Samvardhana Motherson International Limited · NSE:MOTHERSON
Samvardhana Motherson International — Motherson Sumi Systems — Merger or Acquisition (February 2021)
61 slides from Samvardhana Motherson International's merger presentation, Feb 17, 2021
Slide 1: Covering letter to stock exchanges on investor presentation addendum and FAQs
motherson 111 Motherson Sumi Systems Limited Head Office: C-14 A & B, Sector 1, Noida-201301 Distt. Gautam Budh Nagar, U.P. India Tel: +91-120-6752100, 6752278, Fax: +91-120-2521866, 2521966, Website: www.motherson.com February 17, 2021 National Stock Exchange of India Limited BSE Limited Exchange P
Slide 2: Addendum to Investor Presentation on Proposed Reorganization
Addendum to Investor Presentation on Proposed Reorganization 17th Feb 2021
Slide 3: Key Events Post Reorganization Announcement
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 4: Key Events Post Reorganization Announcement
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 5: Strong Industrial Recovery with Operations Back to Near Normal (1/2)
Strong Industrial Recovery with Operations Back to Near Normal (1/2) LV Production as a % of January 2020 Europe Greater China Japan/Korea 153% 155% 142% 144% 113% 129% 123% 111% 115% 114% 115% 120% 119% 119% 115% 117% 100% 100% 100% 94% 104% 108% 93% 79% 81% 79% 105% 100% 74% 84% 86% 72% 57% 53% 44
Slide 6: Strong Recovery Post COVID Slowdown (2/2)
Strong Recovery Post COVID Slowdown (2/2) MSSL Consolidated Revenues*,^ (INR Mn) SMRPBV Revenues* (EUR Mn) 1,79,231 1,66,910 1,58,2771,55,512 1,55,568 1,50,006 1,482 1,450 1,408 1,403 1,310 1,265 731 84,312 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3
Slide 7: Turnaround of SMRP BV Greenfield Facilities
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 8: Greenfield learnings
Greenfield learnings. We have used the COVID- 19 period to draw lessons and improve processes at our large Greenfields. 77
Slide 9: Overall Improvement in FY21 Metrics
Overall Improvement in FY21 Metrics Revenue* EBITDA* Average €1,401 Mn per quarter 4.8% 6.0% 6.2% 7.3% -ve 8.5% 10.1% 1,482 1,450 1,408 1,403 1,310 1,265 146 95 108 71 84 87 731 (54) Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Uptick in operating
Slide 10: SAMIL Investor Day
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 11: SAMIL Businesses
SAMIL Businesses. ‘-— -#INR 28,000 Mn Total capital invested in SAMIL businesses excluding MSSL and SMRP BV. © *Atan aggregate level
Slide 12: SAMIL Businesses Portfolio
SAMIL Businesses Portfolio Top 10 Companies Other companies incubated for future growth 02 03 04 05 06 08 01 Group 07 Lighting Metal Engineering Services & Logistics Health & Shared Aerospace Solutions Solutions & Tooling IT Solutions Solutions Medical Services • Motherson Marelli • MS Global • CTM
Slide 13: Market size of SAMIL businesses
12 12 * Size of the bubble indicates market size; Source: (1) Allied Market Research (2018) (2) https://www.absolutereports.com/13909248 (2019) (3) Allied Market Research (2019) (4) Automotive Lighting: Technology, Industry and Market Trends 2018 report, Yole Development; (5) Global Automotive Stamp
Slide 14: Proforma Financials
Proforma Financials* 3 SAMIL Business (ex MSSL ex.SMRP BV) Revenue EBITDA % Margin Net Debt 28,000 13.3% -ve 13.2% 14.5% Aggregate 3,721 1,259 6,750 7,866 Basis 2,889 892 1,143 13,510 FY 20 Q1FY21 Q2FY21 Q3FY21 -122 31-Dec-20 FY 20 Q1FY21 Q2FY21 Q3FY21 20,437 Net Debt Lease Liability 12.3% -ve 12.5%
Slide 15: Motherson Vision 2025
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 16: Vision
Vision No. 1 No. 2 USD 36 billion 3CX10 revenues in 2024-25 No country, customer or with 40% ROCE component should contribute (consolidated) more than 10% to our revenues The sixth 5-year plan. No. 3 No. 4 75% of revenues from 40% of automotive industry, consolidated 25% from new divisions profit as
Slide 17: To be Achieved Through...
