Ladies and gentlemen, good day, welcome to Q1 FY 2024 results conference call of Samvardhana Motherson International Limited. As a reminder, all participant lines will be in the listen-only mode, 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. VC Sehgal. Thank you, over to you, Mr. Sehgal.
Thank you very much. Good evening, ladies and gentlemen. Thanks a lot for joining the Q1 financial year 2024 results of Motherson. I'm glad to announce Samil board has approved the Q1 results. Motherson outperformed the industry in spite of inflationary headwinds on account of interest rates and wage bills across the geographies. The company has delivered strong performance and healthy growth of the top line, as well as the bottom line on a year-to-year basis. All of our business divisions have performed well, with double-digit growth on revenue and EBITDA. The leverage ratio remains at 1.4 level, which is well within our target max of 2.5x. These results demonstrate that with our continued focus on operations and delivering value to customers, Motherson is in a strong platform for growth.
I have with me on this call, Vaaman, Pankaj, Kunal Malani, Charles, and Rajat, to help me answer any questions that you might have. I now hand it over to Vaaman to provide you an update on the quarterly highlights. Thank you.
Thanks, Papa. Good evening, everyone. SAMIL has had a strong start to the financial year, with quarterly revenues of INR 22,500 crore and absolute EBITDA of INR 1,940 crore. At the outset, I would like to make clear that this is all organic growth. Out of all the acquisitions that we have announced, only INR 26 crore is what is part of the acquisitions in this top-line figure. As you can see, this is a phenomenal growth of 27% in revenues and 64% in EBITDA on a year-on-year basis. I would also like to highlight that the PAT has grown from INR 142 crore to INR 601 crore in comparison to the previous corresponding year.
Further, as Papa already mentioned, the leverage ratio has been maintained at 1.4x, despite the M&A payouts and higher engineering inventory. Samil as a platform is now able to take full benefit of group synergies and interlinkages, under a simplified structure, the outcome, which is demonstrated in a momentum and consistent performance is quite a priority. We believe that the macro environment is stabilizing, although at some elevated levels, there are still some headwinds that remain, such as rising interest rates and wage bills across geographies, which we are dealing with. By and large, though, the disruptions have normalized, Motherson has now moved into business as usual mode. I'm moving into a year-on-year overview for all of you, which takes into perspective the consideration of the seasonality of the automotive production, as you all know, significant.
This quarter, the light vehicle production was around 22 million, which is a 16% increase year-on-year, and for the commercial vehicles, it came in at 842k, which is about an 18% increase year-on-year. We believe the better availability of semiconductors has aided the stabilizing of volumes, as the demand-supply lag is improving with the supply chain also easing. We are seeing strong growth coming from the organic side due to stabilizing automotive production and tailwinds on accounts of uptick in zero-emission vehicles and the premiumization, which dovetails well with our new order wins, resulting in 7 new greenfields being set up in emerging markets. This we had mentioned to you before, 6 in India and 1 in China.
We expect the CapEx for the year to be at the upper band of INR 3,300 crore with this growth momentum. We also believe that with the M&As going ahead, we may relook at the CapEx construct in coming quarters and see what that brings. However, this is all really good news as we continue to grow in this environment. We would like to thank our customers for their trust and support, and we continue to deliver as per the production schedules. There are ongoing conversations with customers as if with respect to the certain headwinds that we, that we still see, which is definitely resulting in few of our plants, which are still operating at suboptimal levels due to issues such as inflated cost structures, labor, pricing issues, et cetera.
We continue to maintain our focus on improving the red units' health and also stay focused on improving profitability on a sustainable basis. M&A is another key pillar of our growth strategy. We are happy to highlight that we have closed seven acquisitions since April 2023, out of which, like I said before, only INR 26 crore has really come in in the top line. You will really see more of this momentum come in the coming quarters and in the new year, where all of this will really be captured. The customers have really supported us during these challenging times, and we are thankful for that. We are working in close collaboration with them, and we aim to bring innovative solutions to streamline and solve operational issues that our industry is seeing.
