Ladies and gentlemen, good day and welcome to the FY25 Results Conference call hosted by Samvardhana Motherson International Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded, and I'll hand the conference over to Mr. V. C. Sehgal. Thank you, and over to you, Mr. Sehgal.
Thank you. Good evening, ladies and gentlemen. Thank you for joining the Results Conference call of Samvardhana Motherson. I'm pleased to announce that the board has approved the results for the quarter three of financial year 2025. Some of the key highlights are our diversified and resilient business model continues to deliver steady performance in a challenging business environment. We are getting continued support from our customers in navigating through these short to medium-term challenges. I am pleased to announce that our leverage ratio has improved to 0.9. This will be the lowest level in the last 10 years, highlighting our robust balance sheet, which will support future growth opportunities. Our first month for the Consumer Electronics business has operationalized during the quarter. We're expecting a sharp ramp-up during the ensuing quarter, which will further strengthen our non-automotive play.
We continue to invest in opportunities that could support our future growth with careful consideration. I would like to now hand over to Vaman and the team to provide a walkthrough and business highlights and insights for the quarter. Over to you, Vaman.
Thank you, Baba. Good evening, ladies and gentlemen. SAMU reported robust quarterly revenues of INR 27,666 crores, reflecting an 8% year-on-year growth. EBITDA stood at INR 2,776 crores, up 13%, and PAC reached INR 879 crores, marking a solid 20% increase from normalized level and 62% on the quarter basis. On the revenue side, business continues to grow at a faster rate than the market. The auto industry degrew by 1.2% on a year-on-year basis, and excluding China, it degrew by negative 4.8%. Against this, SAMU registered a 7.5% growth. On profitability, we have delivered a robust performance with a 10% EBITDA margin, driven by our focus on operational and cost control measures. SAMU continues to demonstrate resilience and stability, underscoring the strength of our well-diversified business model. This steady performance is particularly notable given the weak production environment.
The industry remains in a transitional phase as global OEMs continue to navigate the shift to clean mobility and evolving consumer demand trends. This is further exacerbated with shifting geopolitical landscape and trade dynamics. The shift of production to EV and hybrid platforms continues at varying growth rates across different regions, which we have shown on slide seven. While premium OEMs are recalibrating their strategies to introduce new models across platforms and segments, the mass-market manufacturers are expanding their offerings with a slew of new launches across multiple powertrains. I would like to iterate that Motherson is a powertrain-neutral company with more than 95% of our product portfolio being engine-agnostic. Just to give a sense of the broader business environment, interest rates stayed mostly steady. Commodities like copper experience price volatility, and energy prices in Europe are on a worrying upward trend.
There are indications of supply chain stabilization and logistics cost decrease, supported by port decongestion on key trade routes. This development should help us to release working capital by the end of the year. You can see more on this on slide five. We've had many inquiries about trade tariffs and rollbacks, and we would like to provide you with an update. While different countries are working through the trade agreements, the implications in the global auto industry are yet to be fully understood. Motherson has a globally local strategy with our manufacturing plants in close vicinity to our customers. All material flows like commodities are typically pass-through, and so they have customer-nominated parts. Any change in tariffs on these parts would have a pass-through effect. For the remaining procurement, we work actively to localize, and hence the indications, if any, for Motherson will be very limited.
Further, as tariffs are an industry-wide issue, these would ultimately be repriced by the customers. In the medium term, for a global player like us, it would be a better place to optimize our production in more favorable jurisdictions and thereby provide a faster and unique solution to the customers. However, it's early days to evaluate how the trade dynamics shape us in the future, and we'll work with our customers to find mutually beneficial solutions. Moving back to the results, during the quarter, we have operationalized two greenfields, notably one in the Consumer Electronics that Mahender spoke about before, and one in Precision Metals and Modules. Further, an additional six are expected to come on stream in the ensuing couple of quarters. More on this in slide 14. Motherson has achieved a new milestone in the non-automotive play with the start of production in the Consumer Electronics plant.
While the first batch of deliveries went out in November, we have significantly ramped up serial production in January, and this will start reflecting in the emerging businesses from next quarter onwards. The industrial division has also made significant inroads overseas with the start of construction of its first greenfield outside of India. This will serve as a nearshore production base to European OEMs and open doors for new opportunities in and around the region. We have further extended our collaboration with Honda with the acquisition of Ushin, a global metal and machining specialist having a footprint in nine countries and a revenue of $412 million, and a healthy margin profile of about 8% based on FY2024 numbers. The interesting piece of this asset is that all core high-value-added capabilities such as heat treatment, carburizing, special precision machining are all in-house available.
