Ladies and gentlemen, good day and welcome to Motherson Sumi Wiring India Limited Q2 FY25 Earnings Conference Call. 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 the star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Sehgal. Thank you, and over to you, sir.
Thank you. Good evening, ladies and gentlemen. Thank you for joining the Q2 Conference Call of MSWIL. I'm pleased to announce the board has approved the results for quarter two for financial year 2025. The quarter has delivered revenues of INR 2,326 crores, representing a growth of 10% year-on-year for outperforming the industry, which is attributed to an increase in content and change in the product mix. The passenger vehicle industry remained relatively flat year-on-year, registering a 6% growth sequentially. Similarly, two-wheelers industry demonstrated 13% growth year-on-year and 7% sequentially. The uptick on quarter-on-quarter basis is due to the festival production, build-up, and demand. There has been a significant number of new models launched in the quarter and planned for the second half of financial year 25. The automotive megatrends continue to overwhelm, adding to the content mix.
Our EV share of the revenue for the period is 4.1%. We continue to work on our innovative solutions for various platforms such as EV, hybrid, and other products, such as battery management systems, etc. EBITDA for the quarter stood at INR 250 crores. While absolute profit remained resilient on a year-to-year basis, it is lower by 120 basis points. This can be explained by two greenfield sites being set up in Pune and Navagam for new customer programs. We are going through the ramp-up phase, and in one of the plants, a delay in customers is occurring in the other plant. We continue to focus on core operations and manufacturing excellence in alignment with the customer production requirements.
We are setting up a new facility in Kakkalur, expected to come on stream in financial year quarter 26, quarter one. Our CapEx for the year remains at approximately INR 200 crores. We continue to remain net debt free and gross exceeding 40% in half one in financial year 2025. With this, I would like to conclude my remarks. I have Anurag, Pankaj, and Mahendra with me to answer any questions. Back to you, operator. Thank you very much.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Siddhartha Bera from Nomura. Please go ahead.
Yeah, hi sir. Thanks for the opportunity. So my first question is, cost side, we have seen a very sharp jump in some of the costs, like employee and other costs in the quarter. While I understand that this new plant is in the ramp-up phase, so if you can just throw some more color on how to think about the costs, will most of the impact of the ramp-up be within the quarter and we should expect some normalization going ahead or how to think about some one-time if there is any cost element for the quarter?
I think you can understand the two new projects are there. That means the full impact of two plants without any production is happening at this moment. So it makes numbers a little productive. But I think Rajendra and Anurag can answer this question more clearly. Anurag?
Yes. Anurag Gahlot, thank you. See, these are two projects. There are two greenfield projects, and one of that is having already a because in this particular plant, there are multi-customers, and one of the customers has already started SOP, and the second one is yet to happen. The other plant which we are talking about has gone delayed. The project has gone delayed by six months by a customer. So when we are talking about the greenfield projects, we have to hire these manpower and a few infrastructure-related costs have to come upfront, which takes some time when the SOP starts and the production gets stabilized. Then only the sales started coming to that. So you will find that these some costs are already part of our P&L, and you have seen those costs are there.
So as a window, it takes six-to-nine months' time till the time the SOP and the production get stabilized.
Okay, sir. So basically, would it be possible to highlight, sir, what is the final potential revenue from these two greenfield plants just to understand what size they sort of can scale up to in the future?
Mahendra, sorry. I called your name, Rajendra. I apologize. But yes, normally we don't give unit-wise details. That would be a new one for us. Pankaj, what do you think we can do here? Normally we don't give unit-wise.
Not the unit-wise, but the greenfield plant at full potential, say it will be having INR 400 crore or INR 500 crore of revenue. Something, some color like that will help us understand the size.
Okay. Okay. See if we can help.
I would say that these are not small businesses so as they ramp up to their full potential as you ask, that they are relatively good numbers, substantial numbers, not very small numbers. If everything goes well and these numbers, once they get to their full bloom, so you're right that it will be quite a good number.
Got it. And the second plant, sir, you mentioned that it got delayed by six months. So plan is that it starts by first quarter of FY26. Is it the right understanding?
The plant is there. The costs are there. The step-by-step SOP will start from quarter one. That's your assessment, that's right.
Got it, sir. Thanks for your time. We'll come back and get you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Raghunandhan from Nuvama Research. Please go ahead.
Thank you, sir, for the opportunity and festive greetings. Sir, firstly, on the capacity addition, last quarter, I remember that you had roughly alluded that 10% is the capacity addition due to new plants. Is it broadly in that range, or is it much higher for these two plants?
Okay. Anurag and Pankaj, whatever you want to answer on this one.
Sir, as I mentioned, that's very difficult to give a precise number, but you're right that, as you mentioned, that these are substantial businesses, so these three or four plants which are coming up with the capacity extensions, yes, they will approximately, I mean, we can say around that sort of a ballpark figure as they come to their full projected volumes.
