Samvardhana Motherson International Limited · NSE:MOTHERSON
Samvardhana Motherson International — Motherson Sumi Systems — Merger or Acquisition (July 2020)
65 slides from Samvardhana Motherson International's merger presentation, Jul 3, 2020
Slide 1: Updated Investor Presentation on Reorganization (cover letter to exchanges)
July 3, 2020 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 : MOTHERSUMI Scrip Cod
Slide 2: Poised for Next Phase of Growth
Poised for Next Phase of Growth 11
Slide 3: Safe Harbour
Safe Harbour The contents of this presentation are for informational purposes only and for the reader’s personal non-commercial use. The contents are intended, but not guaranteed, to be correct, complete, or absolutely accurate. This presentation also contains forward-looking statements based on the
Slide 4: Motherson Group – Poised for Next Phase of Growth
Motherson Group – Poised for Next Phase of Growth Transaction Overview Overview of Businesses under Resultant Structure - MSSL - DWH Appendix 33
Slide 5: Today
Today Engineering focused company, strong 2010-201 CAGR = 18+% Tier 1 OEM supplier. US$ 11.3 Bn. in yearly revenues. Operating over 270 is facilities in 41 countries. one of the Over 135,000 world’s leading people worldwide. specialized Working with 33 joint manufacturing venture partners. companies
Slide 6: Group Business Portfolio Today
Group Business Portfolio Today Transformation from a wiring harness manufacturer to a diversified group 01. 02. 03. 04. Wiring harness Vision systems Modules & polymer Technology & software products 05. 06. 07. 08. 09. Metal products Retail & services Aerospace Logistics Health & Medical 55
Slide 7: Vision: To be a globally preferred solutions provider
VISION To be a Be part of the globally success of preferred our customers solutions provider 66 Photo by Olympic Spaceport
Slide 8: This is what happens when we dream with our eyes open
35% This is what INR 62,573 Cr. Motherson has happens when we grown 3,293 dream with our times in 27 years, at ~ 35% eyes open and, year-on-year most importantly, together INR 34,490 Cr. INR 2,209 Cr. 20% INR 6,702 Cr. INR 730 Cr. 15% INR 781 Cr. INR 19 Cr. INR 59 Cr. INR 153 Cr. 1993 1995 2000 2005
Slide 9: Proud to be part of the increasing wealth of our investors
Proud to be part of An investor who invested in the increasing wealth the IPO in 1993 has earned of our investors a compounded annual return of 32% over 27 years INR 2,500 invested in the MSSL IPO is 1,630x worth INR 4,075,936 today (including cumulative dividend of INR 412,985)* IPO 1993 2020 88 *A
Slide 10: Preparing for the next stage of growth
Preparing for the next stage of growth 99
Slide 11: Motherson Group – Poised for Next Phase of Growth
Motherson Group – Poised for Next Phase of Growth Transaction Overview Overview of Businesses under Resultant Structure - MSSL - DWH Appendix 10 10
Slide 12: Proposed Reorganization
Proposed Reorganization Key objectives: (a) Simplification of the Group structure Next chapter (b) Alignment of the interests of of growth in all stakeholders the history of Motherson (c) Creation of strong platforms for growth 11 11
Slide 13: Current Holding Structure and Business Segments
Current Holding Structure and Business Segments Sehgal Family Sojitz Employees SAMIL 90.4% 6.5% 3.1% Diverse Businesses 1. Automotive Lighting SAMIL* Systems Public SWS 2. Moulds and Toolings 3.0% 38.3% 25.3% 33.4% 49.0% 3. Sheet Metals 4. Shock Absorbers 51.0% MSSL (Listed Entity) SMRP BV^ 5. Infor
Slide 14: Part 1 - Vertical Demerger of Domestic Wiring Harness Business into DWH
