Amtek Auto posted a loss of ₹159 crore for the September quarter, as higher expenses and finance costs dented its profitability. Bloomberg TV India discusses the quarter gone by with John Flintham, the company’s Vice-Chairman and MD.
Amtek has reported a loss. Run us through what really has happened this quarter.
If you look at the revenues for the year, you can see ₹15,000 crore in consolidated revenue. Obviously, revenues are down about 15 per cent in comparison to the previous year. There are a few things. First, obviously the market in India is very challenging. It has significantly reduced to what it was last year. Our overseas business has countered that a little bit by increasing its base business. Also, some of our acquisitions over the last 12 months have started to come through in terms of revenues and profits.
But the mix between overseas and India has significantly changed. A year ago we were talking roughly a 50-50 mix between revenues. Now we are looking at 70 per cent plus revenue from our overseas businesses.
If you exclude the merging and the reduction, we have seen some marginal pressure in our Indian business. This is fairly normal in a market that is down and challenging.
People are chasing orders; people are reducing prices in the market space. So we have that challenging aspect to cater to.
Second, we have also seen increasing costs in terms of power, minimum wage increase in number of our units. So we are doing a lot of work in terms of restructuring and maintaining the margins. In this difficult time, a 16 per cent margin is still quite healthy.
You mentioned that your overseas business constitutes about 70-75 per cent of your overall revenues. Where do you see weakness operationally?
Without a doubt, 70-75 per cent revenues are coming from overseas, which is not a balance strategically we would like to see. We are pretty comfortable with 50-50 or 60-40. Obviously, one piece of good news is that if you look at the order intake of our new business, we have got ₹13,000 crore worth new orders coming into the group in the last 12 months.
This will bolster the figures going forward. We are waiting for the recovery in India. Our utilisations are relatively low in India. It is almost 50 per cent. The capacity has already been spent. The capex has been spent. We are well placed for our recovery in the Indian markets.
You will be selling your non-core assets to reduce debt. Can you give us an update on that?
We declared our monetisation programme for debt restructuring. We are looking forward to raise about $1 billion, which is a significant amount of money. A big chunk of that is going to come from the sale of our overseas facility. We would look to sell a minority share of our overseas business, which is valued at round about $2 billion. We will look into selling 25-40 per cent of that business. Since we made that announcement, we have had a number of bids for individual companies overseas.
We are looking at whether that is the best option for the group or the equity option. We have got some significant bids in place already for our Tech For business. I would say that we will see significant progress over the next three months in terms of making decisions. That will leave us well placed to achieve the 12-18 months realisation of that asset.
In India, we declared we are going to look at selling non-core assets in terms of the food side of our business. We are looking for an equity sale; support in terms of joint ventures. We are looking for sale in our rail business as well, which is in doldrums with no orders coming from the Indian government.
We are fighting this on many fronts, as one can expect. Within a span of 12-18 months we will achieve the targets we have set for ourselves.