See 20% plus EBITDA margins for FY15: Amtek Auto

John Flintham, senior MD & CEO, Amtek Auto is confident of maintaining FY15 sales of Rs 16000 crore and consolidated EBITDA margins in excess of 20 percent.According to him the quarter gone by saw a steady growth in number of markets and so and above than expected growth in two-wheeler market. Also the passenger car market saw a steady growth with Maruti Suzuki being the lead player, says Flintham. With regards to the growth in the commercial vehicles, he says since it is linked to the economy it has taken longer to savour than the passenger vehicular market but that too is seeing an improvement with Ashok Leyland doing well in that segment.Even the non-auto market like agriculture, tractors and railways continued to perform well. Globally, the US market has been outperforming the European markets but some German companies per se having been doing well, says Flintham.Flintham says the capacity utilisation for the company currently stands at 57 percent, which is likely to go up to 58-59% for the year.On the acquisition front, he says there is nothing on track at the moment but the company is always on the look out for good value propositions. However, the earlier acquisitions have seen a turnaround.

The company for the current year does not expect any more orders for railway wagons but for the next year they expect it to be 4-5 times of that, he adds.  Amtek Auto received an order of 500 railway wagons.Below is the transcript of John Flintham's interview to CNBC-TV18's Latha Venkatesh and Reema Tendulkar.Latha: How is business in the quarter gone by, was it better than you anticipated at the start of the quarter, can you give us some idea of the volumes?A: The quarter is quite interesting; there has been steady growth in a number of markets. I don't think it is the growth that people have projected but certainly in the two-wheeler market there has been some very good growth. It also depends a lot on the customers that you are dealing with. In the two-wheeler market Honda Motorcycle & Scooter India (HMSI) are doing really well and Hero are doing well. Also the passenger car market saw steady growth over the last three quarters with Maruti being the leading player and they are recovering very well after last year. If you look at other markets like commercial vehicles (CV), it is traditionally linked to the economy and it is taking longer for the CV market to recover than the two-wheeler market. But if you look inside the CV market now we are starting to see some interesting improvements. Ashok Leyland is doing reasonably well so that is good. Certainly our direct schedules in the last quarter have been quite healthy, certainly recovering and increasing over the previous quarter, which all in all is very good. In addition to that the non-auto market which is primarily agriculture, tractors and railways continues to perform quite well. Tractors have been strong for sometime from our point of view and the railway market with the recent release of the wagon order is also very good.

Latha: The couple of negatives that we got was that the September CV sales weren’t very good especially for Tata Motors as well we have seen some fresh bad news out of Europe as well. so overall what kind of a revenue growth or a volume growth would you anticipate for FY15?A: We have been predicting for sometime now that the revenue growth for the year will touch something like Rs 16,000 crore and we are still pretty confident that we will achieve that figure. Europe again is a bit of a mixed bag, certainly one-two questions on Germany but Germany is not doing too bad if you look at individual companies. UK which is one of our strongest markets is outperforming the European markets and they are doing very well driven primarily by Jaguar-LandRover but our growth is going to be pretty much in line with what we have been predicting for sometime now.Latha: Would you do better on margins because commodity prices have been unusually kind?A: I think what we have always been saying is that our consolidated EBITDA margins should be in excess of 20 percent and we are holding those margins at that level. Commodity prices have eased a little bit which should help and will help but we are pretty confident that they will hold the margins at that level of plus 20 percent on a consolidated basis.Latha: What were the performance of your recent acquisitions, Neumayer Tekfor and Kuepper?A: Neumayer Tekfor we purchased over a year ago now and that has done a pretty good job in the turnaround programme. In the last twelve months, we have doubled its EBITDA with revenues staying pretty flat 500 million euros and we are just about completing the turnaround plan there.Our Kuepper acquisition obviously we are just into that, sales are growing in our Kuepper acquisition. When we put the whole Amtek organisation together then we have got some real benefits for Kuepper. So we are seeing some strong growth in Kuepper and again the margins should be pretty healthy in that when we complete our turnaround.Latha: Since you have definitely completed your turnaround in Neumayer Tekfor and in Kuepper, as you said you are pretty close to a turnaround, would you look for fresh acquisitions?A: I think the answer to that question is that you can never say yes or no. We are always looking for good value propositions and if you look at our track record, the multiples we have paid for these businesses against the value of the businesses, they are always being pretty healthy and we will continue to look there is nothing on the tracks at the moment but we are always on the look out for good value assets.Latha: I am not sure whether you gave us this number when you last spoke to us but you said the capacity utilisation was about 58-59 percent, has it since improved?A: I think I said last time it was about 57 percent. It should have improved; it will increase slightly over the last quarter. It will be somewhere between 58-59 percent.Latha: About the wagon order, you did get a 500 wagon order. Is there any more movement because the new government has reiterated that it intends to look at railway modernisation and railway growth very seriously? So any tenders floated, should we look forward to more order wins before the year is out?A: It is very exciting for us as we have been planning this for sometime; building a  new factory in the Punjab for the wagons to be built and this is our first order. The 500 wagon order is in place and we will start manufacturing that surely. I don’t think there are any further orders in this calendar year but obviously in 2015 there will be another round of wagon orders as the fleet needs a replacing. So we are well-placed in this year to deliver the 500 order which is the maximum anybody can get as a new entrant. Next year, we are expecting to get 4-5 times that size of order.