Atul Auto plans Rs 30cr capex this year

Here is a verbatim transcript of the exclusive interview with Vijay Kedia on CNBC-TV18. Also watch the accompanying video.

Q: What kind of fund raising are you planning via the rights issue? What would these funds be utilised for?

A: All these things will be decided on June 25 when we are scheduled to meet for rights issue. Right now, I can tell you that we have capital expenditure of some Rs 30 crore this year, 12 months from now. So for that we need some funds and it would be a modest rights issue.

Q: What is the kind of dilution that the promoters be comfortable with?

A: I don’t know the valuations that would be decided by the board on June 25. At this point, I can only tell you that it will be a modest issue and the funds will be raised to expand our existing capacity.

Q: How much of an expansion are you looking at in your capacity, currently where does it stand and are you looking to double it because that is what reports suggest?

A: Right now, we have capacity of 24,000 vehicles, which we plan to increase to 48,000 in two year’s time. So fund will be required for that expansion.

Q: What will this capacity expansion do to your revenue profile? What is it that you are targeting in FY11?

A: For example the data, which we have submitted to Siam (Society of Indian Automobile Manufacturers) in the month of April- May, we have growth more than 100%. I cannot tell you the data for the whole year, but we will grow around 50% for the whole year.

Q: How is the business shaping up for you because you primarily manufacture three-wheelers and now in this space lot of bigger players like M&M and Tata Motors have launched cheaper four-wheelers in this space that will give some competition to three-wheeler manufacturers like yours, what kind of a demand are you expecting? Are you expecting significant competition from these cheaper four-wheelers?

A: We don’t have any competition from Tata ACE because we are selling per vehicle at Rs 1,25,000 and Tata is selling at Rs 3,00,000, so there is lot of difference. So whereas three-wheelers is concerned, the market is growing by 20% per annum. Last year, it was around 30%. There is huge demand for three-wheelers in the market, so I don’t see any competition coming from Tata ACE or Mahindra.