In what has come as a shot in the arm for companies making air conditioners for the auto segment, the government has made use of air blowers compulsory in trucks; they should have an AC cabin. One of the big beneficiaries could be Subros. The stock has run up over 50 percent in the last three sessions and about 75 percent in the last three months.
In an interview to CNBC-TV18, PK Duggal, VP-Corporate Planning & Marketing at Subros spoke about the latest happenings in his company and sector.
Duggal said that we supply products to truck manufacturers.
He further said that we expect revenue of Rs 150-175 crore from the truck segment. We have the highest market share in the segment, he added.
Talking about capital expenditure, he said we require marginal amount for capital expenditure going ahead.
According to him, profitability from truck segment should be similar to car segment.
Below is the verbatim transcript of the interview.
Latha: You do supply to cars, but can you all supply AC parts to trucks as well?
A: Yes, we are into this business now for last 2-2.5 years as optional supplier, but now it has become as part of regulation blowers/ air conditioning, so we are supplying to truck manufacturers now.
Latha: What portion is for trucks and how much do you see the business expanding?
A: This business is around 300,000 is the population for N2 and N3 category and we have tied up around 70 percent business with all these trucks OEMs. So, we are expecting this would be additional revenue on annualised basis around Rs 150-175 crore.
Sonia: Who are your clients currently in the medium & heavy commercial vehicles (MHCV) space? There is Ashok Leyland I know but any other fresh clients that you have added recently?
A: Ashok Leyland, Tata Motors, Mahindra Truck and Bus, and SML Isuzu.
Sonia: So you have had the first move advantage in this particular segment, are you seeing a lot of competition come up or do you have the highest market share here?
A: We have the highest market share here, so since the time was very short of implementation so that is why we took some advantage of our pre-preparation which we had done last year.
Latha: Demand is going to be huge since it is a mandatory now do you have capital expansion plans?
A: We already did all such expansion, so it would be very marginal investment now moving for considering the annual growth of this segment.
Anuj: Right now 70 percent of your revenue is from Maruti Suzuki, so if we have this business coming on stream fully do we see that dependence coming down slightly?
A: Yes, of course if this would be lower than 70 it would be in the range of 64-65 percent.
Anuj: How much do you think this segment will contribute in terms of profitability the same numbers as the cars segment?
A: Yes, it is proportionate to that only.