On Q4 performance
Our results are doing the talking. Globally and in India as well, we have turned out a stupendous performance under tough circumstances. The Covid pandemic is still going on and in spite of stopping and going and everything else, we had an amazing performance in Q4 with consolidated PAT zooming 289%. All around, there has been a very good performance especially in the standalone India case. Last year, we had a little bit of dividend income coming in but the PBT and PAT after that is up almost about 60-70%.
We do not give forward guidance and the conditions globally are pretty stable. There are bits of pockets which remain start-and-go. The world is coping much better than expected and we are on our toes globally to make sure that they can achieve their numbers.
Do you expect recovery on the global front? We hear that in the luxury car market in the developed world, there is a huge shortage?
There will be these particular things because of the semiconductor issues or things like that but the car makers have been able to ride that storm and have come up with ways and means by which they are going to cover up. But luxury cars get the lion’s share in the first place because that accounts for much more realisations for the car makers. There are certain customers who are facing this particular issue but they will catch up very soon on that.
Over the last two quarters the earnings beat has largely been driven by the turnaround in SMRPBV. Do you think that this will continue?
This question was asked in the first quarter and in the last quarter as well. But our numbers are doing the talking. It is definitely sustainable and it is only going to improve from here. So kudos to the teams that are doing this particular business in these tough conditions. They are focussed on the cost and efficiencies and our customers are very dedicated in making sure that the numbers that they had promised us are exceeded. I am sure it is sustainable and can improve more.
Do you expect the rising input costs to act as a dampener to margins?
It is a matter of time. All these particular things have been playing catch-ups globally because people thought that the pandemic is not going to go away so easily and did not really focus on capacities. But they are all waking up to the situation and the supply ability is increasing. I am sure that in the interim period, the customers would have been very forthright about making sure that we are adequately compensated.
Do you see EVs being a big part of Motherson’s business? How is the company gearing up for that?
We have already shared with all of you in our presentation that 25% of the order book is coming from pure EV vehicles. Everybody feels that change to EV will come very fast and we are very well prepared for that. We have all the right ingredients and none of the products that we make is anything that is not conducive or helpful to electric vehicles.
The key point about electric vehicles is to make the car parts lighter but they should be stronger and should have that much strength in them. Motherson is very well poised for that and if you look at the top five models that are being made in the world, four are being supplied by Motherson in big ways.
Over the next five years where do you see the company?
We have said that we will be a $36 billion company which means the two companies that we will separate into will be $36 billion in totality. We will give a return on capital employed (ROCE) of around 40%. That is the clear target that we have got from our team members and we are all moving towards it. Already in this quarter, we have done two acquisitions and many more are coming up.
You have also been on a deleveraging drive. What is the debt reduction plan you have in place?
We have already reduced. The overall debt is probably the lowest that we have. We have a debt equity ratio of almost 1.2, which is one of the lowest even from the days of Peguform acquisition. Motherson is very focussed. Whenever we have cash, the first thing we do is reduce our debt. At the moment, we have a consolidated debt of about Rs 4,000 crore odd and it is the lowest ever that we have had in almost seven, eight years.
We want to reduce our debt to zero if possible and give that cash back to the shareholders. That is the simple thought process of Motherson. Neither do we like to sit on cash nor on debt.