every five years, company declares targets of revenues,be.acespheremf.com/uploadresearch... ·...

MSSL is the flagship company of Samvardhana Motherson Group (SMG) and is one of the largest auto ancillary company in the

country with ever growing global presence. Company made two large acquisitions in last four years. It has already started

reaping benefits of synergies with Samvardhana Motherson Reflectec (SMR) operations. If Samvardhana Motherson

Peguform(SMP) operations, bigger than existing consolidated operations at the time of acquisition in Nov. ’11, turnaround as planned,

MSSL can report substantial jump in profits as there is no equity dilution for acquisitions. Group turnover was approx. US $ 5.4 Billion

in FY ’13. 82% of total revenues come from outside India with presence in 25 countries across five continents. Major business areas

include, polymers, rear-view vision systems, wiring harnesses and modules. Company has reported stupendous performance since its

listing in 1993. In last 20 years its revenues grew by CAGR of 43.16% and net profit by 37.16%. An investment of ` 2,500 in 1993 in 100

shares of the Company was worth ` 14,66,732/- as of 31st March ’13.

Company is one of the largest manufacturers of automotive rear view mirrors for passenger cars in the world and one of the largest

manufacturers of IP modules, door trims and bumpers in Europe. In India it is largest manufacturer of automotive wiring harnesses

with more than 65% market share in passenger car segment, serving the entire automotive industry. It is also supplies rear view

mirrors for passenger cars and MUVs in India, with nearly 48% share in the segment.

SMP acquisition has enabled MSSL to widen its reach with global automotive OEMs, provided access to new geographies and opportunity

to leverage different customer relationships & offer wider portfolio of products to customers & within the group. Synergies between

group companies will allow the group as a whole to integrate vertically. With increasing level of capacity utilization, additional

capacities and increased inter group sourcing, operating leverage will aid increase in EBITDA margins. SMP operations will benefit

especially from inter group sourcing, as 60% of its revenues are from bought out components.

u Every five years, Company declares targets of revenues, profits, countries of presence, sales from global customers etc. It has already achieved its FY ’15 target of US $ 5 Billion revenues. The management will now be working to improve the ROCE from 17% in FY ’13 to targeted 40% in FY ‘15. Both SMP & SMR operations offer ample scope to improve profitability.u Indian auto component industry faced challenges during FY ’13 with the growth rate squeezing on account of economic slowdown. In spite of current dismal performance, medium to long term outlook for auto industry remains positive as per management, with country emerging as a small car hub and all major global players now having base in India for manufacturing, global sourcing as well as engineering.u The Consolidated performance has got momentum with transformation of SMR, delivering strong improvement in profitability and SMP having started showing significant improvement in operations.u The Company was able to maintain strong profitability despite severe cost pressures due to adverse movement in forex market and volatile commodity markets.u Although car sales in India are slowing down, value of cars being sold are much higher than previous year. u In June ’13 quarter SMR reported a revenue growth of 28%, y-o-y, driven by 73% increase in US revenues. Given that the US truck market is expected to post healthy growth in the second half of the current year, analysts expect the sales trend to continue. u While SMP’s revenues grew 4% y-o-y, its margins came in at 5.5%, higher than the analysts expectations of around 4-4.5%, driven by higher utilization and cost cutting at its loss-making plants. The business, which is loss-making at the net level, is expected to turn around in FY ‘14.

u Company paid ` 2/- per share or 200% dividend for FY ’13, with payout ratio of 31% of consolidated profits.

u Return ratios are likely to improve significantly going forward, helped by healthy performance, strong cash flows and healthier balance sheet. Better operational performance especially in SMR & SMP should see the stock being re-rated from the present valuations of 24.6 x FY ’13 earnings.

Highlights

PE Band

Motherson sumi systems Ltd. is also available on www.balance-equity.co.in

Motherson Sumi Systems Ltd.

