Samvardhana Motherson's EV order book swells by Rs 20,000 crore in just six months

As the zero emission mobility business scales a new peak globally, the electric vehicle (EV) order book for India’s largest automotive component major Samvardhana Motherson International (SAMIL) (formerly Motherson Sumi Systems) has shot up by Rs 20,000 crore in just first six months of  FY 2022-2023.

In the April-September period of FY23, SAMIL was sitting on an orderbook of Euro 6.7 billion or Rs 56, 356 crore, this is 55% higher than Euro 4.4 billion or Rs 36, 152 crore of order book it had in April to March of FY-22.

Even its cumulative order book including supplies for internal combustion engines has swelled to about Rs 1.5 lakh crore or Euro 18.2 billion at the end of September FY-23.

"The total order book during H1 FY23 amounts to Euro 18.2 billion at SMRP BV up from Euro 16.1 billion as on March 2022. Out of this, the share of EVs in the order book stood at 37 percent. At present we have booked a business of Euro 33.9 billion which is reflective of our strong technological capabilities," Kunal Malani, Chief Financial Officer, SAMIL said during a conference call.

He also indicated that the EV order book size will continue to expand in the coming quarters as automotive industry focus towards sustainability is improving. Notably, the share of revenues from EVs has increased to more than 4% of the company's overall revenues for FY22. 

The share of EV business in its overall order book jumped from 27% in April to September of FY-22 to 37% in the six months of FY-23. 

The Noida-based auto parts maker is one of the leading manufacturers of automotive wiring harnesses, mirrors for passenger cars and a leading supplier of plastic components and modules to the automotive industry. The company is supporting the drive towards vehicle electrification through bumpers and interior components for large electric vehicles (EVs) and decorative parts for electric two-wheelers for the Indian market.

In the last 12-18 months, SAMIL has secured new contracts from Asian EV OEMs for its EcoMirror, mainly used for lightweight construction, as well as contracts for next-generation camera monitoring system (CMS) for new electric vehicles.

It offers HVACs for electric buses, and machining solutions for electric vehicle (EV) components such as polycrystalline diamond (PCD) milling for battery terminals, profile-turning for EV rod guides and complete tooling for machining EV motor housings and axles. In addition, the company has identified the electric two-wheeler sector as a segment with high growth potential where it can make an impact by sharing multifaceted expertise and manufacturing capabilities. 

Financial performance
In January 2022, Motherson Sumi Systems Ltd (MSSL) demerged its domestic wiring harness business into a separate entity, Motherson Sumi Wiring India Limited (MSWIL).

Also, the holding company Samvardhana Motherson or SAMIL was merged into MSSL to consolidate 100% stake in Samvardhana BV.

Currently, SAMIL contributes 70% to the Motherson Group's revenue with a total turnover of Rs 62,832 crore. With over 40% market share in the Indian wiring harness industry, the overall turnover of MSWIL stood at Rs 26,337 crore in FY22.   

The Q2FY23 financial performance of SAMIL was above market expectations. During July-September period, the company reported three-fold growth in its consolidated net profit at Rs 288 crore driven by strong auto sales across geographies and the benefits of partial cost inflation pass-through. The company had reported a net profit of Rs 93 crore for the same period of last year. 

Meanwhile, total consolidated revenue from operations also rose significantly to Rs 18,261 crore in the second quarter of the current fiscal as against Rs 14,076 crore in the year-ago period aided by increasing vehicle production volumes and premiumization trend. 

"We are seeing improvement in the external environment though it remains volatile and uncertain. While constructive discussions with customers on sharing inflationary cost structures are moving in a positive direction, this continues to be a work in progress quarter," the company's Chairman Vivek Chaand Sehgal said.

During the quarter under review, SAMIL’s net debt has increased by nearly Rs 300 crore to Rs 8,500 crore due to enhanced working capital requirements. According to the management, the company is witnessing a 10 day increase in inventory which is blocking a substantial capital. 

“In the post-COVID world the inventory days are higher by 10 days due to supply chain volatility for which we are investing an additional amount of Rs 2,000 crore. However, as supply chain issues normalize, we are expecting a moderation in working capital expenses in the coming months,” the CFO added. For the ongoing financial year, the company has planned a regular capex of Rs 2,500 crore, out of which it has spent only about Rs 850 crore in H1 FY23.