Force Motors now the largest vanmaker in the country: MD

The company plans Rs 300 crore worth capacity expansion in FY17 but it will be fully funded through internal accruals, he said. Incremental growth in revenue and margin will come from new products being launched like 4-stretcher ambulances and school bus segments, he said.Below is the verbatim transcript of Prasan Firodia’s interview with Sonia Shenoy & Anuj Singhal on CNBC-TV18.Anuj: Good set of numbers what led to such an operational beat this time? A: It has been across the segment for us. It is not that just one product has contributed. So, our Traveller platform has done pretty well. Our Trax platform has grown. Our other aggregate business has also grown so all has relatively contributed to this phenomenal growth that we have got.Sonia: What has the volume growth been for this quarter?A: In terms of volumes on a year to year basis we are up by closed to about 14 percent on volumes. Sonia: Can you breakup the volume growth for us between what you have done with vehicles, buses and on the other hand how much the engine volumes have gone up?A: Difficult to give you a complete breakdown as such but suffice to say that our vehicle business has contributed anywhere closed to about 70 percent and our engine business has contributed closed to about 30 percent of this growth. Anuj: The margins have been quite impressive for you was it purely volume led or did you undertake any cost efficiencies?A: one of course is, we have put in a lot of effort on cost reduction on our materials, on re-engineering of our vehicles to make them lighter and much more fuel efficient. Secondly, the contributions have also come from the fact that we are selling now much bigger Traveller, much more upmarket products where both the topline and also the bottom-line on these products in terms of contributions is much higher.Sonia: The question on everyone’s mind is, is this growth sustainable in FY17 because the stock has seen a phenomenal run up in anticipation of good numbers and that has played out but what now?A: We will definitely try and achieve anywhere close to about a 15-20 percent growth in this new financial year for us. It all depends largely on how the monsoon’s come in and how the rural economy performs. However, I think anywhere close to 15 to 20 percent growth is something which can be achieved. Anuj: Manufacturing diesel engines for both Mercedes and BMW that is something that we had discussed in the past. What is the capacity currently and what is the kind of growth that you expect?A: In terms of capacity has we had mentioned last time as well our capacities in case of BMW currently installed in phase I is closed to about 20,000 engines and a slightly higher number in case of Mercedes; for Mercedes of course we are doing both petrol engines and also the diesel engines. Sonia: Since you are debt free company would you be looking to raise any money from the market at all to fund your capex plans in future?A: In this current financial year we are looking at closed to about Rs 300 crore of capex and that will largely come out of our internal accruals. So, there is absolutely currently on plans of raising any debt for now. Anuj: What could be the next growth trigger then for the company?A: I don’t know, let us see; depends if we get some, we venture into a completely new product line or a completely new platform or something of that sort which could be capital intensive. However, there is nothing significantly on the radar. Sonia: You have launched two large vans recently the Traveller Royal and the Traveller Super. Just wanted to understand whether the margins for these brands are much better than what your traditional business gives you?A: Yes, and the fact that we currently are now a 67 percent market share with the Traveller so we are clearly dominating this segment and we are know very well positioned as the largest van makers in the country. With not just these two products we also have now launched a new ambulance which is a four stretcher ambulance. This is for the first time in the country where you get a four stretcher ambulance. We have also launched a First Responder Vehicle on the Traveller platform. The good thing with the Traveller is it is an application friendly product. We are able to build multiple applications and things like emergency vehicles, medical vehicles are currently the need of the hour as infrastructure is growing and you know the rate of accidents that we have. So, to have four stretcher ambulance and a first responder vehicle will be a big opportunity for us. As also is with the school bus segment, we have grown pretty well with the school bus segment as well.Sonia: The question on everyone’s mind is, is this growth sustainable in FY17 because the stock has seen a phenomenal run up in anticipation of good numbers and that has played out but what now?A: We will definitely try and achieve anywhere close to about a 15-20 percent growth in this new financial year for us. It all depends largely on how the monsoon’s come in and how the rural economy performs. However, I think anywhere close to 15 to 20 percent growth is something which can be achieved. Anuj: Manufacturing diesel engines for both Mercedes and BMW that is something that we had discussed in the past. What is the capacity currently and what is the kind of growth that you expect?A: In terms of capacity has we had mentioned last time as well our capacities in case of BMW currently installed in phase I is closed to about 20,000 engines and a slightly higher number in case of Mercedes; for Mercedes of course we are doing both petrol engines and also the diesel engines. Sonia: Since you are debt free company would you be looking to raise any money from the market at all to fund your capex plans in future?A: In this current financial year we are looking at closed to about Rs 300 crore of capex and that will largely come out of our internal accruals. So, there is absolutely currently on plans of raising any debt for now. Anuj: What could be the next growth trigger then for the company?A: I don’t know, let us see; depends if we get some, we venture into a completely new product line or a completely new platform or something of that sort which could be capital intensive. However, there is nothing significantly on the radar. Sonia: You have launched two large vans recently the Traveller Royal and the Traveller Super. Just wanted to understand whether the margins for these brands are much better than what your traditional business gives you?A: Yes, and the fact that we currently are now a 67 percent market share with the Traveller so we are clearly dominating this segment and we are know very well positioned as the largest van makers in the country. With not just these two products we also have now launched a new ambulance which is a four stretcher ambulance. This is for the first time in the country where you get a four stretcher ambulance. We have also launched a first responder vehicle on the Traveller platform. The good thing with the Traveller is it is an application friendly product. We are able to build multiple applications and things like emergency vehicles, medical vehicles are currently the need of the hour as infrastructure is growing and you know the rate of accidents that we have. So, to have four stretcher ambulance and a First Responder Vehicle will be a big opportunity for us. As also is with the school bus segment, we have grown pretty well with the school bus segment as well.