Motherson Sumi's stock has crashed the most since November 10, after Q3 earnings missed street estimates. Speaking to Bloomberg TV India, the company’s Chairman Vivek Chaand Sehgal said the auto components maker has adhered to the mantra that “topline is vanity, bottomline is sanity, and cash flow is reality”. While consolidated revenues are up 8 per cent, profit after tax (PAT) has grown 21 per cent, he said.
Can you run us through your third-quarter earnings and tell us more about the overall business environment?
Well, I think it is a phenomenal performance by all the companies in the group.
They have worked very hard in the basic idiom that Motherson believes in — topline is vanity, bottomline is sanity, cash flow is your reality.
So I think our performance on the profit side is even stronger than the revenue.
The consolidated revenues are up 8 per cent to ₹9,676 crore, profit before tax (PBT) has grown 28 per cent to ₹615 crore and of course PAT has grown 21 per cent to ₹307 crore. Keep this in mind that we have a one-off asset impairment of about ₹30 crore in Brazil.
We have a not like-to-like comparison with the performance of our profitability because last year in the same quarter, we had an additional income of about ₹57 crore of one-time insurance income.
And, in case of the standalone results, please also take into account that we also have an additional provision made for bonus because of the law that has come in. Domestic operation is also impaired by the floods and heavy rains.
Our customers lost two-three weeks of production. And that was a severe hit for Motherson. So all around, in spite of all these things, I think it is a stellar result brought up by our team.
Give us a sense of the outlook as well. What are the kinds of numbers that you are looking at in terms of growth, going forward?
Our sales are always a reflection of what the customer is doing because we do not do any aftermarket sales. The future is looking good. We are launching seven new models. The people and factories are buzzing with activity. Let’s see how things shape up in the coming months.
What do you make of the European business? What is your outlook there?
I think there are lots of challenges that have come in the last one year. But as far as we are concerned, even in euro terms, our sales are up 18 per cent quarter-on-quarter.
So that itself tells you it is going right for us. There were talks about what is going to happen because of a certain carmaker’s problem. But we have no issues with that. We are having increased sales.
What we are seeing is there is growth, there is a lot of requirement, we are one of the fastest growing countries in the world and we are pretty excited about it.
Product wise, what is expected to drive growth going forward?
I think one of the most stellar performances came from SMR (Samvardhana Motherson Reflectec), which has crossed €1 billion in sales during the quarter.
They have delivered the highest ever EBITDA margin of 10 per cent plus for the first time.
I think SMP (Samvardhana Motherson Peguform) has done great as well. Their sales are up 19 per cent and EBITDA is up 24 per cent.
That’s a phenomenal performance coming from SMR and SMP. Standalone, if you look at it, the rupee weakening against the euro and euro against the dollar. All these things have played out. In spite of the Chennai problem that we have faced and the other things put together, still our standalone sales is up by 1 per cent.
This is because of supreme performance by our team members in Chennai.