Ladies and gentlemen, good day and welcome to the Q2 FY 2023 results conference call of 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Vivek Chaand Sehgal. Thank you and over to you, sir.
Thank you very much. Good evening, ladies and gentlemen. Thank you for joining us. The board approved the second quarter results, and we are happy to report our improved performance. As a synopsis of the quarter, SAMIL has reported a strong improvement in operating performance with the highest ever quarterly revenue for the second time in a row and steady Q&Q growth for the last five, six quarters. Improvements in profitability are on the back of efficiency programs and part realization of the inflationary cost pass-throughs. Automotive production volumes have grown this quarter as supply chain issues recede but are still below 10%-15% pre-COVID levels at a global level. This improvement in external environment is a welcome change, but it still remains very volatile and uncertain and continued inflationary pressures.
Thus, though there are improvements but remains a work in progress quarter for us, and we always say best is yet to come. With this, I'd like to call upon Vaaman and Kunal to take you through the results quickly and then we can take your questions as you may have. I have a full team here, Vaaman, Pankaj, Kunal, Rajat, and Vipin Jain. Thank you all very much. Over to you, Vaaman.
Thank you, Papa. Good evening to everyone. As Papa was mentioning, we have posted our highest quarterly revenue for the second quarter in a row. It has actually grown 4% quarter-on-quarter and 30% year-on-year. All our business divisions have grown. You may want to note that this is happening in a quarter which has traditionally been a leaner quarter for us, given the summer holiday shutdowns in Europe and America. Two things have aided this. One is the automotive production trends. From the industry perspective, better, more stable supply chain enabled production of over 21 million vehicles across the globe this quarter, with China being the clear outperformer with more than 30% growth as seen on slide eight. India continues to grow with 8% volume increase.
Commercial vehicles have, however, remained largely flat, with China still showing 6% decline quarter-on-quarter. The second is the premiumization trends. Even though Europe was down 10% quarter-on-quarter, as seen on slide nine, the impact on premium vehicles was not really visible and continued to be flat. In fact, growth was seen in North America. Our disproportionate share in premium vehicles has really helped. Premium also aids the content increase for us, and also the impact of interest rate cycle on the premium vehicles should be less muted. It will also be heartening to note that our order book in SMRPBV, as shown on slide 18, has grown about 13% from EUR 16.1 billion to about EUR 18.2 billion.
The other great thing is that the share of EVs in this has grown from 27% to 37% now and is reflective of our strong technological capabilities. For the first time, we have also provided our total order of booked business of EUR 33.9 billion for SMRPBV. On the profitability side, our EBITDA at 8.2% grew to nearly INR 1,500 crores, which is 30% growth quarter-on-quarter and 47% year-on-year. PAT at INR 246 crores grew by 70%, 75% quarter-on-quarter and doubled versus Q2 FY 2022. All business divisions as seen on slide 25 onwards have reflected this improvement, of course, albeit at different levels. The growth is considering two one-off items.
The first one, the geopolitical situation in Russia and Ukraine keeps getting elongated, so OEMs have limited or halted the activities in the region. We have thus considered a comprehensive impairment provision of our assets in Russia of INR 112 crores, including write back of deferred tax asset of INR 14 crores. The second one, we have received INR 46 crores so far on insurance claims that we filed for floods that happened in our plants in South Africa in Durban. Costs of these were already booked in the earlier quarter. Both of these have been highlighted in the financial slides, such as on slide 11 and slide 20. The improvement in profitability has to be seen against the backdrop of continued inflationary trends, where across the globe unprecedented levels of inflation have prevailed as seen on slide five.
Some commodities, like copper, has reduced, but generally the environment remains very volatile and still unpredictable. On one hand, we are trying to actively manage risks such as energy costs through energy reduction measures, alternate sourcing
These are all shown illustratively on slide six. At the same time, we continue to work with our customers to find win-win solutions. While some aspects of inflation have been passed through price increases, it still remains a work in process. Kunal, would you like to add?
Sure, Vaaman. Thanks. Hi, everyone. Good evening. In addition, you know, you may want to note that India remains a very significant portion of our business, with over 24% of our gross revenues coming from India in the half year period, and that has grown by 40%. 30% of our EBITDA comes from India, and over half of our profitability is coming from India. This is reflected on slide 15 as well. Given our presence, our home country being India, we continue to invest in it, both to meet existing growth requirements as well as to expand product portfolio.
