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Motherson Sumi FY22 Capex Steady at Rs 2000 Crore; Scaling Up of EV Business

Group company Samvardhana Motherson Automotive Systems Group BV (SMRPBV) saw its order book increase to EUR 15.6 billion as of March 31, 2021 from EUR 13.1 billion as of September 30, 2020. The share of pure electric vehicle programs in the order book jumped to 25 percent by the end of FY21.

June 4, 2021

Motherson Sumi
Mr. Vivek Chaand Sehgal, Chairman, Motherson Group

Motherson Sumi Systems has lined up a capital expenditure of Rs 2,000 crore for FY22 which will be used to service the large order book it currently has. The capex guidance for FY22 is largely similar to the capex of FY21.

As reported in a leading daily — Mr. G N Gauba, Chief Financial Officer, Motherson Sumi System said, “We have been guiding a capex of Rs 2,000 crore and depending on the exchange rate it can fluctuate but it should be in that range for FY22 also. Our FY20 capex was just below Rs 2000 crore to around Rs 1970-1980 crore.”

The robust order book growth at EUR 15.6 billion with increasing BEV content is likely to support content per vehicle increase thesis. The current plants would be adequate to execute this expanding orderbook, thus would in-turn lead to faster asset-sweating and RoCE improvement,” as per the report from ICICI Securities.

“The current capacities at SMRPBV should be able to take care of the order book that we have. We don’t want to face any supply chain issue when demand increases further and we will make sure we have enough capacity,” Mr. Gauba added.

Nearly 90% of MSSL’s revenues emerge from outside of India. Half of its revenues came from Germany, France, Spain and the US, as per disclosures made by MSSL for FY20. Daimler Group, Audi and Volkswagen are the company’s biggest customers, accounting for 35 percent of the revenues.

An analyst conference call of Motherson Sumi Systems highlighted that the electric vehicle (EV) orders are new orders, and should commence within 2 years, and could reach a revenue peak in the 3rd and 4th years.

“Realizations for EV components are higher in comparison to ICE (internal combustion engine) components. For EV components, engineered plastics are used, which are lighter, stronger and more expensive,” as per Emkay Global report.

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MSSL reiterated its commitment to its vision of tripling revenues by FY25 to $36 billion from $10 billion clocked in FY20 under the Vision 2025 plan. A major part of that turnover growth will be coming from acquisitions. Since 2002, Motherson Sumi Systems (MSSL) has made 24 acquisitions in the automotive and non-automotive segments.