Jupiter Wagons plans to invest around Rs 300 crore in the next two years to expand its core wagon manufacturing business, the recently-acquired Stone India, and commercial electric vehicle (EV) operations, the company's Managing Director Vivek Lohia said.
"We plan to become a Rs 1,000-crore company by 2025 from the current Rs 500 crore, and for that we are looking at an overall capital expenditure of between Rs 300 to Rs 400 crore in the next two years," Lohia said.
In an interview with Moneycontrol, Lohia said that Jupiter Wagons plans to fund the expansion through the Rs 125 crore raised via the recently-concluded qualified institutional placement (QIP) and internal accruals.
"We have raised about Rs 125 crore, and the rest (of the Rs 300 crore) will be from our cash flows," Lohia said.
He added that out of the total Rs 300 crore, Rs 25 crore will be used to complete the acquisition of Stone India. The company will invest another Rs 30–50 crore in Stone India.
Furthermore, another Rs 50 crore will be invested in its commercial EV operations, and the remaining will be used for brownfield expansion of its wagon manufacturing plants.
The company has plants in Kolkata, Jabalpur, Indore and Pune.
Banking on its global partners, the company is also looking to double its exports to account for 20 percent of its revenue in the next five years.
Edited excerpts of the interview:
Jupiter Wagons reported its highest-ever revenues in 2022-24. Going forward, do you expect this growth momentum to continue in 2023-24?
Yes, we are very confident of growth in 2023-24 as well, because we have an order book of about Rs 6,000 crore.
Also, we expect the Indian Railways to come out with tenders for 50,000 to 80,000 new wagons in 2023-24.
So, at least for the next two-three years, we don't see the momentum going down. We are only going to become stronger.
When do you expect the Indian Railways to announce its new order for 50,000 to 80,000 wagons? What portion of this business opportunity are you targeting for your company?
We expect the Indian Railways to come out with the tender for 50,000 to 80,000 wagons in the next two months.
All put together, we expect to receive new orders for a minimum of 20,000-odd wagons from the Indian Railways in 2023-24.
Will you bid for these wagons alone or through a consortium with another player?
On the global tender, we will bid as part of a consortium with Tatravagonka (CSG Group, Czech Republic and Budamar Logistics, Slovakia) for manufacturing wagons.
Tatravagonka is one of the most dominant players in the industry, with a European market share of around 50 percent.
For the domestic order from the Indian Railways, we are planning to bid alone.
Last week, you raised Rs 125 crore through a QIP. How do you plan to use this cash?
We are looking to increase our company's size from Rs 500 crore now to Rs 1,000 crore in the next two years. We will deploy (this money) for capital expenditure for the same.
We plan to use around Rs 25 crore to complete the acquisition of Stone India and then invest another Rs 30–50 crore in Stone India.
Furthermore, another Rs 50 crore will be invested in its commercial EV operations, with the remaining for brownfield expansion of its wagon manufacturing plants.
We want to increase our company's wagon manufacturing capacity to about 1,000 wagons per month.
Wagon manufacturing has been your core strength. But you recently diversified into commercial EVs. What is the thinking behind this diversification? What percentage of your revenues do you expect to come from this business in the next five years?
The reason for the diversification was very clear. We already manufacture commercial vehicles (CVs) for original equipment manufacturers (OEMs). We were manufacturing the entire body, chassis, and motor for other players in the market.
So, it is an easy transition into manufacturing light commercial vehicles (LCVs) under the Jupiter brand.
Today, the market size of LCVs in India is about 600,000 internal combustion engine (ICE) vehicles. So, the opportunity for electric LCVs is huge.
In the next two-three years, we expect around 20 percent of the market to switch to electric LCVs – that’s between 100,000 and 200,000 vehicles, which is a huge opportunity.
At the moment, we have a manufacturing capacity of around 6,000 vehicles per month. If we see the market grow faster than expectations, we will invest more in the segment.
Last year, you said that Jupiter Wagons would look to expand its freight wagon business in Africa. What has been the progress?
On the wagons front, we have tied up with RITES, formerly Rail India Technical and Economic Service.
We see a big opportunity for the export of wagons to African countries. We expect the African export market to be a Rs 100-200-crore business for us, going forward.
In our container export business, we have tied up with General Electric (GE) and other companies, and we expect this to become another Rs 100-crore opportunity for us.
All the containers that GE purchases from us are exported, and the rest are used up in India. We make very specialised containers, like refrigerated ones.
This is a niche market that we are creating in the country. Currently, India does not even have 2 percent of the global container market.
The dependence on government orders will decrease. Once brake manufacturing kicks off, the share of exports will also increase. This could effectively reduce the share of business from the government in our portfolio.
You entered the metro coach business in partnership with the Spanish company CAF, Construcciones y Auxiliar de Ferrocarriles. What are your plans for this segment?
We have bid for six-seven tenders in partnership with CAF. We will get a clearer picture of this segment in the next six months.
We are targeting to supply metro coaches for the Bangalore Metro and Mumbai Metro.
What is the interest you've seen from private players in procuring wagons?
We are seeing a lot of interest from private parties in procuring wagons at the moment. We have already started taking orders for 2023-24.
We are seeing orders come every month and every quarter, and we don't see any slowdown in momentum.
We have now started taking orders for the next financial year.
We are looking to supply orders worth Rs 2,000-3,000-crore in 2023-24 in this segment.
We are seeing interest from steel and cement companies for wagons.
Furthermore, for private containers, we are seeing interest from logistics players and automobile companies.