Part 1 - Vertical Demerger of Domestic Wiring Harness Business into DWH Sehgal Sehgal Family Family Public SWS SAMIL Public SWS SAMIL 3.0% 38.3% 25.3% 33.4% 3.0% 38.3% 25.3% 33.4% 1 Demerger of domestic wiring harness business into DWH DWH MSSL (New Co *) Listed To be Listed 51.0% Mechanics 1. Demer
Slide 15: Part 2 - Merger of SAMIL into MSSL
Part 2 - Merger of SAMIL# into MSSL* Sehgal Sehgal Mechanics Public SWS Family Family Sojitz Employees 38.3% 25.3% 3.0% 90.4% 6.5% 3.1% 1. Merger of SAMIL# into MSSL Merger of SAMIL 2. Share Entitlement Ratio into MSSL 2 - 51 shares of MSSL* MSSL SAMIL for 10 shares of (post demerger of DWH Business
Slide 16: Resultant Holding Structure and Business Segments
Resultant Holding Structure and Business Segments Public1 SWS Sehgal Family Public SWS Sehgal Family 31.9% 17.7% 50.4% 38.3% 25.3% 3.0% 33.4% DWH MSSL* (New Co) Listed To be Listed 100.0% SMRP BV^ MSSL* DWH 1. Wiring Harness (Exports - PV, CV, 2W and 6. Moulds and Toolings 1. Wiring Harness (Domesti
Slide 17: Benefits of Proposed Reorganization
Benefits of Proposed Reorganization Consolidation of 100% shareholding in SMRP BV under MSSL* • Value creation from future growth of SMRP BV to fully accrue to MSSL* shareholders Simplification of Group Structure MSSL* to retain stake in DWH to ensure continuity of benefits • MSSL* retains exposure
Slide 18: Overview of Businesses under Resultant Structure
Motherson Group – Poised for Next Phase of Growth Transaction Overview Overview of Businesses under Resultant Structure - MSSL - DWH Appendix 17 17
Slide 19: MSSL – Poised for Next Phase of Growth
MSSL* – Poised for Next Phase of Growth #1 Diversified Portfolio Enhancing 3CX10 Strategy #2 Platform for Future Growth Through Organic and Inorganic Route #3 Powertrain Neutral Portfolio Favorably Positioned for Mega-Trends MSSL #4 Partnerships with Global Technology Leaders #5 Shareholders to Gain
Slide 20: Diversified Portfolio Enhancing 3CX10 Strategy (1/4)
1 MSSL*: Diversified Portfolio Enhancing 3CX10 Strategy (1/4) Delivering full system solutions globally Auto / Auto ancillary Pillar Trim Wiring Front end Extruded Harness Cockpit Bumper Module Door Trim Plastic Parts Lighting Injection Systems Molding Tools Spoiler Tail Gates Shock Cutting Tools No
Slide 21: Diversified Portfolio Enhancing 3CX10 Strategy (2/4)
1 Diversified Portfolio Enhancing 3CX10 Strategy (2/4) COUNTRY MIX^,## Slovak Brazil Republic Others - Emerging Markets Hungary 3% 3% 2% Germany 2% 20% Emerging Mexico 5% Markets Developed exposure 3%2% 3% 2% Markets - increased by 20% 5% 59% 2% to 41% China 9% Post 10% Pre reorganization reorganiza
Slide 22: Diversified Portfolio Enhancing 3CX10 Strategy (3/4)
1 Diversified Portfolio Enhancing 3CX10 Strategy (3/4) CUSTOMER MIX^,## Daimler 13% Others 30% Audi 11% 13% 29% 12% Post reorganization Pre reorganization MSSL* 2% 9% Volkswagen 2% 8% 3% Scania, 2% 7% 3% 4% 4% Paccar, 2% 4% 4% 4% Renault Nissan General Motors Automotive 2% 7% Porsche, 3% Hyundai Suz
Slide 23: Diversified Portfolio Enhancing 3CX10 Strategy (4/4)
1 Diversified Portfolio Enhancing 3CX10 Strategy (4/4) COMPONENT MIX^,## Metals Others Automotive Lighting 1% 2% Enhances Product and Technology 1% Wiring Harness Diversification Other Polymer 27% Products, 10% ü Enhances offerings in auto and enables 1% foray in the non-automotive space 10% Enginee
Slide 24: Platform for Future Growth Through Organic and Inorganic Route
