MSSL has established itself as globally preferred solution provider to the automotiveindustry for interior and exterior modules, rear view vision systems and wiring harness.The Company has continuously improved its product portfolio by offering technicalinnovations in its product range and has maintained its leadership position in a highlycomplex technology driven industry. The Company is able to create value for its customersand improve operating performance with constant focus on "QCDDMSES" (Quality,Cost, Design & Development, Delivery, Management, Safety, Environment andSustainability). This has been a momentous year for MSSL as it completed its fourth FiveYear Plan with truly impressive performance. The Company surpassed revenue target of US$ 5billion set up in 2010 and achieved consolidated revenue of US$ 5.5 billion withimpressive return on capital employed (ROCE) of 41% at standalone level and 26% atconsolidated level (36% at consolidated level excluding acquisitions made postannouncement of the Vision 2015) . MSSL is continuously making strategic investment toexpand its global footprint, product range and customer base. The Companysacquisition of wiring harness business in America and polymer business in Europe hasfurther increased its footprints in these regions. The company targeted of having 70% ofits customer base from outside India. The customer base of MSSL from outside India is 85%in 2014-15.
The Company reports the highest ever revenues in 2014-15 both on consolidated as wellon standalone basis.
Some of the major accomplishments during 2014-15 are as follows:
The Company achieved its target of consolidated revenues of US$ 5.5 billion forthe year 2014-15, above its five year vision target of US$ 5 billion setup in 2010.
The Company has achieved 26% return on capital employed (ROCE) at consolidatedlevel with capital expenditure for new facilities and acquisitions. ROCE would be 36% ifthe businesses acquired after 2010-11 were to be excluded. Return on capital employedexceeded 40% for MSSL Standalone level for the first time.
Consolidated sales up by 14%, standalone sales up by 10% and exports from Indiaup by 6%.
The Company succeeded in maintaining its operational Earnings Before InterestTax and Depreciation (EBITDA) margin of 9.4% at consolidated level. EBITDA increased by13% on consolidated basis.
Driven by continuous operational improvement across all business units,consolidated operating margins for the Company improved and Profit Before Tax (PBT) hasincreased by 14% on consolidated basis.
Profit After Tax (PAT) improved by 18% on consolidated level.
Shareholding of Samvardhana Motherson Reflectec (SMR) reorganized underSamvardhana Motherson Automotive Systems Group B.V. (SMRP BV), Netherlands to integrateresources and leverage from strong customer relationship of SMR and SMP together. SMRP BVwhich is held 51% by the company and 49% by Samvardhana Motherson International Limited,becomes holding company for both SMR and SMP. In addition to this, SMRP BV furtherconsolidated its shareholding in SMP to 100% and SMR to 98.5% by acquiring shareholdingfrom the minority shareholders during the year.
Significant improvements at SMRP BV ( i.e. SMR and SMP ) :
Samvardhana Motherson Reflectec (SMR) has delivered strong results, recordedsubstantial improvement in Profitability along with highest ever annual sales of
` 98,887 million (Euro 1,276 million). SMR achieved 11% growth in EBITDA at Rs 9,637million (Euro 124 million), PBT by 11% at Rs 6,594 million (Euro 85 million) and PAT by17% at Rs 2,533 million (Euro 33 million).
Samvardhana Motherson Peguform (SMP) too achieved highest ever annual sales ofRs 172,205 million ( Euro 2.2 billion) with substantial improvement in EBITDA by 26% at Rs10,637 million (Euro 137 million), PBT by 32% at Rs 3,600 million (Euro 46 million) andPAT by 176% at Rs 457 million (Euro 6 million).
Growth and improvement in performance of SMR and SMP has been achieved by taking anumber of measures including operational improvements, enhanced relationship with the OEMsand servicing of new orders procured post acquisition.
Samvardhana Motherson Automotive Systems Group BV, Netherlands (SMRP BV)acquired assets of Scherer & Trier group, Germany from its administrator through itsstep down subsidiaries. This has enhanced the Companys range of polymer products.This acquisition now known as SMIA (Samvardhana Motherson Innovative Auto systems)includes two manufacturing facilities situated at Michelau (Germany) and Puebla (Mexico).