These acquisitions will add a lot of value to our offerings and will definitely provide new growth opportunities for Motherson. We believe this will contribute to additions in our yearly revenues of almost $5 billion in gross levels and about $1.1 billion in net levels. We've added 41 facilities into the Motherson ecosystem, and again, we are very grateful to our customers for their continued trust, and we also welcome 8,500 employees of these new companies into the Motherson family. On top of this, three M&As that we have announced are still pending closure: Cirma, Yachiyo, and Dr. Schneider, which will further add revenues of $1.4 billion next year. It is important to note that all of these above are strategic in nature, and all are also cumulatively cash flow EPS accretive, cash EPS accretive.
The faster integration of these assets will enable us to go after even more M&As. The automotive industry continues to evolve with changing technologies required for zero-emission vehicles and the premiumization. As a result, we believe there are even more opportunities and customer-driven deals with fewer players to really be able to conclude these. We believe we're in the driving position here, and exciting times are up ahead for Motherson. With this, I would like to conclude the highlights and open the floor up for the question and answers. Moderator, can you please support that?
Thank you. We'll now begin the question-and-answer session. Anyone who wishes to ask a question may press star 1 on their telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. Participants, you may press star 1 to ask the question. The first question is from the line of Siddhartha Bera from Nomura. Please go ahead.
Yes, sir. Thanks for the opportunity. My first question again is on this acquisitions where you have mentioned that it has added about INR 26 crore of revenue. Where will this be mainly accounted? Will this be coming as a part of the standalone or any particular segment? Can you just indicate where will it be getting accounted right now?
Kunal, will you take that?
Yeah, a little bit in, in the polymer side, a little bit on the emerging business side. The two we have closed is Vimal and Bolta. Bolta lies at polymers, Vimal lies at emerging business side. All of them are in the console, none of them are in standalone.
Okay, got it. Got it. Second question is on the standalone side, sir. If you see, the growth has been quite strong at 25% on the revenue side. Even, if I look at, the passenger vehicle industry volume growth, it has been quite soft, like about 7% in the quarter. Are we adding any new orders, or what is driving this strong growth, according to you? If you can just highlight a few reasons here.
Yeah, I'd like to take that, and maybe the team can support. Look, we've always told you that with all the JVs that we had signed and seeded in the past are now coming to a very good place where they are ready for exponential growth. The orders are taking, which has happened in the past, is now being executed. These are very exciting JVs that have come into to, to the farmer side. The order execution is happening, which is increasing our value content as well. Definitely, we are placed to grow perhaps a bit faster than how the market is growing because of our strategic positioning in the products that we're offering to the customers and the premiumization that we talked about and our value content going up.
That's a result of the hard work of the teams to, to bring in the right products, and, that's what you're seeing.
Got it. Also, sir, if I look at the standalone numbers, there is a credit loss provision which has been reoccurring every quarter. Even in this quarter also, I see that about, I think, INR 11, 12 crore of provisions have been factored in. Possible to highlight what is this exactly and why it is coming up every quarter in the past few quarters?
Kunal?
I will continue working in trying to turn them around, and as part of it, there are ongoing conversations around this, where we're obviously taking a strong stance on some of these aspects. Conservatively, you know, we are building some of these provisions in order to highlight that, you know, we'll be happy to take losses on board, but we won't be running businesses at loss perpetually. It is more a conservative piece. You would also have noted that some bits of improvement is visible if you look at how the minority interest has turned positive now, or share of profits from investments have turned profitable now. It's heading in the right direction, taking still some time, but, yeah, we're heading in the right direction.
Got it. Sir, lastly, if we look at the net debt, that also has gone up, quite a bit, if I look at, compared to the last quarter. Any particular reason why it has gone up? Is it more seasonal, or how should we understand this?
...Kunal?
It's, it is seasonal in, in nature. You would see this trajectory happening pretty much every year, where there is a buildup as we move into the summer months, and then there is a ramp up again once summer months come down. This is part of that buildup that occurs. Besides that, I think, we have also built up some of the engineering revenue. You know, we, we last quarter, we disclosed $70 billion worth of order book, that incremental growth. As these production volumes come into play, the engineering associated with it is the other piece of the pie, which is adding to the inventory piece of it, so. There is a working capital expansion, pretty much similar to how the, the net debt has played out.
