See 20% topline growth in FY17; bus demand rising: JBM Auto

Nishant Arya, Executive Director, JBM Group, is very upbeat on the 20 percent topline growth at around Rs 1800 crore in FY17 for JBM Auto. The growth would come on back of plant additions that have started operating to full capacity now. For the last fiscal the topline growth stood at Rs 1500 crore.Arya is also optimistic of maintaining margins around 12-13 percent or upping them slightly in FY17.

The company has started manufacturing buses and is seeing good demand for them going forward. The bus division will meaningfully start contributing to the topline this fiscal onwards, says Arya in an interview to CNBC-TV18.

The company recently entered into a joint venture (JV) with Polish firm Solaris to manufacture electric and hybrid buses. The JV named JBM Solaris will invest Rs 300 crore towards electric mobility in India and will develop India’s first 100 percent electric bus ECOLIFE.

By FY18, Arya expects the bus division to contribute around Rs 400 crore to the total revenues. Below is the transcript of Nishant Arya’s interview to Nigel D’souza and Sumaira Abidi on CNBC-TV18. Sumaira: Is there any sort of corporate development that is in the offing? Anything that the market is probably working ahead of? A: As we shared during our results a few weeks back that now the buses have started churning in the kind of revenues we were looking for and the first quarter of this financial year has been evidence of that. And in the upcoming quarters, we will see many more products being sold. And also, what we have seen is that the few plants which were set up in the last two years has started running at the optimal capacity for few months in the last quarter. Then starting from these quarters, they will be adding that revenue in topline and significantly in the bottomline as well. Similarly, the tooling division also will start to perform well and since the sales are cyclical in the tooling division. And what we have also done is that we have brought in a lot of high end technology in the tooling division where we have reduced time to market. And we have started to produce high end tools with which components which are very intricate in nature can also be manufactured and that is all being designed in house. So such kind of capabilities have been developed where we were working on in the last few years. So, all those results are coming on at this moment. So, the market is realising the potential which we have got and they are reacting to it. Nigel: You were telling us that the market is sensing something. It is sensing an opportunity over there, so just wanted a couple of details from you. You were talking about a lot of capacities that are coming stream. The best is yet to come. Last year, you did a revenue of around Rs 1,500 crore, approximately. This year, with all these new facilities coming on stream and everything looking quite good, what kind of topline can you do? Going ahead, do you expect margins to go back to around that 14-15 percent mark? A: Yes, because if you would see that in the first 5-6 weeks of the previous quarter, the customer volumes were not as committed. So, therefore we got compensation with respect to that which is shown in the extraordinary income. Otherwise, that would have come in the profitability. So, we have got compensated for the same. On the second front, the tooling division as it was the cyclical business and every quarter the customers do not buy tools. so that was something which was not there in this quarter and we will be seeing the same in the upcoming quarters. And the first few buses have been sold which had been manufactured by us and now the customers will be lifting the buses constantly on a quarterly basis. And talking about the new facilities, since the new facilities, when they start off, at that point, the efficiency levels are not at the optimum level. So, first quarter or first few months, we do take that time for them to settle down. And since they have become operational, some of them from the beginning of this financial year, from the beginning of this calendar year, so they settle down, the kind of volumes which were anticipated earlier in the last year it did not come in and here we are seeing that with the good monsoon and the good demands from the customers so they will be picking up well. Nigel: I wanted to get that topline number. I missed that. Rs 1,500 crore is what you did last year. This year, what can we look like? In the first quarter, what you said, your revenues have grown by 18 percent. For the entire year, can we see a 20 percent growth on the topline at least? A: Minimum, yes. Nigel: So, we will be at around Rs 1,800 crore for this fiscal? A: Yes. Nigel: And margins are at around 12-13 percent? A: Yes. We will maintain our margins or further enhance them in this case. Nigel: So, we will do around Rs 210 crore of operating profit then? A: Yes. Last year, we did about Rs 190 crore. So, we will be enhancing that significantly, but definitely, Rs 210 crore should be coming in that scenario. Sumaira: This bus division that you were talking about, when is it going to meaningfully start contributing to your topline and what are you expecting by way of a contribution there? A: It will meaningfully start contributing from this year itself. And now, since we have had a new joint venture, which is one of its kind with the largest European manufacturer of electric buses and hybrid buses which is Solaris. And they are considered among the leading players globally in the city buses also. They have supplied about 14,000 buses across 30 countries. So, we have tried to reduce the time to market. Normally, any player which is coming into this segment of electric buses does take a few years. But, we have turned around within a year’s span itself. We had showcased this product earlier this year. And by the end of this financial year, we will be putting it on the road. Already we have been participating in multiple tenders with different customers and we will be seeing those results by the end of this year. Similarly, for the city buses, we see that a lot of different municipal corporations and state government undertakings, are really seeing the potential of our product and they recognise the same. That is where we see good pipeline being created for this in the coming months. Nigel: What kind of a number can we work with? It is going to start at the end of this. So, for FY18, what kind of revenues we can see from this bus division? Could you tell us very quickly? A: In FY18, the bus division definitely would contribute up to easily Rs 400 crore or so.