Understood, sir. And these new capacities, would they be both high-voltage and low-voltage chargers?
Anurag, the thing is that we can't give details because our customers don't like it. Once we start to answer this, then you can already assume that it's an electric vehicle or an ICE vehicle or whatever. So we are privy to a lot of confidence from the customers. So please understand.
Fair point, sir. The objective was to try and understand that given that we are already having a basket of customers on the EV side and given that you are already doing high-voltage harnesses, trying to understand what could be the level of localization with scale. Has the localization been improving in high-voltage? And if you compare it with low-voltage harnesses, how far do we need to go?
Fair question. Pankaj, can you give some idea on that?
Still, as you would see, the penetration of electric vehicles has not reached the volume level. So you're right that as the volumes will keep growing, more and more localization possibilities get enhanced. From our side, as we had mentioned earlier, that the group has already started and localized the cables, started localizing and achieved success in the charging connectors completely made here in India. So we continuously embark on this journey and work with various customers on the projects where things are stable and expected to continue. And as the volumes grow up, these localization levels for sure will keep growing.
Understood, sir. On the EV side, I would not ask the names of the customers, but if you can broadly indicate among the top five customers in four-wheeler, two-wheeler, commercial vehicle, would we have the presence and what would be the EV share in revenues?
EV share of the revenues will be approximately 4%, and I mean, we don't name the customers, but we are with most of the, I mean, in all the segments, be it two-wheelers, be it passenger cars, trucks, buses, all segments, we support our customers.
Got it, sir. On the cost side for JPY appreciation, has there been any increase in cost due to this as there is some lag before you pass it through?
Yeah. So for all the forex-related transactions, we have a pass-through arrangement with our customers. With some customers, it is at a quarterly lag, and with some customers, it is at a half-yearly lag. So there could be impact on the P&L, but that's more of a timing gap over a period of time. It really doesn't kind of impact our P&L in either way.
Got it, sir. And on a quarter-on-quarter basis, your gross margin has slightly improved. Would that be mainly the benefit of lower copper prices?
Please go and read this question, please.
Yes, I'll answer this. I think this is more of a product mix get changed from one quarter to another. So it's very difficult to pinpoint the reason of that.
Understood, sir. Thank you, sir. Thank you very much. Wishing a good day.
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Sachin from UTI Asset Management. Please go ahead.
Hello. Hi, sir. Just trying to understand on these two greenfield plants how much CapEx that we are incurring and maybe what kind of asset turnover typically we should be expecting from these new CapEx that we will do?
Yeah. So Mahender Chhabra, so I'll take up this question. So our Capex spent for the year for the current financial year is about 200 CR, and out of that, we have spent about 95 CR in H1, FY24, '25. So as far as specific investments on individual plants is concerned, then we don't kind of get into the specific investment on the plants. We don't.
Yeah. So I'm not referring to just this. I'm just trying to understand how should we on an incremental CapEx that we would be doing, what kind of asset turn without being any specific to any client. Just trying to understand what kind of asset turn should we be assuming in this business going forward.
You want to know specifically the new plants?
Yeah. Not just the new plants, but on incremental basis, the CapEx that we will do, how should we think about the asset turn for these new plants? I know that the company works with 40% ROC background, but just trying to understand, is there any change in trajectory to that we should assume? How should we think about it?
Yeah. So as far as asset turnover is concerned, it should be more or less in line with what we have with the existing plants once the full ramp-up has taken place.
Sure. Sir, and the last question from my side is that on incremental basis, I'm sure company is likely to generate a healthy cash flow over a period of time. So in terms of just trajectory, how should we understand maybe the Capex intensity of this business and also what kind of dividend policy or the cash return policies that the company will follow? So just trying to understand broadly how much of the incremental cash flow, which on yearly basis company will generate, how much we are looking to deploy and maybe in the business and what should be the cash distribution policy for the company?
We have a stated policy that we will return to the shareholders 40% and the rest will be reinvested in the business. Please understand that there is tremendous amount of growth that's expected for the car industry, in two-wheeler industry, and commercial vehicles also. So Motherson, we keep on setting up new plants as required wherever the customer is close to them. So in that scenario, I can tell you that we are very enthused by the kind of demand that the customers are having for us, new plants, new areas. And Pankaj, would you want to add on that or Anurag?
No, that is very right, sir. And the market is very exciting. We do believe that customers have invested a lot and continue to invest and have further investment plans to grow the business in India. And therefore, we will continue to keep working and exploring more and more to work together with them for continued development and expansion of our business.
Sure. Thank you.
Thank you. Participants who wish to ask a question to the management may press star and one at this time. Ladies and gentlemen, if you wish to ask a question, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Thank you very much. We both congratulated the teams for a great job done. Please understand that we are inundated by customer requests, and new models is the order of the day. So we are very much on our toes and working hard to make sure that we can take the maximum advantage in this scenario. Thank you very much and have a good day. Bye-bye.
On behalf of Motherson Sumi Wiring India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.