Okay. Got it, sir. I'll come back to that.
Thank you. Next question is from the line of Raghu from Nuvama. Please go ahead.
Thank you, sir. Congratulations. Good to see extremely strong performance. Sir, firstly, on the profitability at Vision Systems or SMR, any cost pressures being seen here? Costs seem to be higher in this quarter compared to the past 2 quarters.
While I understand that, the one, one of item... Rajat? Look, nothing in particular. It is as, as we shared, there are some, you know, softening on the commodity side, which is helping. Then there are some, you know, pressures on the tape side that we are facing in certain geographies. It is, it is a mix of, you know, various factors moving around. I mean, what we also have seen last year is that, you know, we have had settlements with our customers, you know, with the discussions that we've been having and, and they've supported us during that, that process.
You know, as, as we go into this year, this again is some discussion with the, you know, customers, wherever it is, it is required. That's something which will carry on. I would say, nothing, nothing specific.
Got it, sir.
Sorry, if I just might add a few, so that you appreciate this a little bit more. I think last year we had mentioned very clearly that we should not be looking at it only on, on the, you know, quarter end phenomena and how the margins are performing, but more at an aggregate level for the year is a more reflective picture. Where if you look at SMR or Vision Systems, that was at 9.8%, if I remember right, for the aggregate. This performance is, is at least on absolute levels, highlighting a little bit the growth rather than degrowth, from that perspective. Just bear in perspective, and this is first quarter, which seasonally is, is not the strongest quarter.
Thanks. Thanks, sir, for that. Very helpful. The seasonality which is associated with the first quarter, is there any specific costs which are, one is, I understand, employee costs, but apart from that, is there any other costs which are generally on the higher side in first quarter?
We have 5%-10% of our revenue. So this is again, for the business systems, right, this question?
Yes, sir.
Okay, cool. Look, as I know, there, there is, yeah, nothing unusual, other than the seasonal, you know, factors that we have. Again, I mean, if you are comparing quarter-on-quarter, as Kunal also highlighted, there are some, you know, year-end, final settlements that happened. Also, I think, it would be worth noting that there were also some pending settlements that happened for the prior period, which actually got converted in the, you know, last 2 quarters. Maybe that is something which if you compare with those last 2 quarters, might be giving you a bit of an anomaly there. I mean, if you compare Q1 to Q1, quarter-on-quarter, you can actually see an improvement.
That, that I think would be a more appropriate comparison to you.
Thank you, sir. Very useful. Kunal, in terms of energy costs, in recent months, gas prices have again started seeing a bit of increase. Would you consider taking hedges or is gas prices now part of customer contracts going forward?
There are some pieces that are hedged. A lot of it actually not hedged, because a lot of has been discussed with customers, either in terms of indexations or in terms of coming back to them as and when there is a change in the pricing structure. It's a mixed bag, but I think the the industry in general, and Motherson, I would imagine, has started both evaluating this a lot more closely and working with the customers to to work parallelly to see if there are any inflection points at which we need to discuss one way or the other on the pricing front.
Got it, sir. On the EV side of revenue, it's very good to see INR 1,600 crore number. Directionally, EV transition is helping increase in content, revenue and profit in dollar terms. Does EV business also have better margins?
...I think, look, we, we gave a lot more clarity on that in the, in the, in the investor day that we had last year. Definitely, we believe that the shift towards EV vehicles definitely has a good positive impact for most of our products. As you know, we are actually engine agnostic in that sense. For the EV offerings that we have, because they have a lot more, let's say, aesthetic part of more technology embedded into the offerings, even the wiring harness constantly changes if you're, if you're looking at EV, it only, you know, augurs very well for us. Although, definitely is to be seen how these offerings are accepted by the market and how they continue to grow.
Like I said, from a Motherson side, either which way, we are on both the platforms. We are so-- you're seeing that the, we are there on the EV platforms, we're there on the traditional platforms. So regardless, of which one really play out, I think, we would, you know, continue to grow.
