What are the reasons for such a strong performance in Q3? Was it largely because the base effect has kicked in because there is definitely an uptick which is now visible on the deleveraging front?
We have a great team led by a lot of great people and it is an overall statement of their gratitude to our customers. They have systematically used all the opportunities to improve their performance and this goes for every single plant we have in the world. The revenue is at a lifetime high of almost Rs 18,000 crore. It is up by 15%. The profitability and EBITDA are double, triple digits up. It is an all round fantastic performance by our team members at Motherson.
How did you manage to navigate through a tough commodity pricing environment?
One has been a bit prudent and we have kept all our raw material supplies on the higher side and that has helped us a bit. Also, there is a time lag and that is going to be taken care of in the coming quarters and related results thereof. But a tremendous amount of focus has been given to improvement of production, thereby reducing scrappage and all these things.
Could you give us a breakup of how the segments have performed?
What is important to understand is that since almost all the components are going into different cars and trucks, the improvement in the sales of one particular product gives us all around benefit in all the other companies as well. The real congratulation goes to the customers for making those car sales and passenger cars and bikes and trucks sales to happen.
How has the international demand been shaping up? Has the narrative turned towards a demand revival?
Absolutely. As the reality of Covid-19 and the variants and other things are happening, the confidence level of the people for buying personal vehicles is improving. Though we have not yet hit the highs of pre-Covid era, in the next quarter or two, we will definitely be exceeding that as well. So there is a definite shift in the mindset of the people. They want personal mobility and they are not so comfortable using the other modes of transport. So I think for another year or two, this will keep on increasing. I am very confident of that.
What do you feel when it comes to the overall domestic demand? Is there a sense that demand is coming back?
Absolutely. It is a given that people are very much concerned about their personal safety. I think that is going to continue in India as well. That is reflected in the kind of sales our customers are doing. India is no different. It is very difficult to overcome one whole quarter, the first quarter which was a real disaster area in four quarters but next year looks even better and promising. I think we have overcome the worst of Covid and very clearly we are doing better and better.
What is the guidance on your overall capex and deleveraging? Are there any plans to expand either your brownfield or your greenfield projects?
We have average guidance of about Rs 1,800 crore or so depending upon the currencies but definitely capex is coming down because there is no new big greenfield project just now. As we get new orders, we will start to do that but as you can see in the presentation also, our actual capex has come down for this quarter and we feel it is going to remain that way because the kind of orderbook we have does not really need a huge capex. Our existing plants should suffice as we have set up 41 new plants in the last five years. Maintenance capex is what it will be snd so it will be on the lower side.
Are Electric vehicles (EVs) a large looming threat? Would you say this is an opportunity, a distant reality or a very much near term one?
We have talked about the EV push.
products are almost agnostic to the engine. It does not matter whether the cars are EVs or regular ones, but in case of EVs, the value goes up. So, whether it is an HV or an IV or an EV, we are using the same components and parts and so it is not really a concern. Whichever way is the right way to go, we will keep on supporting that that.
Commercial vehicle, passenger vehicles and two-wheelers — where do you see the strongest evidence of an upcycle on the cards?
I am optimistic globally on everything including two-wheelers, four- wheelers, six-wheelers or trucks and commercial vehicles. If the GDP is going to rise, then commercial vehicles as well as passenger cars are going to grow. We are grateful that this whole sector is growing. It is very exciting for us.