With Akshini Tech, we get access to manufacturing footprint in new countries like Vietnam and Indonesia, further increasing our exposure to emerging markets and related growth opportunities. Akshini Tech's capabilities are complementary to our capability set. The company resides in India and Mexico, and hence we now have a global potential to pivot and serve more customers across industries as we start to unlock some of these synergies. On the balance sheet side, effective net debt for the quarter is approximately $10,500 crores versus $11,500 crores in September 2024. This is with the net leverage ratio now under one at 0.9 times. You can see more on this on slide 11. We continue on our deleveraging trajectory with a much stronger balance sheet geared to go after large opportunities. During the quarter, we also fully utilize the QIP proceeds to pay down debt.
The full impact of interest cost reduction should be visible from Q4 onwards. To cope with the changing market dynamics, we have further recalibrated our CapEx estimates for FY25. We are now estimating to have a reduced spend of about $4,500 crores ±5% versus the earlier guidance that we gave you of $5,000 crores ±5%. The CapEx spend for growth, primarily in emerging markets, remains intact on a four-year basis. You can see more on this in slide 13. Finally, I would like to report that the consolidated growth based on the nine-month FY25 growth has improved to 18% from 17.3% as reported in the last quarter. As we move towards the end of the year, the teams are working relentlessly on core operations and working to deliver some working capital by the year-end. This should further enable improvements in our growth calculations.
Thus, in a weak production environment, we have been able to deliver a steady and resilient performance. We are engaged with our customers for sharing some of the pressures related to changing business dynamics. While the environment is what it is, volatility also creates opportunities for multiple things. It gives us the opportunity to add issues in the supply chain and pain points for customers and the assistance provider across our industries. The M&A pipeline is running hot with these in various stages across automotive and non-automotive businesses. With this, I conclude my remarks, and I have Pankaj Mital, Rajat Jain, and Kunal Malani on the call, and we'll be happy to take your questions that you may have. Thank you, and over to you, Operator.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Aditya Chhabra from Investec. Please go ahead.
Hi, yeah. Thanks for the opportunity, and congratulations on good numbers, resilient numbers in a tough environment. My first question is on our emerging business. It would be great if you can give a break-up of revenue of the emerging business as we had given in Q1 presentation.
Kunal, you want to take that?
Yep. Aditya, we give that in every yearly basis, so you will see that next quarter.
Okay. And Kunal, if on the consumer business, how should we expect ramp-up next one to two years? Any broad numbers you can share with?
Broad numbers, as you again said, it's a fairly confidential piece, but needless to say, I think the ramp-up is extremely significant. It will be, I don't know, a Burj Khalifa kind of a ride-up.
Okay. That's good to know. And any update on the JV investment? So our JV partner was supposed to infuse equity with 10% stake and scaling up to 49%. Any update on that, Kunal?
Kunal, I can take that. I think they've just received the approval for the equity investment, and they are just in the final stages of getting their internal approvals for the same, and hopefully, by next quarter, we'll be able to give you more color on that, but it seems that they've got all the approvals to be able to go and make the equity investment.
Perfect, perfect. My final question is on the wiring harness business. Pretty impressive margin expansion despite weak revenue print. So if you can help us understand that, what drove this expansion, and should we expect this margin as more sustainable going ahead?
Pankaj, you'll take this.
Basically, we have been working throughout the regions to optimize and to improve, and the focus is mainly on human resources. As you know, Motherson does well with its human resources and its capital, so we have been improving on that. Plus, while markets have been choppy and markets have been down in some of the regions, we did get we mentioned about two years ago that we had received additional orders to get started again, and therefore we could balance the portfolio and keep our facilities optimized. So that's the main reason as to how we continue on this path. Really, we can't predict how the markets continue to behave as we have quite well diversified in different markets. As you know, the commercial vehicle markets have been at a low number in Europe.
We do believe that in the coming quarters, they are inching upwards, hopefully. The U.S. markets have been quite stable, and China is still a little bit lower and still surviving on exports also from China.
Okay. Sorry, just to summarize, I mean, you mentioned that there was a favorable product mix as well as geographic mix along with cost saving. Is that right, Pankaj?
Yeah. Basically, it's been that the kids have been looking hard since everything went off each other after COVID, and it's a human resource-oriented business. We have been improving our facilities, improving our productivities and efficiencies, and that's how we have also insourced metal products, which also supports the customers. So we do share the benefits with the customers also when we insource, and those benefits are there reflected in us as well.
Perfect, perfect. That's it from my side. All the best.
