Out of the two new plants to be operational by August, one has gone into full production, while the other plant in Rajasthan will commence soon, Rai elaborates on the company's expansion plans.
Also read: M&M sees FY14 tractor sales growth at 12-14%
Below is the edited transcript of his interview to CNBC-TV18.
Q: Q1 was a difficult quarter for you; flat revenues were reported year-on-year and margins contracted closer to 300 basis points (bps). Have things improved ahead of the festive season? What are you penciling in your growth for FY14?
A: Q2 has been a significantly better compared to Q1. Q1 has always been a weak. We have a robust second quarter; our growth has been about 15 percent against industry growth of 2-3 percent.
Even in Q1, we have been growing at about 8-9 percent, whereas the industry is at zero percent. It is in line with our annual guidance that we will beat the industry growth by 5-10 percent.
On margins, Q2 is typically, historically has an EBITDA margin of about 17 percent plus-minus 1 percent. Although Q1 has been slightly sluggish, it will be taken care of.
Q: While announcing earnings of last quarter, you had mentioned that two of your new plants will be operational by August. Is there any update on it? Based on these, do you hope to garner some more market share in the second half?
A: One of the plant has gone into full production, but it is more like a relocation of existing plant and debottlenecking our manufacturing capacity. The second plant at Bhiwadi (Rajasthan) is about to get into production.
This month and next month are critical for auto ancillaries. We are now ready to gear up to meet these festive requirements of customers. We are looking forward to one of the record month sales in October.
Q: Since many of the auto companies are providing some discounts or promotional offers, what about auto ancillaries to the auto companies? Are there cases of some promotions to offer?
A: There is a kind of pricing mechanism with the customers; so it goes with that. Our pricing doesn't mirror the situation in the market for the automotive sector. Our pricing is determined based on the current raw material prices, market scenario and the dollar parity. It is not related to what the customer maybe offering at the festive season.
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