AXISCADES Engineering Technologies, a niche engineering precision technology player, has signed memorandum of understanding (MoU) with ASSYSTEM, one of the top engineering services companies in the world for collaboration to deliver enhanced values to Airbus Group. Sudhakar Gande, Group Vice Chairman, AXISCADES Engineering Technologies speaks about the deal and its impact on the compaby going forward In an interview to CNBC-TV18.
Gande said the sector in which the company operates has a lot of potential in the coming three-four years. He sees the listed entity clocking a revenue of Rs 300 crore this year and earnings close to 20 percent with repeat clients.
Below is the transcript of Sudhakar Gande’sinterview with CNBC-TV18's Sonia Shenoy and Ekta Batra. Sonia: What exactly the opportunity is for the company in the aerospace vertical? A: Basically we are a niche engineering precision technology company focussing on aerospace defence sector and working with global Original equipment manufacturers (OEMs) etc. This entire spectrum is like what has happened to software 20 years back, in the coming years this sector is going to have a very high kind of growth from the next decade or so, particularly in the next three to four years we see a lot of opportunities in this sector, that is one. In this memorandum of understanding (MoU) we have signed with a company called ASSYSTEM which is possibly among the top three in the world on engineering services and it is a 45 year old company with about 11,000 employees. This has been advised by Airbus that we should work with them so that our expertise in the Indian market as well as global market along with ASSYSTEMS will form a very formidable combination to cost optimise to Airbus.
Ekta: My understanding is that you have tied up with ASSYTEMS, it is an MoU which will eventually work for Airbus? A: Yes. Ekta: Have you done work for Airbus before? A: Yes, in fact three years back Airbus did exist as a client for us and we have been selected by Airbus amongst 21 Indian companies to become their overseas development centre. In last three years Airbus and Airbus related companies we are doing almost 350 people working on this thing, in extremely high end technology with where my office is directly connected with Toulouse, the headquarters of Airbus.
Ekta: Just give us a profile of your clients who you service in the defence space at this point in time, within your total revenues how much are you already getting from such kind of contracts and how much do you eventually expect to generate from say, something like this MoU that you have signed? A: Today most of our customers are global customers. We work across the globe from Korea on side to US. We have built this company by acquisition of three companies. So this has given a lot of expertise and depths of knowledge because some of these companies are 20-30 years old but we have put all these together and created a company and we should have revenues of about Rs 500 crore this year. Ekta: Rs 500 crore by? A: Rs 500 crore currently out of which Axiscades Engineering Technology will be Rs 300 crore plus, the aerospace and technologies will be Rs 200 crore plus.
Sonia: By when do you expect to get this Rs 500 crore?
A: In the current financial year.
Sonia: In FY16?
A: Yes.
Sonia: And what will your profits look like for FY16?
A: I won’t be able to comment on that because one of the company is a listed company but we can tell you one thing that this is a highly profitable industry. The normal EBITDAs for any good company is almost in the range of about 20 percent and it is a repeat business and it is a global OEM like an Airbus Airbus or somebody selects us then normally this business will come for a very long time because before selecting you they do a lot of analysis. It is a difficult business to get in and more difficult business to get out.
Sonia: I am talking about listed entity. For a listed entity what would the revenue and profit profile look like for FY16?
A: For the listed entity last year we had done about Rs 300 crore plus and this year there will be a growth but obviously I can’t give a number being listed.
Ekta: You did around Rs 137 crore for the nine months FY15. Can we expect a similar run rate in Q4 of around maybe Rs 50 crore that you did in Q3 for Q4?
A: The listed entity has Indian operations as well as consolidated. You should look at consolidated. Last year we had done about Rs 300 crore, so this year it will be Rs 300 crore plus only.
Ekta: Can you tell us how much you generated from Airbus when you worked for them earlier three years ago?
A: Four years back it was zero and this year we will be among the top three customers.
Ekta: Tell us what your balance sheet looks like, your consolidated entity balance sheet?
A: Consolidated entity balance sheet we will be net worth of more than Rs 100 crore in the listed entity with Rs 27 crore capital ?4:59 value. One thing you ought to understand is that this is a sector which is going to have a high growth because this is a sector which involves defence and aerospace etc and the current government strategy’s plans etc this sector is going to see huge upside. As long as few things are done right in terms of certain policies, Make in India programs, clarity in offset policies. This will have a very high growth. We are possibly one of the few companies which is positioned to capitalise on this
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