Corporate Reports

Published: Dec 29, 2021
Updated: Dec 29, 2021

‘Marshalling’ a post-Covid comeback - Simmonds Marshall

Hit hard by the collective impact of the economic slowdown and Covid-19 during the last 24 months, Mumbai-headquartered Simmonds Marshall, a six-decade- old manufacturer of a range of specialised nylon insert self-locking nuts and other special fasteners, is on the path to revival. “Not only is the worst over but the company is also on the comeback trail and has started doing very well. What is more, the prospects ahead are all the more promising,” maintains Navroze Marshal, the dynamic Managing Director. He adds, “With the sharp drop in business activity, what was a profit-making company all these years has plunged into the red. However, things have started changing for the better as demand for the company’s products, which had suffered a serious setback on account of the sudden and prolonged countrywide lockdown, has started reviving.”

Even before the full effect of the Covid pandemic could be felt, Simmonds Marhsall, the speciality auto components maker was hit by the country’s economic slowdown, with its turnover plummeting from Rs. 181.78 crore in FY19 to Rs. 141.69 crore in FY20, and PAT of Rs. 6.77 crore correspondingly turning into a loss of Rs. 7.71 crore. But following the Centre’s ‘unlock’ tonic and the upswing in the auto industry, Simmonds’ sales graph is also climbing. Managing Director Navroze Marshall is upbeat about the sales-boosting potential of a new integrated plant near Pune, and is also on an employee-friendly HR drive to get the best out of his workforce.

The widespread economic slowdown, which led to a fall in demand for automobiles, adversely affected the performance of Simmonds. During the last five years, the sales turnover of the company, which had advanced from Rs 136.13 crore in fiscal 2015-16 to Rs 181.78 crore in 2018-19, declined to Rs 141.69 crore in fiscal 2019-20. Correspondingly, the net profit, which had improved from Rs 4.94 crore in fiscal 2015-16 to Rs 10.05 crore in fiscal 2017-18, dropped to Rs 6.77 crore in fiscal 2018-19, and the company plunged into the red in fiscal 2019-20 with a loss of Rs 7.71 crore. This forced Simmonds, which had been paying good dividends for the last few years – 25 per cent for fiscals 2014-15, 2015-16, 2016-17 and 2018-19 (it paid a dividend of 35 per cent for fiscal 2017-18) – to skip the dividend altogether for fiscal 2019-20.

With the impact of the pandemic receding, the company has started doing well again. The automobile industry in general, and the two-wheeler and commercial vehicle segments in particular, have started putting up a highly encouraging show and there has been a steady and sustained rise in demand for Simmonds products. As a result, the total sales turnover, which had slumped from Rs. 31.62 crore in the quarter ended March 2020 to Rs. 7.37 crore in the quarter ended June (the worst period of the lockdown), shot up in the quarter ended September 2020 to Rs. 33.10 crore. However, the bottomline remained in the red. After suffering a loss of Rs. 7.71 crore in the year ended March 2020, the company incurred a loss of Rs. 9.37 crore in Q1FY21, which came down to Rs. 2.47 crore in the Q2 ended September 2020. “Though I expect the current fiscal to end with a small loss, things will start changing from the Q1 of the new fiscal year starting from April 2021. Next year, we hope the company will earn sufficient profits to enable the management to re-enter the dividend list once again,” says an optimist Mr Marshall, with a glint in his eyes.

Prospects ahead are highly promising for the company. According to Mr Marshall, the demand for the company’s products is on the rise as the automotive industry in general, and two-wheelers as well as commercial vehicles in particular, have started moving into a high gear. Besides the three major customers – Honda, Bajaj and Ashok Leyland — which lift around 35 per cent of the company’s production, the company has started approaching other leading auto sector players, including Tata Motors, and the response has been quite encouraging.

Says Mr. Marshall, “We expect a decent performance for the financial year 2020-21. Though our business was impacted brutally during the first half of the year, with the gradual phasing out of the lockdown the company is already seeing a significant revival in overall demand and expects this trend to continue in the coming quarters, and to a limited extent thereafter.”

Besides the external improvements (modern factory, new furnace, automation, etc.), the company is paying extra attention to internal improvements also. Reveals Mr Marshall, “We have introduced internal control systems which are designed to ensure the reliability of financial and other records and accountability of executive action. The internal control systems are reviewed by the top management and the audit committee of the board, and proper follow-up action is ensured whether required. Regular audit committee meetings are held where statutory auditors as well as internal auditors participate, and internal audit reports are discussed and reviewed. An internal audit of the transactions of the company is carried out and the company is planning to enlarge the scope of work of the internal auditors.”

UPSKILLING STAFF

Insisting that “our management believes that human resources are the company’s key assets”, Mr Marshall adds, “The company’s HR policy focuses on developing the skills and competencies of all the employees, facilitating team work and total employee involvement, providing a happy work environment for the employees and support to their families, and remaining a socially responsible company contributing to society.”

Pointing out that “learning is given the utmost importance in the company”, Mr Marshall adds, “Training programmes focus on improving employees’ current skills and competencies as well as developing them for their future roles as part of their career development. The company ensures overall development of every employee and all inputs are provided to reach the expert level of their skill and competency. HR processes are aligned to make employees feel that they are a part of the company family. The company has a platform for employees to voice their opinions and make suggestions to improve the working environment. The company maintains regular communication with employees to make them feel connected with the company and perform their jobs most effectively.”

With positive changes in the external and internal operations, Simmonds has re-entered the growth path. The company has started humming with activity, and with rising demand it is sure to do quite well in the coming quarters. Shareholders can expect good returns on their investment in the company from the next year onwards.