Shareholding Pattern as on 30th June ‘13 (%)

BSE SENSEX/S & P NIFTY 20528/6096

Sector Auto Parts & Equipments

Market Cap./Free Float (` Crs.) 14609/5027

Market Price as on 11/10/13 ` (FV ` 1/-)

248.45

52 Week High/Low ` 257.05/147.75

Equity Shares Outstanding (in Crs.) 58.8

P/E Ratio (Times) (for FY ‘ 13) 24.6

P/B (Times) (for FY ' 13) 6.40

EV/EBITDA (Times) (for FY '13) 9.73

ROE (%) (for FY '13) 26

36%

25%

25%

10%4%

SMIL

SWS & HKWS

FII's & Mutual Funds

Public & Others

Sehgal Family



Sehgal family started Motherson Group in 1975 and started manufacturing Wiring Harnesses in technical agreement with

Tokai Electric Industries, Japan (a part of Sumitomo Wiring Systems) in 1983. MSSL was established in 1986 by Samvardhana

Motherson International Ltd. (SMIL) – 36.12% stake - in JV with Sumitomo Wiring Systems Ltd. (SWS), Japan – 25.55% stake. The

relationship between partners has gone much beyond wiring harness business to tooling, designing and components including wires,

connectors, terminals and fuse boxes. SWS is a 100% subsidiary of Sumitomo Electric Industries (Japan). It is one of the global

technology leaders in manufacturing of wire harnesses as well as components and wires. It has the second-highest market share of

wire harnesses worldwide.

After entering in to collaboration with SWS in 1983, Company has come a long way. Today it has 11 JVs with 9 JV partners and

has made 17 acquisitions so far. As a global Tier I supplier, it has presence in 25 countries and it is supplying to top global car makers

with 126 manufacturing facilities. Company has created a network of production plants, design and engineering centers, marketing

offices, global sourcing and logistics hubs to support its expanding customer base on a global level. Presence in both developed and

emerging markets gives the Company a geographical balance and opportunities to grow. It also enables MSSL to source from the best

cost countries. With demand for vehicles declining in most mature markets, global automakers are turning their attention even more

strongly towards the expanding middle class in the BRICS region, the new economic powerhouse.

Background

Group Structure*



SMIL is the principal holding company of Samvardhana Motherson Group. The Company undertakes the provision of design

and manufacturing solutions, mainly to the automotive industry, through subsidiaries and joint ventures with partners in the relevant

fields. It has its operations spread across the globe with over 140 manufacturing facilities and 34 engineering and design centers

with a presence in 25 countries across the world. SMIL has successfully forged partnerships with global technological leaders and has

24 JV partners.

MSSL emerged as one of the world’s leading manufacturers of automotive rear view mirrors with the acquisition of Visiocorp

in 2009 (its JV partner for mirrors since 1996 in India) and the formation of Samvardhana Motherson Reflectec (SMR). MSSL acquired

Peguform in November 2011 to form Samvardhana Motherson Peguform (SMP). SMP is among the largest manufacturers of IP

modules, door trims and bumpers in Europe.

In automotive segment the company supplies to all the leading automobile manufacturers globally. The main products offered

by the company in this segment are Wiring Harness, High Tension Cords, Wire, Plastic Components, Rubber Components, Cockpit

Assembly, Mould for wiring harness components and mould parts, Plastic Molded Components, Brass Terminals, Thermo-Formed

Products, Polyurethane Molded Products, Blow Molded Products, HVAC Module, Compressors, Body Control Modules, Meters Clusters,

Interior Mirrors, Exterior Mirrors, Bumper Systems, Plastic Components for vehicle exteriors, dashboards and vehicle interior trims.

The major customers include the Volkswagen group, BMW, Daimler, Renault Nissan, Ford India, Volvo Car Corporation, Maruti

Suzuki, Tata Motors, Honda Siel Cars India, Toyota Kirloskar Motor and Fiat India.

In non automotive segment, MSSL is one of the largest suppliers of wiring harnesses to manufacturers of material handling

equipments and industrial forklifts. MSSL also manufactures and assembles water purifiers for HUL in India.

Five Year TargetsVision 2005 Vision 2010 Vision 2015

Targets Achievement Targets Achievement Targets Achievement` Crs. ` Crs. US $ Billion US $ Billion US $ Billion US $ Billion

2015 2012-13

Sales 1000 1029 1 1.5 5 4.6Countries of presence 26-27 25Single largest customer ontribution

<25% 27% <20% 15% 20%

Sales from Global customers

30% 29% 60% 70% 70% 82%*

Dividend payout 40% 43% 40% 44% standalone (32% consolidated)

40% of consolidated

32% of consolidated

ROCE 40% 39% 40% 37% standalone (22% consolidated)

40% 17% - Consolidated 35% - Standalone

* Taking SMP sales as sales from global customersSince year 2000 MSSL has set targets for 5 years and has delivered well on those targets.



