MSUMINSEJune 2, 2022

Motherson Sumi Wiring India Limited

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Key numbers — 31 extracted

Rs. 16911 crore

ntlemen. I am pleased to announce the Results. I think you must have already got a copy. We did Rs. 16911 crores of revenues in SAMIL Quarter 4. The EBITDA is about Rs. 1287 crores and quarter PAT is about Rs.

Rs. 1287 crore

e already got a copy. We did Rs. 16911 crores of revenues in SAMIL Quarter 4. The EBITDA is about Rs. 1287 crores and quarter PAT is about Rs. 122 crores. Please take this under the circumstances of very tough

Rs. 122 crore

ores of revenues in SAMIL Quarter 4. The EBITDA is about Rs. 1287 crores and quarter PAT is about Rs. 122 crores. Please take this under the circumstances of very tough quarter, rising costs everywhere and yet

Rs. 1662 crore

h very impressive colorful results with that because India is doing very well with revenues about Rs. 1662 crores which is up almost 14% and the EBITDA is up almost 31% quarter on quarter. So, I think we can ea

14%

with that because India is doing very well with revenues about Rs. 1662 crores which is up almost 14% and the EBITDA is up almost 31% quarter on quarter. So, I think we can easily say that India is k

31%

very well with revenues about Rs. 1662 crores which is up almost 14% and the EBITDA is up almost 31% quarter on quarter. So, I think we can easily say that India is kind of a shining point in the wh

rs,

w material and consequent raw material prices that, for example, they are getting from our suppliers, etc. So, these are all being shared, and we are working on a good plan to work with the customers

Rs. 1611 crore

te on the same. Yes, the second question was on the standalone business for MSS. We have reported Rs. 1611 crores of revenue and 18.2% margin. I just wanting to understand what are the one offs here. Are they b

18.2%

question was on the standalone business for MSS. We have reported Rs. 1611 crores of revenue and 18.2% margin. I just wanting to understand what are the one offs here. Are they both in top line as wel

65 crore

ious quarter. The one off that you are seeing if you see the slide 13 it has a note talking about 65 crores of pretax income, which is one off which is in relation to the nine-month rental and management

Rs. 55 crore

t, but I am saying is it in revenue it is in other operating income, where do we account for that Rs. 55 crores. Kunal Malani: It is an operating income. Kapil Singh: Okay other operating income that we

Rs. 55 crore

ght. So, the underlying margins, to understand the underlying margins here, we need to adjust the Rs. 55 crores. Is that the right way? Kunal Malani: At an EBITDA level that is true at a post-tax level, it

Guidance — 20 items

Laksh Vaaman Sehgal

“So, these are all being shared, and we are working on a good plan to work with the customers as to how these can be mitigated moving forward.”

Raghunandhan NL

“So, there are a lot of things which go into the whole system and that will be vehicle maker by vehicle maker in that sense, but so, it is up to us.”

Kunal Malani

“Going forward that will be the new reporting construct that we will go from next quarter onwards.”

Jinesh Gandhi

“So, just a clarification on what Pankaj mentioned we are present in two wheelers, PVs and CVs that is on electric side, or this is in general, and electric will be the presence will be different as of now.”

Joseph George

“We should think of a quarterly run rate of say about 22 crores or there about 7- 8 more it can go up or down, but is that a number that we should think of going forward?”

Amyn Pirani

“Okay and going forward, I mean, obviously, this year's production growth should be higher.”

Amyn Pirani

“What is the kind of commodity cost pressures that you are seeing going forward and, broadly, should we expect margins to move higher from here into the next year?”

Amyn Pirani

“G N Gauba Well, first of all, we do not give guidance for the short term neither on the EBITDA margin.”

Arvind Sharma

“G N Gauba I mean, you have MSWIL balance sheet and P&L account there is no outflow of dividend, so the dividend is proposed, which will be paid in the financial year 2022 to 2023 to all the shareholders including public shareholder.”

Mumuksh Mandlesha

“So, over the medium term, can Motherson also diversifying into industrial wiring business or any other segment sir?”

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Risks & concerns — 12 flagged

One particular thing that you must note is that this is a work in progress kind of a quarter, because tremendous amount of costs almost on a weekly basis have gone up for some reason or the other depending upon the geography that you are looking at and that, of course, is a big challenge for us, but also the segregation of two companies the legal costs now that the thing outside have been written-off in this quarter.