Thank you very much. Participants, you may press star and one to ask a question. Next question is from Kapil Singh from Nomura. Please go ahead.
Good evening, sir. Congratulations for a resilient performance. My question is on emerging businesses. We started this consumer electronics plant, but emerging business revenue has seen a bit of a dip in December quarter. Also, the margins are holding pretty steady. Usually, when we start the new plants, sometimes there is an impact coming on account of that also. So if you could help us understand seasonality of revenues, and also if there could be some impact on margins for the startup with itself, we are making good margins in the consumer electronics division, and by when do you expect to hit optimal performance in that division?
Kunal, will you take this, please?
Yep, sure. So Kapil, I think on the emerging market side, you're right that there has been a slight decline on the revenue front when you look at it from a quarter-on-quarter basis. As you can see, most of the markets on the automotive side are. Sorry, most of our emerging market businesses are in the Indian automotive side, and that piece of the puzzle has shown a decline in both commercial vehicles, particularly in commercial vehicles and businesses associated with it, like heavy equipment, machinery, etc. I think that part of the business has been on a decline in India, and that's how that impact is visible. Having said so, areas like aerospace continues to grow, areas like our IT business continues to grow, and consumer electronics becomes the cherry on the top in some way. It's coming, however, for only a month in this three-month period.
So as we look forward, I think the ramp-up is going to be steep, so you should be able to see that emerging market portfolio as a whole will continue to be showing the maximum growth among the portfolio set that we have. On top of it, Akshini Tech is also going to get added to this portfolio. That's a sizable piece where our corresponding assets are residing in India and Mexico, and then the idea is to split between India and Mexico and the nine facilities that Akshini Tech has. And there might grow both not only automotive business, but their capability sets are equally good for the non-automotive part, and the aim will be to use that capability set and grow both the auto and non-automotive part. So I can only say look out for the emerging market segment as we move to the ensuing quarters.
Yeah. No, thanks for that answer. I also wanted some color on consumer electronics division. How much time does it take before it hits optimal profitability profile for the first month?
It's been two months of production. I think where things stand, things look reasonably more stable than, frankly, what we anticipated. So I think things are looking good. Much depends now on the customer also and how quickly he or she wants to ramp up production. We are ready. Our new facility, the second facility, will also come up by quarter two of next year, and then the larger one will come in beginning of FY 2027. So putting all of it together, I think the ramp-up is going to be steep, obviously subject to customer support coming around the way.
Sure, sir. And one more thing on your interest cost, if you could give color here. It's been still a bit on the higher side. Are there any one-time elements here, and how do you think about on a normalized run rate at current level of debt?
Yes. So I think when you look at debt, some of the pieces which are over and above the debt piece which resides in the interest cost is one is forex losses. This time, on account of the volatility seen in a variety of different currencies, there is around about, I think, INR 35 or 40 crores of forex losses that reside into the interest cost bucket. Secondly, you're aware that in September we had done cumulative convertible debentures. The accrual for that, while I don't think the company needs to ultimately pay for it, but from an accounting perspective, we are accruing that at 14% return, and that is adding another 30-odd crores into the interest cost bucket. The third element is some of the debt that we had to pay down using the QIP proceeds that only happened in November.
So you're seeing around about one and a half months of impact on some of those reductions, and hence you will be able to see the full quarter impact in quarter four. So I anticipate quarter four numbers to trend downwards by somewhere between INR 50-INR 75 crores from here on. The forex piece is a little bit unknown. That is dependent now on how the currency plays out. But mind you, most of the forex losses are also accounting entry because we do have corresponding hedges. So there are MTMs and translation gains and losses which negate it. So overall, our asset liability is relatively matched up, but then yes, from an accounting perspective, we do need to recognize mark-to-market pieces.
Thank you, sir. Wishing you all the best. I'll come back in the queue.
Thank you. Next question is from Gunjan Prithiani from Bank of America. Please go ahead.
Yeah. Hi. Thanks for taking my questions. Just following up on the emerging businesses, could you also give some color on the aerospace piece? Because there was a pretty healthy order book that you all had flagged earlier on that, and you also flagged in this presentation about becoming a Tier 1 supplier for the commercial aircraft. So if you can give some color on where the revenue for this business stack up, how should we think about the growth on the aerospace side?
Connor?
Yeah. Look, we have facilities that are coming up, and they should be coming up in the first quarter of 2026, sort of a timeline. So I think, again, we have a large order book there. I think in the next quarter, we can also discuss more on the order book over there. But that's seeing very good gains, and definitely a lot of the expansion is coming up with the two facilities that are coming up specifically for the aerospace expansion. Like I said, we'll be able to give you some more on the order book on the next quarter.
