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Motherson Sumi says challenges for auto sector to continue for next 3-6 months

Updated : May 28, 2019 12:39 PM IST

Auto components major Motherson Sumi Systems Ltd (MSSL) reported 43.32 percent decline in consolidated net profit at Rs 429.31 crore for the fourth quarter of 2018-19. The company posted a profit of Rs 757.50 crore in the year-ago period.

Total revenue from operations stood at Rs 17,169.47 crore for the fourth quarter as against Rs 15,407.83 crore in the same period of 2017-18. For 2018-19, the company posted a consolidated net profit of Rs 2,098.13 crore, down 7.15 per cent from Rs 2,259.93 crore in 2017-18. Total revenue from operations during the last fiscal stood at Rs 63,522.88 crore as against Rs 56,521.30 crore in 2017-18.

Motherson Sumi's operational performance was weak as guided by the management. Both standalone and overseas subsidiaries saw a fall in EBITDA. Vivek Chaand Sehgal, chairman, Motherson Sumi Group, shared his views and outlook.

“Globally we are in sync with whatever you are hearing. However, we believe that in our case, it is more related to a steep increase in the new models that are being done by our 34 new plants that we have set up. The turnover is going to go from 20 million to 110 million in the next six months. It is all about growth. In spite of whatever we said, consolidated revenues are up 11 percent quarter-on-quarter (QoQ) and 12 percent year-on-year (YoY),” Sehgal said.

“Tuscaloosa (Alabama) and Kecskemet (Hungary) are the largest plants of Samvardhana Motherson Peguform (SMP). We don’t believe in putting our costs into our balancesheet. We take it on our chin and whatever it is, it there in front of you. I think the people have done a phenomenal job in spite of these challenging things, to come up with maximum profitability in the different wings of SMP. So yes, it is a challenge for 3-6 months but when they will come out of it, they would be showing you very stupendous numbers,” he said.

In terms of revenue growth, Sehgal said, “Definitely, the growth in 2019-2020 is going to be spearheaded by the acquisition and there is a lot happening because of the conditions globally. So there is no worries on that account for Motherson.”

“In the domestic market, for the last six months, the demand seems to be on the lower side but the appetite for the cars is going to grow so it is not going to reduce for any reason. I am sure there are new models that are coming up, new things happening, which will correct the picture,” he added.
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