To be Achieved Through... #1 #2 #3 #4 Business growth in current Use of New technologies in Adjacent expansion (New Diversification into new product lines current products / processes solutions in current industries) industries Vision systems: Wiring harnesses for new 2 wheeler LED lighting
Slide 18: Acquisitions Announced Post July 2020
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 19: Recent Acquisitions to Enhance Value for Shareholders Post-Reorg
Recent Acquisitions to Enhance Value for Shareholders Post-Reorg Inorganic Growth Journey Continues… Bombardier Successfully integrated 23 acquisitions between Mexico (Wiring harness) 2002 – 2020, bringing a wide range of solutions to customers 2002 2020 2021 Plast Met Group Turkey Announced Group (
Slide 20: Financial Performance for Current Fiscal
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 21: Key Financial Metrics on Proforma Basis (1/2)
Key Financial Metrics on Proforma Basis (1/2) DWH and MSSL Standalone ex DWH Revenue EBITDA % Margin Net Debt -ve 11.3% 14.4% 1,947 3,293 13,480 1,214 10,793 DWH 2,004 171 -779 Net Debt Lease Liability 1 Q1 Q2 Q3 Q1 Q2 Q3 FY21 FY21 FY21 FY21 FY21 FY21 31-Dec-20 -ve 18.0% 18.2% 743 11,348 10,037 1,80
Slide 22: Key Financial Metrics on Proforma Basis (2/2)
Key Financial Metrics on Proforma Basis (2/2) MSSL Consolidated ex DWH and Merged Entity Revenue EBITDA % Margin Net Debt -ve 9.7% 10.9% 18,668 1,71,004 14,546 13,068 1,49,653 MSSL 83,477 61,805 Consolidated ex DWH -4,938 Net Debt (excl lease liability) Lease Liability Q1 Q2 Q3 Q1 Q2 Q3 FY21 FY21 FY
Slide 23: MSSL: Summary Proforma Financials
MSSL* : Summary Proforma Financials^ MSSL - Consolidated ex Combined MSSL - Standalone ex DWH SAMIL# Financials (INR Mn) DWH Post Reorg (a) (b) (c) (b+c- eliminations) Year FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 Revenue 43,694 40,088 604,206 607,529 13,907 12,863 614,906 616,248 EBITDA 6,747 6,898
Slide 24: Summary Proforma Financials
Summary Proforma Financials* MSSL1 - Standalone MSSL - Consolidated Combined DWH Entity SAMIL2 ex DWH ex DWH Post Reorg Financials (INR Mn) (a) (b) (c) (b+c-eliminations) Year Q2 FY21 Q3 FY21 Q2 FY21 Q3 FY21 Q2 FY21 Q3 FY21 Q2 FY21 Q3 FY21 Q2 FY21 Q3 FY21 Revenue 10,793 13,480 10,037 11,348 149,653
Slide 25: EPS Analysis - Pre and Post Reorganization
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 26: EPS Accretion Achieved Ahead of Schedule
EPS Accretion Achieved Ahead of Schedule Q3 FY21 Earnings Per Share - (Pre-Reorganization) Q3 FY21 Earnings Per Share - (Post-Reorganization) PAT Combined Entity Proforma PAT MSSL Cons. Ex DWH* 5,372 (MSSL Cons. ex DWH + SAMIL*) (INR 8,301 Proforma (INR Mn) Mn) 8.0% No. of shares (Mn) 3,157.9 No. of
Slide 27: Scheme Timelines
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 28: Indicative Timelines for Scheme Execution
Indicative Timelines for Scheme Execution M o n t h s Jul Jan Aug Sep Oct Nov Dec Feb Mar Apr May Jun Jul Aug 2020 2021 Board Approval Filing of scheme with BSE, NSE, SEBI Tentatively Scheme uploaded on websites of BSE & NSE Scheduled for April 29th, 2021 Receipt of BSE, NSE, SEBI approval Filing wi
Slide 29: Reorganization is subject to scheme and RPT approvals
Reorganization is subject to, among others, both scheme and RPT approvals… Receipt of minority Receipt of shareholders’ approval + minority for the proposed shareholders’ related party approval for transactions between the Scheme MSSL / SWS / Group entities and MSWIL There would be two separate meet
Slide 30: Appendix
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 31: Bridge from Reported to Proforma Financials (1/5)
Bridge from Reported to Proforma Financials (1/5) MSWIL / DWH Entity Reported DWH Management Adjustments Proforma DWH* Q3 Q3 Q3 INR Million FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 21 FY 21 FY 21 Revenue 44,838 39,439 13,480 0 0 0 44,838 39,439 13,480 EBITDA1 7,369 5,534 2,026 30 -240 -79 7,399 5,294
Slide 32: Bridge from Reported to Proforma Financials (2/5)
Bridge from Reported to Proforma Financials (2/5) MSSL Standalone ex DWH Reported MSSL Standalone ex DWH Management Adjustments Proforma MSSL Standalone ex DWH* Q3 Q3 Q3 INR Million FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 21 FY 21 FY 21 Revenue1 43,624 39,851 11,269 70 237 79 43,694 40,088 11,348 EBI
Slide 33: Bridge from Reported to Proforma Financials (3/5)
Bridge from Reported to Proforma Financials (3/5) MSSL Consolidated ex DWH Proforma MSSL Consolidated ex Reported MSSL Consolidated Proforma DWH Entity Adjustments / Eliminations DWH* Q3 Q3 Q3 Q3 INR Million FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 21 FY 21 FY 21 FY 21 Revenue1 635,229 635
