Yes, hi, thanks for taking my questions. Just two questions. Firstly, on the acquired assets, the revenue seem pretty much in line with last quarter, but there's clearly been deterioration in the profitability. So is there something which was one -off in this quarter or anything to call out there?

Kunal?

So, Gunjan, this is a seasonally weak quarter. We had highlighted it again and again. In this quarter, you have the summer shutdowns in Europe. So it's a fairly sizable impact when you think from our operations perspective in Europe plus summer shutdowns in other parts as well do occur. So it has always been a seasonally weak quarter. One-offs that we are talking about, I wouldn't say one -offs, but obviously, the production schedules have been erratic as I think Vaaman was mentioning in his opening remarks as well, there is lack of clarity around the EV production schedules, the SOPs, q uite a few of them are getting delayed, awaiting better time and better demand environment in which to launch those vehicles and so on and so forth. So for many of these volume/uncertainties, the reality is in our quarterly pieces we would be taking the entire cost in and then we will be working with the customers to try and find solutions for it and try and do gain sharing going ahead. So this has bee n, as you see it over the last 2 years, 3 years, 4 years at least post-COVID, this is how it has been playing out. We do take the entire cost in upfront and then we do work towards finding solutions for it. And hence here also, we anticipate that H2 will likely be better than H1, at least that's what we anticipate right now.

So this I guess would be applicable to the entire business itself where all the costs have been taken forward and you will see some of these costs easing through in the second-half and which would mean margin improvement in second half. This is more applic able from a margin improvement perspective?

That's right.

Okay, got it. My second question is on the -- on the leverage. I mean, you did speak about the working capital, but if I look at in the span of six months, actually despite raising of fairly sizable equity money, the debt has remained pretty stable. So how should we think about you know working capital reversal? And also if you can share a little bit on how -- whenever the normalisation happens, the deployment or the opportunities that we've been talking about, how should we think about that? Is that something which is in next 12 months, it can take longer any thoughts around that?

So look from a leverage perspective, our leverage has come down on a net basis. It is down to 1x in this quarter from 1.5x in the previous quarter. Having said so, there is still cash on the books, which has got paid down in November. As we mentioned, we w ould be utili sing the proceeds to pay -down the debt as it comes due. In November, we have utili sed around about INR6,000-odd crores. The remaining will also get utilised within the month of November as the debt comes due. So the entire QIP proceeds, including the CCD piece will be residing or will be going towards repayment of debt or to a very large extent directly or indirectly. When it comes down to CCD itself, please do note that it is lying in debt right now. Though it is actually in the form of equity, as you can understand, it is a convertible instrument. But from an accounting perspective, it is residing as debt till the point it gets converted. So you may want to recalibrate that portion when you're computing your debt on the balance sheet. From where the working capital is right now, I think as Vaaman was mentioning, the production schedules have been uncertain, there is geopolitical risks associated with how the Red Sea effects are played out, there were commotions on the port in the US and so on and so forth. There are multiple reasons why the business took a conservative stance across the globe to load on some amount of inventory in order to prevent any disruption to the customer in this uncertain environment. At the same time, obviously, expectation of better production, which did not necessarily play out in the month of September. We'll see how it plays out going ahead. But if it does not, the inventory anyway gets recalibrated to meet the production requireme nts as it plays out. So directly or indirectly, we should be able to see a declining trajectory on the working capital requirements from here on. And much of what was increased in September should go do wn as we go through the next 6 months. Also, Gunjan, this has traditionally been always the quarter in which we have the peak working capital because you come off the summer shutdowns, then you build up the inventory in anticipation of the ramp-up in quarter 3. Quarter 3 typically is the peak production volumes and hence you build-up that inventory in anticipation of that production volume kicking in. So there is a degree of seasonality in there, but then there is a degree of conservatism, as I said, that we have built-in right now in it, which we expect to normalize as we go ahead. So from a leverage of around about 1x right now, we anticipate that by March '25, we should look somewhere between 0.5 to 0.75x depending upon how the production schedules and deleveraging takes place.

Got it. That's quite helpful. And if you can comment on the growth opportunities, I'll join back the queue.