2 Platform for Future Growth Through Organic and Inorganic Route Indicative Global Opportunity Size^ ($ bn) Business Revenues # of # of # of 120 Segments (INR bn) Plants Countries Acquisitions Total Size of Between 2000 - 2020 Structural Stamped Opportunity is 100 Metal Parts (5) $200 bn+ Wiring Ind
Slide 25: Powertrain Neutral Portfolio Favorably Positioned for Mega-Trends (1/2)
Powertrain Neutral Portfolio Favorably Positioned for Mega-Trends 3 (1/2) Key trends Wiring Harness Vision Modules & Polymer SAMIL# Portfolio Increasing • SMART Modules and • Camera systems and smart electronic Semiconductor Devices (in place functionality • Integrated sensor solutions. • Use of ECU
Slide 26: Powertrain Neutral Portfolio Favorably Positioned for Mega-Trends (2/2)
Powertrain Neutral Portfolio Favorably Positioned for Mega-Trends 3 (2/2) Key trends Wiring Harness Vision Modules & Polymer SAMIL# Portfolio Driver / Occupant • Electronic distribution systems with • Digital mirrors: greater field of • Increased sensor technology increasing sensors and features vis
Slide 27: Partnership with Global Technology Leaders
4 Partnership with Global Technology Leaders Existing Marquee Partnerships… …SAMIL# introduces partners who are global champions in their product areas Technology Partners Top premium Automotive Amongst the Leading HVAC Solutions for CV Lighting Supplier in India Shock Absorber Suppliers Increases G
Slide 28: Shareholders to Gain from Full Upside of Group Synergies
5 Shareholders to Gain from Full Upside of Group Synergies 1 Ever Increasing Cross- Strong relationships to enhance cross-sell opportunities and increase Selling Opportunities share of wallet through addition of new product portfolio 2 New organization structure gives greater flexibility to raise ca
Slide 29: Investors to Participate in Full Growth of SMRP BV (1/2)
6 Investors to Participate in Full Growth of SMRP BV (1/2) SMRP BV … with consistent EBITDA2 Margins Revenue1 growth @ 12% CAGR… (adjusted for Greenfields & SMRC) € Mn € Mn 5,312 5,603 4,422 4,373 4,087 4,159 4,112 4,542 3,564 9.9% 10.6% 10.8% 10.5% 3,564 8.8% 315 403 467 473 438 FY2016 FY2017 FY201
Slide 30: Investors to Participate in Full Growth of SMRP BV (2/2)
6 Investors to Participate in Full Growth of SMRP BV (2/2) SMRP BV (€ Mn) Particulars FY 16 FY 17 FY 18 FY19 FY20 EBITDA 292 362 378 347 336 • Reorganization results in EBIT 170 244 255 179 99 consolidation of 100% shareholding of SMRP BV PBT 143 213 209 148 37 into MSSL* Less: Tax 29 66 71 45 41 •
Slide 31: MSSL: Summary Proforma Financials
MSSL* : Summary Proforma Financials^ Financials (INR Mn) MSSL - MSSL - SAMIL^(c) Combined (b+c) Standalone ex DWH (a) Consolidated ex DWH(b) Year FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 Net Revenue 43,694 40,088 604,206 607,529 13,907 12,863 614,906 616,248 EBITDA 6,747 6,898 52,540 49,173 1,800 1,2
Slide 32: Overview of Businesses under Resultant Structure
Motherson Group – Poised for Next Phase of Growth Transaction Overview Overview of Businesses under Resultant Structure - MSSL - DWH Appendix 31 31
Slide 33: 1983 - Our First Wiring Harness Order
32 1983 - Our First Wiring HarnessOrder Started building Maruti 800 wiring harnesses in a structured way. 32 32
Slide 34: Outperformance over Industry Volumes Driven by Sustained Leadership
Outperformance over Industry Volumes Driven by Sustained Leadership Position and Increasing Content per Car 44.9 DWH Re venues(INR Bn) India PV Volumes* (Mn) 42.1 39.4 36.3 29.7 28.9 26.9 26.0 CAGR CAGR CAGR (FY10-FY20) (FY15- FY20) (FY17- FY20) 20.9 DWH 4.0 4.0 14.4% 6.3% 2.5% 17.0 3.8 Revenues 3.4
Slide 35: DWH – Sustained Leadership and Competitive Advantage in India
