After the Volkswagen scandal, there has been concern over the fate of auto ancillary companies that have been closely associated with the German auto major. Although Volkswagen accounts for 12 per cent of the consolidated revenues of Motherson Sumi, the auto parts maker has surprised everyone with robust Q2 earnings. In a candid interview to Bloomberg TV India, Motherson Sumi Chairman Vivek Chaand Sehgal says he is not perturbed by the incident as the company posted a whopping 176 per cent growth in consolidated net profit and order books are bulging.

Motherson Sumi stocks surged on healthy Q2 results. What are the factors that are at play?

The board congratulated the team on an excellent set of numbers. August is the holiday season in Europe, which is our strongest market. In spite of that we have our revenues up consolidated at 14 per cent, PBT is up 53 per cent and PAT is up 176 per cent. What is really encouraging is the new order booking that we have in the first half — we have €3.87 billion worth of new orders. And this is over and above the €2.2-billion order that we had received from Daimler that has already been accounted for in the last quarter. This represents about 270 per cent above the new orders we had received at the same time in the last financial year. The stand alone numbers also were good. Our top line is up 9 per cent, our EBITDA is up 18 per cent, PBT is up 38 per cent and PAT is up 36 per cent.

How are you seeing the sentiment in domestic market?

I think generally the markets are going up. The market is responding to the interest rate cuts by the RBI. I feel that it is indicative that in the immediate future, things are going to be even better.

How are you seeing the demand in Europe and China? How are those regions looking?

I think China was little bit flattish in this particular quarter. Of course, recently we are seeing the numbers are coming up because of the government-specific subsidies. Europe has always been steady for us, we have kept saying that again and again and we have indicated that. I think if you look at Europe by itself, their numbers are up by 4 per cent, Germany is up 8 per cent. So there is a good traction over there. We don’t see any reason why we should be concerned. Though, of course, we are watching the situation very carefully and closely.

What are the current debt levels and more importantly are you comfortable with the way the debt situation is panning out right now? What about the finance cost? Has it come down?

With better management, and, of course, with no new issue been done, there is no finance cost over there. So it’s a normal thing now. Whatever the finance cost was there earlier, it was probably a one-time effect, it has panned out. And we see a consolidation in this kind of trajectory.

Volkswagen contributes to up to 12 per cent to the consolidated revenue. Are you seeing any impact of the Volkswagen scandal in your consolidated revenues for the current quarter?

I think Motherson is a company that reflects exactly what the customers ask us to do. So we don’t really give any guidance as such for the next year. We give guidance for five years. We are absolutely on our target for 2020. Just see what Motherson does in the new factories that are coming up, which we had guided you in the last quarter. So we don’t see any reason why we should be very perturbed.

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