Motherson Sumi eyes 40% earnings growth by 2015
Motherson Sumi has recently acquired Peguform and Visiocorp and Vivek Chaand Sehgal, Vice Chairman of the company said, the acquisitions have reaped good returns so far.
September 07, 2012 / 17:08 IST
Motherson Sumi has recently acquired Peguform and Visiocorp and Vivek Chaand Sehgal, Vice Chairman of the company said, the acquisitions have reaped good returns so far. He is pleased with Peguform's performance and its current turnover stands at Rs 15,000 crore.
Besides, Motherson Sumi is eyeing 40% earnings growth by 2015.Here is the edited transcript of the interview on CNBC-TV18.
Q: A lot of brokerages have been giving thumbs up mainly because your acquisitions, Peguform and Visiocorp are now beginning to pay. First take us through Peguform, what kind of performance can we expect this year?A: I think these are very big acquisitions and we have acquired them at virtually attractive prices. In the first quarter itself Peguform has given a PBT positive after taking into account all the interests and the loans that we have taken. The mirror company has been PBT positive and EPS accretive right from day one. Basically, the message is loud and clear - we acquired good knowhow, good companies and it took a while. In fact in 2005 we had gone out for an FCCB and it took us up to 2009, four years to acquire the first company. We do a lot of detail work before we takeover the responsibility of a company. We are happy with Peguform’s response and we believe that globally it will be a very strong company in the coming time.Q: Some of the brokerages have put out a figure saying that you will probably give an EBITDA earning of Rs 700 crore in the next two years i.e. FY12 to FY14. Is that a fair assessment?A: Peguform is doing about 15,000 crore as turnover, so 700 crore seems a bit on the lower side, isn't it. Q: Tell us what you will do by way of margins, we can calculate the EBITDA?A: We do not give guidance and EBITDA on margins. We always give guidance on ROCE (return on capital employed) and we are sure that by 2014-15 we will give a ROCE close to 40%._PAGEBREAK_Q: What all these acquisitions have done is it has also stretched your balance sheet. Could you give us an update on where the debt stands and any plans to reduce the debt on the books, deleverage your balance sheet?A: I think people misunderstood the way we present our figures. We actually give total figures. Since Motherson Sumi owns 51% of Peguform, the whole debt comes in and looks like it is about Rs 4,000 or Rs 9000 depending upon how you look at it.But if you take the minority out, the debt is not so much. In fact Motherson Sumi has a QIP which was approved in December. We still haven't taken that because all the loans that we have is a five year period loan, they are sub 5% on the interest side and most of our business, almost 75-80% of our business is in euros. We do not have any losses on the euro count. We are in no hurry to pay back the loan or to do something to get the money off our balance sheets.Q: I just wanted to clarify once again with respect to the QIP- so can we understand that QIP will not take place in this fiscal year?A: As of now, we don't see any reason because our cash flows are very strong. We do not see any reason why we should do a QIP but that option is always open just in case there is another opportunity which has to take. Q: Last quarter you saw some sluggish revenue growth in India. That was down about 8.5% on a quarter on quarter basis – has the situation improved or worsened domestically?A: No. I don't think so. I think in fact our standalone numbers are up 41%. I do not know which way on a year on year basis because Q4 is always a very high number and the first quarter is a bit on the lower side. If you look at it from a year to year basis, we have grown 41%. I don't think that is sluggish. Q: Am I detecting another acquisition on the anvil? A: What is important is that we don't go out in the market to do acquisitions on our own. We are always being requested by the car makers or by the OEMs to look at ways by which we can solve their issues. If there is something there we never hesitate. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