MSSL continues to deliver progressive returns to the shareholders and hasdeclared dividend of Rs 3 per share. The total dividend outgo including tax thereonrepresents healthy dividend payout ratio of 37% (Previous year 34%) of the consolidatedProfits after tax.
The Company purchased wiring harness business of Stoneridge Inc. with sixmanufacturing facilities and one engineering centre. It principally supplies to thecommercial vehicles, agricultural equipment, material handling equipment and off -roadvehicles. This acquisition strengthened the Companys presence in North America.
During the year under review the Company has incurred Significant capitalexpenditure of Rs 18,390 million (on consolidated basis) to expand its footprint and toenhance existing capacities:
SMRP BV expanded its manufacturing capacities and global footprints under bothSMR and SMP business.
a. Mirror Division (SMR) added capacities and started commercial production from newfacilities in Langfang (China), Chongqing (China), Marysville (USA) and France foractuator manufacturing and vertical integration. Further construction of new plants andexpansion is in progress at USA, Mexico, India, Hungary and France.
b. SMP has incurred major capital expenditure on greenfield plants atSchierling-Germany, Zitlaltepec-Mexico, new paint line at Polinya-Spain, new plant atMichigan-USA, brownfield expansion at Botzingen-Germany, new paint line atOldenburg-Germany, vertical integration expansion at France and greenfield plant atBeijing, China.
MSSL Global RSA Module Engineering Limited, 100% subsidiary of the Company hasset up a new plant in Durban (South Africa) for manufacturing of moulded parts likebumpers, instrument panels and door trims, the ramp up of commercial production andsupplies started during the year
MATE (a division of the Company) has set up a plant at Sanand (Gujarat, India)for manufacturing moulded components and integrated modules. MATE is also setting up aplant at Walajabad (Chennai India) for manufacturing moulded components. The plants willbe operational during 2015316.
Wiring Harness Division expanded its manufacturing capacity at existingfacilities in Noida and is also setting up plant at Walajabad (Chennai India), ramp up ofthese plants will be during 2015316.
(Note: all the growth percentage stated above are in comparison with correspondingprevious year figures)
INDIAN VEHICLE & COMPONENT MARKET
Indian automotive industry is showing signs of revival with moderate growth inpassenger vehicle and two wheeler segment after a challenging past year. During the yearOEMs launched new models with additional functionalities and features to attract customersand create demand.
Figures in thousand
Source: ACMA Report
Long term outlook remains positive for the automotive industry with all major globalplayers having base in India for manufacturing, global sourcing as well as engineering.Correction in fuel prices and lower finance cost should further add domestic growth inshort term to medium term. Regular product launches planned by OEMs will keep customerexcitement levels and create demand and is favorable for overall industry growth.
GLOBAL CAR PRODUCTION
|Region (in numbers)|
|Asia (including India)||46,580,863||45,097,254|
The global production of passenger cars and commercial vehicles has increased by 2% in2014-15. There is moderate growth in automotive production in Europe, North America andAsia excluding India in 2014-15 as compared to last year.
Segment performance - Automotive / Non Automotive
The Company predominantly operates in manufacturing of automotive products and alsomanufactures non-automotive products. Hence the operations of the company have beenclassified as Automotive and Non-Automotive.
The Company`s automotive segment is a supplier of Wiring Harness, High Tension Cords,Wire, Plastic Components, Rubber Components, Cockpit Assembly, Moulds for wiring harnesscomponents and moulded parts, Plastic Moulded Components, rocker panels, spoilers,sculplates, mouldings, belt line mouldings, antenna hoods, air bag covers, decorative trimparts, injection-moulding, extrusion, stretch-bending, Brass Terminals, Thermo-FormedProducts, Polyurethane Moulded Products, Blow Moulded Products, HVAC Module, Compressors,Body Control Modules, Meters Clusters, Interior Mirrors, Exterior Mirrors, Bumper Systems,Plastic Components for vehicle exteriors, dashboards and vehicle interior trims. Inautomotive segment the company supplies to all the leading automobile manufacturersglobally.