In fact, as you would have seen on slide 22, we have a disproportionate presence in emerging markets with it, emerging markets comprising nearly 50% of our sales. We plan to share these on a half yearly basis, for you to understand the developments that occur during that period. Also on the leverage side, you would have seen on slide 12 that our debt has increased by nearly INR 300 crore to INR 8,500 crore. This is largely driven by enhanced working capital requirements. Between pre-COVID and post-COVID, you would have seen a 10-day increase in inventory. We've shown that on slide 13, which on a 10-day basis has an impact of around about INR 2,000 crore.
That's the additional amount of capital that we have invested in inventory. As Vaaman was mentioning, some of the supply chain issues recede, we should expect this to normalize going forward, and hence see reduction, as well as release of capital from working capital going forward. On the leverage side, because of the improved EBITDA on the leverage ratio side, the net debt to EBITDA has come down from 2.1x to 2x. With some of the deleveraging paths on working capital as well as improved performance, we expect the net debt leverage to further improve from here. On the CapEx side, we continue to monitor the situation very closely. We had guided the market to INR 2,500 crores ±INR 250 crores.
We have spent only around about INR 850 crore of it. Given the environment, this might go up a little bit next quarter, but at an aggregate level for the year, we should still be within the mid to lower end of our range of INR 2,500 crore ±INR 250. On the inorganic side, we announced two transactions. One was the acquisition of the frame manufacturing business from Daimler in India, and the acquisition of the mirror business of Ichikoh Industries in Japan. Both of these are great testaments of our strong customer relationships. The mirror one also adds a much needed stronger presence for us in Japan. This has traditionally been a white space opportunity for us.
With Ichikoh coming in, we should be able to leverage the presence now in Japan to grow all our divisions in there. Finally, I guess on, you know, the strong balance sheet that we have with the improving profitability trends, it does provide the right mix to enhance our growth, both organically and inorganically going forward. Thank you. Over to you, Sir Vivek.
Okay, you know, thank you very much. That was just an introduction because we've changed a lot of our presentations and all that. Over to you for question and answer, please.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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. The first question is from the line of Kapil Singh from Nomura. Please go ahead.
Good evening, sir. Congratulations on a very strong set of results. My first question is on the revenues itself. If we look at the Vision Systems Division, we have grown by 16% on a quarter-on-quarter basis. I just wanted to understand that if we look at you know underlying industry growth that we have seen in the presentation or for Modules and Polymer Products Division, the growth is you know around 4% QoQ. So if you could just talk us through what are the drivers for this growth, and do you expect a further build out of revenues from these levels as we go ahead?
Sure. Vaaman, and team, who would like to take this?
Yeah.
I
Go ahead, Vaaman.
Okay, thanks. I think, you know, a lot of our market came back in North America and China. Of course, China was muted in last few quarters due to lockdowns, et cetera. We saw those markets bounce back.
In general, I think launch of the programs and good take from the customers on our products is what has resulted in the sales growth that you see in this quarter. As you know, now with the acquisitions that have come in, of course this will further help our growth opportunities and our growth prospects for the future as well.
If I might add, look, the disproportionate share of growth that you are seeing in Vision versus some of the other division on a quarter-on-quarter is largely getting driven out of China, as Vaaman was mentioning. As we know, SMR has the largest presence in China, and that is capturing the growth that we saw in China, which is not necessarily true in other divisions. Where the share of business in China is much less. In fact, commercial vehicles in the wiring harness business has de-grown in China, which is also impacting it. It's just the geographic mix of the businesses that exist is why you're seeing difference in growth rates.
Okay. Any indication, sir, what kind of mix do we have from China for that Vision Systems?
I think the Ichikoh thing will come in by May, but there are many things which they have on cards. Rajat, are you there? Would you want to take this?
Yeah. We are primarily with the global OEMs in China, but we are also growing gradually. We're growing stronger with the local Chinese OEMs as well. Among the organized manufacturers, we are one of the major suppliers. We have a very strong market presence in China.
Okay. Sir, the second question is, if you look at the presentation, we have also talked about, you know, inflation as well as, you know, gas prices or energy prices have seen a big spike in September quarter. Is this something that is already reflecting or should we be, you know, expecting some impact of these costs? And, you know, how is the negotiation on this front going on with the customers?