Thank you, Vaaman Sehgal. One last question. On share of profit from associate, there is an improvement. It would reflect better profits from Motherson wiring, but losses have reduced from other associates. Any major associates that you want to call out, where there is an improvement?
Look, I think, Kunal can help me on this, but, you know, there are multiple companies, there are multiple joint ventures that we have. Also on the, on the, on the India side, we're seeing a lot of progress that's, that's coming up with all these smaller companies that are now, you know, growing to a, to a good level. Of course, there remains some companies with, with some, with certain issues, which is normal with the size of the group that we have. We are quite focused on it. I think we already told you that we are very much focused on each and every red unit that is there.
Our goal is to reduce, or bring to zero, as many as possible, in this five-year plan, and the aim is to make all of them green. Those efforts are paying off, and you're seeing a reduction in those numbers, the market coming back, you know, some tailwind in the numbers that's also coming, that's helping the whole scenario. We are quite focused, and there's a special, you know, team that's only looking after these thermoregulating units, making sure that we are working together with the entire stakeholders, including the customers, to make sure that we have good solutions for all of this.
On top of that, as you know, we're also acquiring companies which will help to bring more scale to some of these, some of these issues that we have on a global basis. Yeah, so overall, you know, there's a multiprong approach to solve this issue, and definitely this number should continue to go down. If we have some luck with the numbers continuing to increase, that should really help it.
Thank you, sir. Very helpful. That's all from my side.
Thank you. Next question is from the line of Ashwin Parekh from JP Morgan. Please go ahead.
Hi.
Your line is on mute. Yeah, go ahead.
Yeah, I can hear. Yeah, thank you. My question is on the wiring harness business. On the consolidated segmental, you've seen a very sharp improvement in the profitability of the wiring harness on both year-over-year and quarter-on-quarter. Given that Motherson wiring, Motherson Sumi Wiring has not really seen any margin improvement, is it fair to say that bulk of this improvement is driven by PKC? If that is the case, you know, what is the outlook for the PKC business and the margin improvement trajectory there?
Pankaj, can you take this one, please?
Yeah. Well, the margin improvement has been all across. The business is not only consisting outside MSL of PKC, but also MWSI and various other units of Sumi. It includes also exports from India, as well as our entities in Sharjah, in Thailand, Mexico and UK. There are multiple areas, and the focus has been in terms of making improvements. As Vaaman Sehgal mentioned earlier, that wherever the red units were for one reason or the other, there have been in the past, some sharp drops of the customers' volumes in some of the regions, and in many others, there were erratic production, which have been causing a lot of pain, and some of these areas have improved. That is what is reflected.
Also the, the, the, you know, the settlements with the customers to bring the cost levels to the real situation, which is there. The situation is always moving, and we all work towards that so that we can keep making the improvements and keep ourselves at pace with the changing environment.
Okay, okay. Just a broader question. You know, last quarter, you know, we had heard from you that the conversations with customers with respect to cost inflation pass-through had been concluded. We had seen the benefits also of that. As we stand at the end of one Q, are there still some costs which are yet to be, you know, fully, you know, like, pass, pass through to the customers? Are there conversations going, and are there any benefits that we expect in the coming quarters?
Look, these are moving parts, right? I mean, can you tell me where energy prices are gonna be in the next couple of quarters? I, I don't think anybody really can. You know, all those things which are still really moving, which are volatile, those conversations will definitely continue till we don't see stability in all of that. I think definitely on the, on the, you know, perhaps on the wage increases, obviously, they happen once a year, so those, those are cemented, already done. Some of these bits which are moving parts, there will be continuing conversations till we don't see stability in there, and the, you know, customers also acknowledge that, that this has now become part of the, the daily operations. Wherever there is, volatility that is not in our control, those conversations will continue.
I think the customers also appreciate that and, and, and acknowledge it.
Okay, great. Thanks. I'll come back if needed.
Thank you.
Thank you. Next question is from the line of Mayur from IIFL Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity, and congrats on these set of numbers. First one is with regard to the EBIT margin expansion in the modules business, especially in recent quarters, it seems to be scaling new highs. Any key drivers you can share of, or can you make it a part of PBT now? Your disclosures are more becoming division-wise. What is driving might be similar for modules or for wiring. What are the drivers and how sustainable they are, so that we can get more predictability on their expansion or build into your model?