We can't really talk about the inorganic piece. Organic pieces, I think you would have seen that we have commenced 5 of our 19 facilities in this H1. In the H2, we will be commencing 8 of the remaining facilities. So a chunk of that will be coming on stream. Vaaman spoke about consumer electronics kick starting. We have done our test runs on it and now they will start producing for the customers and the ramp -up is expected in H2. This i s about considering the larger facility, which will only kick-start in latter part of '26 -- early '27. So all-in all, I think organically, there are many legs of growth. You've seen the 88 billion order book as well. That's also grown from the 83 or 84-odd billion in March. So multiple facets of it and that's why we do believe we will outperform the market. What we do not obviously know is how the market does and that remains an uncertain piece. But whatever be it, I think with our positioning and our diversity, we should be able to outperform the market. Inorganically, we will react to it. I don't need to tell you the state of affairs on some of the peer sets. You would probably know them better than we do. But on a relative scale, I think we will be one of the players having the strongest balance sheet in the industry now and that should augur well, especially when pain increases and there are only few players which can actually provide solutions at that stage. So that's the positioning we have put ourselves in and that should augur well as some of these opportunities play out. Time -wise, very difficult to predict on the inorganic front, we always have our head -on our shoulders. So we're not in rush to do anything in here, but we'll work pragmatically with the customers to find a good solution and a solution that works for them as well as works for us financially.

Got it. Thank you so much.

Thank you. Our next question is from the line of Amyn Pirani from JP Morgan. Please go ahead.

Yes, hi. Thanks for the opportunity and congratulations on a good result in a tough global environment. My first question is on Europe. You had done a significant restructuring last year. And this year, we've seen some of your large customers in Europe actually shutting down plants. So my question was that was your restructuring in anticipation of what is happening at your customer end this year in Germany and Europe or does this mean that there is more restructuring to come based on the actions of your OEM customers?

Vaaman and Kunal?

Yes, I can take that -- yes, I can take that. Look, if you see the news that is coming out from all the German OEMs and the -- in general in the industry outlook, we are being cautious. I think the good thing about us is that we have had obviously multiple opportunities of growth, multiple acquisitions. And hence, obviously some restructuring has been deemed necessary to make sure that all the plants are running at high efficiencies. At this point, we don't see any further consolidation from our end. Like we said, we have a very strong order book. We have a very strong delivery schedule that has to come up, but small things we'll keep pruning to make sure that all our plants are running at high efficiencies. But lucky for us, we have an order book, and we have a growth trajectory, and the reorganisation is going to make sure that all the plants are driving high efficiencies.

Okay. That's good to know. Secondly, you know, since you've decided to utili se the QIP proceeds for reducing debt and then whenever the organic opportunities come up, I'm guessing you'll have to lever up again. So is it because you believe that the debt you may have to take for the inorganic opportunities will come at a lower -cost because you could have kept the cash balance also. I'm just trying to understand from a allocation point -of-view, like how you're thinking about when you need to lever up and what are the interest rates going to be?

Amyn, if we would have kept the cash, you would have asked why is interest and interest income coming so much, then we would have had the other problem.

I just want to know-how are you thinking about it? Obviously, analysts will never be happy, but --

Look, I think the thought was very simple. We had taken the money with the anticipation that we pay-down the debt because it's difficult to predict when the inorganics will happen, how it will happen. Last, mind you, our is a reactive strategy. We've said it again and again on the M&A front and for reaction to happen, the customer also views our balance sheet. So , if the customer views a stronger balance sheet, it obviously provides confidence to them on being able to give us larger opportunities and that's what we anticipate and hope that they are able to see. So bringing this down is just helpful. And at the level that we are in with our performance and credit ratings, I don't think re-levering is a challenge. And hopefully re-levering will be at better terms given the organic businesses are doing better and we would have also shown performance on our existing inorganics that we have done in which has generated synergies growth over a period. So we do believe that this is a better capital structure to go with and then work with the bank as and when the requirements come in.

Okay, great. I'll come back-in the queue. Thank you.

Thank you. Our next question is from the line of Joseph George from IIFL. Please go-ahead.

Hi, thank you for the opportunity. Just one question. When you mentioned that the second -half of the year will be much better than the Q2, is that related to the typical seasonality in the business where we see a stronger second -half compared to Q 2, Q 2 is obviously marked by summer holidays, etc. or are you really seeing an improvement in the underlying business excluding the seasonality impact? And if so, what are the factors?

Kunal?

So it's a mixed bag of multiple things. One, you would see from a production levels, quarter three, quarter four at an aggregate level tends to be higher than quarter one, quarter two combined, because the production levels in quarter three, quarter four t ends to be higher given the summer shutdown, etc is not there and the winter shutdown is a much shorter period than the summer shutdown is. So that's one. Two, as we mentioned from a margin profile perspective, you have the -- all the pains getting taken in the first few quarters and you work actively with the customers to either see compensation solutions or pain sharing as the case may be. And that starts kicking-in only in H2 and hence you'll see a ramp -up on H2. We've always said always please give us on an LTM basis, you may get our picture wrong if you look at us from a quarter-on-quarter basis. And we do anticipate that even in H2 at an aggregate level, we should be better than what we did last year-plus better than what we have done in H1 right now. At least with what we know of the market today, that is what we can foresee. The market volatilit y remains, uncertainty remains, geopolitics remains, which is all difficult to predict. But on the positive side, we have a much diversified platform on every count, which even if any of these were to hit us, we do believe we'll be a lot more resilient than many other players on a relative scale, we should hence be able to get a much larger share of growth opportunities going ahead.

