N Muthukumar, president and whole time director of the company who looks after the India business.of the company addressed the call.

Highlights of the call:

The company is a joint venture of Kalyani Group and Meritor Inc., USA

Meritor is no. 1 in axel manufacturer and second largest in brake manufacturing

It saw a strong third quarter performance.

Q3 sales grew 19%.

Focus on customers, new products and new verticals have helped the company post good performance.

New products and new verticals also helped the company consolidate its position.

New product like suspension are doing well. It has already started supplies to Volvo. New suspension is getting very positive response and is seeing positive impact on tyre life and fuel economy.

It penetrated in all the areas with its products and increased market share.

Post November 2018, CV market has seeing slowdown due to liquidity crunch and financial crisis faced by NBFCs.

Jan-Mar quarter usually is a strong quarter but this time it is likely to be under some pressure. However, the management is confident that after May 2019 situation will improve and next year will be good too.

Migration to BS-VI from April 2020 and Government continued spending in infrastructure will boost the CV industry in FY19-20.

Going forward, new product launches will power growth.

Capacity utilisation is around 85%. The management is comfortable of taking the company to next year.

The company would be adding another 25% capacity by March-April 2019 to cater to the growing demand.

Being an auto company, there is always pressure on margins due to commodities. Going forward, it is expected that the commodity prices are expected to ease slightly or not grow at the same speed. However commodities remain a cause of concern.

The company continues to focus on value engineering.

Currently the company is near debt free with only working capital requirement.

The company is focusing on the domestic markets.

It is targeting 22-25% sales growth in FY19.

Sales guidance for FY19 is Rs 1900-1950 crore.

Commodity price change is exerting pressure on EBIDTA margins.

It has continuous strategic plans in place to improve the productivity and cost and is on track to manage the challenges

It is continuously monitoring and controlling fixed cost.

EBITDA guidance is 11.5-11.7% (11% in FY18).

PBT guidance is 9-9.2% (8.2% in FY18)

Ashok Leyland is it's largest customer followed by Mahindra.

Just 10% of sales came from the export market.

The company is inverting significantly in terms of capacity. It is spending Rs 200 crore in increasing capacity in FY 2019 and some of which will spill over in Q1 of FY20.

Pitampur project will incur capex of Rs 60-70 crore in phase I in FY20.

Most of the commercial vehicle customers like Ashok Leyland, Tata Motors, Mahindra, Daimler and Volvo, Eicher are its top 5 clients, to whom the company supplies axles and brakes.