Planning For Growth Expansion

Could you elaborate about the company’s journey over the past five years?

It has been exciting experience. Atul Auto Ltd. remains one of the fastest growing players. It has grown much better than the industry’s growth. In fact, prior to 2009 we were confined to two territories of India, mainly in Gujarat and Rajasthan. In the last five years we have spread across the country and today available in all the states, except two major states in India i.e. West Bengal and Tamil Nadu. In terms of net worth, it has gone up by almost 2.5 times from 2009. The CAGR for the last five years has remained 89 per cent and we have attained a debt-free status. In terms of market capitalisation, in 2009 it was well below Rs 100 crore but it has now crossed Rs 1,300 crore.

Our products are well-positioned and our market stake, which was below 5 per cent in about four to five regions has now gone up to 13 per cent overall. In India, the commercial vehicles are used for two different applications, cargo and passenger movement. For cargo, we have acquired market stake of 17 per cent. All this has been due to good designing and proper positioning of the product in the market.

What is your perspective on value creation for your different stakeholders?

There has been a sea change in value appreciation. One, we have consistently paid dividend and the payout ratio has remained about 25 per cent all the time during these five years. Two, we got a rights issue. Three, during the period we have declared bonus as well. Finally, even after split of shares, the prices are maintaining their levels in the market because of our performance.

How have things changed with a new government at the centre?

Given the fact that we are such a large economy, the correction process will take its own time to usher in improvement. Until now though there is no change in the equation as far as the industry is considered.

What are the challenges faced and strategies adopted by you for emerging among the top value-creating companies today?

To continue with our growth momentum, we expect acceleration in infrastructure projects so that we can compensate for sluggishness in rural demand. One of the big challenges for the three-wheeler industry during the current fiscal year has been this sluggishness. Meanwhile, we have started penetrating deeper into the markets where we have a presence. We have also started exploring the overseas market.

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Going forward, what do you think will be the major growth-driving factors for your company?

Infrastructural development will be the main trigger, mainly in terms of roads. Further, overall improvement in economy will boost the buying power of customers. Lowering of interest rates will help too since commercial vehicles are mostly financed at a minimum of 17-18 per cent. The proper implementation of new commercial vehicle rules will also work as positive triggers.

What are your capex plans for the next couple of years?

We have a capacity of 48,000 vehicles which has been used up to 90 per cent in the current fiscal. This plant can cater to 60,000-65,000 vehicles per annum. We have started planning for product expansion in tune with the current growth momentum and the new plant will be erected at a cost of Rs 150 crore. This land is close to Ahmedabad.