singh’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Anuj: Why should investors invest in your company what is unique about your company?
A: Our company is growing at the rate of 6.3 percent for last five years and we are having a lot of request for quotation (RFQ) and good visibility for next five years so that is why we are going for IPO and capital investments are there to enhance the capacity.
Latha: This money entirely comes to the company, nobody is divesting?
A: First of all this is purely fresh issue. The total money will be utilised for plant and machinery and working capital requirements.
Latha: How much for capital expenditure (capex), how much debt?
A: Capex is Rs 80 crore and which will be purely used for plant and machinery. The company already have the covered area, other things all intact -- only machinery part is there.
Latha: This Rs 80 crore will increase your capacity by how much percentage?
A: Overall our company will grow on a faster pace because demand is huge.
Latha: I am only referring to volume, because of the capex what will be the volume increase, capacity increase?
A: By 2020 market will be double the size. So, definitely we will grow double in three to four years time.
Sonia: The only worry is that you have a big exposure to the export market more than 50 percent and over there in some pockets like North America you are seeing a slowdown in the commercial vehicle space. Would that cause a hindrance to your earnings?
A: Our portion with class 8 is very little and we are into other markets and segments in automobile.
Sonia: You said that your earnings could double over the next two years, is it?
A: Next three to four years time because you see the market size in 2020 in India is going to be double in CV and tractor market. So far this year with the monsoons and all, tractor market is performing extremely well.
Sonia: Rs 1,000 crore revenues is what we can expect say by FY19?
A: If we maintain same share whatever we are maintaining in last four to five time, definitely it will double.
Anuj: What about the earning per share (EPS) growth?
A: Our margins have grown by 3-4 percent in last four years because of our latest technology what we have opted and invested in to capex in last three years.
Anuj: What are your major clients, what kind of market share do you have, which are your main competitors?
A: Out of the total revenue, 54 percent is from export. We are exporting to all developed countries, so our export is to 13 countries and five continents; main export is to Europe, USA, South America, Mexico and Japan. So, our clients are associated with us for last 10-20 years; we have long association.
Latha: What is the local competition? What is your market share in local market?
A: In local market, we are maintaining over 50 percent share.
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