Sure. I'm just trying to get the revenue sort of some color because I think this is a pretty small piece. If I look at F24, right, it was somewhere around, I think, 300-350 crores. I'm just trying to get some sense with the acquisition and this execution. How big can this be? Can this be three, four times of where the F24 revenues were?
You mean with the acquisition itself or with the growth? We have definitely very high targets for where we want it to grow. Definitely a 10X would be a target in the next few years. So we won't do much better than that. But also, you have to understand that a lot also depends on how the customer is pulled because in this business, there are only two major customers. There is Star, obviously, also there, but they're two very large ones. And you know what's always happening with some of these customers with the supply chain issues. So we believe, again, in the long-term prospects, these customers will ramp up, and I think we will see more of that coming this year.
That's why I was saying if you're a little patient, I think at the end of next quarter, we'll really be able to tell you how all of that is picking up. We are quite optimistic, and it seems like the worst is behind us, so we should be ready for some high levels of growth in this business.
Okay. Got it. He's taking the question.
Sorry, if I just might add, Gunjan, you're talking only 350, which are only part of AD Industries. AD Industries itself is a EUR 120-130 million business. So if you add that, I think on a pro forma basis, the business should be able to see a very significant growth as we release the numbers in Q4 .
Okay. Got it. The second question I had was on the Japan piece. Congratulations again. It looked like a pretty good acquisition. If you can share two things: one, when do we expect the payout and consolidation of this business on the timelines? And secondly, where would Japan, after this acquisition, stack up in terms of contribution to our revenues? Because I think that's been a white space for us. If you can share how big Japan exposure will become with this acquisition.
Go ahead, Kunal.
So Gunjan, I think with Ushin and Yachiyo businesses, I think together, it's not only with Japan, mind you, these are all global businesses to begin with. From a capability set perspective, we have tapped into Hondasan, obviously, in a fairly big way, and we are very happy with the support that we are receiving from them. Ushin itself should get closed in March is what we anticipate right now. So you won't see much of the revenues kicking in in Q1 , but Q1 onward, you should start seeing pretty much the full of Ushin coming in.
I think the interesting piece is as some of these elements come together, there are multiple areas where we can leverage the Japanese presence, not only in cross-selling to other Japanese OEMs, but also supporting Hondasan and many of their other product lines across the globe. At the same time, each of these businesses carries a fair amount of R&D engineering capabilities. The objective would be to not only utilize that in Japan and their existing ones, but to take them global as well, and not only in their product portfolio, some of their capability sets can actually be used across the board. For example, there's a great amount of automation that is embedded in many of their facilities. Frankly, we can learn a lot from that and start building that out in some of our other facilities as well.
That's been also the thought behind the joint venture that we created with Matsui, which is on industrial automation, and hence, the idea is to start leveraging the base of Japan, the engineering and manufacturing capabilities there to not only do it for Japan and Japanese customers, but then to leverage this across the globe and then cross-sell to other customers, other product lines, and so on.
Okay. Got it. This is pretty useful. Just the last question from my side on the SaS, the integrated assembly segment. The margin, of course, there has improved. Also talk about how you're able to find avenues for growth from other segments as well. If you can sort of talk about how that business is growing, is it more to do with the insourcing that we had spoken about when the acquisition was done, or is it some other cross-selling opportunities that you're seeing? So some color on that, please.
Yeah. Kunal, if you let me, I can take that. Look, the idea with integrated assembly was to really push on to become a tier-point-five. So as we are pivoting ourselves to be an engineering, manufacturing, and assembly specialist, I think what we're also seeing is that customers are wanting more and more of the supply base to do the entire assembly of the car and the logistics operations. So this fits in really well with that. I think we are targeting more and more businesses to move up the value chain, not just the cockpit business, which we are doing. We want to do more and more modules, and I think we're getting good traction. So still early days, but I think we're in the right direction.
All the things that Kunal also spoke about, with more focus on industry automation. Our businesses that we are growing in the logistics side are closely connected to customers and their wish to really push more of the assembly businesses over to their suppliers. I think it fits in really well. So again, this is an exciting area of growth. I think we are targeting to do a lot more than what it was originally doing and build capability there, and hopefully, there should be some good news of us being able to do that in the next upcoming quarters and winning businesses, which will be able to bring this division to its full color.
Okay. Got it. Thank you so much.
Thank you. Next question is from Amyn Pirani from JP Morgan. Please go ahead.
