Mumbai: Auto parts maker Motherson Sumi Systems’ consolidated April-June net profit came in sharply below estimates, hurt by a restructuring charge related to a recent acquisition, officials said on Monday.
Motherson Sumi’s first quarter profit of Rs110.5 million on sales of Rs14.04 billion was against a profit of Rs316.5 million the year ago. Though the aquisition helped boost sales from last year’s Rs6.01 billion.
“The consolidated numbers are really not comparable to last year since we have consolidated the acquired entity-Visiocorp,” said Pankaj Mital, chief operating officer of Motherson.
Motherson Sumi had acquired Europe’s Visiocorp’s rear view mirror business in March, which was then renamed as Samvardhana Motherson Visiocorp Solution.
The firm undertook a Rs171 million plan in April-June related to the closure and restructuring of certain plants.
“We have closed certain plants and some plants are under closure at the moment,” Mital said, adding it was also restructuring Visiocorp’s operations in Germany and Australia.
“These are the actions which we really need to take to trim down the costs in line with the changed market scenario,” Motherson Sumi’s chief financial officer G.N. Gauba, said.
“There will be a further restructuring, which is required over a period of time,” Mital added.
The sharp rise in consolidated sales was due to Visiocorp, which brought in Rs88.2 million in revenues, about 63% of total sales.
Its domestic sales rose 16.2% to Rs4.11 billion, while sales outside India soared to Rs9.92 billion versus Rs2.47 billion a year ago.
Motherson Sumi makes a range of auto parts from rear-view mirrors to wiring harness and high-tension cords. It also makes products for the construction equipment sector.
It counts Maruti Suzuki, Hero Honda, Mahindra & Mahindra and Tata Motors among its clients.
Shares of Motherson Sumi ended provisionally up 0.26% at Rs78.15 in a nearly flat Mumbai market.