We would not want to comment too much about the negotiations and all that. Kunal, can you explain how much we have taken? What if you follow the mercantile system, whatever is in the bank is what we have reported. There are still many customers who are not, or for want of their better words maybe, their negotiation style is to do it in the sixth month or in the ninth, in the end of the year. All those particular challenges are there. I think what is in the bank is already shown to you. Still negotiations are going on for all the customers because we are not fully satisfied that all has been paid. Kunal, you want to add something on that?
Yeah. Kapil, just so that you understand how volatile the situation is. If I take energy price as an example, over the last 6- 9 months from the time the Russia-Ukraine crisis has kickstarted, the energy variation in energy prices, you know, from let's say EUR 30-EUR 40 where it used to be, it's went at a point in time as high as EUR 700 and seemingly down now at hundreds. That's the degree of volatility that is there on that price. It keeps on varying depending upon, you know, what the news is, what's happening on the ground, what the governments are doing and so on and so forth. From our perspective, we have been trying to be as reactive as possible.
We have started looking at actively, you know, trying to reduce the energy consumption, ensuring long-term contracts are in place to get, you know, energy availability with us. Continuously monitor those situation to find opportunities as and when to reduce the risk associated with it. If you look at last quarter, as you would have seen on one of our slides, where the energy price had spiked, those costs, as Mr. Vivek was mentioning, was already embedded in this quarter itself. The environment is such that it's not that we can finish our conversations with the customer in one go and say all inflation passed.
Because it remains volatile for us, it will remain volatile for the customer as well, and hence the constant quarter-on-quarter conversation is what is occurring now. We keep on having this conversation depending how things play out in that particular, you know, month, quarter and so on and so forth. It varies by different customers. It is, I would say, a proactive way of dealing with it in some way, but we can only react to the market variables. We're not predicting the market variables and then trying to find a reaction for it. We, you know, the quarter part of some of these past things have come as price rises et cetera in this particular quarter.
A lot more is work in progress and, with a constant dialogue with the customer, to see how some of these risks can be mitigated through win-win solutions.
Thank you very much. I'll come back in the queue.
Thanks.
Thank you. The next question is from the line of Raghunandhan N L from Emkay Global. Please go ahead.
Thank you, sir, for opportunity and congratulations on very strong set of numbers. Sir, on the EV side, the share of order book has been increasing for EV programs. How do you see the share of EV revenues contributing over the next few years? Just to get a general sense on the ramp up. Related to that, given that EV components are more premium and the realization would be higher than that of ICE components, with scale picking up in these components, would profitability be similar or better to ICE components?
Oh, definitely better. I mean, you guys are going to pay much more for electric cars so the components also by requirement have additional requirements. The pricing is always little bit on the higher side. Rajat, do you have a view of this? Or Kunal? Who would be working it?
Rajat, you wanna start? Okay. Look, I think as you would have already noticed, we are getting more and more nominations from on the EV platforms. I think the big shift that is coming is that it's not just the new generation EV makers, but all the traditional OEMs are also getting very strong on their new EV platform introduction. Basically, that is what is getting reflected in our order book also. What you see in the order book is basically a reflection of how the OEMs are moving with their EV strategy.
Thank you, sir.
I think our 37% share in our order book is also reflective of the product's capability to go to the premium end. You're all aware as EVs are typically carrying more content and are more expensive, and that requires more premium features to come into it, which is what we have traditionally been well at. That's again getting reflected in the order book. In addition, you know, our business today is slightly more than 5% on EVs. When you see our order book, which is growing quite substantially, the share of this will become more and more in our revenues going forward.
Thank you, Kunal. On gas prices, 80%-90% of gas requirements are hedged for some of your peers, like FORVIA. Just wanted to understand your thoughts on how. Hello, am I audible?
Yeah. Please don't take comparisons with other companies. You can ask us about us, we will tell you.
Yes, sir.
We don't know what they are doing, how we can respond to that.
Yeah. Yes, sir. Just wanted to hear your thoughts on how you are trying to hedge the requirements and what is the kind of cost increase expected based on the hedging rate.
Kunal, can you take that? I don't want any comparisons with other companies. We have to give a response on our own for our companies. Go ahead, please. Kunal.
