August 10, 2022 | |
National Stock Exchange of India Limited | BSE Limited |
Exchange Plaza, 5th Floor | 1st Floor, New Trading Ring |
Plot No.C/1, G-Block | Rotunda Building |
Bandra-Kurla Complex | P.J. Towers, Dalal Street |
Bandra (E) | Fort |
MUMBAI - 400051, India | MUMBAI - 400001, India |
Scrip Code : MSUMI | Scrip Code : 543498 |
Ref.: Transcript of the Investor call | |
Dear Sir (s)/ Madam(s), |
This is with reference to our letter dated August 3, 2022 intimating about conference call with Analysts/Investors held on August 5, 2022. Please find enclosed herewith the transcript of the aforesaid conference call.
The above information will also be available on the website of the company www. mswil.motherson.com.
This is for your information and records.
Thanking You,
Yours truly
For Motherson Sumi Wiring India Limited
Pooja Mehra
Company Secretary
Encl:a/a
Regd. Office:
Motherson Sumi Wiring India Limited
Unit - 705, C Wing, ONE BKC, G Block Bandra Kurla Complex, Bandra East Mumbai - 400051, Maharashtra (India)
Tel: 022-61354800, Fax: 022-61354801
CIN No.: L29306MH2020PLC341326
E-mail: investorrelations@mswil.motherson.com
website: www.mswil.motherson.com
"Motherson Sumi Wiring India Limited Q1 FY23 Earnings Conference Call"
(Unedited Transcript of the conference call held on 05th Aug 2022)
August 05, 2022
MANAGEMENT:
MR. VIVEK CHAAND SEHGAL
CHAIRMAN,
MOTHERSON SUMI WIRING INDIA LIMITED (MSWIL)
MR. LAKSH VAAMAN SEHGAL
DIRECTOR,
MOTHERSON SUMI WIRING INDIA LIMITED (MSWIL)
MR. ANURAG GAHLOT
COO AND WHOLE TIME DIRECTOR,
MOTHERSON SUMI WIRING INDIA LIMITED (MSWIL)
MR. G. N. GAUBA
CFO,
MOTHERSON SUMI WIRING INDIA LIMITED (MSWIL)
MR. PANKAJ MITAL
COO AND WHOLE TIME DIRECTOR,
SAMVARDHANA MOTHERSON INTERNATIONAL LIMITED (SAMIL)
Page 1 of 10
Motherson Sumi Wiring India Limited
August 05, 2022
Moderator:Ladies and gentlemen, good day and welcome to the Q1 FY23 Earnings Conference Call of Motherson Sumi Wiring India Limited. As a reminder, all participants' 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 '*' then '0' on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Chaand Sehgal - Chairman. Thank you and over to you, sir.
Vivek Chaand Sehgal: Thank you very much. Good afternoon, good evening, ladies and gentlemen. I think you have seen the results. We believe they are a very good set of numbers and without much delay, I would hand it over back to the master of ceremonies to make sure that your questions are answered by us. With me are Anurag, Gauba, Pankaj, Vaaman, all of us are here, Kunal, to answer your questions. Thank you very much. Back to you.
Moderator:Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Kapil Singh from Nomura. Please go ahead.
Kapil Singh:I had two questions, firstly, on this dedicated line we have set up in Chennai for high voltage harnesses, I wanted to understand that to start off with which category of vehicles that is passenger vehicles, commercial, or two-wheeler are we starting off with? And also, if you have any calculations here in terms of content for each of these three categories, how much increase is there? And also, some color on technology aspect, like what are the special requirements which are there for high voltage harnesses.
Pankaj Mital:Thank you very much for your question. This line which we have set up in Chennai as we have mentioned is for both passenger cars as well as two-wheelers and also commercial vehicles which includes basically the buses as well. So, it's for all three of them which have been initiated during this quarter. You have also asked that what the specialties of handling these are, so basically high voltage cables require very special equipment for processing them, there are multiple operations which are there, so different set of machine requirements, different set of testing requirements and complete testing and validation before they get shipped to the customer. So, it's a different level of processing of these cables and connectors, terminals thereof which is required to fulfill the requirements. In terms of the set prices or what kind of value addition, it's very different from different makers and it's no comparison to the low voltage cables because as you would know that high voltage cables have much different specs and need to carry this much higher level of copper and other things and therefore, they are much more expensive than the low voltage part of the harnesses. In a passenger car, nearly 75%-80% of the wiring harnesses remain low voltage and basically the engine side goes off and in terms of that, against that these high voltage cables come into picture. So, I hope that answers your questions.
Vivek Chaand Sehgal: And also, safety-wise its different, isn't it?