SMR

In March 2009 , Samvardhana Motherson Reflectec (SMR) acquired global rear view business from Visiocorp plc ( in administration).

SMR has consistently reported good results and has been EPS accretive since inception for MSSL shareholders. Today, the division

contributes 28% share of the total business portfolio of MSSL. It develops and produces a wide range of exterior mirrors from

basic, manually adjusted mirrors to high-value mirrors with integrated systems such as camera-based detection systems, side turn

indicator lamps and assist system signal. With sustained focus on research and development, SMR has over 600 patents and its

innovations include several industry firsts.

It has presence in 14 countries with 20 production facilities and 7,000 full-time employees as on March 31, 2013. The vehicles

range from small electric to high volume passenger cars, sports cars, luxury cars, pick-up trucks and commercial vehicles. It is a

global Tier I supplier of rear view vision systems to all the leading automobile OEMs, including Ford, General Motors, Hyundai Kia, PSA,

Renault/Nissan, Suzuki, Fiat, Toyota, Tata JLR, Volvo, BMW, Daimler and Volkswagen. It enjoys approximately 22% market share of the

total global exterior mirror sales as assessed by the Company. It has production facilities and engineering centers in 14 countries across

the globe. Europe is major contributor in turnover of the Company with 46% share. Revenue contributions from other geographies

were - Asia Pacific 32% (including India 4.3%) and Americas 22%. Exterior mirrors are the Company‘s largest product segment and it

achieved highest output of 40 million in FY ’13.

Synergies with the group have started showing results with increased in sourcing from within the Group. Group companies

provide wiring harnesses, polymer products, tool design and manufacturing, CAD and CAE services and IT services, while using

worldwide network of marketing and project management centers of SMR.

SMR has been expanding world-wide to meet the continuously growing requirements of its global customers. Plants in Thailand

and Brazil have started production in FY ’13. Simultaneously, SMR expanded capacities in Hungary, Spain, and Mexico significantly.

SMR is launching production of mirror components in South Africa in 2013, apart from exports of mirrors from Korea. It has started

exporting to Japan, third largest automotive industry, from China and Thailand. It is also focusing on two largest and strongest growing

markets of USA and China. It is planning doubling of capacities in Michigan, USA. New orders received by the Company should help in

SMR consolidatedYear Ended (` Crs.) FY '11 FY '12 FY '13

Net Sales 5124.9 5665.21 6953.76Within India 254.53 299.6Outside India 5410.68 6654.16EBITDA 359.8 266.9 441.41Interest 33.72 51.89Depreciation 149.3 135.83 185.95

Profit Before Tax 183.3 97.35 203.57

Profit After Tax 108.6 38.48 107.36MSSL's share after adj. MI 54.3 17.83 52.7Profit before Tax after exchange Fluctuations on LT loans

13.79 9.67



utilizing new capacities and increase market share in North America in next 3-4 years. It is also setting up new plant in Chongqing, Central

China which is expected to start production in 2014. Capacities at Langfang (Beijing) and Yancheng have been expanded significantly with

higher vertical integration. With 16 new orders for Chinese plants, SMR expects to increase its market share in next 3-4 years. With its

broadened positioning in both mature and emerging markets, SMR has a more balanced global presence.

SMP

In November 2011 , Samvardhana Motherson Peguform (SMP) acquired Peguform, which was engaged into Module Assembles such as

cockpit assembles, bumper assembles and door trims, catering mainly to German Car makers across Europe, Brazil, Mexico and China.

SMP caters to cars across all segments ranging from the mass segments to premium and luxury segments. Its major customers are Audi,

BMW, Daimler, GM, Porsche, Renault/Nissan, Seat, Volkswagen, etc. The Company consolidated results of SMP, its largest subsidiary

headquartered in Germany, for full year in FY ’13.

SMP’s business is also complementary to Group’s existing polymer processing business. It has an established international

customer-base and manufacturing locations around the world. It also gives MSSL access to advanced production technologies such as

high volume multi-injection processes, oil-based slushing and double-slush processes, foaming, thermo-laminating and highly automated

assembly lines. To make use of operational synergies, SMP has started to source raw materials, inputs such as wiring harnesses, smaller

plastic parts, IT-services, engineering services and tooling etc. from MSSL’s divisions.