Exactly, sir. We don't even know what the other companies are doing, so very difficult to make any comparison, Vivek. Look, from our perspective, as I mentioned, we've been actively pursuing the market to understand its different variables and seeing what's the best way of doing it. As if I were to put it in different stages, what is controllable with us is something obviously that we want to do upfront and as quickly as possible, which is try to see wherever there are energy reduction opportunities, we are able to capture those. That's an activity that is being undertaken and hopefully delivers the energy reduction elements. It's also part of our sustainability endeavor in any case. It was always there.
It's just getting in some fashion accelerated to see that we can get those benefits as quickly as possible. The hedging, if you were to look at it, if we would have done the hedge a couple of months back, the price was close to INR 600, today it is at INR 100. Had we done the hedge, you know, we would have been sitting on a big loss today on that account. We've been taking it opportunistically, depending upon what things come our way. You know, it's not something that we are doing it as a strategy to see that there is a hedge that's there. What we have done, more importantly, is got into longer term contracts to make sure there is availability of energy.
Some of the countries we have taken this long-term contract, so the pricing may not be on a long-term hedge basis.
Thank you, sir. On slide seven, you have given about geopolitical crisis on how 20% of SAMIL revenue is coming from four countries where there is some dependence on Russia. Would you see the rationing of gas as a threat, or would that not make a difference on the industrial side?
Kunal?
Yeah. Look, that estimate is driven by, you know, whatever are the public sources. There'll be enough number of public analysis around it. Whether it will have an impact, not have an impact is, frankly the government's doing. It's not that we can do anything about it, we can only react to it. What we know today is, the German government has got its, you know, natural gas pretty much filled up. It's at 96% or 98% of its requirements are already in the form of reserves. The availability should not really be a concern.
If I look at Hungary, which is the other dependent one, their relationship with Russia at least seems to be a little bit more positively inclined on gas availability, and they've been able to sign some long-term contracts with the German producers or with the, sorry, Russian producers. You have someone like Germany offering up to EUR 100 billion subsidy program on the energy, where the exact details of this, I believe, are still being worked out. How much of this starts playing out, don't know as yet. Needless to say, the governments are doing as much and more as they can to make sure this is, you know, as quickly mitigated as possible.
Thank you, sir. Thank you very much. I'll come back in the queue.
Thank you.
Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead.
Hi. Am I audible?
Yes.
Yeah. My question pertains to how are we positioned in the volatile Forex environment given our global operations? Two-part question. One is, a, how should we see our exposure to Forex in global businesses? Two, you know, was there any positive or negative impacts of Forex in our current quarter?
Kunal, again, could you take this please?
Yeah, sure. Kapil, as you know, and if you look I think at the last slide of our presentation, it has the different exchange rates. You would see that on the INR to Dollar side, things have depreciated. On the Euro side, things have appreciated. As you're aware, on one end we have tried to do an asset liability matching up as well. We have Dollar loans as well, Euro loans as well, which to some extent has mitigated with the change in exchange rates. Correspondingly, the businesses exist both in Euros as well as in Dollars. Hence on an INR basis, again, things are mitigated to some extent. Beyond that, are we doing any active translation, exchange rate management? Answer is no.
You know, let's say our policies are driven by making sure that we are able to produce and have an exposure in the same currency in which we are selling. What we are ultimately getting exposed to is only the profitability part and the exchange rate associated with that, and not at an operating level where we have tried to make sure that the currencies are getting matched up to the best extent possible. Hence it is only the translation piece which may have some impact. But there also you have the liabilities to support some of the impact. You know, at least in this particular quarter, U.S. Dollar and Euro have moved in opposite directions, so impact is negated to a large extent.
Okay. Basically not much of cash flow impact. Except for the translational impact, there is not much impact in the business.
That is right.
Great. Thanks. That answers my question. Thank you.
Thank you. We have our next question from the line of Chirag Shah from Nuvama. Please go ahead. So Chirag Shah.
Hello, am I audible?
Yes, please go ahead.