DWH – Sustained Leadership and Competitive Advantage in India #1 Diversified and Pan-India Industrial Footprint #2 Strong Customer relationships across OEMs DWH #3 Facilitating OEMs for End-to-End Product Design and Development #4 Access to World Class Technology #5 Well Positioned to Leverage on In
Slide 36: Diversified and Pan-India Industrial Footprint
1 Diversified and Pan-India Industrial Footprint Maruti Suzuki, Honda Cars, Hero, HMSI, JCB, Mahindra, Escorts Construction, Manitou, Suzuki Motorcycles, India Yamaha, Piaggio, CNH Industrial, Claas India, Tata Hitachi, SML Isuzu, PTL, International Tractors Maruti Suzuki, Hero, Tata Motors, Ashok L
Slide 37: Strong Customer Relationships Across OEMs
2 Strong Customer Relationships Across OEMs Customer Delight being the bedrock of Sustainability Maruti Suzuki Toyota Ford Honda Cars Mahindra Mercedes Daimler Renault Nissan Customer Business Quality & Customer Overall Part Supplier of the Year Zero PPM Award Q1 Certification- Gold Award Satisfacti
Slide 38: Facilitating OEMs for End-to-End Product Design and Development
3 Facilitating OEMs for End-to-End Product Design and Development Harness design Harness child part Assembly localization Simulation localization localization design localization • Only Build-to-Print • Product Design • Product Design • Product Design Participation Participation Participation • Tria
Slide 39: Access to World Class Technology (1/2)
4 Access to World Class Technology (1/2) Access to world class technology Ready solutions for Hybrid / EVs 1 • 50 + Types Gateways in 1 PVs Battery BatteryWire • 10 + Year - In Mass Module Production Wire Module Gateways 2 2 Charging • Space Saving Connector • Improving efficiency of Harness System
Slide 40: Access to World Class Technology (2/2)
4 Access to World Class Technology (2/2) Sourcing & Shared Services Arrangements Post Demerger DWH • DWH will enter into a sourcing and shared Sumitomo Wiring MSSL* services agreement with MSSL* to Systems address existing inter-dependencies • Agreements shall be on an arms length • Sourcing of Wire
Slide 41: Well Positioned to Leverage on Industry Mega Trends
5 Well Positioned to Leverage on Industry Mega Trends Industry Macro Rising Premiumization / Alignment to User’s digital Sustainable Technologies Alternate / Electric Trends Customization lifecycle – Connectivity (BS VI / Safety Regulations) Powertrain Consumers All time connected 100% Share of Elec
Slide 42: Best in Class Operating Performance
Best in Class Operating Performance Adjusted EBIDTA, Margin and ROCE (%) INR Mn 72% 64% 55% 10000 • Maintained healthy profitability and ROCE despite market headwinds in 17.0% 16.5% 13.4% 9000 8000 FY19-20. FY20 EBITDA is not a 7000 reflection of stable state profitability 6000 due to abnormal marke
Slide 43: DWH: Summary Proforma Financials
DWH: Summary Proforma Financials* Financials DWH (INR Mn) Year FY19 FY20 Net Revenue 44,838 39,439 EBITDA 7,399 5,294 EBITDA Margin (%) 16.5% 13.4% EBIT 6,426 4,294 EBIT Margin (%) 14.3% 10.9% PAT 3,923 2,860 PAT Margin (%) 8.7% 7.3% Gross Debt (excl. lease liability) 63 333 Cash 202 317 Net Debt (1
Slide 44: We are a long-term thinking company
We are a long-term thinking company. Reorganization lays the foundation for a new chapter in our growth history
Slide 45: Appendix
Motherson Group – Poised for Next Phase of Growth Transaction Overview Overview of Businesses under Resultant Structure - MSSL - DWH Appendix 44 44
Slide 46: Appendix I: SAMIL: A High Growth, Well Diversified Entity (1/2)
