DM Reddy, CEO, Subros, says that there are no plans that Denso is planning to increase its stake in the company. He also says that there is no change in the company's stock holding pattern. Reddy says he that expects the business to grow by 15-20% compared to last year.
Below is the edited transcript of his interview to CNBC-TV18.
Q: There are talks in the market that a US air conditioning company, Alex's Original, is planning to buy over 30% of the promoter stake and promoter DENSO is planning to increase stake in the company. Are your promoters changing, are the promoters looking to up stake. What is the reality as far as promoter holding is concerned?
A: There is no change in our stock holding pattern and there are no clients.
Q: How much is DENSO holding?
A: DENSO is holding 13%.
Q: No plans to increase its stake?
A: There is no specific plan, but they can increase the stake up to 22% as provided in the contract.
Q: But, they have not recently moved to increase their stake?
A: They have not moved to increase their stake but they can do it as part of joint venture agreement.
Q: Has Alex Original shown interest?
Q: They may not have evinced interest you on your part looking to exit stake, the promoter is not looking to exit their stake at this point?
A: Not at all, because this is a joint venture between DENSO, Suzuki and Suri Group, which is Subros.
Q: How does business look like? We have seen a general slowdown in the auto industry, are you experiencing that?
A: We have been a bit impacted by event of one of our customer, apart from that business is running smooth and expect the business to grow by 15-20% compared to last year.
Q: What is the contribution of Maruti to your revenue?
A: Almost 70%
Q: So this quarter would be severely impacted do you think? How much may have production fallen to at your place?
A: In this quarter there has been a drop of 25% in sales.
Q: But you expect to make it up in the rest of the year?
A: Yes, in subsequent quarters.
Q: What about the non-Maruti vendors, have you seen any dip in demand even a small trimming?
A: We have not seen much trimming, it has been steadier but there are normal up and down demand cycles. Generally, there are two peaks, one is in summer and second is during Diwali. This year also we expect the same trend.
Q: Apart from peak, demand in the last six months was less than the demand in the previous six months?
A: No, in the first six month non-Maruti customers base have grown.
Q: How would you report margins for the full year?
A: Margins also have been steady for us because we have done lot of localization. Unfortunately, some of it is lost due to increase in the forex rates.