Yeah. Thank you. So congratulations on good set of numbers. Sir, I have a question that when we look at our historical performance over the last few years, our absolute EBITDA number is largely in a range. I understand there is a demerger impact also in this. But even if I adjust for that, our absolute EBITDA number has been largely in a particular range. Now, given a lot of effort that you have put into restructuring the businesses and bringing in a strong operating leverage when the revenue comes back, from here on, how should we look at this absolute EBITDA number? What are the drivers internally that you think would drive the EBITDA number on the higher side?
If I just for the convenience sake annualize the Q1 performance of say INR 2,500 odd crores of EBITDA that we have done, if you want to see a significant ramp up, question number one, what kind of revenue is required? Is there a big change in the revenue structure that will be required? At what level operating leverage will actually start playing out for us to see the benefits of the effort that you have put in over the last two, three years?
Wow, Chirag, you want to lay out the whole thing in front of you. Let me-
It's more of qualitative, sir. I understand that you will not share the details financially, but I'm trying to qualitatively understand how should we look at it. Given, lot of uncertainty around, it would be really helpful if you can guide us on this.
Look, the first thing we answer is already embedded in your question. If there's going to be uncertainty, then there's gonna be a lot of opportunities as well. I think what is important for you to understand is how good we are with the acquisitions, the kind of numbers that we are putting on the floor and as well in our projections. There is a huge driver that's going to come because of the uncertainty that you say is there, going to be there in the future. That itself will drive.
I'll encourage Vaaman to answer this question because it's important, Vaaman?
Yeah. Thanks, sir. Thanks, Chirag. I think, you know, the question will perhaps be more relevant as we have a couple of more quarters of, you know, stability in the business, and then see a breakout as the revenues continue to grow with the book business. We've given you more clarity on the order book also, the combined business for SMR, SMP, and hopefully in the future for the other businesses as well. I'm confident that, you know, as things settle down a little bit with the costs, you know, we are driving really hard the operational efficiencies. Of course, we don't guide on EBITDA margins. I've given you the example before that look at the technology, et cetera, is also changing.
We should look at the absolute growth in EBITDA and growth, rather than just looking at percentages, because really, because our product is constantly changing. I don't think it's the most relevant thing to look at. We should look at all those businesses that have been in Motherson for longer than five years. Taking out greenfields, taking out recent acquisitions, all of those investments that we have made which have been with us for more than five years, and seeing the growth that they are delivering and the absolute growth in the returns, I think that's relevant. Of course, in an environment where you're having constant pressures, such as hyperinflation, you're having, you know, energy prices which are out of our control.
You're having start and stop production due to semiconductor shortages. You know, it's kinda really hard to answer your question when it's not really, you know, business as usual. I would just like you to be a little bit patient. I think the team has done extremely well that even in these challenging conditions, brought the costs under control, got support from our customers and continue to chip away at more costs and continue to drive the business even though we have some of the, you know, toughest conditions to really work under.
Kindly be patient, and let's have these, you know, answers to these questions when you know we're having a couple more quarters where there's a little bit more stability and you see that the team's efforts at reducing the cost base and increasing the efficiencies really plays out even more.
Second question would be that at, say if I take Q2 as a revenue base, can we assume that at this revenue base, most of our fixed costs are covered in that sense, and incremental revenue, whatever flows through, that operating leverage angle would start flowing through? Or there are certain fixed costs which are yet to be fully covered, or which are linked to our, as more revenue, as more projects start, there will be certain more fixed costs lined up. Or the all that part is largely covered, and if revenue should growing from here on.
Chirag, if you see the first quarter results, that's what we were telling you. That in spite of all the things of not getting the payments from the, I mean, the price increases or whatever, yet we were profitable and yet we were growing. That is already proof in your bag. Vaaman, definitely if you can, if you have an answer to this as well. Yeah. I think you know Chirag, it's kinda difficult to generalize. You're really generalizing us as a company that, you know, has one product and, you know, one set of fixed costs. You know, we are growing, we are expanding, we are into multiple products. So really, I think you know, we should get into perhaps product wise if you really want to have those kind of granular discussions.
You know, definitely all businesses have a certain level of fixed costs and then the operating leverages play out. Very difficult to give you a very general answer. I think in the challenging conditions that there is. I mean, you know, I think we have to look at it in that context. Definitely when we talk about, you know, some of the investments that we have made in increasing our capacities, et cetera, they've all been done. All the additional business that will come and the growth that will come based on these capacities, they should definitely play out.
