Sona Koyo eyes 10-15% growth this year

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Sona Koyo eyes 10-15% growth this year

In an interview to CNBC-TV18, Surinder Kapur, CMD of Sona Koyo Steering Systems said, the company has had good Q1. He further said, the company will end up the year at least with 10-15% growth over last year.

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In an interview to CNBC-TV18, Surinder Kapur, CMD of Sona Koyo Steering Systems said, the company has had good Q1. "On a standalone basis, revenue has increased 23%. Our profit after tax (PAT) has increased from Rs 5.6 crore to Rs 9.2 crore."

He further said, the company will end up the year at least with 10-15% growth over last year. "We should be able to improve our margins continuously quarter-on-quarter," he added.

Below is the transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: Can you take us through the basic numbers?

A: Sona Koyo, on a standalone basis, has increased its revenue in the first quarter by 23%, while the industry has only grown at about 8%. So, we have beaten the industry sales figures substantially. A year ago Q1, we were at Rs 217 crore against that we have done Rs 267 crore this quarter. Our earnings before interest, taxes, depreciation and amortization (EBITDA) last year was Rs 23 crore and is Rs 30 crore this quarter. It has gone up from 10.25% to 11.1%. Our profit after tax (PAT) has increased from Rs 5.6 crore to Rs 9.2 crore. This is on a standalone basis. 

On a consolidated basis, with our subsidiaries our revenue has gone up from Rs 232 crore to Rs 337 crore, while our EBITDA has gone up from Rs 25.8 crore to Rs 50.7 crore. Our PAT after minority interest has gone up from Rs 4.2 crore to Rs 15.7 crore. So, we have had good Q1. I sense that in view of all the economic issues of interest rate hike etc commodity prices coming under pressure. 

I am not certain what the rest of the year will pan out to be. It is sufficed to say that we are on track as far as the budgeting we have done internally. I think we will end up the year at least with 10-15% growth over last year. We should be able to improve our margins continuously quarter-on-quarter.

Q: You mentioned the margins and there were concerns last time around you had some employee provisions to be made in the Q4. Your margins have inched back up from those levels of 9.4%. Do you think these are stable state margins and you will be able to maintain them at these levels?

A: Yes. I think we will improve upon them. We have started provisioning employees' compensation right from Q1. So, this is a much higher compensation than we have done in the Q1 last year. Despite that, our margins have improved. I think we are focused on reducing our material cost and improving our productivity. Our manufacturing costs have come down quite a bit. Therefore, we will be able to continuously improve our margin on standalone basis as well on a consolidated basis.

Q: For one of your biggest buyers, Maruti, the slightly lower production that came in July was not because there wasn't demand, but because they faced supply side issues. For your own self, when do you think the slowdown might start kicking in, till when do you see demand fairly up to your capacity?

A: I think Maruti slowdown has been a planned slowdown partly because they are introducing new models. You will see the ramp up of that coming along fairly soon. We of course have started supplies of those new models. So, I don't see that Maruti will buck the trend in any sense. They will continue to grow at the pace that the industry will grow at. I think there have been some concerns with regard to labour issues, but those are sortable issues. So, I see Maruti in a good position.

We have grown quite substantially in the utility vehicle market in Q1. I think that will remain so for the rest of the year. So, Maruti was the biggest customer and of course the biggest player in the market, will continue to have major influence on Sona Koyo. I think from a growth point of view you will see that evening out with other segments also growing; light commercial vehicles are growing, utility vehicles are growing as well as of course passenger cars.