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Wabco, a global player in safety and control parts for trucks, is optimistic that its capex cycle will be robust. Feeding its hopes is the favourable outlook for the medium and heavy commercial vehicles (M&HCV) market, and the recent implementation of new safety regulations.
The BSE-listed firm has been investing ₹70-90 crore a year and expects the trend to continue in the near term.
“The M&HCV industry is essentially driven by macroeconomic factors, which are projected to be positive,” P Kaniappan, Managing Director, Wabco India, told BusinessLine .
“Barring some periodic and seasonal changes in vehicle build caused by the inventory management policies of OEMs, we share the optimism as in the market in general,” he added.
Being a leading supplier of safety and vehicle control solutions for commercial vehicles, the anti-lock brake systems (ABS) legislation for M3 (above 5-tonne buses and carrying capacity of nine or more passengers) and N3 (above 12-tonne trucks) vehicles, which came into effect in October 2015, has driven business for the company.
“Wabco India will be one of the major beneficiaries of M&HCV growth, as it has a leadership position in the CV air braking systems market with a dominant share of about 85 per cent. Apart from structural M&HCV demand growth, it has benefited from compulsory implementation of ABS. According to the management, the ABS segment could derive incremental revenue of ₹70-100 crore on a quarterly basis.
“Thus, WIL would not only benefit from a pure M&HCV demand but also from the implementation of ABS,” according to auto analysts of ICICI Securities.
Distribution networkPresently, about 30 per cent of Wabco India’s revenue is from ABS sales. In India, eight out of 10 heavy trucks and buses above 5-tonnes and fitted with ABS are equipped with Wabco systems.
Also, Wabco India continues to focus on the domestic aftermarket through an extensive national distribution network. With more than 7,000 outlets nationally, it hopes to sustain the growth momentum.
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