The Company has initiated series of actions post acquisition in an endeavor to turn around SMP into profitable venture. These

include streamlining of operations, restructuring of manufacturing facilities in stress, rationalization of costs at other facilities, upgrading

of facilities and focus on removing inefficiencies from the system. improving the operating cash flow, restructuring of management and

identify opportunities for vertical Integration.

During first whole financial year FY ’13, SMP registered turnover of Euro 1,826 Million and EBITDA of Euro 69 Mn. The growth is

mainly supported by increase in revenue in Germany and China. Germany continued to be the major contributor in turnover with 48%

share. Revenue contributions from other regions were - Spain 33%, China 10%, Brazil 6% and Mexico 4%.

SMP ConsolidatedPeriod Ended (` Crs.) FY '12 (130 days) FY '13

Net Sales 4527.88 12784.77

EBITDA 89.08 391.27

Interest 65.4 132.63

Depreciation 84.76 329.87

Exceptional Items 76.37 0

Profit before Tax -137.45 -71.23

Profit After Tax -159.4 -156.98

MSSL's share after adj. MI -79.98 -110.12

Profit before Tax after exchange Fluctuations on LT loans

-29.89 89.22



Polymer business including SMP

With 49 molding facilities across globe in India, Brazil, China, Mexico, Sharjah, Germany, Portugal, Slovakia, South Africa, Spain

and Czech Republic, Polymer division contributed 56% to the Company’s consolidated revenues in FY ‘13. Now it is amongst the

largest plastic component and module suppliers to the automotive industry in Europe and India.

SMP has 25 facilities including 8 module centers and 17 production facilities and 7 engineering centers in 7 countries – Germany,

Spain, Portugal, Brazil, Mexico, China & Slovakia. SMP has 317 patents & has filed for further 51 patents. SMP is an established Global

Tier 1 manufacturer of polymer-based automotive modules specializing in high quality interior and exterior products for automotive

and related industries. SMP is one of the largest suppliers of door panels and instrument panels along with being one of the leading

suppliers of bumpers in Germany and also holds a leading position in cockpit assemblies in Spain. SMP is expanding its business base in

China, Brazil and Mexico to support its customers across the globe.

MSSL Global RSA Module Engineering Limited and Vacuform 2000 Pty Limited - subsidiaries of MSSL in South Africa - specialize

in manufacturing of molded parts, thermo-formed products, polyurethane molded products and blow molded products mainly for

automotive industry. The Company has consolidated its position in South Africa by broadening its customer base and is aggressively

expanding operations by setting up new facility at Durban.

Motherson Automotive Technologies Engineering (MATE), manufactures wide range of injection-molded components, assemblies,

blow molded components, integrated modules and high precision plastic parts especially connectors, fuse boxes and junction boxes for

wiring harnesses. MATE has 12 manufacturing facilities in India spread over Noida, Manesar, Pune, Bengaluru, Chennai and Puducherry.

This division has established itself as a leading module supplier to the car manufacturers in India.

The Polymer division of the Company has registered a record growth of 149% on consolidated basis and 10% on standalone

basis during 2012-13.

Business Portfolio Share



Wiring Harnesses

MSSL is a leading supplier of wiring harnesses to nearly all OEMs in India, and together with its Joint Ventures enjoys more than

65% market share of the passenger car segment in India as assessed by the Company. The customer base of Wiring Harness spans

the entire spectrum of the automotive industry and includes passenger cars and MUVs, two wheelers, commercial vehicles, tractors and

farm equipment, earth moving and material –handling equipment, electrical & electronics and medical systems. There is a high degree

of backward integration for the product. The Company has substantially expanded its customer base globally and also started supplies

of wiring harness of automotive mirrors to various locations of SMR.

The division currently operates with 40 manufacturing facilities & 7 design centers serving a large number of major automotive,

heavy duty and industrial customers worldwide. It is also expanding its presence globally by setting up new plants. The Company

with its subsidiaries and joint ventures has its wiring harness manufacturing and support spread across India, Sharjah, Ireland, Sri

Lanka, Italy, Japan United Kingdom, Mexico, Thailand and Korea. The cost of main raw material, copper continues to be volatile in the

international market, which remains a challenge.

