SAMIL Completes Fund Raising Of Total Rs 6437 Crore Via QIP | NDTV Profit - video Dailymotion

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00:00Let's shift focus to Samvardhana Madharsan where the company has now completed its 6,637

00:06crore QIP. The issue saw strong demand and shares were issued at 190 rupees a share against

00:13the floor price of 188. Now, as we spoke to the management of Samvardhana Madharsan, Kunal

00:21Malani who is the CFO of Samvardhana Madharsan to understand as to what the fundraise is

00:27all about and the outlook of the company. Listen in.

00:30Look, I think we have been inundated with opportunities right now. If you think from

00:37an automotive space, the reality is there are some pain in the Western world. The supply

00:42chain is stressed and we do anticipate a lot more opportunities to come in it as you know

00:47in Kyosla is the opportunity. When you think from a non-automotive space, we are very uniquely

00:54positioned to be a manufacturing powerhouse. It's been highlighted as a validation when

01:00we started a consumer electronics business. The aerospace business where we have just

01:08completed India industries and makes us a global player in the aerospace industries

01:12and we do anticipate a lot more opportunities to also come in there. Our health and medical

01:17new unit will, I mean the joint venture with the new product there is going to get launched

01:22in October. Our new facility is kick-starting from next quarter onwards. So, overall again

01:31positioned for incremental growth opportunities to come in. Now, with all of these as an example

01:37coming all pretty much parallelly at the same time, it has resulted in having to make a

01:44choice among some of these opportunities and hence our thought was instead of making a

01:49choice, let's fortify the balance sheet which is what the capital raise does and hence we

01:54are then in a capacity to actually go after all of them pretty much parallelly. This will

02:00make sure that we are catering to all the different consumer sets that are there

02:05and it will also make sure that we can actually do a lot more with our balance sheet than what

02:12it was earlier. So, while in the intermediate, we will end up paying down the debt as you rightly

02:17mentioned, but going forward we do anticipate many of these opportunities to kick in and thereby

02:22we will again lever it up again and add to our business perimeter that exists.

02:29Just a follow-up on that Mr. Malani. Now, you mentioned in our previous conversation

02:34well after the first quarter results that you want to decrease your net debt to EBITDA to 1

02:39versus just 1.5 times that it was. Now, with this fundraise, you will be able to do that

02:44but as you rightly said there will be a lot of opportunity in the newer spaces as well apart

02:47from automotive that you will be going after against in case the opportunity persists.

02:53Do you have a target for the net debt to EBITDA ratio? Do you feel that it's imperative to keep it

02:58between 1 to 1.5 depending on the business opportunity that comes in?

03:04So, look our financial policy and that is publicly stated is 2.5 times net debt to EBITDA

03:10and if you were to ever exceed that then within 12-month time period we need a clear line of sight

03:15to bring it down below 2.5. The fact is we have never actually exceeded that so that just

03:20highlights the discipline. We've been an acquisitive entity and if you look at it over in the last one

03:25decade we may have done 30 plus acquisitions. We've never exceeded in fact the number 1.5 itself. So,

03:321.5 to 2 has been our comfort level and that is something we intend to achieve. Obviously,

03:40in different points in time things may play out differently given some of these opportunities can

03:44be lumpy in nature but our objective will always be to be in and around that 1.5 to 2x. That's our

03:51comfort level with our financial policy being at 2.5. Now, it is also important that this is there

03:59because the customer also sees it and ours is a reactive strategy as you know while we are

04:03acquisitive it is not that we are deciding what to acquire. We let the customers tell us what is

04:07potentially good for us and where we can add value and in that reaction that we need to get he

04:12obviously looks at our balance sheet to make sure that it is there for whichever opportunity he is

04:18providing us. So, hence keeping that you know a strong healthy balance sheet just make sure we

04:24are getting to know about these opportunities. Had it not been we may not even hear about these

04:28opportunities and hence the importance of keeping the financial discipline in place.

