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Auto component maker JMT Auto is looking to invest ₹200-250 crore as capex to shore up production capacities, primarily at its Jamshedpur facility.
Investments will be made in phases through a mix of internal accruals and debt.
The capex comes with the auto-component maker anticipating more orders from the US-headquartered Eaton Group, Sanjay Tiku, CEO, JMT Auto, said.
Jamshedpur (Jharkhand) and Dharwad (Karnataka) are the two plants from where supplies to Eaton will be made. JMT Auto is already in the process of being selected as one of the global suppliers across the aviation, hydraulics and electrical divisions of Eaton. Current supplies to Eaton include select productlines for its hydraulics division.
According to Tiku, the capex will “mostly include” brownfield expansion of Jamshedpur facilities; and some addition to Dharwad. Investments will come across a three-year-period. If required greenfield expansion can also be explored at a later stage.
The auto component-maker manufactures over 2,000 different components ranging from gears, shafts, pins, axles, gear box assemblies, oil pump gear for light, medium and heavy commercial vehicles, tractors and diesel engines. Its clients list includes Tata Motors, Kobelco, Tata Hitachi and so on.
“Our EBITDA margins are around 17-18 per cent. So if we plough back 50 per cent of the profit towards capex we will end up investing ₹100 crore in three years and partly through debt,” Tiku told BusinessLin e.
Listed on the BSE and NSE, JMT Auto clocked a turnover (net sales) of ₹334 crore in FY16 and is looking to close this fiscal at ₹350 core.
For the April to December nine month period of FY17, net sales stood at ₹227 crore. Orders from Eaton Group are expected to give a sufficient boost to the company’s turnover by at least ₹750 crore soon.
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