— Vivek Chaand Sehgal

So, that is why you are seeing more impact of the energy costs over there and definitely these costs are being transparently shared with our customers and we are asking them for support during these tough times because these are all costs that are really out of our control, including not just the energy costs, but also the raw material and consequent raw material prices that, for example, they are getting from our suppliers, etc.

— Laksh Vaaman Sehgal

On Motherson Wiring my first question on the EV wiring harness, can you give some color and update on how many customers does the company has, and to which all segments it is supplying as of now, what has been the increase in content per vehicle in EVs versus IC if you can share and also is there a risk to this increase in content because of technologies like Flex PCB?

— Raghunandhan NL

So, you can either get unnecessarily trapped into some questions and what is important is for us to work in partnership with customers, as we have said that the environment still remains volatile.

— Amyn Pirani

When you think I know it is difficult to fathom right now, but when you think.

— Arvind Sharma

So, we cannot do it with a breakneck kind of this thing over there, we have to be cognizant of the fact that everybody is facing a challenge.

— Vivek Chaand Sehgal

But yes, we are all trying to work under the difficult circumstances.

— Vivek Chaand Sehgal

So, very difficult to give a clear answer to you.

— Vivek Chaand Sehgal

But if it is beyond a certain limit which is happening with the volatile movement of raw materials, it is a discussion to be had with the customer.

— Laksh Vaaman Sehgal

So, frequently, the margin pressure should start subsidizing.

— Chirag Shah

So, the sequential pressure starts subsidizing?

— Chirag Shah

Actually, people are thinking that the world is doing nothing, but please believe me even plants which had been given up as bad have been raised, started, lot of things are happening, but the people are not talking about which plant what is happening and all that because the competitor gets that information that becomes at risk for tougher for obvious business reasons.

— Vivek Chaand Sehgal

Q&A — 13 exchanges

Good evening. My question is related to SMP and SMR margin. What we notice is that you have called out on slide number 15. The impact that has come from high labor costs and high energy prices and inflationary costs, but the impact is much larger in case of an SMP than in case of SMR. So, if you could give some more color as to how much is the energy cost that that is there for SMP and SMR and how much cost inflation we have seen and what are the kinds of conversations we are having with customers in these unprecedented cost inflation time to pass on these costs because what I understand histo

Vivek Chaand Sehgal

Thanks Kapil. You are right. It is more pronounced in SMP because SMP has more plants in Germany and the affected areas, while SMR is that much more in the non-affected area, and while I am not going to get into it politically, whether it's correct or wrong, but Hungary continues to take precedence, they are continuing with their contract, while the whole EU is trying to get away from the Russian gas and diesel, and all those particular things are known to you. So, yes, SMP has to bear the brunt of it more than SMR. But look, these are things that have been taken over by Vaaman, so Vaaman can

Vivek Chaand Sehgal

So, you specify you are talking about SAMIL, or you are talking about. Motherson Wiring. Pankaj Mital Just to brief you, if you are talking only about India markets, we are doing both India and outside India. India market as we had explained in the last call, so we are doing all segments. We are Samvardhana Motherson International Limited and Motherson Sumi Wiring India Limited May 26,2022 doing two wheelers. We do also passenger cars, and were needed for the commercial vehicles as well over the machines, etc. So, that is what we do and in terms of content in the EV side much more depends on t

First couple of clarifications with respect to the console numbers which we have declared. So, what is the difference between the SEBI reported number and PPT reported numbers which are on the last page. May be Kunal can share, threw some light on that?

Kunal Malani

Jinesh the SEBI reported numbers as for the accounting standard, where we have continued and discontinued operations, so, it is references against continued operations for the past year. For the current quarter obviously, the merger has been given affected as well. So, when you look at the other one, the performer one that is where the merger and the demerger has been affected for all the four quarters. So, it is for reference to draw like comparison, but the main presentation is SEBI reported numbers. Okay, so, for the fourth quarter both the numbers should be similar if not the same. From wh

I have a few questions on some of the numbers that were discussed in some time back which is firstly the Rs. 65 crores payment to Motherson Sumi, or rather SAMIL? So, what I want to understand is this as you mentioned that this is pertaining to three quarters. So, does it mean that going forward? We should think of a quarterly run rate of say about 22 crores or there about 7- 8 more it can go up or down, but is that a number that we should think of going forward?