Capex & New facilities

The company incurred capital expenditure of ` 1089.5 Crs. on consolidated basis & ` 308.9 Crs. on standalone basis in FY ‘13.

Significant portion of this expenditure has been funded from internal accruals. This was mainly for expansion of capacities at

Noida, Mexico and Thailand, where production has already started in FY ’13. SMR has started commercial production and supplies from

new facilities in Brazil, Thailand and Pune (India) for mirror manufacturing and vertical integration. Polymer division has set up new

Interior plant in Spain, SMP has set up new facility at Mexico, and incurred major capital expenditure at Brazil for enhancing paint shop

capabilities. In India the new facility with robotic paint shop at Ford Supplier Park, Chennai started commercial production. Company

expects to incur ` 700-800 Crs. of capex during each of FY ’14 & FY ’15 on consolidated basis. Out of this, ` 150 Crs. will be spent on

standalone operations in FY ’14.

Customer wise Sales FY ’13

20%

14%

12%

7%6%

6%

6%

4%

3%

2%

2%

2%

2%

2%

1%1%

11%

VOLKSWAGEN

Audi

Seat

Hyundai

Maruti suzuki

BMW

RENAULT NISSAN

Ford

Mercedes-Benz

GM

TATA MOTORS

KIA

Volvo

M&M

Toyota

Parsche

Others



Financials

During FY ’13, Company’s consolidated sales recorded growth of 72% to reach ` 25,225 Crs. Without considering sales of SMP

Group, which was acquired in Nov. ’11, the Company sales grew by 22% to ` 12,441 Crs. Revenue outside India grew by 90% and

domestic sales grew by 19%. Sales from outside India constitute 82% of consolidated revenues. Consolidated EBIDTA and net profit

grew at 90 % and 54% , to ` 1944 Crs. and ` 593 Crs. respectively. Profit figures are without considering exchange fluctuation loss of

` 162.76 Crs. on account of mark to market long term loans and others.

SMR registered its best performance with a record net sales of ` 6,954 Crs. (Euro 993 Millions – 15% growth in Euro terms), a

growth of 22% over last year. SMR recorded an EBITDA growth of 61% to ` 451.1 Crs. and the PAT grew by 179% to ` 107.4 Crs. In SMR,

Company has order book of Euro 2 Billion plus.

SMP, one of MSSL’s biggest acquisitions, contributed ` 12,785 Crs. ( Euro 1.8 Billion) to consolidated revenues during FY ’13,

which was the first full year of consolidation. Management has been able to improve operational efficiencies which are reflected in

the improved performance of the company. SMP reported 3.8% EBITDA margin and an PBT of Euro 180 Million before adjusting forex

fluctuations on long term loans. On a strong growth track, SMP received new orders worth Euro 2.40 Billion since April 2012. MSSL is

planning to achieve Euro 3 Billion revenues in SMP by FY ’15.

During FY ’13, the standalone revenue significantly grew by 20% to ` 4241 Crs. Sales from outside India constitute 14%

of standalone revenues. EBIDTA registered a growth of 37.6% to ` 794 Crs. and net profit went up by 29.9% to ` 482 Crs., without

considering forex fluctuations.

While overall consolidated sales grew 11% y-o-y in June ’13 quarter to ` 7,082 Crs., EBITDA margins nearly doubled from 4%

Revenue Growth based on Industry (` Crs.)

Consolidated FY '13 FY '12 y-o-y Growth

%Automotive (98%) 24609.8 14150 73.9Non Automotive (2%)

615.5 552.2 11.5

Total 25225.3 14702.2 71.6StandaloneAutomotive(92%)

3908.3 3211.1 21.7

Non Automotive (8%)

333 317.8 4.8

Total 4241.3 3528.9 20.2

Geographical Revenue Growth (` Crs.)

Consolidated FY '13 FY '12 y-o-y Growth %

Customers within India

4567.2 3822.6 19.5

Customers outside India

20658.1 10879.6 89.9

Total 25225.3 14702.2 71.6StandaloneCustomers within India

3661.6 3040.9 20.4

Customers outside India

579.7 488 18.8

Total 4241.3 3528.9 20.2



in June ’12 to 8.8% in June ’13. Consequently, the consolidated net profit, without adjusting for forex losses on long term loans & others,

for the June ’13 quarter was at ` 242 Crs. as compared to ` 209 Crs. in the year-ago quarter.

