GNA Axles order book stands at Rs90-95 crores/month: Kulwin Seehra, Wholetime Director

Exports, especially from North America had a great contribution to our growth and we will maintain it between 8-10% across the year, says Kulwin Seehra, Wholetime Director, GNA Axles. In an interview with Swati Khandelwal, Seehra said, increased exports and internal cost-cutting initiatives boosted our profit after tax in the first quarter. Edited Excerpts:

Q: GNA Axles has posted a good result in the quarter. What are your expectations for this year amid an ongoing slowdown in the auto sector?

A: This year’s quarter result has improved a lot when compared with the same quarter of the corresponding year. Our export orders, especially from North America, which has improved a lot was the major contributor to it. Going forward we will sustain this growth – total growth and revenue growth – between 8-10% this year when compared to the last year.

Q: Can you highlight the factor that boosted your profit After Tax (PAT) and margin in the first quarter?

A: Two things have contributed to it (i) exports: our share increased in the North American market and (ii) internal cost-cutting initiatives.

Q: What are your existing order book and your outlook on it?

A: Our order book stands at Rs90-95 crores/month and this will be maintained till December 2019 and I feel it will continue to be the same because of our export orders from Europe and North America is almost stable and we are booked by them till December.

Q: Are you on track with the order book when compared to the projections that were announced at the start of the year or there is any decline or increase in the expected targets?

A: Our projections stood at the same levels of Rs90-95 crores and it is a healthy number amid the existing market conditions, domestic and overall scenario.

Q: How has been the performance of exports segment as 45%, your business is dependent on exports?

A: In the Q1 of the last year, we had a 55% contribution to exports while this time, it has increased to about 60%. So, this is more than 45% and is standing at around 60%. The reason behind this increase is that our share of business has increased with our customers and they have also introduced several new programs and they have been awarded to us. So, our preference for exports with our customers is also on the rise.

Q: Eicher Motors and Escorts are your domestic clients and inventory on their part is on a rise. So, have you seen any decline in order from them?

A: Yes, there is a slight decline. When compared to the last year growth, which was unexpected in the market, but such an uptick is not available and they have also cleared their stocks, which led to a decline in orders in the tractor segment especially.

Q: Can you elaborate the percentage cut in your order book from these two companies?

A: It could be around 30% for the last two quarters.

Q: Can it go up?

A: No but will be stable because the stocks have almost dry and we have future orders with us, which may go up in future.

Q: How has Class 8 Truck Sales impacted the overall numbers of GNA Axles?

A: It hasn’t had any major impact yet because there is growth, but it is not big when compared to last year. So, it will have a different impact. On the other hand, there is an increase in our business share with the customers, which is having a positive impact on us.

Q: Have you identified new geographies and markets where you can get good traction and numbers, where you can reach soon?

A: Maximum opportunities are visible in North America and Europe, at present, and maximum in North America. Apart from this, we have started introducing a new segment this year and it is a light vehicle segment in the passenger vehicles. The plant has been commissioned and tests and trials are on in it. Thus, this plant will be contributing to the light vehicle (LV) segment.

Q; How are you preparing for BS-VI norms which will be effective from April 2020 and how you will be contributing to the OEMs? How are you looking to benefit yourself through e-vehicles?

A: Fully implemented of BS-VI norms from April 1, 2020, would encourage bulk pre-buying of the vehicles that are operational on existing norms. In such a situation, our customers provide heavy discounts to their customers, which can boost the sector for a short period. So, we just have drivetrain components and there will be no change related to it. However, it will bring certain changes in the engines.

When it comes to e-vehicles then we have been supplying in small segments for the e-vehicles and are supplying axle shaft for more than 10 years. In future also, if their designs are at the motor centres will need axel shafts then they will be buying axel shafts, thus it will not have any impact on us. However, e-vehicle is all about power trail and gearbox in which the engine will be replaced if e-vehicle demand goes up in future.