Pankaj Mital: | Sorry, Mr. Sehgal? |
Page 2 of 10
Motherson Sumi Wiring India Limited | |
August 05, 2022 | |
Vivek Chaand Sehgal: | I was just saying the care that has to be taken for the high voltage cables because if it's not taken |
care of then people can get electrocuted, so that's the huge difference between car. Car is | |
operating at 12 volts and maybe 40-80 amps at max and high voltage cables go up to 120-140- | |
180 amps. So, a huge difference in handling of the wires, the lines are special. | |
Kapil Singh: | Sure sir. Now what would help, sir, at some point if you could share in terms of, let's say our |
index value of our passenger vehicle in ICE and similar vehicle in electric vehicle, like how | |
much is the percentage increase that would really help in understanding for all three of these | |
categories, if you have it ready, we can take it now otherwise probably later on at some point | |
that would really help. | |
Vivek Chaand Sehgal: | See, the advantage and disadvantage I think we just explained that to you. But it depends upon |
the facilities that the car maker wants to give you. So, as your facilities go up, the complication | |
goes higher and higher. But Pankaj I will I give it to you to explain. | |
Pankaj Mital: | That's exactly my point was that because it's so variable and it varies a lot, but in many cases the |
high voltage part of the, if you take the charging connector to the high voltage cables which are | |
going into the vehicle itself, it can be as expensive as the low voltage side of it as well. So, it can | |
be varying from model to model also. | |
Kapil Singh: | Okay sir. And second question is on the cost side, just broad question, after a long time we are |
seeing some drop in commodities now playing out. By when do you think we will start to see | |
the benefit of that? Is it from second quarter onwards as a company and as industry should we | |
expect the benefit of commodities to flow through? | |
G. N. Gauba: | Kapil, as we have consistently maintained and said that we have a pass through for copper as |
well as for the Japanese Yen, so while in a percentage term it does help if the price comes down | |
in a quarter and all that, but over a period of time as the prices get stabilized this gets evened | |
out. So, it helps us to reduce the working capital if the prices come down and all that, but at the | |
same time we more work on operating efficiency improvement than just on these commodity | |
advantage. | |
Kapil Singh: | And for the industry though we should expect the benefit to start coming from second quarter? |
G. N. Gauba: | I mean, that goes without saying, I think you know how the prices are, what comparison, so the |
average prices will hold good for the industry. | |
Kapil Singh: | The question was because you know some of the OEMs have also mentioned and for some of |
the other categories beyond the basic commodities, like plastic, etc., they are still seeing | |
inflation. So, that was the reason for the question. |
Page 3 of 10
Motherson Sumi Wiring India Limited | |
August 05, 2022 | |
G. N. Gauba: | I think that is best addressed by the OEMs. The copper price of LME is available across and |
sometimes the comparisons are between peak and the trough but as I said the average prices are | |
there for everybody to see and we also disclose it as annexure. | |
Moderator: | Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial |
Services. Please go ahead. | |
Jinesh Gandhi: | First question is on the RM cost side. So, did 1Q see some lag effects of RM cost inflation in |
P&L or given that prices had marginally cooled off in 1Q as indicated in your presentation, there | |
was not much impact of cost impact? | |
G. N. Gauba: | You have seen the LME copper price in dollar terms as well as the US dollar. So, the impact is |
not very significant as we can see compared to the previous quarter. But Japanese Yen has | |
weakened up, so there could be some plus minus on that, but as things get stabilized this gets | |
evened out. | |
Jinesh Gandhi: | Okay. So, in that context how do we see this Q-o-Q increase in RM cost as a percentage of sales |
which is close to 110 basis points, anything one-off there or anything getting monthly over here? | |
G. N. Gauba: | I think Jinesh, we are not selling the same product all the quarters, so there are some marginal |
impacts of the product mix. Also, it's very difficult to, it's very few basis points that the difference | |
is there, and it would be just not viable to get into those detailed, because we are not selling the | |
same product all the time. | |
Jinesh Gandhi: | Got it. And secondly, from tax perspective given that from first full year from our perspective, |
so are we using the new tax regime of 25% tax rate, or we are still on the old regime? | |
G. N. Gauba: | This is a new company and we have been following the 25% rate. |
Jinesh Gandhi: | Got it. And lastly what could be the CAPEX for FY23? |
G. N. Gauba: | Last time we had given a guidance that it is 100 crores (+) (-) 25 crores so maybe 125. And as |
you can see, we have also said in our commentary that we have established a new plant in | |
Chennai so there is a CAPEX for the new facility. But normally otherwise in normal | |
circumstances the CAPEX as you know for wiring harness businesses is largely on land and | |
building, the normal CAPEX is very small. | |
Moderator: | Thank you. The next question is from the line of Aman Agarwal from Carnelian Capital. Please |
go ahead. | |
Aman Agarwal: | My question was basically if I see our gross margins, they are far higher than some of our peers, |
like they are around 500-600 basis points higher compared to our peers. So, what are the drivers |
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Motherson Sumi Wiring India Ltd. published this content on 10 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2022 15:30:16 UTC.