The following tables and charts show business progress with respect to segmentdisclosure during 2014-15:
Rs in Million
|Rs in Million|
The Companys focus continuous to be automotive industry with its relationship tothe customers who have encouraged the company for acquisition as well as new orders.
The contribution of automotive segment in the Companys revenue remains identicalat 93% on standalone basis and on consolidated basis it has reduced from 98% in 2013-14 to97% in 2014-15. The automotive segment has contributed to increase in sales - 14% onconsolidated basis and 10% on standalone basis, compared to previous year.
In non-automotive segment, MSSL is one of the largest suppliers of wiring harnesses tomanufacturers of material handling3equipments,off-roadvehicles3/3constructionequipment,agricultural equipment, industrial forklifts etc. The company offers variety of productslike plastic components for white goods, household wires, plates, aerobin, re-timer lightdevice, to its customers from individual parts to full system solutions.
The Non-automotive business witnessed Significant increase in revenues driven by recentacquisition of wiring harness business in America which has presence in non-automotivesegments like agricultural equipment, material handling equipment and off -road vehicles.
MSSL has achieved Significant growth at both domestic and global front. Theconsolidated sales rose by 14% to Rs 345 billion (equivalent to US$ 5.5 billion approx.)whereas standalone sales registered a growth of 10% at Rs 49 billion.
On geographical basis, sales performance of the Company during the year 2014-15 onconsolidated and standalone basis are as follows:
Rs in Million
|Rs in Million|
The Company is continuously making strategic investment to expand its global footprint,product portfolio and to achieve business synergies through technological collaboration.MSSLs acquisitions are customer driver. All acquisitions are done at customersbehest.
MSSL has substantially expanded its customer base globally and further strengthened itsaffiliation with existing customers. The Company has presence in 25 countries and conductsits operations from over 145 manufacturing facilities supported by technical centerslocated globally.
The companys sales to customers in India grew by 11% on consolidated basis and11% on standalone basis. MSSL has established itself as a preferred supplier among OEMswith its commitment to keep improving on QCDDMSES (quality, cost, delivery, development,management, safety, environment and sustainability.). The ability to provide end to endsolutions, supported by global manufacturing capabilities and competitive footprint tocore expertise in all aspects of design, research, engineering and development has beenthe driving force behind the growth of the Company.
MSSL continues it track record of outperforming the market and delivering strong growthin revenues and Profitability. The consolidated financial performance is impressive interms of Profitability with strong growth in Profitability of SMRP BV.
The summary of the financial position and results of the company on consolidated andstandalone basis is as follows:
Rs in Million
|Financial Position||2014-15||2013-14||% change|
|Net fixed assets||70,847||65,660||8%|
|- Trade Receivables||30,144||32,384||-7%|
|- Cash & Bank Balance||18,919||9,061||109%|
|- Other Assets||18,298||13,696||34%|
|Liabilities (other than Loans)||81,022||67,737||20%|
|Source of Funding:|
|Reserve on amalgamation and consolidation||3,052||2,978||2%|
|- Payable within one year||2,202||8,452||-74%|
|- Short Term Loans||8,245||10,111||-18%|
|- Long Term Loans||40,859||29,834||37%|
|Loans (net of cash and bank balances)||32,387||39,336||-18%|
|(Net of disposals)|
During the year, the Company incurred capital expenditure amounted to Rs 18,390 million(Previous Year Rs 13,517 million), which was funded from internal accruals. Thecompanys net debt was down to Rs 32,387 million from Rs 39,336 million as on March31, 2014. This is the lowest level of debt since acquisition of Peguform in November 2011.During the year the companys subsidiary SMRP BV issued 7 year Bonds of Euro 500million carrying coupon rate of 4.125% to refinance its debts as well as fund its capitalexpenditure. This borrowing has not only provided long term financing to SMR and SMP(without corporate guarantee from the parent) but has also helped to reduce their cost ofborrowings. Further this increased the maturity Profile of the debt of SMRP BV there byenabling it to use its internal accruals for meeting growth capex to serve new orders. TheCompany monitors its net working capital regularly and able to maintain it adequately evenwith the increasing scale of operations. In terms of days, net working capital employed ason March 31, 2015 was 25 days (24 days as on March 31, 2014). The Companys cash andbank balance of Rs 18,919 million included cash and bank balance at SMRP BV for meetingcapital expenditure requirements.
