ET NowIn a chat with ET Now, Hemant Luthra, Chairman, Mahindra CIE & President, Systech, shares his business outlook. Excerpts:
ET Now: This quarter your standalone margins are at 6.2% and consolidated at 4.4%. What were the factors at play here?
Hemant Luthra: Numbers are normalised after excluding all one-time cost and expenses. If we look at Q4, we have got some slippage in standalone from 9.9% to 8.1%.
If you look at the consolidated margin, we have a nice jump from 8.4% to 11.6%. Our European subsidiaries have moved from 7.8% to 13%. So, we are confident that enough has been done to make sure that costs are under control.
As the market comes back, we will see a healthy improvement in margins.
ET Now: You said that you expected margin improvement to be firmly on track. What are the targets that you have set for yourself?
Hemant Luthra: I am not going to forecast margins. In the last quarter, we have had forgings coming in at about 15%-16%, casting at about 8%, and stamping at about 9%-10%. The consolidated margins in India for Q4 are about 8% and 9%.
For Q4,the consolidated margins are about 12% and subsidiaries are doing 13% against 8% in the last quarter. Remember that India has slowed down and therefore we are feeling some pinch here. But we will certainly do well again as the volumes come back.
ET Now: How is business in general panning out? What are your key takeaways from interactions with key clients?
Hemant Luthra: The large clients in India still continue to be in the traditional area — which is forging. For forgings it is Mahindra, Maruti and Tata. For stampings, it has to be very local; so it is essentially Mahindra. We are getting some orders from Renault for forging because CIE does work for Volkswagen all over the world. We expect to get orders from them for stamping.
Mahindra is treating Mahindra CIE as a partner company. And arm’s length pricing is giving us a healthy share of wallet without one subsidising the other. On the other hand, we have got a whole bunch of other customers who are thanking us for bringing international technology to India.
It gives us greater confidence. So, a lot of stuff that is going on are very encouraging for us because customers have seen that we have brought the best of the world into India.
ET Now: This quarter your standalone margins are at 6.2% and consolidated at 4.4%. What were the factors at play here?
Hemant Luthra: Numbers are normalised after excluding all one-time cost and expenses. If we look at Q4, we have got some slippage in standalone from 9.9% to 8.1%.
If you look at the consolidated margin, we have a nice jump from 8.4% to 11.6%. Our European subsidiaries have moved from 7.8% to 13%. So, we are confident that enough has been done to make sure that costs are under control.
As the market comes back, we will see a healthy improvement in margins.
ET Now: You said that you expected margin improvement to be firmly on track. What are the targets that you have set for yourself?
Hemant Luthra: I am not going to forecast margins. In the last quarter, we have had forgings coming in at about 15%-16%, casting at about 8%, and stamping at about 9%-10%. The consolidated margins in India for Q4 are about 8% and 9%.
For Q4,the consolidated margins are about 12% and subsidiaries are doing 13% against 8% in the last quarter. Remember that India has slowed down and therefore we are feeling some pinch here. But we will certainly do well again as the volumes come back.
ET Now: How is business in general panning out? What are your key takeaways from interactions with key clients?
Hemant Luthra: The large clients in India still continue to be in the traditional area — which is forging. For forgings it is Mahindra, Maruti and Tata. For stampings, it has to be very local; so it is essentially Mahindra. We are getting some orders from Renault for forging because CIE does work for Volkswagen all over the world. We expect to get orders from them for stamping.
Mahindra is treating Mahindra CIE as a partner company. And arm’s length pricing is giving us a healthy share of wallet without one subsidising the other. On the other hand, we have got a whole bunch of other customers who are thanking us for bringing international technology to India.
It gives us greater confidence. So, a lot of stuff that is going on are very encouraging for us because customers have seen that we have brought the best of the world into India.
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