Expect some pick up in economy, sales by mid-2016: Amtek Auto

Auto component maker Amtek Auto has reported net loss of Rs 132.15 crore for the third quarter ended December (Q3) against net profit of Rs 70.81 crore posted in Q3 last year. The year 2016 is going to be a challenging year as the company does not see any improvement in short and mid term, says John Flintham, Vice Chairman and Managing Director of Amtek Auto.Speaking to CNBC-TV18, Flintham says the company has set an internal target of raising Rs 6,500 crore for debt repayment by Sep 2016. Meanwhile, he informs Morgan Stanley has been appointed as the company's advisor and Amtek is working on time-frame till September 2016 to achieve overseas business' sales. In addition, the company has identified a few non-core assets and is looking to sell those, he adds. Talking on the Indian markets, Flintham believes there is no recovery in the market for the current quarter and sales are expected to remain flat going forward. However, he expects to see some pick up in economy by mid-2016. Below is the verbatim transcript of John Flintham's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Nigel: There has been another disappointing quarter for the company. You have spoken about 2016 being a fairly challenging one. Where all have you seen pressure in the past quarter?A: We all understand that particularly for India, domestic India that 2016 is already proven to be a bit challenging year. To be honest with you, we do not see any improvement in the short to medium-term whereas our overseas businesses are performing very well. Now around 70 percent of our total revenues are coming from our overseas businesses, so that is a good balance for the group, but yes, disappointing set of results but on to the circumstances, slight improvement in the last quarter but still long way to go.Reema: The standalone finance cost is higher than the reported EBITDA by the company. Isn\\'t that a concern?A: No. We, through our debt reduction programme already addressing the debt levels in the company and that programme is well on the way. We set ourselves an internal target of raising about Rs 6.5 crore for repaying of debt and we have set ourselves an internal target of achieving that by September \\'16 and we are on our way to do that. We have appointed Morgan Stanley as our advisors and the process is well underway.Nigel: Where do you stand currently in terms of the divestment and could you provide us with some timelines?A: Morgan Stanley has been appointed as our advisors. We have an internal timeframe of achieving the sale of our overseas business by September this year and we are on track to achieve that timing. In terms of internal asset monetisation, we have identified few assets which are noncore to the business i.e. non auto and we are looking to sell those. We have appointed Ernst & Young and Grant Thornton to assist us in those programmes. The timeframe is on track.Reema: Your revenues have fallen by 30 percent on a consolidated basis last quarter. What is the expectation for calendar year 2016?A: We certainly feel that in this current quarter for instance, we feel there is little recovery in the Indian market and I would suggest that pretty flat in terms of sales going forward. I would like to feel that from the middle of 2016 we will start to see some pickup in the economy which will then drive certain parts of our business, but our business is pretty well spread over many markets; commercial vehicles, agricultural tractors which is hard hit at the moment, passenger cars, two-wheelers and those businesses are well publicised as being fairly depressed at the moment.Nigel: European market continues to see double digit growth. Is that sustainable and within Europe the growth in UK has slowed down to around 3.5 percent. Are you facing any pressure there?A: It\\'s a bit of a mixed bag. If you look into UK, you got to look at that overall, not just in one month; you have to look at over full quarter. The growth in the UK has been reasonably decent over that quarter. So I do not think using one month in isolation is a good way of doing it. Europe continues to perform well in the main markets in Germany and other markets like France and UK. I see that continue for the short-term, whether some of the financial issues will come back and affect the European market. Time will tell.In terms of all the overseas businesses, our Japan business that we purchased last year is performing very well and much in line with expectations, improved EBITDAs. Our US business is also performing well. The US market itself is at record levels and there is nothing in the short to medium-term forecast that suggest that\\'s going to change.Reema: Can you update us on any debt reduction, if it took place in the prior quarter?A: We do not release our debt figure at this quarter but it is safe to say that with the exception of the Castex's conversion then that's pretty much in line with where you are seeing. We will release the debt figure next quarter.Nigel: Any progress on selling your German subsidy Neumayer Tekfor?A: Advance discussions are going very well, much quicker than we expected but we are still sticking to the fact that we have agreed that that would be a September 2016 target internally for the management team for exit and we still maintain that date.