Vivek Chaand Sehgal

Yep, ballpark that would be right the number would obviously have variations to it. But yes, ballpark that should be. Understood and which line item of the SAMIL reported format is this reflected in MSWILs results just to understand the corresponding line items. On the MSWIL side and it is also tried to clarify on footnote that the management fee goes before EBITDA as an expenditure as other expenditure and when we are talking about the renters of the factory premises which are taken on lease from SAMIL that will that gets accounted for under Ind AS 116 or whatever is the relevant standard, wh

I just needed one clarification. So, if it is possible to be please share the gross block figure for both FY21 and FY22 in regards both the entity SAMIL and MSWIL? Samvardhana Motherson International Limited and Motherson Sumi Wiring India Limited May 26,2022 Kunal Malani It will come out in due course as the annual reports are sent out as well.

Saurabh

I just need the gross blog headline number that is it. Is that handy right now. Kunal Malani Unfortunately, not right now. This we can connect it offline. No worries. Thank you.

So, before that question, I had a clarification. So, when I looked at 9-month MSWIL and full year MSWIL for FY22 for revenue and raw materials, these are like to like right, there is no adjustment that I need to look at. G N Gauba That is correct.

Amyn Pirani

So, if I look at full year or rather 9 months to full year, your gross margin is broadly flattish at a time when obviously raw materials have gone up quite a lot. So, is it because you have been able to get the correction from customers at a faster rate or have you done any specific cost cutting some efficiency that your end. Can you help us understand actually this is a very, very flat gross good outcome in such an environment? G N Gauba I think Amyn, you are absolutely right, our teams are working very hard, and you have to give due credit to them because there have been all adverse situatio

Sir two questions, one on the other income on the SAMIL side seems to be very high. So, what is the reason for that? Samvardhana Motherson International Limited and Motherson Sumi Wiring India Limited May 26,2022 Kunal Malani That is largely on account of the dividends that we have received during the year.

Arvind Sharma

And would it be on an annual basis its high a bulk of it coming from MSWIL. Kunal Malani No it does not come from MSWIL. I am presuming you are referring to 711 and on slide 13, you could also see in Quarter 4 we have received 264. G N Gauba I mean, you have MSWIL balance sheet and P&L account there is no outflow of dividend, so the dividend is proposed, which will be paid in the financial year 2022 to 2023 to all the shareholders including public shareholder. Right sir that is why just wanted if you could because standalone other income is almost Rs. 384 crores on an annual basis it is up alm

Sir few questions for Motherson Wiring, so in the revenue clarification there are item others in revenue. To which segment does it cater sir? So, in the Motherson wiring, there is an item does in revenue breakup. So, which segment does it cater sir?

G N Gauba

Yes, this could be to any of the segments which are otherwise described, because this is more to the Tier-2 as well as components to the industry. So, some part could relate to Passenger car some part to commercial vehicle. Samvardhana Motherson International Limited and Motherson Sumi Wiring India Limited May 26,2022 Sir globally Sumitomo has a strong presence in industrial wiring business. So, over the medium term, can Motherson also diversifying into industrial wiring business or any other segment sir? Industrial wiring business sir. What do you classify as industrial wiring. To non-autonom

Sir my question is on the wiring business India. Sir If I look, if I were to look at its performance, clearly, you have outperformed the industry by a very healthy margin. Just wanted to understand the contours of the same, if you can just probably help us how much it come from content increase, how much it come from pricing increase? Clearly, because the margins also show that you have taken healthy pricing increases. So, if you need this help us maybe break that up or understand your revenue performance better. I have one more question on margin. G N Gauba I am afraid we do not have such kin

Vivek Chaand Sehgal

And I can I support you with one line. We also do not have so many people bisecting and dissecting and all these particular things happening and that is how we save money, and we focus on people act positively to the production, the quality, and these kinds of things. So, we are not a research organization, we are a production company, we focus on what delivers value to the bottom line. So, I hope that could also help you. I understand that I just said that, in a declining environment, your Company is growing quite well. So, I was just trying to understand better on that. We never waste a cris