04:34Now, before I come to the business outlook just one question on acquisition because

04:38over the last few years we have seen you know as you mentioned that customers do come up to you for

04:43these opportunities and that's when the decisions are made but now you are entering also into a

04:48non-automotive side of business as you mentioned aerospace healthcare. What is the strategy there

04:53for acquisitions? How are you tackling these and how are you coming across them as well and

04:58specifically do you have any outlook for you know these specific non-auto businesses that

05:04they have to be outside India or within India something on that and what's the current revenue

05:08picture from them from the new non-auto business currently? Are they more India centric? If you

05:13could just give us some light on that. No, look our strategy is exactly the same as what we have

05:19in automotive. If you look at automotive we started with Sumitomo-san. We learned wiring

05:24harness then we got more opportunities more joint ventures. We went global with it and we are where

05:30we are in this journey right now. If you look at our non-automotive the playbook is exactly the

05:36same. If you look at aerospace for example we started the team in 16. We did small small things

05:41with the customer to get them comfortable. They then helped us look at you know creating a joint

05:47venture with Simtools a couple of years later while Simtool has grown nearly 35-40% bigger.

05:54We have now just acquired ADI Industries which takes this business global and there on I'm

06:00presuming as we do well with that there'll be more opportunities. Same story when you look at health

06:05and medical you have created the joint venture with Atelier. Now our our greenfield facility

06:09should be up and running. Logistics same story Hamikorex joint venture and we're trying to do

06:15optimization of our own internal logistics and so on and so forth. So the playbook is exactly the

06:20same. It's a successful formula that has worked for us so really no need to change and it's still

06:26a reactive strategy even from an acquisition perspective. So all in all it's exactly the way

06:31we've done in automotive. We're just doing that for other industry sets. Not just one question on

06:37the business outlook per se because we have seen that auto companies have come out and sounded off

06:42alarms as well as some of them have actually cut guidance the likes of BMW. Now you also cater to

06:48that region but specifically I just wanted to ask because in in your quarter four presentation you

06:53did call out that BMW forms about five percent of your current revenue. How are you seeing the

06:58impact of BMW specifically cutting their guidance for this particular fiscal year and within because

07:05we have seen a lot of problems are coming from China specifically where auto components Indian

07:10auto companies makers are not big because there is a lot of focus on Europe as well as the USA.

07:15So how does that just a two-part question on this how is BMW's guidance cut specifically

07:20impacts you because it's a sizable number and secondly on the business outlook itself.

07:27Look for the first one again to be seen how BMW plays out but if you look at our revenue share

07:34which is around about if I remember around about four odd percent you can take a 10-15 percent

07:38haircut so you can imagine the impact it is less than a percentage on a top line in that regard

07:44and that's the beauty of you know the 3c extent that we have followed no country no component no

07:50customer should be more than 10 percent of our sales so reality is something or the other will

07:54keep happening across the world and in our diversity it gets fairly muted out and that's

08:01the benefit of the diversity that we have. We'll however work with the customers to try and find

08:06solutions that's a different matter but in the extreme short term the implications become muted

08:11out. We are right that the industry in general is challenged especially in the western part of

08:19the world having said so again we have multitude of different factors that in some way negated

08:25a lot of you see is getting impacted by EV volumes getting into the zone of

08:33flattish growth or low growth and that is not playing out in terms of the incremental volumes

08:39that were expected to come out of it at the same time we are seeing ice actually getting elongated

08:45so for a player like us which is powertrain agnostic the reality is while one part of the

08:49business may have an implication because we do have EV orders as well we are also seeing extension

08:54of ice orders which then you know is ROC accredited for us. If you think from premonization

09:02trends and all our product categories get benefited by premonization trend because it carries more

09:08content the reality is again that trend seems to continue irrespective and hence you know should

09:16not be having as much of an impact so our content growth should continue to grow. Also if you look

09:21at western Berlin it's been 10-15 percent lower than pre-COVID levels for a fair amount of time

09:27now and hence there is a base level of demand which will likely exist and hence we do not

09:32anticipate a you know a cliff kind of an environment it is more of a muted growth

09:38limit plus minus two odd percent is the way we see that part of the world play out.

09:44On the China front I think while there are challenges that are there and there's a lot

09:50more with the international OEM than with the Chinese OEMs. We do service all of them though

09:55in a very small way to the Chinese OEMs and as and when they were to move into the offshore part

10:00I mean outside China that's the time we will tap into them in a much larger way than where it is today.

10:08India while flattish continues to do well.

SAMIL Completes Fund Raising Of Total Rs 6437 Crore Via QIP | NDTV Profit

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