Again, very hard to give you an answer on, you know, such a diverse set of products, because I think it'd be more relevant if you were only doing one product, and then you could, you know, decipher what the fixed cost is for manufacturing that.
Thanks for this. Last question, housekeeping one if I can squeeze in. Is there any lag effect of price increases coming from OEM that we have accounted in this quarter, which could be for earlier quarters? Is there any of that thing which has helped in this quarter?
Kunal?
Yeah. Chirag, you know, as mentioned earlier, you today go and talk about that price of energy is 100 INR or 100 EUR. You will come back home next day morning, it'll be 120 EUR. As I was mentioning, it's an everyday affair of trying and managing the inflation, the different cost structure that exists. It's a constant endeavor to work with the customers to try and see what are the best win-win solutions. I mean, there are, the solution is not only frankly price rise. There are engineering changes that can be done to improve some of the parameters associated with this and so on. Hence there are multiple different kind of conversations that are ongoing.
We did think about how do we showcase what is past, what is current, and so on and so forth. Frankly, the reality is if we think it's past in some of the cases, you know, like commodities may have also eased out to some extent or stabilized in some extent. In some of the other situations, something may have spiked up, like wage inflation in Mexico spiked up. There are so many different variables at play that it became very, very difficult to find a common theme to be able to highlight that. The best I can say is frankly it is work in progress.
There are some portions of it which have got passed through, which is what we are referring to in our presentation, and there is still a fair amount of conversations ongoing, which will hopefully solidify in the next few quarters.
Yeah. Thanks a lot, and all the best.
Thank you.
Thank you. The next question is from the line of Pramod Amthe from InCred Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity and, thanks for the detailed presentation, and the disclosures continue to improve. First question is with regard to the EV order book. It seems to be a pretty impressive jump, from 27% - 37%. Considering you have wide areas of businesses and each of them have a different technical capabilities to win these orders, would you help us understand where, which regions might have helped you to jump up, drastically on this front?
Okay. That itself is a very wide question, but Kunal, can you give him a taste of the variety? Maybe what's very important is the ability of Motherson is that we are giving the diversity, and that also creates tremendous moat for us because we are becoming more and more suppliers of choice. You will see that time and again in the order book and the execution of the same. Even the difficult times we have picked up over $2 billion worth of orders, which a lot of people thought would be very difficult for us. Anyway, Kunal, can you try to answer this? Yep.
Pramod, number one, I think you may want to note this is in reference to the order book that we have for SMRPBV, which is largely the vision vertical and the module and polymer vertical. Those are the two large verticals represented in SMRPBV. That's where the share has gone to 37%. Maybe, Rajat, you want to give specific examples of how we've been able to win, you know, share of business in EVs, anything special that we are doing maybe that will help Pramod. I'm happy to help address this for now.
If you look at Modules and Polymer, we have a very healthy order book in range of over EUR 12 billion that is going to be coming up, you know, into realization or SOPs, if you will, within next year or two years ahead of us. If you look at the portfolio of where those revenues are coming from, we continue increasing our proliferation of different regions. Historically, you will see a very strong presence in Europe. We still maintain that, a very strong presence in Europe, but other regions like China, like America, North America, South America, are becoming a larger part of our portfolio, helping us de-risking, you know, localization or dependence on specific region.
We also have, I think, large growth in electric vehicles. You will see that I think on page six, if I don't lie to you. There is a page that is showing our order book and, I'm sorry, it's page 18, then you will see in detail what I'm still talking about. Working as well, of course, on the diversification of customer portfolio where premium vehicles are or premium car makers are significantly larger part of our portfolio in polymer group, which works for us very well under the current circumstances. We also have a very good presence in mid-segment and entry segment in other regions than Europe.
I think, all in all, this is a very good, healthy portfolio and order book, showing growth, and good future. Rajat, would you like to add something for vision division?
Yeah. Look, I think maybe, Rajat you very well explained how we've grown across the regions. If we look at, you know, the driving factors of what is, I think, pulling more nominations on the EV per se, I think it's the ability of the organization to deliver very quickly on the new programs because most of the EV makers are trying to catch up and that is where they're looking at very short timelines. I think that is one of the big drivers, our ability to engineer very quickly. Also, it is about the content. Most of the EV makers are again coming with very high content, and that's where I think competitiveness also plays in a big role.