Company sees good traction in US with Euro depreciating against Dollar, and exports from Europe to US picking up. For June ’13

quarter, US which is about 20% of consolidated sales, grew by 73% y-o-y. Europe, which is about 45% of revenues, grew by 13% and Asia

which contributes about 35% of revenues grew by 15% y-o-y.

Revenue growth for standalone Indian business in June ’13 quarter, which largely caters to the auto industry, has been marginal

due to the tough macroeconomic conditions and the sluggish growth of its customers. Sales growth of 1.6%, y-o-y, was largely led by

exports which grew 22% over the year ago period. EBITDA went up by 10.6% to ` 195 Crs. on back of lower raw material costs and other

expenses. Net profit was more or less flat at ` 128 Crs. due to higher tax provision and lower other income. The firm exports wiring

harnesses to group companies in Europe, its partner Sumitomo and customers in the commercial vehicle segment.

Although in the last two quarters of FY ’13 Company grew by 10% as against 20% growth in full year FY ’13, growth is expected

to pick up over the next few years with higher passenger car production and shift of customers to higher priced cars as well as increase

in share of content per car. Margins, according to the management, are growing on the back of cost cutting and increasing operational

efficiencies in the system.

Consolidated net debt to equity ratio as of March ’13 worked out to 0.62 x. Company has reduced its debt by ` 70 Crs. to ` 4,240

Crs. in June ’13 quarter. Majority of capex is being funded by internal accruals.

Segmentwise Revenue Growth (` Crs.)

ConsolidatedFY '13 FY '12 y-o-y

Growth %Polymer Components * 14204.8 5699.3 149.2Mirrors 6946.9 5661.1 22.7Wiring Harness 3765.1 3054 23.3Rubber/Metal machined & Other products

308.5 287.8 7.2

Total 25225.3 14702.2 71.6* Includes sale of SMP 12784.3 4527.9StandaloneWiring Harness 3182.6 2568.8 23.9Polymer Components 1019.4 930.3 9.6Rubber/Metal machined & Other products

39.3 29.8 31.9

Total 4241.3 3528.9 20.2



Concerns

u Any problem in integrating SMP operations with the group will impact it substantially, as SMP turnover is about 3 times

MSSL’s standalone operations.

u German car manufacturers contribute 75-76% of SMP revenues. Top four customers would now contribute over 53% of

consolidated turnover.

Quarterly Consolidated Financial Results

Period Ended (` Crs.)June '11 Sept. '11 Dec. '11 March

'12June

'12Sept. '12 Dec. '12 March

'13June '13

Income from Operations 2300.17 2338.65 3840.8 6425.23 6388.01 5890.52 6662.59 6675.84 7082.6Inc/Dec. in Inventories -14.94 -14.74 53.39 93.16 -117.54 -95.63 62.35 -152.14 -125.39Cost of materials consumed 1470.41 1468.36 2303.99 4125.82 4256.1 3866.85 4125.61 4361.15 4566.58Purchase of stock in trade 41.14 16.83 17.24 39.35 87.42 33.06 46.37Employee Cost 355.37 367.53 600.25 993.84 1054.41 1004.32 1102.66 1121.32 1195.54Other Exp 290.75 388.25 666.44 675.44 923.46 665.64 775.09 743.15 777.89Total Expenditure 2101.59 2209.4 3665.21 5905.09 6133.67 5480.53 6153.13 6106.54 6460.99EBITDA 198.58 129.25 175.59 520.14 254.34 409.99 509.46 569.3 621.61EBITDA Margin (%) 8.6 5.5 4.6 8.1 4.0 7.0 7.6 8.5 8.8Depreciation 62.15 70.04 104.58 142.87 164.27 166.84 196.12 187.28 183.9Interest 21.15 23.37 41.38 78.95 66 63.3 62.39 57.77 76.57Tax 51.31 36.73 51.81 75.46 70.04 82.11 93.58 137.78 97.68Other Income 3.34 3.3 3.56 3.31 3.82 3.84 4.77 4.52 4.27

Forex (gain)/loss-11.21 74.33 80.43 -92.68 200.9 -67.55 63.91 -34.5 169.32

Net Profit 56.1 76.74 61.81 133.49 158.75 101.58 162.14 190.99 267.73Share of Profit/(Loss) of As-sociates/MI