Slide 34: Bridge from Reported to Proforma Financials (4/5)
Bridge from Reported to Proforma Financials (4/5) SAMIL Reported SAMIL Carve out / Carve in** Management Adjustments Proforma SAMIL Q3 Q3 Q3 Q3 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 21 FY 21 FY 21 FY 21 Revenue1 14,711 13,358 3,337 -1,101 -592 -1 297 97 -56 13,907 12,863 3,280 EBITDA2 8
Slide 35: Bridge from Reported to Proforma Financials (5/5)
Bridge from Reported to Proforma Financials (5/5) Combined Entity Proforma MSSL Consol. ex DWH Proforma SAMIL Adjustments / Eliminations Proforma Combined Entity* INR Million Q3 Q3 Q3 Q3 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 21 FY 21 FY 21 FY 21 Revenue1 604,206 607,529 171,004 13,907 1
Slide 36: Sourcing & Shared Services Arrangements Post Demerger (1/2)
Sourcing & Shared Services Arrangements Post Demerger - Guiding Principles (1/2) Nature Description Incremental FY20 9M FY21 Proposed Cap Comments due to Reorg Quantum Quantum (Yes / No) (% of DWH (% of DWH (% of DWH Net Net Net Revenue) Revenue) Revenue) DWH sourcing Wires, connectors, tubes, plast
Slide 37: Sourcing & Shared Services Arrangements Post Demerger (2/2)
Sourcing & Shared Services Arrangements Post Demerger - Guiding Principles (2/2) Nature Description Incremental FY20 9M FY21 Proposed Comments due to Reorg Quantum Quantum Cap (Yes / No) (% of DWH (% of DWH (% of DWH Net Net Net Revenue) Revenue) Revenue) Functional Rendering of functional support N
Slide 38: Reference to Detailed Documents
Key Events Post Reorganization Announcement – Strong Industrial Recovery – Turnaround of SMRP BV Greenfield Facilities – SAMIL Investor Day – Motherson Vision 2025 – Acquisitions Announced Post July 2020 Financial Performance for Current Fiscal EPS Analysis - Pre and Post Reorganization Scheme Timel
Slide 39: Reference to Detailed Documents
Reference to Detailed Documents For ease of reference and understanding, investors can access the below mentioned documents using the hyperlinks provided Reorganization : Press Release Reorganization Presentation : Poised for the next Phase of Growth Reorganization Scheme (Including Valuation
Slide 40: Safe Harbour
Safe Harbour The contents of these 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 th
Slide 41: Not for distribution in the United States
THIS ANNOUNCEMENT AND/OR PRESENTATION IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (the "U.S."). This announcement does not constitute nor form part of any offer or invitation to sell, issue or subscribe for securities in the U.S. or any other jurisdiction
Slide 42: Frequently Asked Questions on the Proposed Reorganization
FREQUENTLY ASKED QUESTIONS (FAQs) & ANSWERS ON THE PROPOSED REORGANIZATION OF THE COMPANY ANNOUNCED ON 02nd JULY 2020 1
Slide 43: Safe Harbour
SAFE HARBOUR The contents of these FAQs 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. These FAQs also contains forward-looking statements based on the currently hel
Slide 44: Limitation of liability
None of the Company, its directors, promoter or affiliates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in s
Slide 45: Structure & Strategic Rationale
FREQUENTLY ASKED QUESTIONS (FAQs) & ANSWERS ON THE PROPOSED REORGANIZATION OF THE COMPANY ANNOUNCED ON 02nd JULY 2020 STRUCTURE & STRATEGIC RATIONALE 1. What is the proposed reorganization and what is the strategic rationale for the same? The proposed reorganization approved inter alia by the Board
Slide 46: Shareholding pattern of MSWIL post Step 1
The shareholding pattern of MSWIL (Post step 1) (basis the shareholding pattern as at June 30, 2020) would be as depicted in the chart below Intermediate Structure – Post Step-1 Rationale - The demerger accomplishes the long-standing request from the Company's joint venture partner, Sumitomo Wiring
Slide 47: Resultant Structure - Post Step-2
Resultant Structure – Post Step-2 1. Public includes MSSL public shareholders (26.8%) and Sojitz and employees of SAMIL (5.1%) Rationale – This will address the long standing request of the investors to bring all the businesses of the Motherson Group (“Group”) together. The largest business of the G
Slide 48: About SAMIL Businesses
About SAMIL Businesses SAMIL is part of the promoter group of MSSL and, as on date, is the single largest shareholder holding 33.4% shares in MSSL. It provides operational, strategic and management support to all Motherson companies. SAMIL has partnerships with global industry leaders such as Marell
Slide 49: Board approval and process of reorganization
