Vijay Mansukhani, managing director of MIRC Electronics, said panel business came down due to Chinese products and free trade agreement will not support Make in India. In an interview with Zee Business, Mansukhani talks about sales expectations and the sale of assets to bring down debt.
MIRC Electronics has posted weak results on all fronts – margin, profits and sales. Can you explain the reason behind this?
Market sentiment is responsible for the decline. The fourth quarter was sluggish not only for Onida but for the entire country and the sentiments were also negative because it was not known whether PM Modi will return to power. In addition, we thought that Goods and Services Tax (GST) rates of 28% on air conditioners (ACs) and television and 18% on washing machines were too high and we must get these down. But now I can see a lot of positivity, which is going to convert into real sales. So it was a blip for full India. Delayed summer and rupee depreciation were other factors that led to decline. Apart from this, the dip was a result of provisioning of the raw materials that were available in our balance-sheet and remained unused for a year. Our air-conditioning segment grew by 100% in the third quarter and remained flat in the fourth quarter. But it has seen a huge growth in the first quarter and this growth is backed by the summers. However, our panel business came down due to the presence of Chinese products. We will have a discussion on the issue with the PM; they are bringing their products from Vietnam under the free trade agreement, which means 0% customs duty while we, the Indian manufacturers, are paying 5% duty on our products. So we have to make a representation to the government and inform them that this free trade agreement is not a good step and it will not support Make in India and result in the decline in job creation.
What are your sales expectations for ACs this summer?
As compared to last year, we will grow by 10-25% in the AC segment in the first quarter. For the purpose, we have introduced a new voice-activated model. For television panels, we are working with Google and Amazon, and they are Google Android TV and Amazon TV. Both the projects will be executed online. Similarly, we are also providing TVs to Reliance and will carry on the same project with other companies as well. Amazon TV comes with a fire operating system (OS) and we will be the only people to have it. So these things will help us in increasing our volume and non-captive manufacturing, i.e, non-Onida, will go to Rs 125 crore from this year’s Rs 25 crore. Apart from this, we have appointed a new CEO in Onida from Ceat Tyres. We will start focusing on rural areas and I think that it will benefit us. We are also looking forward to acquisitions and mergers.
Update us on debt?
I don’t think that we have big debts on our books as we have brought down our inventories and receivables. We will be selling all our non-core assets as soon as there is an improvement in marker conditions. For example, Onida House can bring about Rs 100 crore after it is sold out. Similarly, we have about 20-acre land in the factory that is lying idle, but we are not selling it because we are aware that several foreigners including people from China will approach us to do joint manufacturing. Secondly, we haven’t sold our real estate properties yet because of the market conditions, which are not good at present, but it has the potential of making us debt-free.
Can you provide a timeline by when these non-core assets may be sold?
Non-core assets are dependent on the market and we are not desperate to sell them. We have limits and have got a lot of spare limits of the bank but are not using them. However, a lot of non-core assets will be sold by the end of this financial year, but it will depend on the market conditions. The assets will be sold because they are of no use and selling them will help us put money in the company. It will be used in advertising, the Devil will be back and we will be advertising a lot during the World Cup.―DNA India