First question is on the consolidated leverage, when he has called out Rs. 2000 crores of working capital impact and on the leverage. So, how should we look at this number over the next say one year. So, OCF minus CAPEX, and plus any recovery on the organic side, how should fit this number trend over the next one or two years. Kunal Malani Ronak the Rs. 2000 crores of working capital that we called out was largely to highlight the fact that, given the supply chain disruptions that we are seeing across the globe, we are required to keep a much higher level of inventory, we are also required to

Ronak Sarda

Couple of questions in the Motherson Wiring part. Sir just if you can just help us understand on the yen exchange rate, so, are we already seeing benefits of the yen depreciation or are these are also on a three-to-six-month contract? How does this impact our financial? As far as copper and Japanese yen is concerned, that is a pass through for us. Okay, with the lag or whatever those terms are? Okay and sir any indication, I mean, MSWIL will continue to generate a very strong free cash flow. So, how do we intend to deploy cash? Given we have a pretty long-term agreement with SAMIL on the compo

Yes, thanks for taking the question and good evening to team. Sir my first question is regarding the MSWIL, on the wiring harness side, you did mention that you are committed to investing in India and you have seen that, your competitors, maybe, in the current EV wiring harness, maybe the high voltage wires, a lot of components would be imported. So, how different are we versus the competition in terms of our localization content for the high voltage wires? We understand the connectors are one of the major components over there and would we be producing it in India and hence, our cost structur

Vivek Chaand Sehgal

Let me let me just help you out here, the customer is going to decide based on the economics, think about it, if you go and blindly go and copy the components since I am making it here, I think it is a big, big mistake, at the end of the day, you need the volume, otherwise, you are better off importing it. So, the tools by itself can cost you crores of rupees. So, it has to be a maker by decision that we have to do and that is the reason why at this moment, we are not really going for this because the volume for cars is very small. The other gentleman was also asking about electric cars and th

I have a question on SMRPBV and PKC product. Sir just wanted to understand what are the raw materials or the cost contract that we have are generally annual on nature and but obviously, with excessive momentum you may have been negotiations with the customer, right? That is the nature of contract team, SMRPBV and PKC.

Vivek Chaand Sehgal

I do not know where you are taking this up from but look, if the pressures are unprecedented, then definitely whatever we have to do we have to do. But again, I would let Vaaman answer this particular question because you are talking about SMRPBV or SMP and you are talking about PKC. So, PKC great Pankaj will take care of that, and great Vaaman will take care of SMP. So, on PKC generally, us like most of the contracts for copper would be six monthly or quarterly and similarly for some of the countries where there are currency risks for the same is for the currencies as well. And for SMP sir. A

Thank you all very much. I think what is important is to understand according to me, this is a work in progress quarter, you will see the positive effects of this coming in the next quarter and quarter after that and it will be going on for some time to come. I think it needs about 3, 6 months to a year to really settle down, but till that time, it is a challenging environment. But in Motherson, we always say when a challenging environment is there that will be more acquisition opportunities are there. So, I hope all the wonderful companies that you admire are also falling Samvardhana Motherso

Management

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Speaking time

Vivek Chaand Sehgal

Moderator

Ronak Sarda

Jinesh Gandhi

Kunal Malani

Chirag Shah

Pankaj Mital

Kapil Singh

Laksh Vaaman Sehgal

Raghunandhan NL

Opening remarks

Vivek Chaand Sehgal

Thank you. Good afternoon. Good evening, ladies and gentlemen. I am pleased to announce the Results. I think you must have already got a copy. We did Rs. 16911 crores of revenues in SAMIL Quarter 4. The EBITDA is about Rs. 1287 crores and quarter PAT is about Rs. 122 crores. Please take this under the circumstances of very tough quarter, rising costs everywhere and yet the Company has been able to mitigate the challenges. An amazing job has been done by the people in containing the costs and also getting price increases. One particular thing that you must note is that this is a work in progress kind of a quarter, because tremendous amount of costs almost on a weekly basis have gone up for some reason or the other depending upon the geography that you are looking at and that, of course, is a big challenge for us, but also the segregation of two companies the legal costs now that the thing outside have been written-off in this quarter. So, those are the one-time expenditures. But it also

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