(a) The Board of Directors of MSSL at its meeting held on January 30, 2020 granted an in principle approval for reorganization of the business within the Group which inter-alia involved the demerger of domestic wiring harness business and consolidation of shareholding in SMRP BV so that it is held 1
Slide 50: Fairness opinions and share entitlement and exchange ratios
DSP Merrill Lynch Ltd. provided fairness opinion on the share entitlement ratio for the demerger and share exchange ratio for the merger, to MSSL. Kotak Mahindra Capital Co. Ltd. provided fairness opinion on the share exchange ratio for the merger, to SAMIL. Step 1: Demerger of Domestic Wiring Harne
Slide 51: Economic interest of MSSL public shareholders post reorganization
(The valuation and fairness opinion reports provided by the valuers and merchant bankers respectively are available on the Company website as a part of the composite scheme document– “Composite Scheme”). 5. What will be the economic interest of the MSSL public shareholders in various businesses post
Slide 52: Proportionate EBITDA and EPS accretion calculation
Q3FY21 Businesses Economic Holding of Existing Proportionate EBITDA EBITDA MSSL Public Shareholders Q3 FY21 (INR Mn) Q3 FY21 (C) Pre Reorg (A) Post Reorg (B) Pre Reorg Post Reorg (INR Mn) D = (A X C) E = (B X C) DWH 38.3% 47.2% 1,947 746 919 SMRP BV 19.5% 26.8% 12,720 2,480 3,409 Others 38.3% 26.8%
Slide 53: Related party transaction approval
In addition to the Scheme, the shareholders of MSSL, being the ultimate shareholders of MSWIL, will, on behalf of MSWIL, also approve the related party transactions which are: 1) existing contracts/ arrangements in relation to the DWH business which will be novated from MSSL to MSWIL as a part of th
Slide 54: Activities prior to listing of MSWIL shares
10. What are the activities to be completed prior to listing of equity shares of MSWIL? The broad steps to be undertaken prior to the listing of the equity shares of MSWIL are as follows: Steps Receipt of observation letters / no-objection letters from BSE, NSE 1 and SEBI 2 Filing of first motion pe
Slide 55: Board constitution of MSWIL
a minimum 50% of directors as independent directors so long as the chairperson is a not a non-executive director or is a promoter. 12. What will be the constitution of Board of MSWIL (DWH Entity)? The board of MSWIL is expected to have 10 members. The constitution of the Board of Directors of MSWIL
Slide 56: Guiding principles of related party transactions
While the DWH business will be demerged into MSWIL, it will continue to be one of the key businesses for MSSL. To ensure that, post the demerger, the benefit of the in-house value chain continues to be available to all the businesses, certain related party transactions are proposed between MSWIL and
Slide 57: Management support and lease arrangements
contribution by MSSL is crucial to the growth and development of the DWH business. Pursuant to demerger of DWH business into MSWIL, MSSL will continue to provide strategic guidance and management support to MSWIL. The commercial terms of the contract will be same as that of the technical assistance
Slide 58: Related party transaction caps and rationale
Particulars FY 20 Quantum 9M FY21 Quantum Proposed Cap Tenure Rationale for Higher Cap Incremental due to reorg (% of DWH Net (% of DWH Net (% of DWH Net (Yes / No) Revenue) Revenue) Revenue) Purchase of From MSSL: From MSSL: From MSSL: 10 years Fluctuations in No components c.29.3% c.32.0% 34.5% co
Slide 59: Technical assistance and other arrangements
Particulars FY 20 Quantum 9M FY21 Quantum Proposed Cap Tenure Rationale for Higher Cap Incremental due to reorg (% of DWH Net (% of DWH Net (% of DWH Net (Yes / No) Revenue) Revenue) Revenue) Technical c.0.6% c.0.6% 1.0% 10 years Existing arrangement, the No Assistance technical assistance from SWS
Slide 60: Process for approval of related party transactions
14. What will be the process for approval of related party transactions? • The Company is proposing to convene a separate shareholders’ meeting to approve the related party transactions on behalf of MSWIL, immediately after the NCLT convened shareholders’ meeting for approving the Scheme, on the sam
Slide 61: Appendix: Glossary
Appendix: Glossary BSE BSE Limited CCI Competition Commission of India DWH Domestic Wiring Harness EBITDA Earnings before Interest, Taxes, Depreciation and Amortization EPS Earnings Per Share JV Joint Venture MSSL Motherson Sumi Systems Limited MSWIL Motherson Sumi Wiring India Limited NCLT National
Motherson Sumi Systems — Merger or Acquisition (February 2021) on 6ix