Kunal, I, I couldn't hear the question very clearly. There was some cracking in the noise. If you heard it, can you answer it or direct it?
Okay, Mayur, sorry, I, I didn't catch the question either. Could you repeat again?
Sure. I was saying, the wiring and modules, both the divisions seems to be scaling a new high in terms of EBIT margins in recent quarters. As your disclosures have improved on this division side, would you be able to give more color, where it's coming from, what parameters are leading to this, so that we can try to predict them and try to build them in a part of our projections? Can you just give us, so what's happening there, which is driving this EBITDA scaling new highs in these two?
Okay, understood. Look, I think, first of all, it is not only wiring polymers, but I think all our divisions have done well. The themes are actually commonly playing out for all the divisions. There is a piece of operating leverage that is playing out, given the expansion in the order book and the execution of some of the earlier contracted orders. Vaaman Sehgal spoken enough about, I guess, premiumization and value content, et cetera, that is all getting embedded in there, so that's adding on the operating leverage side. There is a tailwind on account of some of the commodity prices, et cetera, especially when you start looking at it from previous year to current year perspective, which again aids the profitability.
There are headwinds, however, that still remains on the inflationary side, both on supply chain as well as on the wage side. So some pluses and minuses as the case is. But as we've been saying now, things are looking relatively more stable. There are obviously still work to be done on many of the red units that are there. Those conversations are ongoing. As some of the variables change, we need to be continuously discussing with the customers to figure out ways of getting those compensations in place. So that is now pretty much business as usual construct now is the way we see it. And hence, we should be seeing, again, improvement, as I said, on a year-on-year basis as we move ahead as well.
The trends are, are clearly favorable in that direction. Even at a pure volume construct perspective, I think the industry is, in spite of all the recessionary talk around, still continues to showcase growth. I, I think we are looking at better times ahead.
Sure. The second one is, the September quarter seems to be bulky, with two large acquisitions to be part of the revenue, if I see your SMRP presentation right. Can you indicate... Have you decided where you will place these two large acquisitions in terms of divisional disclosure? Any impact we need to see on the margin profile, if that is the case for those divisions?
Kunal, can you take this? I'm not sure how much we can speak about these acquisitions at the moment.
Look, I think SAS, which we have closed, is a relatively newer line of business, in the sense that it has a much larger assembly component to it, and hence we will likely classify this as a, as a separate division, along with some of the other similar kind of businesses that might be lying in some of our existing divisions. That's the most likely outcome. We're obviously still looking through some of these aspects and then take a call around it. I think the other large one, if you're referring to the Yachiyo one, that is still some time away, we really haven't given it a thought around that construct. If you're thinking about Dr. Schneider, that will be part of the module and polymer business.
The last one is with regard to the M&A wins. The speed at which you're closing the deals, it looks impressive. At the same time, if I had to look at your PPT, when you are talking about global growth, and as you refer to the, you know, even though recession fears are there, but the actual volume momentum seems to be still double digit. Wanted to know your thoughts. These discussions were always on, and is there a change in fund availability for these entities, which is making you to get the deals at your valuation or terms, and hence you are able to close it? What's happening in the environment which is turning favorable to you?
... Kunal, I can start and you can, you can add in. Look, I think we've always told you that, you know, we, we stay true to our vision to be a globally preferred solution provider, and I think we have really focused on making sure that wherever the customers have issues, we are really the, the people there to be able to give them lasting, sustainable solutions to these things. Our track record is, is, you know, speaking for itself. Whenever there has been acquisition that Motherson has done in the past, we have solved those problems. We continue to hold those assets, we invest in those assets, we are growing together with the customer, and our track record really speaks for itself.
