If you have the right cars, there is no slowdown: Vivek Chaand Sehgal, Motherson Sumi
All the greenfield projects are going through a ramp-up which cannot happen overnight.
Your second quarter numbers have beaten estimates. What in your view are the key positive triggers for the company?
I agree with you. There is not one or two headwinds., there are headwinds almost everywhere but Motherson has been winning new orders from almost all geographies and those orders are now coming into production. Hence, you can see overall the revenue has gone up by 6%. Of course, other things have also gone up.
PKC, which we took over, has done really well. Their revenues are up. Their profits are up and though SMRPBV faces some continued challenges in the setting up of greenfield plants, overall all have done a phenomenal job and vindicates our statement that the slowdown is there but in the right places, if you have the right cars, there is no slowdown.
Talk to us about the working capital management in this quarter as well. Has the slowdown in the EU enhanced working capital needs?
You must understand that this is the last year of our five-year plan and we are all focussing on return on capital employed (ROCE). Obviously people are working towards bringing the inventories down and they are taking all the necessary steps, so that we can come up with good gross number at the end of the five-year plan.
What is your guidance on growth and margins for the rest of the year? Do you see an improvement in the following quarters?
Our teams are working very hard. In fact, the board complimented teams and the associates for the very responsible way of handling costs and the performance of their companies. So, yes, there is going to be a tremendous amount of focus. All the units are taking these slower times to improve their efficiencies, improve their layouts and redo the machine. Everything has been looked into so that we can deliver a better set of numbers.
Could you also update us on the progress of the greenfield sides? How long will they continue to be a pain point for the company?
These greenfields are all going through a ramp up and that cannot happen overnight. It is not just a switch on or switch off. The last time we had talked to the investors through your channel, we were talking about 600-700 cars per day. Now we are doing about a 1,000 cars per day and the next quarter we will be doing approximately 1,100 to about 1,300 cars per day. There are various combinations and permutations. Various plants are going through various launches and that is good news because these are all the latest cars. They are very strong in their demand and we are maybe a quarter here, quarter there but we are not so worried about it. The whole group has really supported them and is doing a great job.
What about Brexit deliberations? Have they had any impact on the business and if so, will there be any long-term impact positive or negative for you?
Brexit is a global happening. We as a group or a company are not so much affected by Brexit. Once the terms and conditions of Brexit are known, we will probably be able to guide better but it would be of very little consequence really to Motherson because Britain is a very small portion of our business as of now.