Ladies and gentlemen, good day and welcome to the conference call of Motherson Sumi Wiring India 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 the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. V. C. Sehgal. Thank you, and over to you, sir.
Thanks. Good evening, ladies and gentlemen. Thank you for joining the results conference call of MSWI. I am pleased to announce the board has approved the results for the quarter and quarter four, as well as the full financial year 2025. The company continues to charge a strong trajectory of growth based on sustainable fundamentals. I'm happy to say the company has delivered its highest-ever revenues, both on a quarterly and a full-year basis. We're setting up greenfield plants to support our customers, and I would like to highlight MSWI is supplying to the top nine customers of the top best-selling vehicles, four-wheelers in India as of financial year 2025. With this, I conclude my opening remarks. I have with me Bahman, Pankaj, Anurag, and Mahender with me to answer your questions. Back to you. Thanks.
Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephones. 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. The first question comes from the line of Raghun andan from Nuvama Wealth Management. Please go ahead.
Thanks, sir, for the opportunity. It is heartening to see a 12% growth when industry growth is in mid-single digits. My questions relate to the greenfields. Firstly, for the greenfield plant revenue of INR 119 crore, would it be completely EV-related revenue, or approximately what portion of revenue would be EV?
Go ahead, Anurag, Pankaj. Hello?
Sorry. Out of the total revenue of the company, about 4% has come from the EV side. These investments are in these new plants, the greenfield, and it is a mix of EV and ICE vehicles, which are being produced by the farmers to come up here EV, and in some of them are both combinations.
Got it, sir. Thank you for that. On Gujarat greenfield plant, when is the production expected to commence? As there is a mention in the investor PPT, which says delay in launch, would the ramp-up happen in Q2 instead of Q1?
In Gujarat, there are two sort of projects, and one project is going to happen in Q1 of FY2026, and the other project is going to happen in Q2 of FY2026. If you see the presentation also, there is an EV and ICE both models are there as well.
Okay, Anurag sir, thanks for the clarification. Anurag sir, for the greenfields, approximately what level of utilization would be the break-even point? Would it be like 40%-50%?
See, if you have seen our last quarter presentation also, the total sales from these three new greenfields is INR 2,100 crore on the annualized basis. Once the volumes will pick up, which we are expecting in H2, when these three plants all volumes will pick up, at that time, this sales will get realized on the annual basis.
Understood, sir. So fair to assume by end of the year, we would be closer to optimal utilization?
Yeah, that's right. What do you think about the greenfields? Towards H2, we should be able to utilize them to the optimum capacity. That is where we have calculated the revenue on an annualized basis from these three greenfields to the extent of INR 2,100 crore on an annualized basis.
Thank you, Mahender sir. I'll fall back to the queue.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Siddhartha Bera from Nomura. Please go ahead.
Yeah, hi sir. Thanks for the opportunity. It's good to see that the greenfield losses have kept on coming down every quarter in the past few quarters. First question again on this aspect only. We have already started one greenfield, and two are about to come. Do the losses mainly pertain to the two new greenfields, or does the first one which has started also have some element of loss because of the lower utilization?
Anurag?
Yes, sir. Largely, it will be on account of two new greenfields, but yes, there will be some bit of the other greenfield also which has started the production because the sales for the second customer had started in between Q4. That is still not at the optimum utilization as far as capacity is concerned.
Okay, understood. Second question, sir, when you say that the EV revenue share is 4%, does it include only the high-voltage harnesses, or this will have some low-voltage harnesses also which will be going in this?
This is purely about the EV, the electric harnesses only.
The high-voltage only when you say the EV?
Yes.
Okay. Okay. Okay. Lastly, on the gross margin side, I understand that the copper is usually a pass-through, and even in the past, we have not sort of seen any meaningful impact on our gross margins because of the volatility. This time, the gross margins have sort of dipped Q2 and both on a year-over-year basis. Is it something to do with the mix which is impacting the gross margins, or something else which we are missing here?
Go ahead.
Yeah, sure. So it's a combination of both. There's a combination of both. Obviously, product mix is one of the reasons where the margin varies on different products that we have, different wiring harness. Also, as far as copper is concerned, even though there's a pass-through arrangement with the customers, there's a time lag. There could be an impact on the margin for a particular quarter, but then we need to look at it for a larger period, maybe for a year or so, where the impact will get scared off.
Okay. Understood, sir. Thanks a lot. I'll come back on this now.
Thank you. The next question comes from the line of Vijay Pandey from Nuvama Wealth Management. Please go ahead.
Hi, sir. Thank you for taking my question. Sir, I just wanted to check. Can you tell us about what is the capacity of the greenfield plants? The upcoming Gujarat, Haryana, and Pune plant. Just wanted to see if this will help in the forecasting.