-2.04 21.85 77.32 -33.84 50.29 -30.57 4.79 -29.69 -25.21

Net Profit after SA 54.06 98.59 139.13 99.65 209.04 71.01 166.93 161.3 242.52Net Profit Margin (%) 2.4 4.2 3.6 1.6 3.3 1.2 2.5 2.4 3.4Equity Capital (FV ` 1/-) 38.75 38.75 38.75 39.2 39.2 39.2 58.8 58.8 58.8

Equity Shares (in Crs.) 38.75 38.75 38.75 39.2 39.2 39.2 58.8 58.8 58.8

EPS (`) 1.4 2.5 3.6 2.5 5.3 1.8 2.8 2.7 4.1

Note:1.Forex Gain/Loss & other exceptional items have not been considered in profit calculations.2.Equity captial in FY ‘12 has gone up as a result of convertion of FCCB & merger of group company.3.Bonus Issue in Oct. ‘12 in the ratio of 1:2



u Most of the joint ventures of MSSL have been prompted and suggested by customers. All major acquisitions by the Company

have also been done at the behest of its customers. The trust and confidence of customers have helped Company not only to develop

organically through new orders, but also develop new products, increasing content per car, enabling Company to grow faster than

market.

u Over the last 20 years, MSSL has transformed from a domestic wiring harness manufacturer to a diversified global manufacturer

of automotive components and a module supplier to the automotive industry. The entities that the Company has acquired over the

years, provide it with access to customers in new geographies, enhance technological capabilities and expand its product range.

u Latest acquisitions by MSSL – SMR & SMP – have very strong research and engineering capabilities and together hold over 860

patents.

u FY ‘13 had its own share of challenges with a sentiment of slowing markets, high interest rates and the sliding rupee among

others. While the overall market was sluggish, USA with 14.5% and China with 9.3% increase, led the growth for light vehicles, whereas

in Western Europe and the U.K. there has been only marginal growth.

u Company is continuously investing in expansion of capacities in various locations. New capacities are being added for wiring

harnesses in Mexico, Thailand and India. In rearview mirrors it is expanding capacities in China. In Spain it has added new capacity

of automatic painting in existing plant. Four Polymers plants are being set up in India and China. These expansions are aligned to

the orders and requirements of customers.

u Company is seeing green shoots in American economy and situation improving in Europe. China operations are expected

to provide a major thrust to business momentum going forward. Second quarter sales are generally impacted due to one month of

holidays in Europe, however, Company hopes to do better in y-o-y terms.

u SMR & SMP put together account for 80% of consolidated revenues. Company sees almost 20-25% growth in SMR and 7-8%

growth in SMP in Euro terms. In recent communication, management confirmed having orders of around Euro 4 Billion plus in SMR &

SMP. MSSL is at present focusing on putting on more capacities to take load off future investments.

Comments



Standalone Financial Results

Period Ended (` Crs.) FY '10 FY '11 FY '12 FY '13

Income from Operations 1758.05 2855.08 3587.46 4321.7Inc/Dec. in Inventories -36.94 -63.89 -10.28 -54.9Cost of materials consumed 1059.12 1701.24 2072.84 2483.82Purchase of stock in trade 89.5 89.09 100.69Employee Cost 164.51 257.25 345.38 439.26Other Exp 264.78 409.13 513.28 558.53Total Expenditure 1451.47 2393.23 3010.31 3527.4EBITDA 306.58 461.85 577.15 794.3EBITDA Margin (%) 17.4 16.2 16.1 18.4

Depreciation 64.58 82.96 117.25 145.33Interest 26.51 32.02 59.75 53.47Tax 88.58 107.04 117.33 180.08Other Income 16.02 26.62 77.48 73.88Forex (Gain)/Loss -55.52 -21.04 43.13 19.68Exceptional Items 18.62 -9.47 10.5 -7.1Net Profit 161.55 256.98 370.8 482.2Net Profit Margin (%) 9.2 9.0 10.3 11.2

Equity Capital (FV ` 1/-) 37.46 38.75 39.2 58.8Equity Shares (in Crs.) 37.46 38.75 39.2 58.8Reserves 677.1 969.4 1236.75 1555.71EPS (`) 4.3 6.6 9.5 8.2Book Value (`) 19.1 26.0 32.5 27.5ROE (%) 22.6 25.5 29.1 29.9Note:1.Forex Gain/Loss & other exceptional items have not been considered in profit calculations. 2. Equity captial in FY ‘12 has gone up as a result of convertion of FCCB & merger of group company.3. Bonus Issue in Oct. ‘12 in the ratio of 1:2



