What enabled you to deliver 21 per cent growth in profit after tax in the fourth quarter and 48 per cent growth in PAT in 2015-16?
We focused on return on capital employed (ROCE) across the group, which is different from margin improvement measures. With the efforts of the ROCE teams, the company reached a turnover of over Rs 10,000 crore in a quarter, which is more than the turnover of the group five years ago. This helped us post record profits of Rs 1,274 crore in 2015-16.
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How have you defied the slowdown in the automobile market?
The company has a clear policy of increasing the content per car and helping customers by acquiring companies that are important for them but are in trouble for some reason. This allows us to grow even if the car industry is not growing.
Our growth is a result of orders by customers after the acquisition of Samvardhana Motherson Reflectec and Samvardhana Motherson Peguform.
How do you see net margins improving?
We measure operational performance through ROCE. Our stated target is to achieve a ROCE of 40 per cent. In 2015-16, the standalone business achieved a ROCE of 43 per cent and SMR achieved a ROCE of 42 per cent. The consolidated ROCE is 27 per cent. We have invested in new capacities. As these new facilities start operations, we expect the ROCE to reach 40 per cent by 2020.
What is your outlook on debt?
SMRP raised Euro 100 million by way of 10-year bonds carrying a coupon of 3.7 per cent. As on March 31, 2016, the company has an order book of approximately Rs 100,000 crore. The company's net debt is 1.16 times of annual earnings before interest, taxes, depreciation and amortisation.
We maintain a healthy balance between dividend payout and leverage.
We cannot comment on future debt levels as this would depend on our working capital requirement and expansion.
How do you plan to lower your debt?
Between 2011-12 and 2015-16, our sales and PAT grew by 159 per cent and 391 per cent, respectively, but our debt-equity ratio declined by 42.5 per cent. Further, most of this debt is at SMRP without recourse to the parent.
Are more acquisitions on the anvil?
There are always opportunities in the market and we keep a close watch. The funding will depend on the size of the acquisition. Once something is finalised, we will access the best way to finance the deal.
How does the company build expertise for 1,000 different components?
Motherson Sumi Systems wants to be a globally preferred solutions provider. We have joint ventures and investments in new countries and acquired companies. The company's philosophy is to support customers' requirements in the most efficient manner. We are focussed on making our businesses operationally efficient. The expertise comes from the various R&D centres that each business vertical has. These are working together with car makers to develope new products and processes.