Look, it's always difficult for us to talk about capacity and all that because our customers don't appreciate it because we can't really talk on that. But wiring harness is such a product that we can always increase the capacity by boards, by better efficiency, and all that. So not really extremely relevant for Motherson. But Pankaj, what would you say?
Exactly, sir. We definitely need the space, and we should keep the capacities on the machining side, but then some of the capacities we can flex, and that's how we work it out.
Okay. So just if I try to frame it in another way, sir, how should we expect once all the three plants start running up, what level of sales can we expect when they are fully ramped up?
Difficult for us to say that because it will depend upon the mix, how much is electric, how much is ICE, how much is hybrid. Very difficult for us to guide you on that because at the end of the day, it's the customer who's.
Okay.
Pankaj, can we help them if we can?
Exactly, sir. So the exact mix, what will get made and what will get sold, it's a time question. What we had indicated in the last quarter was that if all the volumes come in, which were based on the plans, then all the total volumes with the kind of mix which we have received from the customers would be about INR 2,000 crore +.
Okay. Thank you.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Raghunandan from Nuvama Wealth Management. Please go ahead.
Thank you, sir, for the opportunity again. For FY2026, what would be the broad CapEx planned? Would it be again in the range of INR 200 crore?
CapEx is about INR 200 crore also, isn't it? Pankaj? Sorry, Mahender and Anurag?
Yes, sir. It is approximately in this line only.
Thank you. Anurag sir, with relation to the high-voltage margin, how does it compare with the low-voltage harness margins? By when do you think the profitability will match in terms of, would you look at scale of high-voltage harness going up, localization improving? Would you say that journey might take two, three years before you start making similar profitability in both the products?
I think, first of all, it is wrong to say that there will be no profitability into the high-voltage harness also. It is going to happen only after two to three years only. Yes, there are different margins into the different businesses. All the time, I can say the efforts are that we should look for the opportunity where we can do a lot of localization, whether it's high-voltage or low-voltage, wherever it makes sense. Try to keep discussing with the customer as well on these things and keep improving the margins wherever the possibility is there.
Just to add on, Anurag, that in terms of localization, already the high-voltage cables that are coming in the plant, where we localize the high-voltage cables as well as the CCSP charging connectors, and the company works with the customers for the localization as well.
Yes.
Thank you, sir. Thanks for highlighting that. We have that answered. Just one question. In terms of the copper price increase, would it be fair to say that generally three to six months is the time for pass-through?
In the world, it's a lot of work, but we try as early as we can to get it.
Got it, sir. That's all from my side. Thank you very much.
Thank you.
A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Vipul Agrawal from HSBC Bank. Please go ahead.
Yeah, hi. Thank you for taking my question. Part of my question on localization has been answered. Just wanted to understand a couple of points over there. Like in a layman's language, how does localization work in wiring harnessing business? What parts can be localized in India, and to what extent is it possible to localize at all, and what are the margins, how the margin trajectory changes when localization improves?
Oh, question very close to my heart. Mahender or Anurag, can you take this question?
Yes, sir. See, on the localization front, this is when anything because we are a design partner also as well as a development also. So whenever the customer is giving us the product and putting out the components like that which are not localized, there is always a we do a feasibility of that. Can we go for the localization? Initially, it started with the import parts only, but in the longer run, we try to localize that as soon as we see the volume. And we have Samil one side where we have all the wire ranges which are localized. We are already 1,000 + components we are manufacturing in India. So we are capable enough to handle any components of wiring harness can be localized very, very quickly if it makes sense. Whenever we are doing a localization, we obviously discuss with the customer also.
We see how the benefit goes either to us or to the customer in which way. That is decided with the customer in close coordination.
Sir, how does it impact the margin trajectory? Like, is it who will get it for both the OEMs and you, or is it just you have to pass on the total benefit to the OEMs? How does it work in the localization?
It depends upon the customer. As much as possible, all the customers prefer that we have localization. Depending upon what the opportunity is, we share or we do not share.
Understood. Thanks for that. Understood. The second question is on copper pass-through. It's a pass-through. Again, historically, if I see the data, despite steep increase in copper prices, your margins remain resilient. Maybe a few quarters here and there, but you normally catch up. Is it like hedging is there? How does it work at MSWI? Sorry if I answered this question inaccurately. This is something new for me.
Pankaj, can you take this because?
No, wait. Yes, sir. We are not hedging any copper by ourselves. Basically, if our customers are hedging it, we work together with them. We have pass-through arrangements, as we discussed earlier, that whether it is quarterly or half-yearly. It is a pass-through item for us.
