Demand is back at places where our plants have opened: Vivek Chaand Sehgal, Mothersom Sumi

Vivek Chaand Sehgal, Chairman, Motherson Sumi Systems Limited (MSSL), talks about Q4FY 20 results, demand scenario and international business among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Your margins in Q4FY20 have gone up by 2% to 9.2% despite street expectations of 6.5%. What were the key reasons for this operational performance and what is your outlook for the future?

A: It is so that the last year, FY20, was the last year for our five year plan. So in May-June 2019, we planned a project Victory, under which in our final year, as we always do, paid more attention to our profitability among others. As you said, we did very well and all the team did a phenomenal job and accordingly, we brought ourselves to the lowest debt in the last 11 quarters. The cost-saving efforts were started almost 10-11 months before the year-end. So, the joint efforts led to good results at our end. And, what is achieved on the cost front should also continue the next year but unfortunately, things changed in the April-June quarter as the maximum of our plants were closed. There was a very depressing environment at the end of March. But things are better now as almost all of our plants are opened, except one or two, i.e. almost all of the 272 facilities of Mothersom Sumi are on. 

Q: Update us about the demand scenario. Is it completely back on track or there is some reluctance? Also, tell us about the kind of orders that you are receiving from the OEMs and what is your outlook on the same?

A: Countries like China, Japan or Korea, where the lockdown was extended beyond January-end when they had a new year, had an impact on our results of the last quarter, i.e. Q4FY20. They also opened first after which the lockdown gradually spread to other countries of the world. So, it is a kind of procession in which it moved from February-March and is moving to date. So in these four months, our plants have either closed or opened in the way the COVID has moved across the world. Regarding the demand, we have seen one thing that wherever our plants have opened, the demand is back and the thinking that we need our transportation has got stronger and strengthened. So, I think demand will return, just let it open. In the case of vehicles, there are thousands of parts into a car or motorcycle and each part comes from different places and this is a place where the importance of transportation is felt. I would like to tell you something about India that we were transiting from BSIV to BSVI, due to which the carmakers had zero inventory at their end at supplier level to their factories to dealers. Now, when things are opening, there is a change in the mindset of people in which they all want private transportation. This is why I think the demand is going to be very good. It is evident and during your visit, you will find that people are buying available cars. 

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Q: What kind of demand you are seeing in the US and Europe because international markets are a big chunk in your business? Earlier, you have said that you have plans to triple your revenues in the next 5 years. Are you on course and are you planning to enter into new segments for the purpose?

A: It is a part of the next five-year plan. As far as Europe and America are concerned then the feeling - they are not comfortable in the shared transportation - is even more pronounced among people. So, I think that demand has returned in those countries and many of our plants have started functioning in the US and Europe. In the case of China, Japan and Korea, the demand for 120-130% capacity utilization is coming to us. So, I think this is a global phenomenon and it will stay for the next one year to one and a half year or till an immediate solution for COVID is not found. I think, there will be a change in the way people think.