Minda Industries says green shoots visible in H2FY20 but difficult to sustain

There are some green shoots visible in the second half of the year but it is difficult to say how long they will sustain, said Sunil Bohra, executive director and Group CFO, Minda Industries. The auto ancillary firm was able to arrest some of the falls because of our diversification.

“Yes, there are some green shoots visible in the second half of the year but it’s difficult to comment as to how long they will be able to sustain,” he added.

“In November-December we are seeing marginal improvement in some of the OEs but it’s difficult to comment at this stage where we are now because for one year we have been consistently seeing a drop in volumes; whether these green shoots are enough to build that confidence as to sustainable momentum in terms of volume growth,” Bohra further added.

Talking about capacity utilization, he said, “In FY18-19 we had 5 new plants commissioned in Gujarat; we moved along with Maruti and we have commissioned a new light plant in Chennai.”

“In the newer plants the capacity utilization is relatively low; it is almost 50-60 percent depending on business to business but in existing plants which are in Manesar or Pune or in the southern region, our capacity utilization ranges around 70-75 percent,” Bohra added.

On the revenue front, Bohra said, “Maruti is almost 20-22 percent of our revenue share and it is very difficult to say what should be the contribution because we supply a lot of components to Maruti ranging from alloy wheels, switch, lamp, horns and contribution ranges from 7-8 percent to 15-20 percent. So it’s difficult to give an average number but if I have to take a number then it should be in the range of average contribution of around 12-13 percent.”

He further said that we won’t have huge capex to scale to meet higher demand from Gujarat units. However, there are no delay in payments from any auto clients.