Got it. Thank you.

Hi, good evening. I just had a broad industry question. As an outsider, it seems to me that the Chinese auto manufacturers are becoming more aggressive and more relevant, not only in their own country, but in other countries. Could you give me a sense for how you guys think about their presence and how the company is positioned to take advantage in terms of working with them?

I think the Chinese have to export, don't forget that and any country which is importing from China has to pay a huge bill in the forex side. In this kind of environment, it's not going to be so easy just to be an exporter of cars and to be importing cars. So I think it's too early to say, I think jury is out -- if the governments will come back with their -- what is happening in the U.S. side, the numbers are going to be pretty complicated. So it’s not too easy to do that. Vaaman, you have something to say on that?

No, I agree with what you are saying. I think of course, the Chinese are setting up plants in European countries and it will be interesting to see how they fare over there. I think that the good news for Motherson, in particular, is that we are already there present in China. We have already at 29 facilities. And of course, while we cater largely to the international OEMs, selectively, we've also started to cater to the local OEMs and started to build our relationships there. And thanks to our joint ventures over there, I think it's a pretty comfortable position for us. And as these businesses will start to now come outside of China, we also have an advantage since we are already serving quite a few of them in the local countries. So, in that sense, I think we are fairly covered. But like papa said, the jury is out there. Let's see how they perform. One thing is to perform in China and it's a different game to be outside. And if that is the case, definitely we will also get a chance to serve their needs in the international countries.

Well said. I think you're right. And also please keep in mind that selling a car is easy if you're importing the whole CKD portion of it. But to manufacture it in different countries, different geographies, different people, the Chinese people are very, very industrious, very good in China, but really are they as good when they go out or is the local people who are producing in the local countries, are they as efficient in the same? I have my doubts on that, but it's upon you, how you look at it.

Thank you so much.

Thank you. Next is a follow-up question from the line of Gunjan from Bank of America. Please go ahead.

Yes, hi, thanks for taking my question again, I just wanted a little bit more colour on the consumer electronics business. You mentioned that the first batch of production happened in this -- in November and we get into mass production. So anything that you can share now in terms of the revenue scale-up of the business?

Yes, I can take that. Look, it's still -- it's still, of course small. I think we have said that our bigger plant is already starting construction this month and that will take a year and a half for it to be fully up and that's when you will see the full impa ct of the volumes. But I think the good news is that, look, it's not -- you can't go from 0 to 100 without having any experience in it. So from a much smaller plant that we set-up for the pilot line, I think that's already been approved and that's going to start supplying like we have informed. So that's a very big step for us. In terms of revenues, the impact is still fairly small. That w ill continue to ramp -up till the main plant is up, but we will come back to you when the revenues get meaningful.

Okay. And if I were to think from the INR 3,000 crores run-rate that you put for the emerging businesses and this will add -in, is there a number that you can sort of talk about for the exit of emerging business revenues because this is -- there are many things which are going on here on the aerospace, on consumer electronics, on the medical side as well. So anything that we should keep in mind as an exit revenue run -rate that is possible in this segment? I mean, I'm talking about the entire emerging business piece?

So we give a clear direction that we want it to be about 25% of our overall portfolio. It's still much smaller than that, but I think as we are now ending the 5-year plan and now that we are well-entrenched in these new industries, we'll be able to give you a lot more, let's say, micro picture on individually these industries in the next 5-year plan. But the long direction that was set by papa for the group was the 25% of diversification and I think that's something that we will continue and keep in mind as w e move forward. So it will be quite sizabl e in this next 5 -year plan.

Okay, got it. Thank you so much.

I think the largest plant of Motherson which was supposed to be in USA will be beaten by the plant which is coming up in Chennai. And just for your -- to give you an image of what kind of plant it is going to be about 500 meters long, half a kilometre and it's huge. That could even beat the Alabama plant of Motherson. So a lot of things in store. Yes, we have the time. It takes time to build this plant and get the production line, so really watch this thing.

Thank you, sir. Our next question is from the line of Avish Bhansali from Chanakya Capital Services. Please go-ahead.

Yes, thank you for taking my question. I just wanted to know that if you see on the segment side of the modules and polymers, the margins have declined like by 130 basis-points. So any colour on that would be very helpful?