Appendix I: SAMIL#: A High Growth, Well Diversified Entity (1/2) Enables entry into products and services such as auto lighting, logistics, shock absorbers, air conditioning systems etc. Products Allows immense inorganic opportunities in newer products and technologies where MSSL* had no prior exper
Slide 47: Appendix I: SAMIL: A High Growth, Well Diversified Entity (2/2)
Appendix I: SAMIL#: A High Growth, Well Diversified Entity (2/2) Lighting, Modules & Metal Products Technology & Software Retail, Services and Others Product Tooling Diversified Operations of SAMIL Customer Segment PV PV/CV, B2B PV, B2B PV, B2B make it a unique entity India, Europe India, Middle Eas
Slide 48: Appendix II: SAMIL Subsidiaries / Joint Ventures (1/5)
Appendix II: SAMIL# Subsidiaries / Joint Ventures (1/5) Key JVs and Subsidiaries Marelli Motherson Automotive Lighting India Pvt. Ltd. Magneti Marelli Motherson Shock Absorbers India Pvt Ltd (50:50 JV) (50:50 JV) Partner • Top Premium Automotive Lighting Supplier in India for PVs • Amongst the top 5
Slide 49: Appendix II: SAMIL Subsidiaries / Joint Ventures (2/5)
Appendix II: SAMIL# Subsidiaries / Joint Ventures (2/5) Key JVs and Subsidiaries MS Global India Automotive MothersonSumi Infotech and Design Limited Pvt. Ltd** (53.7% owned by SAMIL)1 Partner NA Sumitomo Wiring Systems, Ltd. • Consistent growth from Motherson group companies through new age • Hot s
Slide 50: Appendix II: SAMIL Subsidiaries / Joint Ventures (3/5)
Appendix II: SAMIL# Subsidiaries / Joint Ventures (3/5) Key JVs and Subsidiaries Valeo Motherson Thermal Commercial Vehicles India Ltd Matsui Technologies India Ltd. (51:49 JV) (50:50 JV) Partner • Diversification into various industry (Packaging, Healthcare, • Strong relationships across all key OE
Slide 51: Appendix II: SAMIL Subsidiaries / Joint Ventures (4/5)
Appendix II: SAMIL# Subsidiaries / Joint Ventures (4/5) Key JVs and Subsidiaries Anest Iwata Motherson Private Limited Motherson Techno Tools Limited (51:49 JV) (60% held through SMISL^) Partner • Pan India Installation Base of Air Compressors. Business in SAARC • Long standing association with Sumi
Slide 52: Appendix II: SAMIL Subsidiaries / Joint Ventures (5/5)
Appendix II: SAMIL# Subsidiaries / Joint Ventures (5/5) Key JVs and Subsidiaries Other Marquee JV Partners Fritzmeier Motherson Cabin Engineering Pvt. Ltd. CTM India Ltd . (50:50 JV) (41% owned by SAMIL)2 HVAC solutions Partner NA • Strong track record and reputation with Indian OEMs • Strong relati
Slide 53: Appendix III: Sourcing & Shared Services Arrangements Post Demerger
Appendix III: Sourcing & Shared Services Arrangements Post Demerger - Guiding Principles Nature Description Arrangements (% of Commercial principle proposed FY20 DWH Revenues) Sourcing from • Wires, connectors, tubes, plastic • c.43.0% (existing • Continuation of existing arrangement on an arms- MSS
Slide 54: Appendix III: Sourcing & Shared Services Arrangements Post Demerger
Appendix III: Sourcing & Shared Services Arrangements Post Demerger - Guiding Principles Nature Description Arrangements (% of Commercial principle proposed FY20 DWH Revenues) Shared • Rendering of functional support • c. 5.5% (existing • Aggregate payment in this bucket to not exceed Services/ serv
Slide 55: Appendix IV: Post Scheme Share Capital Structure
Appendix IV: Post Scheme Share Capital Structure Step 1: Demerger of Domestic Wiring Harness Business from MSSL* into DWH As of the date hereof #Shares (Mn) Outstanding equity shares of DWH of face value of Rs. 1 each (A) 0.5 Outstanding equity shares of MSSL of face value of Rs.1 each (B) 3,157.9 N
