Kolkata-headquartered Jupiter group promoted by Lohia family which manufactures rail wagons, rail components and infrastructure, has announced completion of acquisition of around 70 per cent stake in Commercial Engineers and Body Builders Co Ltd (CEBBCO).
CEBBCO, a listed entity, has been going through a resolution process under RBI February 12 circular. The stake acquisition by Jupiter Group and Slovakian shareholder Tatravagonka AS which has acquired 26 per cent of Jupiter in 2015.
According to Vivek Lohia, Director, Jupiter Group, the company and its partners Tatravagonka and Budamar Logistics, a Slovakian logistics major which has acquired 50 per cent in Tatravagonka in February 2018, has invested up to ₹100 crore in the stake in CEBBCO that will become Jupiter’s subsidiary.
This strategic decision allows Jupiter to expand its product portfolio and manufacturing capacity without any greenfield capex. CEBBCO is one of the leading designers and manufacturers of automobile and locomotive bodies that owns facilities for manufacturing of freight wagons and components for coaches and locomotives and offers heavy fabrication services.
Jupiter Group also created several new joint ventures, including a manufacturing of disc brake systems for LHB coaches set up in collaboration with Dako, a Czech manufacturer of brake systems and components for railway vehicles.
Partnership with several European majors gives the company access to technologies that do not exist in India, Lohia noted.
He added that Jupiter Group is now eyeing 30 per cent growth in the topline to $80 million in 2019 fiscal and it targets similar growth in FY20 given a large order book of ₹1500-₹1700 crore across all business verticals. The order book comprises both order from Indian Railways, its main customer, and order from private sector companies.
“Till 2020 we have enough orders and good visibility as demand from the private sector is growing and we no longer depend on Railways orders,” Lohia said adding the private sector now accounts for around 10 per cent of Jupiter’s order book. He also noted that private sector may account for around 15-20 per cent of new demand for wagons in 2019.
According to CRISIL April 2018 report, the Indian wagon industry plagued by over-capacity in the past 2-3 years, due to low demand from Railways as well as the private sector.
“However, the jupiter group has been able to tide over this challenge on account of its cost-efficient and integrated nature of operations,” CRISIL noted.