I really can't comment on, on, on the others, but I can tell you that definitely we are extremely focused on, on, on the customer. You know, working together with them, finding sustainable solutions and trying to, to get out of the, the mess that we've seen in the last few years with all these impacts that have come and hit on all sides, and finding good solutions to these companies which have good technology or, or, or have strategic location advantage or, or many things that could be working for it, which the customer wants to preserve and make sure that when a company like Motherson comes in, not only do we preserve that, but we enhance it. That's why, you know, the trust is there. I, I think that's, that's all I can say.
reme hard work done by the teams, the board really appreciated. This is a large number of acquisitions that have happened in a short period of time. The entire Motherson team has been working round the clock to make sure that the customers' requests have been answered, and we've given it our best shots to come up with lasting solutions for these companies. And we're really quite proud of our efforts. And, you know, we've been patient the last few years, waiting for the right moment to really go out there and do acquisitions. So that's a combination of all these things coming together, and definitely very, very hard work done by the teams to get us here and to make sure that the customers' trust is kept full in us
If I might just add, in spite of all this, our leverage is still going to be below 2x. That highlights, you know, how our existing business is performing, as well as the comfort we have on some of the newer assets that will come on board. And as, you know, things are where they are, we will probably be, give or take in and around where we are today on the leverage as well. This is not coming without much expansion on the leverage ratio side.
Sure. Thanks, Mayur .
Thank you. Next question is from the line of Vedha Bhardwaj from Capital Insights. Please go ahead. Veda, may I request you to unmute your line and go with the question, please? Veda, can you hear us? Due to no response, we move on to the next participant. Next question is from the line of Nishit Jalan from Axis Capital. Please go ahead.
Yeah, hi, thank you. Congratulations on very good set of numbers. Just two clarifications. Vaaman Sehgal, in your opening remarks, you mentioned that there are a few M&As which are pending and which will lead to, which will add $1.4 billion of revenues next year. Just wanted to understand which three acquisitions you're talking about? If I understand correctly, there are more than three acquisitions which are pending closure. Secondly, you also mentioned that a part increase in debt from Q4 to Q1 is also because of payment for the acquisitions. Is it possible to quantify how much did you pay in Q1 to complete all the acquisitions?
Just wanted to understand how much is seasonal and because of increase in engineering inventory, and how much is because of M&A?
The second one, I'll, I'll request Kunal to, to go to. What, what we were saying was that the three acquisitions that are still to happen are Somaa, which is the aerospace one, the Yachiyo, which is the Honda's one one that we that we announced, and Dr. Schneider. You know, there are antitrust approvals that need to happen. There are closing things that need to happen. All these are, are moving parts. As they close, that's when they start to get added. When I said that they will add $1.4 billion, that's the performer for the full year that will come. Obviously, as every quarter comes, depending on which quarter of the seasonality as well, that will get added to the top line of the company.
Of course, the ones that are, that are profitable, that will add there as well. We believe, like you said, that they're all EPS accretive. I believe that we have structured them well to, to get off the ground running with these things. They will immediately add to both the top line and bottom line of, of, of Motherson. That's just depending on the, on the closing times for these acquisitions. As you know, these are all regulatory things that, that happen, you know, a couple of them have already closed, so you will see some of them already kick in in the next quarter. Some of them are kicking... Definitely, Yachiyo will be more towards the next, next year. Somewhere around March, we believe the closing will be.
The work doesn't stop for us. I think, obviously, once we announce the acquisition, we already start working together with the customers, together with the teams, as much as we are allowed to do in a, in a, in a legal manner, to start preparing ourselves so that as soon as it closes, you know, the impact is immediate. That's, that's what I meant in the first part. I hope I'm able to answer that. If you want further clarification, please, please let me know.
No, I think it's clear. I just wanted to. Just one, one doubt. SAS acquisition is being closed now, and it will be part of revenues in 2Q?
Which one?
SAS Autosystemtechnik, which we announced in February.
Yes. Next quarter onwards. Kunal, correct me?
Yeah, it will be part of Q2.
Yeah.
Okay. Kunal, if you can just answer the debt part, it will be very helpful. Thank you.
I think, this quarter, we basically closed Vimat and Bolta and Prysm as well. Altogether, I think the payout would be somewhere in the INR 150 crore region.
Okay, thank you so much.
Thanks.
Thank you. Next question is from the line of Rajesh Kothari from IndiaNivesh. Please go ahead. Amar, may I request you to unmute your line and go with the question, please?