Yes. Hi. Thanks for the opportunity. My first question is on the announcement that you made for becoming a Tier 1 supplier for commercial aircraft. Can you specify what components or parts you'll be making for this?
Kunal,
I think we'll have to come back. I don't think we're allowed to give you the answer on that, but I mean, as you know, we're focusing a lot on the structure side and being able to do more and more of those kinds of parts, so look, it's all part of the strategy once we enter this segment to increase the customer base and the ability of our products that we're able to do, so seeing that two new facilities are coming up in the aerospace segment, which, again, together with ADI Group, increases our product portfolio with complete capability on the machining side, and that's something that we continue to grow with the customers and have success with that.
Sure. No, that's actually this Tier 1 with this company is actually quite a big thing. So yeah, we wait for more details on that when you can share. Secondly.
I mean, you will hear more about it in the next few days.
Okay. Look forward to it. On the consumer electronics piece, just a clarification. So you've already started ramping up one plant. I see in your presentation two more plants coming up next year. So is this for the same product line and the same partner, or are these something else? If you can just help us understand on that.
Kunal, maybe I can start, and then you can add on. Look, I mean, the plant that we are setting up is a very large plant. It's in Chennai. So the first plant was always the prototyping plant where we were doing much smaller volumes and kind of showing that we are capable to do it and build the competence from there so that when the large plant comes along and the large volumes that we're able to execute out of that plant, we're able to do that at a size and scale which is demonstrated already. So that's the idea. I think we've been fairly successful at doing it at the smaller setup. Smaller setup is still quite large for us, but compared to what we are setting up, it's very small. So everything is kind of relative.
I think it's moving at an exceptional pace, and I think the teams have done a wonderful job to be able to deal with this new technology, and it is only going to be supplemental or growth in the things that we're already doing in a smaller way in a much, much larger way than the big plant is all set up next year.
Just lastly, on the Akshini Tech acquisition, which again seems to be a decently profitable business with good revenues. Historically, you've been almost exclusively powertrain agnostic. I think you started doing acquisitions with this one where you are getting into things which are related to more engine kind of components. Should we assume that going forward, you are relatively more open to doing this? Is there a slight change in thought process given there is so much uncertainty regarding the EV? How should we think about this?
I think this particular point is your point of view, how you think about it. I think the change is not going to be as dramatic as what people are telling us that from one day to another, the change will happen. So I think the objective is basically to take over these high-capability companies, and then over a period of five years, 10 years, you are then actually using that as a base of engineering and technology and capabilities, and then coming out how you solve what our company's objectives are. So it's not from one day to another. If you're thinking it's bad, then of course, you would be in trouble. But we know for a fact that it will not be from one day to another.
We have a period of 10 years, 15 years to use that particular technology and then give that competence or a geographical spread to new customers because at the moment, they're only tied up to one customer and give it to the other customers, and also in the process, come up with the future technologies where we want to be, which could be in the emerging businesses and all that, so there's a lot which is the basis which we are taking these particular companies over for.
If I might add, look, our strategy remains exactly the same. This is a customer-led piece. If not, we decided to go to powertrain. The customer has requested much like every other asset that we look at. And it's a collaboration with them to find solutions for them as well as to find solutions for ourselves in terms of our product lines and our capabilities getting enhanced. It's the matching of the two that results finally in the acquisition.
I'm sorry. Thank you. Thank you for this. I'll come back to that.
Thank you. Next question is from Jinesh Gandhi from Ambit Capital. Please go ahead.
Yeah. Hi, sir. A couple of questions from my side. One is when we talked about Consumer Electronics. Of close to INR 2,000 crores, it was for all the three phases put together, right?
Yes. The INR 2,600 crores is for all the three phases put together.
Got it. And any sense on how much we would have invested in the first phase?
It's happening over a period of time. I don't know the exact numbers, to be frank. We can come back to you. It's roundabout. I'm taking a broad guess. It should be somewhere in the INR 700-800 crore levels.
Got it. Okay. And second, with respect to you have said the revenues from acquisitions post Q3 2024, any sense on what would be the EBITDA contribution from those acquisitions?
Sorry. I don't have that number with me right now.
We don't have that number. Okay.
We can get back to you separately.
Sure. Sure. I'll take that offline. Thanks. Thanks and all the best.
Thank you. Next question is from Pankaj Bobade from Affluent Assets. Please go ahead.
Thanks for taking my question. Am I audible? Hello?
Yes.
Yes.
Go ahead.
Good. Sir, as I understand, the tariff-related things which is being spoken about in the news these days is expected to impact the automobile industry, especially the European, Mexican, and Canadian countries, so just wanted to understand what is our exposure to these countries, and as you mentioned in your introductory message that most of the things will be passed on, I mean, the raw material and other things, so would these tariffs, if they go through from US side, have any impact on our top line and bottom line?