Consolidated Annual Financial Results

Period Ended (` Crs.) FY '10 FY '11 FY '12 FY '13

Income from Operations 6923.98 8371.05 14907.58 25616.96Inc/Dec. in Inventories -51.64 -114.26 116.87 -302.96Cost of materials consumed 4217.52 5259.64 9337.46 16685.99Purchase of stock in trade 89.09 100.79Employee Cost 1131.9 1258.8 2316.99 4282.71Other Exp 931.17 1044.5 2023.61 2906.44Total Expenditure 6228.95 7448.68 13884.02 23672.97EBITDA 695.03 922.37 1023.56 1943.99EBITDA Margin (%) 10.0 11.0 6.9 7.6

Depreciation 260.1 246.49 379.64 714.51Interest 63.49 57.64 164.85 249.46Tax 109.38 188.32 215.31 383.51Other Income 14.36 13 13.51 16.95

Forex (gain)/loss -64.93 -33.71 50.87 162.76

Exceptional Items -82.07 -49.8 -5.5 -14.4Net Profit 129.42 359.41 322.64 599.06Share of Profit/(Loss) of Associates/MI

9.35 -52.12 63.29 -6.16

Net Profit after SA 138.77 307.29 385.93 592.9Net Profit Margin (%) 2.0 3.7 2.6 2.3

Equity Capital (FV ` 1/-) 37.46 38.75 39.2 58.8Equity Shares (in Crs.) 37.46 38.75 39.2 58.8Reserves 1125.46 1560.39 1822.86 2220.55EPS (`) 3.7 7.9 9.8 10.1Book Value (`) 31.0 41.3 47.5 38.8ROE (%) 11.9 19.2 20.7 26.0Note:1. FY ‘13 figures reflect SMP figures for full year, as against for 130 days in FY ‘12, hence not comparable.2. Forex Gain/Loss & other exceptional items have not been considered in profit calculations.3. Equity captial in FY ‘12 has gone up as a result of convertion of FCCB & merger of group company.4. Bonus Issue in Oct. ‘12 in the ratio of 1:2. EPS & BV for FY ‘13 on increased capital.5. Company may incur an additional tax liability for SMR of Euro 4.3 million in respect of years prior to acquisition.6. For SMP Company incurred ` 78.91 Crs. of acquisition & one time costs like due diligence exp., upfront & arranger’s fees etc. in Dec. ‘11 quarter. Goodwill amouting to ` 4.51 Crs. arising on account of acquisition of Vacuform 2000 (pty) Ltd. was also written off during Dec. ‘11 quarter.7. Company has provided for ` 20 Crs. towards impairment of assets in FY ‘13.

DISCLAIMERThis document has been prepared by Consilium InfoRes & Advisors (Consilium) for Balance Equity Broking (India) Pvt. Ltd (Balance). This Document is subject to changes without prior notice and is intended only for the person or entity to which it is addressed to and may contain confidential and/or privileged material and is not for any type of circulation. Any review, retransmission, or any other use is prohibited. Kindly note that this document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Though disseminated to all simultaneously, not all may receive this report at the same time. Consilium and Balance will not treat recipients as customers by virtue of their receiving this report. The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, Consilium and Balance, its subsidiaries and associated companies, their directors and employees are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent Consilium and Balance and their affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our views. Affiliates of Consilium and Balance may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Consilium and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Consilium and Balance and/or their affiliates may have used the information set forth herein before publication and may have positions in, may from time to time purchase or sell or may be materially interested in any of the securities mentioned or related securities. Consilium and Balance may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall Consilium and Balance, any of their affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. Any comments or statements made herein are those of the analyst and do not necessarily reflect those of Consilium and Balance.”

Please send us your feedback on [email protected] or [email protected]

Balance Equity Broking (India) Pvt. Ltd209/10 Mittal Commercia, ‘C’ Wing off Andheri Kurla Road (M.V.Road) MarolAndheri (E) - Mumbai-59. www.balance-equity.co.in

every five years, company declares targets of revenues,be.acespheremf.com/uploadresearch... ·...

Documents