3 min read.Updated: 11 Nov 2019, 09:08 PM ISTAmit Panday
Q2 revenue from operations rises 5.4% at Rs15,924 crore
MSSL’s consolidated EBIDTA increases from Rs1,290 crore in Q2FY19 to Rs1,355 crore in Q2FY20
Motherson Sumi Systems Ltd (MSSL) has reported consolidated Q2 FY20 profit after tax (PAT) at Rs385 crore on Monday. PAT was up 3.78% year-on-year (YoY) on good growth in overseas revenues and reduced tax expenses.
The company’s total Q2 revenue from operations stood at Rs15,924 crore, up 5.4% YoY as gross sales from markets outside India stood at Rs14,129 crore as against Rs12,875 crore from the year-ago period.
However, at Rs1,580 crore, the domestic revenues were down 20% YoY on the prolonged slowdown in vehicle sales in India. Notably, domestic business accounts for just 10% of the company’s overall turnover.
Motherson Sumi Systems’ consolidated expenses saw an uptick of 6.7% YoY at Rs15,386 crore in Q2 on increased cost of materials consumed, employee benefits and depreciation expenses. The total tax expenses, meanwhile, stood at Rs187 crore for Q2 against Rs258 crore for the year-ago period.
SMP, which represents subsidiaries of Samvardhana Motherson Automotive Systems Group BV (SMRP BV – an overseas subsidiary of MSSL), remained the largest contributor to the consolidated revenues at Rs7,988 crore, up 14.65% YoY. These subsidiaries are engaged in manufacturing and supplies of plastic parts and system modules for vehicle interiors and exteriors.
That was followed by the revenue contribution from SMR and PKC at Rs3,112 crore (down 1.49% YoY) and Rs2,425 crore (up 6.83% YoY), respectively. While SMR represents subsidiaries of Samvardhana Motherson Reflectec Group Holdings Ltd (another overseas subsidiary of MSSL) involved in supply of rear view mirrors and drive assistance systems, PKC subsidiaries (of PKC group – another overseas company of MSSL) supply electronics and related components for commercial vehicles.
MSSL said that PKC Group has delivered a growth of 12% in its revenues and 73% in its profit.
MSSL’s consolidated EBIDTA (earnings before interest, tax, depreciation and amortization) increased from Rs1,290 crore in Q2FY19 to Rs1,355 crore in Q2FY20.
Meanwhile, Motherson Sumi’s order book continues to be robust at Rs143,851 crores at SMRP BV level for H1 FY2020. The company said that it bagged new orders worth Rs29,708 crore during the first two quarters of the ongoing fiscal even as it executed orders worth Rs28,926 crore during the same time.
On the standalone front, MSSL reported PAT of Rs174 crore, down 36% YoY, on drop in vehicle production in line with the demand slump for automobiles in the domestic market. MSSL’s standalone gross sales for Q2 stood at Rs1,593 crore against Rs1,950 crore from the year-ago period.
Speaking to Mint earlier on Monday, GN Gauba, CFO of MSSL, credited the company’s cost rationalization measures that steered its performance in the tough market situation.
“We have to remain prepared for the market recovery while conserving our energies in terms of our cost structures. We are using this time to make improvements in our plants to keep them in steady state for scaling up as and when market recovers. We have been following our customers’ orders," said Pankaj Mittal, COO, MSSL.
The company has set up more than 30 new manufacturing plants globally including India in the last five years thereby adding enormous fixed costs. MSSL’s past annual reports point out that its unamortized expenses have increased by Rs6.7 billion to Rs7.3 billion over the last two financial years. The company management had earlier attributed this to the cost of acquiring new projects and development of new products.
“We have very strong order book. Based on the new orders received, we had set up new plants," said Mittal.
Commenting on the Q2 results, Vivek Chaand Sehgal, Chairman, Motherson Sumi Systems Ltd. said, “Our teams are working very hard to stabilize the operations in the new plants and to maintain the growth and profitability."