I think the top line will increase, but there will be that lag period. So that could be two months. That could be three months. But I don't think it's going to be a showstopper or something like that. But the top line will definitely go up because the taxes have gone up, and the car makers are definitely going to increase the prices.
Okay. Sure. And second thing, sir, regarding this consumer electronics, as I understand, is this the same EMS space which you are talking about, or is it something different from that? And secondly, if this is the same EMS space, whether it is low margin, high value, or high margin, low value segment?
Very difficult to define high value, low value. It's all relative in nature. So I don't know what reference you have. From our perspective, we are doing electronics manufacturing if that helps you. But I don't know how to define what is low value, high value.
So would the margins from this segment be same as our 9%-10% margin, or will it be higher than that?
We expect it to be margin accretive.
Okay. Okay, sir. Thank you. Thank you.
Thank you. Next question is from Sagunandan N. from Nuvama Research. Please go ahead.
Congratulations, sir, for strong results. Sir, firstly, you highlighted about container prices, which has come down by 15% between Q2 and Q10. This certainly indicates a positive on working capital. But freight cost is generally 2% of our sale. Would this also benefit be partly retained or fully passed on to the customer?
No, this will have a portion that we will retain. There is some portion which is a pass-through. There's some portion which is retained, but I think the bigger impact, more than the cost front, is actually on the working capital side because once you have an ability to predict when the material is going to reach the shores, that is what gives you the comfort on keeping lower levels of inventory and having a lower, let's say, BOQ, etc, so that is where I think we anticipate a lot more liquidation of inventory as we move to quarter four and even beyond.
Thanks for that. Sir, standalone business profitability is lower. Would this be partly because of front-ending of certain costs for upcoming capacities? Any one-off impact that you can highlight?
Look, I think a couple of things happened on the standalone side. You are aware that euro depreciated against INR, and hence, obviously, export revenues got hit. On top of it, European markets have generally been underperforming, and hence, in general, the volume trajectory has been lower. So the operating leverage didn't play out. And then the commercial vehicle market, which is again housed in standalone as well, was underperforming in India, including the highway equipment and the heavy equipment side. And that had a dent again on the overall revenues and hence the lower operating leverage.
So we would not be doing any capacity building for increase in supplies to Motherson Bryden because they have a lot of capacity additions happening over the next three quarters?
We are adding capacity on the Motherson. I mean, you're referring to the wiring portion of our business? I'm assuming you're referring to MS Will.
Are you talking about the wiring harness?
Yeah. So at our standalone, would the capacity needs to be increased to supply to Motherson Bryden business?
Yes. New facilities are getting done for MSCW. There's one new facility that is coming up as well.
Understood, sir. One clarification on consumer electronics, you alluded to that there is an approval for the JV partner to take an equity stake. What would be the range of stake, sir? Would it be 40%-49%, which was announced earlier?
Up to 49.
Contractually, it is 10-49. So we'll wait to hear from the JV partner what they are comfortable with.
Understood, sir. On the CapEx guidance, which was reduced INR 500 crore, and this reduction is in global businesses, which segments would it relate to?
It's actually related to a variety of segments. Essentially, when you're seeing both either lower production levels as well as delays in SOPs, we're planning to recalibrate our CapEx to meet those revised expectations of customers. So that's how the recalibration has been done. Some of it is getting pushed on to a point when they'll be starting the SOPs. Some capacity additions have been delayed out till there is better clarity on how the volume trajectory is playing out.
Region-wise, it would mainly be in Europe?
To a large extent, I would say, yeah, and America as well to some extent.
Got it, sir. Thank you very much. I'll get back to you.
Thank you. Participants, you may press star and one to ask a question. Next question is from Lakshmi Narayana. From Tunga Investments, please go ahead.
Yeah. Thank you. So look at your wiring harness business. How much or what has been the India growth? Because I think last year, around 36% of our wiring harness business comes from India. So I just want to understand how that business, what is the composition of the business in the last nine months for India business, and how it has actually grown?
Are you talking about MS, sir, or?
No, I'm talking about the revenue growth last nine months in the business. What is the India part of the business growth?
The wiring harness business is one only for India. That's MSW. Wiring harness business is also international, which is in Thailand. Which one are you wanting to know about?
Okay. There is another. So there's a deal with this Quinchin, right? So that is part of this entity, correct?
Tamil. Tamil.
Gotcha. So look, I don't think we have exactly what the numbers of India is right now. Again, we can come back to you.