Our larger market share or growing nomination on EV side is also a reflection of our strength in that.
I think overall capability and trust that we have from the customers is also helping us gain more share. Overall, I think we're very well placed to get more and more EV share, and I think that's what is getting reflected in the order book as well.
Yeah. Thanks for the detailed answer. Second question is to Kunal, if I can ask. On this slide 14, where you have talked in detail about working capital, inventory days, post-COVID, it seems like structurally, it has been elevated. How do you see normalizing? Are there any chances of normalizing, or where are the levels you expect the inventory to normalize and some rundown to happen on these inventory days and hence your working capital debt?
Sure, Pramod. You would see a very stark increase in inventory as seen on that slide, which is consuming over INR 2,000 crores of capital right now, or extra inventory that we are carrying. This is an impact or effect of the supply chain volatility, where inventory obviously becomes the first measure to try and see that customer lines are not impacted by supply chain volatility. Now, as you would have seen in, you know, like the supply chain pressure index, which is looking downwards now, some of these issues seems to be resolving or at least receding to some extent. Remain volatile, but directionally at least receding, hopefully.
that as more confidence comes into the supply chain, we should be able to reduce these inventory levels back to more normalized points. How quickly is a little bit of an unknown animal? Yes, we should hopefully see directionally improvement coming as one, you know, derives more confidence on the supply chain.
Sure. Thanks and all the best.
Thanks.
Thank you. The next question is from the line of Prateek Poddar from Nippon India Mutual Fund. Please go ahead.
Hi. Just on slide 32, you've called out $400 million worth of order book on the aerospace side. Is that understanding correct?
That is right.
Over what period is this supposed to get executed, sir? I'm assuming that you follow the same rules which were there when SMRPBV order books were disclosed. The moment the order gets into SOP, you completely knock it out of the order book.
Yeah, that's always followed. In the new order, this thing we are giving you additional information. Kunal, maybe it's a good idea to explain that. Yeah, sure. Number one, Prateek, you may want to note this is booked business, not order book. The difference being this includes work in production.
Okay.
Number two, you should think about this as potentially 6-7 years, kind of a space.
Okay. Kunal, when you say 30% growth, it is, let's say last quarter this was roughly around INR 300 odd million, which has now become INR 400 million, right?
Absolutely right.
Secondly, just Kunal, one small help, if you can, if I were to just go back to this India share of business, which you have highlighted on one of the slides, could you call out how much was your EBITDA coming in H2 FY 2022 from India business and H1 FY 2022 also? Is it possible?
H1 this year, I can tell you, I
30%.
Don't have it offhand what it was last year. This year it was
This year it's 30%, right?
Right.
You called that. Yeah. Okay, so you don't have that offhand. Could you disclose this? Is it possible for you to disclose H2 FY 2022 and H1?
We have disclosed it. I think the PAT number, if I remember right, was I think 55%, if I remember right, or greater than 55%, or 45%, something like that. I can get back to you. I think we had disclosed this at least last H1.
Sure. Thanks.
It wasn't very different to the current share of profit, give or take 5%.
Perfect. Thanks and all the best. Thank you.
Thank you. The next question is from the line of Arvind Sharma from Citig roup. Please go ahead.
Yeah, hello. Good evening, sir, and thanks for taking my question. Sir, just a question on this one-off thing on slide three. Could you please let us know where exactly it is accounted for, if it is SMRPBV within the Euro terms? And also if you could share SMRPBV PBT and PAT.
Kunal, you take that.
Sir, just to clarify, you're referring to the Russia impairment? Is that what you're referring to? Yeah, slide three, the notes that you have given, those INR 98 crore, INR 14 crore total. Exactly which entity are they sitting in? If it's SMRPBV within the Euro terms, and then SMRPBV PBT and PAT. Right. There is an SMRPBV presentation that has been uploaded as well. You will get it there.
Vipin, maybe you can help me with SMRPBV. Here you would see the PKC piece that is over and above.
What is there in SMRPBV? PKC also has presence in Russia. The wiring harness piece is, I think, if I remember right, EUR 7.7 million what has been booked in SAMIL. The rest is coming in SMRPBV. The other portion which is the German insurance claim that is lying in SAMIL directly. That is part of the module polymer business of erstwhile MSSL and now SAMIL.