Okay. So one last question on the industry trends. Basically, maybe this would be, so basically, how are you seeing industry moving towards hybrid? There are a lot of discussions among OEMs that have, there are a lot of discussions going on between EVs and hybrids. Hybrids are still highly taxed. Any sense you are getting from the OEMs, like they are more focusing on hybrids going forward, or they still stick to EVs? How do you see the trends in between hybrids and EVs in India? Maybe you can take a view of three to five years.
We can't comment on which way the market will. That would be, in a way, taking bets. Motherson does not do that. We, in fact, follow the customer. We are very, very fast and nimble on our feet. We react very quickly, and that's how we decide. Secondly, we are not trying to make money on these variables. We make our money on our efficiency, our good speed, and everything like that. Yeah, these kind of things sometimes may give you money, sometimes will take money from you. We try and operate the plant based on the efficiencies of the plants, people. We don't second-guess the customer. That's at least what I have always told my team. Pankaj, Anurag.
This is very right, sir. We are supporting all the power trains, and for us, it's very difficult in which one will do how much. We are working on all kinds of power trains, and we support the customers' EV, ICE, hybrid, CNGs, multiple options the customers are all working on with different possibilities.
Understood, sir. Thanks a lot for all the answers.
Thank you. The next question comes from the line of Siddhartha Bera from Nomura. Please go ahead.
Yeah. Thanks for the follow-up, sir. Just a short clarification. In a scenario that some of the new greenfield plants, which we have sort of are expecting start of production in Q1 and Q2, in case they get delayed, what happens in that scenario? Is there some compensation which is there which we get, or we need to continue to sort of bear the startup costs for a few more quarters? What happens in that scenario? If you can just help me understand.
Pankaj.
This is a very, I mean, private discussion with the customers. And of course, if there are impacts, then always it's discussed mutually.
Okay. Okay. Okay, sir. Thanks. That will be all.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Raghunandan from Nuvama Wealth Management. Please go ahead.
Thank you, sir, for the follow-up opportunity. For the three new greenfield plants, about 7,000-7,500 employees were required, as indicated in the last call. Have these employees already been taken in, have they already been hired? Trying to understand whether employee cost is currently hovering at INR 410 crore per quarter, whether there can be an increase to that in coming quarters.
It's need dependent. This is what maybe Anurag and Mahender can give some light on this.
Right, sir. See, this is as you have seen that one plant has already ramped up, so that manpower is fully there. The other two plants are falling on Q1 and Q2, and some of the trials have already been started because it's in the phase when SOP gets the mass production ramps up. So partially, yes, that manpower has been hired. In case any changes happen, we always believe to breathe with the market and try to adjust our actions accordingly.
Just to add to what Anurag mentioned, as the volumes will ramp up after the SOPs because many more volumes will come up, people will get added.
Got it, sir. It will be in a staggered modular manner based on the scale and utilization ramp-up?
Yes.
Thank you, sir. Thank you very much.
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Kapil Singh from Nomura. Please go ahead.
Yeah, good evening, sir. Just one question I have. We are seeing some supply constraints for rare earth materials because of the Chinese government putting some restrictions on that. Are you facing or likely to face any kind of supply constraints on account of that? Also, for the connectors, if you could tell us what Percentage of the connectors are localized?
Kapil, we produce a lot of different harnesses and all that. Are you talking of any particular harness or just?
Mainly for the electric?
We produce maybe a million connectors. So which connector are you wanting to talk about?
Sir, basically wanted to understand for electric vehicles and hybrid vehicles because it seems there is a higher content of rare earth over there, but.
Let's see raw material, yeah? Raw material. We don't make connectors out of lithium and all that. That's battery. We don't do battery yet.
Okay. So for that.
Things like that, no?
Okay. So there is no risk of any supply disruption on account of that?
Not that I can imagine, but I'll open it to Pankaj, Anurag, and.
Yeah, as you rightly said, sir, there is no such disruption on anything.
Okay. Thank you, sir.
Thank you. Participants, you may press star and one to ask a question. Participants, please press star and one to ask a question. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. V. C. Sehgal for the closing remarks.
Thank you very much. Thank you all for your questions. I hope we could answer them. I think under tough circumstances, the results have been very, very encouraging, and the board accepted that and congratulated all the people in the company. Yes, the transaction in future of what kind of car is going to be important or not important, or is it going to sell or not going to sell is there. I think generally we are seeing that we are in a position to support the customer exactly where he wants us to. That allows us to actually increase our share. We will continue to do that. Wish you all a very happy and safe weekend and all the best to everybody. Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of Motherson Sumi Wiring India Limited, that concludes this conference. You may now disconnect your lines.