|Rs in Million|
|Other operating income||5,416||3,631||49%|
|Cost of goods sold||216,314||193,615||12%|
|Exchange fluctuation loss/ (gain) on long-term loans||321||1,777||-82%|
|Exceptional expenditure / (income) net||1,648||-||100%|
|Concern share after adjusting minority interest||8,625||7,650||13%|
|EPS Diluted (Rs)#||9.78||8.67||13%|
*Excludes foreign exchange fluctuation on long-term loans, exceptional income / expenseand non-operating income. During the year under review, the Companys consolidatedsales hit a new record level of Rs 344,903 million in comparison to the previous yearsales of Rs 303,580 million.
The major raw materials required by Polymer Division of the Company are polypropylenes,polycarbonates, ABS and various grades of nylons and resins. Finished products incorporatedecorative (leather, textile and foils), chrome, fasteners, wiring harnesses, electronics,electrical parts, die-casting, plastic and metal parts. The major raw material used in themanufacture of tools and moulds is alloy steel.
The main inputs for the companys mirror business are glass actuators, powerfolds, glass, electro-chromatic glass ("EC glass"), wiring harnesses,electronics, electrical parts, die casting, plastic parts and resins. The key raw materialfor the companys wiring harness business is copper.
Employee cost on aggregate comprises the second largest cost after raw material. Itincludes salaries & wages, contribution to provident fund, gratuity, employee pensionschemes and expenses incurred on staff welfare. Employee costs have increased by 25% in2014-15, which is 18% of total revenue (Previous year 17%). The increase in employee costis mainly due to capacity expansion.
Profit before Interest Depreciation and Tax (PBIDT) increased by 13% at Rs 32,348million from Rs 28,678 million during 2014-15. The Company has reported strongProfitability on account of Significant improvements at SMR and SMP.
Profit before Tax (PBT) substantially increased by 14% at Rs 18,171 million from Rs15,960 million during previous year. Profit after Tax (PAT) concern share Significantlyimproved by 13% at Rs 8,625 million as against Rs 7,650 million during the previous year.During the year, the Company incurred exchange fluctuation loss of Rs 321 million onaccount of long term loans including mark to the market (Previous year exchange loss of Rs1,777 million). During the year, the company incurred exceptional expenditure of Rs 1,648million in connection with issue of 41/8% senior secured notes and acquisition cost inrespect of wiring harness business.
|Rs in Million|
|Financial position||2014-15||2013-14||% change|
|Net fixed assets||15,017||14,863||1%|
|- Trade Receivables||4,577||5,754||-20%|
|- Cash & Bank Balance||1,461||191||665%|
|- Other Assets||2,930||4,387||-33%|
|(other than Loans)|
|Source of Funding:|
|Reserve on amalgamation and consolidation||1,663||1,663||-|
|- Payable within one year||1,206||1,400||-14%|
|- Short Term Loans||947||1,957||-52%|
|- Long Term Loans||3,183||4,221||-25%|
|Loans (net of cash and bank balances)||3,875||7,387||-48%|
|(Net of disposals)||2,028||1,455||39%|
During the year, the company incurred capital expenditure of Rs 2,028 million onsetting up of new facilities at Sanand (Gujarat, India) as well as for expansion / normalcapital expenditure at other locations. The companys net debt is Significantly lowerat Rs 3,875 million compared to Rs 7,387 million as on March 31, 2014.
|Rs in Million|
|Other operating income||97
India Infoline Research
Vivek Chaand Sehgal , Chairman
Toshimi Shirakawa , Director
Arjun Puri , Director
Pankaj K Mital , Whole Time Director & COO
Company Head Office / Quarters:
2nd Floor F-7 Block B-1,
Karvy Computershare Pvt Ltd