Got it. Got it, and with there having been an increased EBITDA margin in the wiring harness business, what is the margin band you like to operate this business at?
We don't give guidance on margins, but we believe in growth. I think so really can't guide you on that.
And sir, this particular wiring harness business, do you also have anything which is made in India and exported outside? And how much is that?
There are mirror products that do get. I'm going to answer that question. We do export from India to some markets. But as you would have seen, the moment our market is maturing, we have been setting up the plants in those regions. So, used to export to ASEAN. We now have a plant in Thailand. We manufacture there and support the ASEAN markets. We have plants in the Middle East from where we are supporting our various customers. And we are also exporting from India. So the plants have been expanding, and sooner or later, we had set up the plant in Mexico. And then, of course, with acquisitions, more and more plants got added in. So mostly, we have been trying to be closer and being in the same region where the customers are or where we could do better logistics.
But we keep many options for the customers as customers like us because they have the multitude of options to work with us.
Got it. Also, in your annual report, you had mentioned that there is a movement towards high-voltage wiring harness especially in the east. I just want to understand how that has actually picked up in the last nine months' sales, either in terms of sales or in terms of order books. Is it when you're getting a mix of high-voltage wiring harness as well as regular ones? Can you just throw some light on that?
So as Mr. Sehgal earlier mentioned, for India market, there is another company called MSW, which supports the customers in India both on the high-voltage as well as low-voltage harnesses, both for EV cars or ICE cars, hybrid cars, all kinds of cars. As far as Motherson's business is concerned, we also support our customers globally in whichever kind of vehicles they're making. So all the commercial vehicles which are coming up with the electric vehicles, we are supporting our customers both on the low-voltage as well as high-voltage side in different regions. As you would know, the penetration of the electric trucks has been not so much at the moment. But we do support them. So we are working together with them, and we supply to them also other products which we are making.
As they embark on the journey in the future with different powertrains also, different configurations, we are all working together with them to support them.
Got it. Got it. Thank you.
Ask about our other joint venture, which is with Kyungshin. It also supports its customers, which is Hyundai and Kia, both on the low-voltage as well as on the high-voltage side.
What is the revenue that entity makes? The Quinchin joint venture? That's included as part of this revenue which you actually put in your presentation, right?
Sorry. Did you say potential joint venture?
No, the current joint venture with Kyungshin, which you have for Hyundai, that is part of this revenue.
It's 20 years old. It's 20 years old. By the way, what do you want to know the numbers of that?
No, no. My question is that is part of the wiring harness business which you report in this entity that includes the revenues from that joint venture also, correct?
That's true.
What is that revenue?
We will talk about this on an annual basis. So you will hear about this as we release our annual results.
Okay. Thank you.
Thank you.
Thank you very much. Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. Next question is from Kapil Singh from Nomura. Please go ahead.
Yeah. Yes. Thanks, sir, for the opportunity again. Just one question I had on the vision systems business. We mentioned some effect of unfavorable platform and geographic mix. Could you elaborate a bit on this? And are you seeing we are at the peak of this effect, or this could increase a bit in 2025?
Are you there on the line?
Yes. Yes. I'm there.
Okay, so yeah, look, I think we all know that the industry is going through a bit of a flux on the new platforms and new model introductions. I think customers are trying to figure out what's the right time to make new launches. So you would see different OEMs having different plans on how they want to have this new model introduction strategy. So we are seeing a bit of this delay somewhere, and some launches are maybe not at the volume that were expected, but this should settle down. I mean, we do also see somewhere where the ramp-up has started, and we also expect that in a few quarters, the ramp-up should get stronger in some customers and in some longer speeds, so it's an evolving, developing situation. I think we have to go through this.
We are working very closely with our customers to support in these changes, and I guess we are going through this with them together for the next few quarters, and then it should all start to look much better.
Can you talk a little bit about increased capacity in China as well in this division? What really is happening over there?
Yeah. We have good presence in China with most of the OEMs. I mean, there are some OEMs who are doing by themselves. But then there are other OEMs who are open to get into new technologies and buy high-quality and high-technology components. So we are engaged with those types of customers, and they are also doing very well. So we are having good growth with those customers with the volumes going in China. So yes, to some extent, we do see the slowdown that we are facing in ramp-ups and new model production in Europe and U.S. is offset partially with the higher volumes we see in China. So that is obviously with our diverse portfolio helping us to keep very similar levels in the current quarters and going forward.
Thanks, sir. And when you say adverse geographic mix, basically what I'm trying to understand is that China mix would be a little bit adverse on profitability compared to the Europe and US markets?
