H2FY22 will be challenging as the festive season is not looking great: Ashok Minda, Chairman, Minda Corporation

Ashok Minda, Chairman & Group CEO, Minda Corporation, talks about the Q2FY22 numbers, commodity inflation and demand trend among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: The company's revenue has grown by 11.5% in Q2FY22. What led to this growth and what is your outlook for the rest of FY22? 

A: We have grown by 11.5% while there has been degrowth of 2.6% in the industry. We have generated a revenue of Rs 731 crore. After the wave of the pandemic, we saw growth in the market in the second quarter irrespective of the segment. Our aftermarket has supported us a lot and the segment has grown by around 20% and it helped us to post these results.

Q: Despite commodity inflation, we have seen an improvement in your margins. How did you do this and is it sustainable in the future as well?

A: As you have said, commodity prices have risen a lot. Along with it, there has been a huge shortage of semi-conductors and despite all these factors, we have been able to make this result possible. In addition to this, there is an improvement in the balance sheet position and our net debt has bettered by Rs 42 crore. We have generated a free cash flow of around Rs 45 crore in the first half of the year. In terms of commodity prices, we have back-to-back arrangements with the customers due to which it has impacted us less. At the same time, we also made arrangements with our suppliers which was made possible and it also helped us in being impacted less. I feel that the third quarter and the next half year will be quite challenging because the festive season is not looking great. I believe that the semi-conductor shortage will continue to be in place.

Q: Do you want to say that the buying trend you saw after the COVID is tampering down now?

A: keeping in view the captive requirement and youth population of India, it is for a long term, definitely, this growth will continue, while the issue is for a short period. So, I think that that the third and fourth quarters will be a bit challenging after that, next year, the growth will continue irrespective of the sectors, maybe it is two-wheelers, three-wheelers, four-wheelers or commercial vehicles.