Can you hear me?
Yes.
Yeah. Hi, this is Rajesh Kothari from Alfaccurate Advisors. You know, I have just, you know, one question. I actually missed the opening remark, if any, by the management. Just wanted to know, in your view, you know, how the you know, you think the capacity utilization from here on, do you see significant improvement in capacity utilization based on, you know, the key customers' outlook on the industry?
Yeah, thanks. Look, you know, capacity utilization is a broad term for us. We've got thousands of products, and we also, as you know, if you've been following us, that, you know, we did a significant part of the CapEx for the order book that we announced in the last quarter was already done. All that you are seeing, where we are investing, now is for future growth, in taking view of all, of course, the new orders that we are getting, and also, of course, the new acquisitions that are coming in, which will add on their own CapEx there. On the capacity utilization bit, I think for the order book that we have, we are substantially covered. We are only gearing ourselves for future growth that is coming.
And happy to answer any more around that if you have further questions.
Basically, my question is a little bit different. You know, what I'm saying is, you know, over the next, say, 12-24 months, do you see significant improvement in capacity utilization from current levels based on the outlook, from your customers?
Rajesh, this is Chairman here. I think you're very fine. Just wanted to tell you that if capacity utilization, if you imagine that if we are working on 100%, then we will always fall short and stop the customer line. You know, we don't want our capacity to be utilized more than 75%. If it goes to 75%, immediately we start to make it half, because that means the models are doing very well, and we have to have another plant on the ground. One, one month to another, the capacity sometimes needs tremendous amount of growth. We're not a cement producing company, you know?
Yeah.
That, capacity utilization is 100%, 120% is great. In the component car production, we don't want to go beyond 80%. The whole planning of setting up a green field happens when the plant has already hit 80% capacity.
Hmm. True. No, no, you are, you are absolutely right. My point is basically, currently, where are we? You know, of course, we are putting up CapEx, and the capacity is based on the customer's outlook and the guidance. Currently, where are we?
We are close to 1,000 parts here. Which capacity are you worried about?
Overall, generally, because I'm, I'm sure you can't give me product wise and plant wise.
We, we don't make one part, but, you know, we have 2,000 wiring harness, polymer, so many parts. I mean, we don't sell in the open market anyway.
We are still below the COVID levels of the automotive industry. There is still, you know, we believe 15%-20% to go for the highest that we have reached, and we are slowly creeping back. I think the outperformance that you're seeing by Motherson is because we grow faster than the market, we grow more value than the market, and the premiumization and these trends that we have talked about are really playing out in our favor, which helps our products, which are directly impacted as, as the numbers grow. Look, no one really knows the 12-24 month thing. I think, you know, we're still grappling with quarter-on-quarter, the last couple of years being with multiple different issues that are, that have been, that have been hitting us. We are, we are optimists.
We are diehard optimists. We believe the next 12-24 months will be much better.
Much better.
Okay, perfect. Great. Thank you.
Thanks.
We've grown 27% in this quarter also, anyway. Year-over-year.
Super. Thank you, sir.
Thanks.
Thank you. Participants, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions, I will now hand the conference over to the management for closing comments.
Thank you. I think it is important for you to understand that we are very customer-focused, and when we are growing, it, it, it automatically means that the customer is growing. We don't sell anything in the open market. We've never done that before, also, neither are we doing it now. Capacity utilization and all that for us is to some extent irrelevant. If it helps you, moment we will touch 80%, we will try to bring it down by a new plant and try to bring it to 40%. That's the way we have to be, because in the automotive business, it's required. I think the board again congratulated that under such tough circumstances, the companies have done such a good job.
All, all engines are firing. We are also would like to say that in the first quarter, you know, we've just over in March, April, we have actually just closed all the past year's whatever increases and decreases had to happen, we've done that. First, first quarter, we are waiting for whatever is going to play out, then it has to be applied and put pressure back on the customer or on the other forces to make sure the price is there. I hope and wish all of you a good week, weekend, tomorrow later. Thank you very much for the all, all the questions. Bye-bye.
Thank you very much. On behalf of the Motherson International Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.