Yes, look, like I said, I think some of the most of the piece that we were looking at in terms of the restructuring was in the modules and polymer piece. So definitely, we are setting up the base so that we can stay in line with what's happening in the market. But I'm quite confident that this quarter was probably one of the weakest quarters that we have, and we should improve moving forward from here. So please don't just look at it one quarter. I think year-on-year, as you will see the improvements coming, I think we are making the right moves in the reorganization and with the acquisitions, we have a good growth opportunity funnel. That's over there a nd I'm sure that a much better performance is coming in upcoming quarters.

Thank you. That's all from my side.

Thank you. Next is a follow -up question from the line of Joseph George from IIFL. Please go - ahead.

Thanks again. I had a follow -up question on the consumer electronics business. So if I recall right from, I think either Q 1 or the last fourth quarter con call, there were two pieces to the consumer electronics piece. One was the assembly b usiness and second was component manufacturing in the joint-venture with BIEL. If it's possible, can you give an update on the two of them separately? And secondly, the large plant that you mentioned will come up in 1.5 years. Is it assembly or is it component manufacturing? Just some clarification there.

I can take that.

Go ahead, Vaaman.

Look, both of them have come online and the larger plants are obviously between both of them are the larger pieces, of course, the manufacturing piece together with our joint-venture partner. And like I said, on the pilot lines, we are quite happy because the lines have been set -up and have been approved and we are starting the small shipments as we speak. So the plan is to be big in both, but manufacturing of the glass pieces is the one that's going to be the largest part of the business.

All right. And that's the one coming up in 1.5 years?

That's right, I think the pilot lines are already doing both of them in a small way, but the last plant will be coming up in one and a half years. That's correct.

Perfect. Vaaman. Thank you.

If I might add, Joseph, just so it is clear to you the entire consumer electronics business is a joint venture with BIEL once they get the approval. Right now, it is lying as an 100% arm. So both the size of component and the assembly pieces are with them and the pilot line is covering both. Once that is successful, the idea is to zoom that out into the larger facilities. So that's the purpose behind it. And as this works out well in the next 1.5 years’ time, you should see the new facility up and that's when the sizable ramp-up will happen.

Understood. Thanks so much.

Thank you, sir, for the opportunity. Good evening. One question. The profit share from associates has seen a large jump both on a Y-o-Y and Q-o-Q basis, any specific entities which have done well, anything you can call out?

No. Look, I think in general, businesses have done well. Our China joint -ventures have done well. Our Indian joint-ventures have done well. So that's part of the reason. The other part is we -- we bought stake from Sojitz, as you're aware in our MA SL facility and land was sold to our joint-venture as well. That profitability is also residing in that piece of around about I think INR 70-odd crores, if I remember right. So that's there in the presentation as well. You can pick it up from there. So that's the other reason why the share of profits from joint-ventures have gone up.

Thanks, Kunal for that. On the order book side being a powertrain neutral company, we have strong exposure to all powertrain vehicles. How do you classify the focus on hybrids? What would be the share of hybrids in our order book and current revenues?

Go ahead, Kunal.

So, Raghu I think in our portfolio, we have currently diversified it or split it between EVs and non-EVs. In the non-EVs, hybrids also exist, but as you know, hybrid is a combination of ICE plus an electric motor/battery etc. embedded to it. So from our product portfolio perspective, we do not club it separately because it is not necessary that the product has a different construct in a hybrid. And hence we -- it's difficult that all product lines, it is difficult to put it under sector because we still supply the line, the customer could decide to make an ICE or a hybrid as the case may be. So we may not be able to fully decipher it at our end. And hence our linkage is between EVs and non-EVs way to put it. Having said so, hybrids have caught the fancy of the market. I think that's the highest-growing segment. And for any slowdowns that we've seen EVs at least versus anticipated growth, we do see hybrids kick-in. And in most of the cases, we would have that share as well. So directly or indirectly, I think our order book does reflect a decent proportion of all different powertrains including hybrids.

Thanks, and also fair to assume that content per vehicle is generally higher in hybrids compared to ICE?

Generally it would be if you look at typical hybrid it will typically have a premiumization angle even if it's within the same model and hence it obviously carries in a higher content because it's supposed to be a much more premium product than the ICE is. So, yes, generally it's true.

Thank you, sir.

Thank you. As there are no further questions, I now hand the conference over to Mr. Vivek Chaand Sehgal for closing comments.

Thank you. Thank you for your questions. I hope you found a reasonable answer to them. Look, quarter second as Vaaman and Kunal both said is always kind of a question where you don't really know how the market will go, but I think technically we think the quarter 3 and quarter 4 would be the real performance of the group will come even further. We are very sure that they will do better, so wish you all a good evening and a good week ahead.

Thank you. On behalf of Samvardhana Motherson International Limited , that concludes this conference. We thank you for joining us and you may now disconnect your lines.

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