All right, sir. If you could share the SMRPBV PBT and PAT number? Unfortunately, I could not see that in the presentation. Maybe I'm missing it, but if possible, can you share that?
Vipin, do you have that?
I don't have the number offhand with me. You know, just to clarify, the complete interim report, which is the complete consolidated financial statement on an unaudited basis, are already uploaded on the website.
Sure, sir. I'll check it.
From there we can see the PBT and PAT number. Yeah.
Sure, sir, will do that. Thank you so much.
Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead.
Yeah, hi sir. Just a follow-up on the external environment, the concerns that we are seeing. If you could comment both from the point of view of how the customers are looking at Motherson, from you know, market share perspective or incremental orders perspective, and also from an acquisition perspective. Because I remember some of our best acquisitions have happened in periods when, you know, the external environment has been quite tough. You know, how are you thinking about it? What are the kind of opportunities you are seeing? Just some qualitative color on that would be helpful.
Definitely, Kapil. The thing is that people forget that the more the problems that happen in the world, that many more opportunity doors also open up. Our M&A teams are being requested time and again for more solutions. You notice we're appearing in the papers also. We would only take a company over if we think that that's going to be EPS accretive, it's going to be something where the customer is standing behind us. Obviously, all these things are going to sort of give you a little bit of concern. We in Motherson have a huge plethora of companies that actually support acquisitions and all that. Vaaman, would you want to add something over here?
No, Papa, I think you covered it. Lots of opportunities, absolutely. You know, with the performance that the team is putting up, it opens up more opportunities and the confidence of the customers is even more there.
Yeah. I think one thing is very important, which you asked. It's important for me to cover it. You asked me if the customers are worried about the market share that we might have or something like that. Think about it. There are so many companies which are not there anymore who were supposed to be our competitors in the products that we are getting into. You know, it's something which is very interesting. A lot of our competitors, so-called competitors, themselves are in very big trouble and are extended beyond this thing. More and more we are seeing the big companies, car companies coming to us asking us to solve their problems.
That's going to be there when we announce the other acquisitions which will come as per the time limit at the moment which is there. You'll see that the customers' confidence in Motherson is only increasing. Thank you.
Okay, great to hear that. All the best.
Thanks.
Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Jay Kale from Elara Capital. Please go ahead.
Yeah. Thanks for taking my question. Just one question, clarification on your income from JV and associates line item in your consolidated results. You know, just a clarification that that includes your profits from Motherson Sumi Wiring, right? But Motherson Sumi Wiring profits have been quite steady. This line item for the last four quarters or so has been quite volatile with some bit of losses also coming in. Can you just throw some light on how to look at this line item going forward and what are the other JVs which may be under pressure if at all?
Sure. Kunal, can you give that?
Yeah. You're right, it does include the profitability of MSWIL. That is only one of the many, many JVs that we have. There are, I believe, I think 26 or 27 different ventures in there.
It's a fairly long list of things, some going well, some not going so well. Some in the investment phase and so on and so forth. Different JVs being in different forms of growth and its you know, let's say, maturity that the business has in. Difficult to really say. It will frankly remain a bit volatile just given the nature of the number of JVs that are in the dividend base.
Okay. Understood. Thanks, thanks, and all the best. That's all from my side. Thanks.
Thank you.
Thank you. Participants who wishes to ask a question may press star and one. As there are no further questions from the participants, I now hand the conference over to Mr. Vivek Chaand Sehgal for closing comments.
Thank you very much. We are trying to improve the information that we are giving. The presentation is a good way to understand that. Secondly, we are asking all the top people in the group to be present in this call so that you can get straight answers from those guys. There is lot of doubt about what will happen in the energy crisis, which is gonna be around the corner in Europe. I think it's fair to say that a lot of countries have taken good measures to make sure that people are not without a job and all that. Believe me, it has very tough attention of the whole group. Not group, sorry. All the countries out there.
I think the system of Motherson is very clear. It's a mercantile system. Whatever is in the bank is what we're gonna show you. What is in the discussions, negotiations, and not yet with us in our bank account. As Michael G. would say, "Cash in bank is reality." We are very, very sure to follow that. I wish you all the best, and thank you all very much for attending this call. Over to you.
Thank you. On behalf of Samvardhana Motherson International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.