I think each OEM would be different. It would be very hard to say. As you can imagine, every model, every platform comes with different margins, different challenges. We keep improving with all of those platforms as we go along. We work with the customers. We work internally. There's always a mix. Yet, as we are going through this very volatile situation, you do see some impact. It can be favorable. It can be unfavorable. It will keep changing. On the whole, we look very strong in terms of order book and also the new launches that are coming up. As I said, in the next few quarters, it should all start to settle and start to look better.
Thanks, sir, and look forward to that. Thank you so much.
Thank you. Next question is from Pankaj Bobade from Affluent Assets. Please go ahead.
Thanks for giving me an opportunity again. Sir, just wanted to understand the impact of this new Russia-Ukraine war on our business. I mean, to ask you whether the war had impacted our business because there is noise that now things will be settled on, and this war would be put to an end, so this development helped our business?
Raman, Kunal, can you take that?
Yeah. Look, from our side, we didn't have any facilities in the Ukraine or any of the affected areas. So from our side, we were relatively insulated. The customers have fairly moved all their production from affected units to other European locations. So actually, we have not really seen too much impact on our business. Kunal, you can correct me if I'm missing something. But from my side, not really much of an impact.
My question was whether, since after the start of this war, the economy of Europe went to doldrums. So did it have any impact on our business? And if it revives, what would be the developments for us?
So look, I think two things. One, we have a very diversified business model. So not any one country is able to really affect Motherson's business thanks to the diversification that we've had to pull off with the businesses. You've seen that we've also made a pivot towards other growth areas in different industries. And also, sometimes when these periods of turmoil are there, we have the opportunities of growth. So back in 2020, we were probably one-third smaller than where we are today. So all these threw up opportunities for us to grow. So we don't really agree that it's all a bad scenario. There's been really opportunities for Motherson to grow and get closer to the customer and look at new business opportunities in these periods of volatility and uncertainty.
And if I might add, we did have facilities in Russia, which obviously cannot produce. So if the sanctions, etc., are taken out, it enables us to get back into that market. As one, two, as an immediate hit, obviously, the whole energy crisis in Europe was a function of the Ukraine-Russia issue. Presumably, if that gets resolved, at least some of the cost pressures on the energy may ease out as we move forward. And these are at least two immediate impacts that may be positive for us as it moves. Besides, obviously, as Raman was saying, with turmoil, there are always opportunities. So. And also, I think Europe is not in doldrums. They're in a bit of trouble, that's for sure. But Europe is still very strong. And everything is, it's in their side. They take it. That's all right. It's part of life.
Okay. And sir, if you can help me with any guidance for FY26, top-line growth guidance, I mean?
I think I'll just give you one precondition that we have a clear target of till the end of this financial year. That's March 2025. This thing will come in the new five-year plan that we will have, and that's what we can tell you about 2026, but yes, growth all over, so sure, we're going to be growing.
Okay, sir. Thank you. Thanks very much.
You're welcome.
Thank you. A reminder to all participants, you may press star and one to ask a question. Next question is from line one, Rishi Vora from Kotak Securities. Please go ahead.
Yeah. Thank you for the opportunity. Just one clarification on the results. In our consolidated numbers, other operating revenue has seen a sharp jump. Can you just give us some color on what has resulted in such a sharp jump?
Kunal? Yeah. So part of it is there's income obviously coming on account of the parking of funds that we had done before paying off debt. So one and a half months, those funds were invested in a variety of different instruments. Some of that interest income is residing in there. That is one chunk of it. I think that will be the largest chunk of what this will be.
It is a part of other operating revenues, is it?
Oh, sorry. You're talking about other operating revenue. Other operating revenue will have a host of different things in it. There will be places like scrap sales that may have happened to have caused it. So there'll be a whole host of different things residing in there.
So frequently, there was a jump of INR 250 crores. So just wanted to understand, is there something which you could highlight?
No, no. Just one quick bold.
Hello?
Rishi, do you have any follow-up?
No, no. Thank you.
Thank you very much. Ladies and gentlemen, I now end the conference for closing comments.
Okay. Thank you. Thank you very much. I'm sorry I had to catch a flight, so I had to go get onto the telephone call, but I think the board was very pleased that in such circumstances, the company has come up with the expectations much to the good surprise of the board. And I think all the teams have done a phenomenal job in this particular endeavor, and we are hopeful that the opportunities are there, so just watch the space. It's what I can say. The future is really bright. Thank you, and wish you all a good weekend.
Thank you very much, sir. On behalf of Samvardhana Motherson International Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.