Slide 56: Appendix V: Indicative Transaction Timelines
Appendix V: Indicative Transaction Timelines M O N T H S Jul Jan Aug Sep Oct Nov Dec Feb Mar Apr May Jun Jul 2020 2021 Board Approval Filing of scheme with Stock Exchanges Receipt of Stock Exchanges approval and filing with NCLT Filing with NCLT Shareholders / creditors meeting NCLT / other regulato
Slide 57: Appendix VI: Swap Ratio Recommended by Independent Valuers
Appendix VI : Swap Ratio Recommended by Independent Valuers, Registered Valuer and Fairness Opinion Providers • Independent Valuation Exercise conducted by two Valuers • Valuation and Swap Ratio also carried out by a Registered Valuer • Fairness Opinion on the Swap Ratio obtained from 2 Merchant Ban
Slide 58: Appendix VII: Procedure followed to arrive at Proforma financials (1/2)
Appendix VII : Procedure followed to arrive at Proforma financials outlined in Slide No. 30 and 42 (1/2) S.No Entity Procedure Followed • The Company has prepared the special purpose financial information of DWH Business in accordance with allocation basis as determined by the management and Guidanc
Slide 59: Appendix VII: Procedure followed to arrive at Proforma financials (2/2)
Appendix VII: Procedure followed to arrive at Proforma financials outlined in Slide No. 30 and 42 (2/2) S.No Entity Procedure Followed • The Company has prepared the combined/carve-out financial information of SAMIL in accordance with Guidance Note on “Combined and Carve-out Financial Information” i
Slide 60: Appendix VIII: Business Consolidation through Reorganization
Appendix VIII: Business Consolidation through Reorganization MSSL MSSL ex DWH SAMIL# Post Reorg • 100% • Nil • 33.4% • 33.4% Domestic Wiring Harness Business • 51% • 51% • 33.4% of 51% + • 100% SMRPBV 49% = 66% • 100% • 100% • 33.4% • 100% MSSL businesses excluding DWH & SMRPBV stake (e.g. Standalon
Slide 61: Appendix IX: SAMIL Financials Overview – FY20
Appendix IX: SAMIL# (ex MSSL ex SMRP BV) Financials Overview – FY20 INR mn Revenues EBITDA Net Debt^ Aggregate Prop. Consol. Aggregate Prop.1 Consol. Aggregate Prop. Consol. 28,000 20,437 12,863 3,600+ 2,520 1,263 11,923 11,631 11,147 Significant profitability in SAMIL# ex MSSL ex SMRP BV in unconso
Slide 62: Appendix X: Sourcing & Services Arrangements Post Demerger – Impact Analysis
Appendix X: Sourcing & Services Arrangements Post Demerger – Impact Analysis Cost Details Not exceeding % of revenue Currently Included Under Impact • Software, IT related costs, Common group support functions (such as legal Respective heads such as , taxation, etc), rent and maintenance 2.0% softwa
Slide 63: Transaction Advisors
Transaction Advisors Financial Advisors and Fairness Opinion Providers Tax Advisors Legal Advisors For MSSL For SAMIL Financial & Legal Valuation Advisors Diligence Advisors Real Estate Advisor 62 62
Slide 64: Glossary
Glossary CAGR Compound Annual Growth Rate MIND Motherson Sumi Infotech and Designs Ltd. CKM Calsonic Kansei Motherson Auto Products Pvt. Ltd. MMLI Marelli Motherson Automotive Lighting India Pvt. Ltd. CTM CTM India Ltd. MMSA Magneti Marelli Motherson Shock Absorbers India Pvt. Ltd. CV Commercial Veh
Slide 65: Thank you.
Thank you. © Motherson All rights reserved by Motherson and/or its affiliated companies. Any commercial use hereof, especially any transfer and/or copying hereof, is prohibited without the prior written consent of Motherson and/or its affiliated companies. In case of transfer of information containi
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