Subros expects large order from railways this year

Subros Ltd released its third quarter results on Monday; the company saw a 17 percent growth in revenue and a 55 percent gain in net- profit on a year-on-year (YoY) basis.

The company has Maruti and Force Motors as its main clients, who themselves have done well, are considered to be the main growth driver this quarter.

In an interview with CNBC-TV18, Ramesh Suri, Chairman of Subros said that the passenger vehicle market is gaining traction while the company’s biggest client Maruti has seen a good respose to Baleno and S-Cross.

He further said Subros is expecting a large order from the railways this year.Below is the transcript of Ramesh Suri’s interview with CNBC-TV18's Anuj Singhal and Sonia Shenoy. Sonia: Just take us through how the demand has been for you and which are the clients that have given you the highest amount of revenues this quarter and where do you see the trigger going ahead? A: As the passenger vehicle market is picking up our main customer Maruti Suzuki they have introduced new brand Nexa where Baleno has picked up really well, with the S-Cross model which they launched about few months back and this market we are expecting very good volume in the next quarter also. The other customer who is doing well is Force Motors where the traveller vehicle is also picking up very well and we are the sole supplier for their AC system. The third one which is picking up is Renault and the other one is the Mahindra & Mahindra, their new models are also picking up. So, keeping that in view we have a very good prospect as far as the fourth quarter is concerned. Anuj: The standout features for your numbers at least for this quarter was the big margin improvement and which lead to big growth in net profit much more compared to the top line number. Do you think you can sustain that and would that mean this kind of net profit growth can continue for few quarters? A: Yes, we are going to do that because we are consolidating as far as our expenses are concerned and inventory control also is there and the cost reduction plan is very much focussed on the area. As you all know now the customers are becoming very competitive and they look forward how to control the cost and if we don't do then we can't move forward as far as this type of the percent of our profitability is concerned. Sonia: You were telling us about your client wise contribution. Can you tell us how much does Maruti Suzuki form as a percent of your overall revenues and how much do you get from Force Motors? A: Maruti Suzuki almost about 70 percent plus. Sonia: And Force Motors and Renault? A: About eight percent each. Sonia: Any other new client that you may have added in the past or are looking to add in the next three to six months? A: It is not going into that detail but I can only tell you that we are working in the other areas like the Bus, railways. So, we are going into that segment also where we are expecting good business in the coming years including fourth quarter also. Sonia: So, do you have to make any investments in order to get into the railways segment or is it the same kind of air conditioning system because if I am not wrong you already have some revenues coming from railway? A: Yes, and we are expecting good order also in the coming period. As far as the investors are concerned already most of the areas we had earlier invested and we are utilising the surplus capacities what we are having. Sonia: What could the quantum of that order be from the railways segment? A: Difficult to mention but it is quite a good number. I can't give you the figure at the moment but it is a very good order because railway is also now doing very good as far as the upgradation of their services are concerned to the public.