In an interview with CNBC-TV18, Deepak Dheer MD of Mahindra Forgings citing the company's outlook said, "Our European recovery has been better than expected. We are looking forward to a very good result from the German plant."
In an interview with CNBC-TV18, Deepak Dheer, MD of Mahindra Forgings citing the company's outlook said, "Our European recovery has been better than expected. We are looking forward to very good results from the German plant."
"We are at a stage where we are consolidating with the German companies in India. We hope to see the results in Q3 of FY12 onwards," he added.
He said that the company has created capacity in anticipation of demand and is not looking forward to major fund raising.
Below is the verbatim transcript of Dheer's interview with Sonia Shenoy and Gautam Broker of CNBC-TV18. Also watch the accompanying video.
Q: Could you give us some highlights about the European operations and how they are doing? What kind of run rate can you give us in terms of for revenue from the European business?
A: Our European recovery has been better than expected. Most of our major customers are growing by more than 9% on an average, which is a very good sign and the German plants are full of orders. Their capacity utilization is very close to 100%. We are looking forward to a very good result from the German plant.
Q: Mahindra & Mahindra (M&M) has been very active, itís acquired SsangYong. There is also talk that M&M is looking at a new tractor plant, 40% upage of capacity in their tractor manufacturing capacity. How do you think that is going to help Mahindra Forgings?
A: As far as Mahindra Forgings is concerned, we are also a very major supplier to tractor plant. We are supplier to the Original equipment manufacturer (OEMs). If the tractor capacity and tractor production of the market goes up, we get directly benefited from that.
Q: How much do you think this will be able to help you augment to German plant who is going forward?
A: Our basic strategy has been that we do not depend on the group company beyond 25-30%. It will help us because we are also expanding. We have capacities to be utilized further. At this point of time, I can't say that what would be the exact impact on our revenue or bottom line.
Q: What run rate can you maintain in terms of growth? Is there any catapulting of a growth that you will see going into the next couple of quarters? You stand at a total income growth of 25% for Q3, at about Rs 91 crore or so and your standalone PAT has not been too high Rs 19 lakhs that you did in Q3.
A: Itís difficult for me to make a forward looking statement at this point of time. But, we are at a stage where we are consolidating with the German companies in India. We hope to see the results in the Q3 of FY12 onwards. It should be definitely better result as we understand from the market situation today. We are looking forward to a better outlook Q3 onwards.
Q: What kind of fund raising do you have planned? Are you looking for any more fund raising?
A: No, not at all because we have done all that already. We have created capacity in anticipation of demand. We donít look forward to major fund raising. We are expanding into machining and therefore we require small amount of funds, not major ones at this time.
Q: Mahindra Forgings, Europe has been cutting down cost quite significantly. Should that help you increase your margins in Q4 and going forward into FY12?
A: It should, we have to still wait for what will be the total revenue and what will be the real growth in the auto sector there. Because we are in to the truck market. So, we need to know how truck market is going to go further.
Mahindra CIE stock price
On October 23, 2014, Mahindra CIE Automotive closed at Rs 189.25, up Rs 0.50, or 0.26 percent. The 52-week high of the share was Rs 225.20 and the 52-week low was Rs 37.60.
The company's trailing 12-month (TTM) EPS was at Rs 2.05 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 92.32. The latest book value of the company is Rs 99.99 per share. At current value, the price-to-book value of the company is 1.89.
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