Samvardhana Motherson International Limited (517334) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '21 Results conference call of Motherson Sumi Systems Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. VC Sehgal. Thank you, and over to you, sir.

Good evening. We have had a first quarter. Everybody knows, April and May was almost a wash out. But we are very enthused that the second quarter looks even better, much better than at least the first quarter. This has been the worst quarter in our history. So definitely, we will make up for it. But maybe it might help you to realize that in the 2 months that the plants that were shut, we are very grateful to our teams and our associates, who actually came in, as we relocated the plant. We did all the improvements, all the bottlenecks that we had, which we couldn't change because of the pressure that we had. We have been able to overcome that. And I think from here, we will come out very strong. So without getting much into this thing, waiting for your questions. I hand this thing back to you. Thank you.

Should we open up for questions?

Yes, please.

[Operator Instructions] The first question is from the line of Nitin Arora from Axis Mutual Fund.

My first question is, when we read your statement in the presentation that about 84% of the plants are operating at more than 50%. Babuji, if you can tell us more on a direction side because it looks a little lower. So I just don't want to draw any conclusion. If you can talk about how the region wise plant utilization directionally and at this point in time? And how much Q2 do you think business should be back for us? That's my first question. Second question was related to the Greenfield losses, seeing a remarkable improvement there. Just wanted to understand, is there any one-off there? And if there are no one-offs, and that's what you're guiding everyone about your plans and the way to reduce losses...

Mr. Arora, this is the operator. Sir, there's a lot of background disturbance from your line.

Okay. Now it is fine?

Sir, a little better.

Okay. So my second question was that, if there are no Greenfields -- one-offs in the Greenfield losses today, one-off there. And on such thin volumes, you have narrowed down the losses. Where do we see -- we are actually going to start making money on the Greenfield plants because if the recovery is strong as you highlighted? Those are my 2 questions.

Thank you. We will take the first question from Gauba. And the second question will be by Vaaman because you're asking about the Greenfield. Go ahead, Gauba.

When we say more than 84% of our plants are operating at 50%...

Sorry to interrupt. Sir, we're not able to hear you clearly.

Okay. When we say that more than 84% of our plants are operating at more than 50% of the capacity, that means most of our plants are getting to normalcy because some -- we have given the data based on each of the region also. And you will find that in Europe compared to 30th June, on 24th July, the more than 75% utilization has come down because of the summer holidays. So therefore, it is a question of at what point of time we pick up the data. And as you would also recall, we have always maintained that when we start reaching capacity to about 75%, 80%, we start expanding. So we will always keep extra capacity with us. As June became kind of a better month relative to April and May when we started opening up, it also showed how the demand is likely to be for July, September quarter, and we are seeing that we are getting to a normal situation earlier than what we would have thought. The demand is good. And of course, Europe has its summer holidays, which was there last year also and year before also. So barring unforeseen situation, we are seeing that by September, October or December quarter, we should be back to the pre-COVID levels...

Or better.

Or better.

Vaaman, can you take the Greenfield question, please?

Sure. This is Vaaman here. The Greenfields, of course, the only silver lining to this whole COVID situation was that we got time to really relook at our Greenfields in a way that when you're working a plant 7 days a week, it's very hard to bring in fundamental improvements. And with the COVID shutdown, we were actually able to bring a lot of the improvement that we've been wanting to put into these plants by relay outing, reorganizing and bringing in a lot of improvements for in terms of training as well that we were not able to do during the heavy pressure time of running the plant at very, very high sales levels for that time. I think as the plants have started to come back up, of course, April and May, like Papa alluded, have been complete washout. But since June, towards the end, as the plants are picking up volume, we are seeing that these improvements are finally bearing fruit. They should continue in the next quarter. And we should really see the impact of this in the coming quarters as the volume comes back to those normalized levels and all the improvements that we have really put into place should happen. I can't give you an exact number. But definitely, the progress is going to be continuing in the good way that you are seeing. And I hope that there is no second wave of COVID or something that really dampens that. Other than that, as long as the demand holds, I think we should see much better performance in the coming quarters.

And Vaaman, there are no one-offs in this quarter, right, in the Greenfield. It's a pure, pure reduction in the -- led by the efficiencies and the cost reduction plan, right?

That's right. I mean, the improvements you will see them on a constant basis. It's not a one-off thing.

We'll move on to the next question, that is from the line of Mr. Amyn Pirani from CLSA.

Yes. First of all, thank you for putting on a separate slide on what you've been doing at the Greenfield. It's actually quite informative. I just had 1 question on this. There is a significant reduction in manpower that you mentioned in Tuscaloosa. So I was just wondering if this is something like a temporary reduction because of the reduction in revenues. Or is it like you have been able to increase the productivity and structurally you need lesser people going forward? If you can just help us understand.

Vaaman.

Yes. I mean, we don't see that the manpower will go up again. Again, you have to understand where we are coming from. We had a very strong bench because we had a very high absenteeism ratios, and of course, like I was saying before, the improvements that we wanted to put into place, we never really got a window of opportunity to put that in. As those things are happening with the same level of sales, we don't -- that we were pre-COVID, we think that we can manage with the people that we have over there. And of course, there are even further improvement targets from here. So no, we won't go back to the original number that we had pre-COVID because of the improvements that have been put into place and the lower level of absenteeism that we are seeing now that the situation is a lot more stable.

Great. That's helpful. My second question was actually on the debt. I mean the net debt actually, given that this quarter has been very weak, I would say, has been kept well within control. If I look at the trailing net debt-to-EBITDA on a consolidated basis, it is still, I think, pretty comfortable. So have you been doing any more cash flow measures, like last quarter, you had a significant reduction in working capital. Can you just put some light on what you have been doing on the cash flow, working capital, CapEx side to control net debt?

First of all, thank you very much for acknowledging because this was one of the important responsibility all of us have to ensure that there is enough of liquidity and our working capital does not go up unnecessarily. So immediately, and we had a advantage of facing a COVID situation in China, so immediately we got into an action to control our working capital. And therefore, you see that while there is a marginal increase in working capital, approximately by INR 900 crores, which should come back once the operations get normalized, we were able to ensure that the debt levels are kept within that controllable levels. And thank you very much for understanding this. On the CapEx side, we have been emphasizing that the larger part of the CapEx is over and the Greenfield CapEx, larger part was done until '18, '19 and the initial part of '19-'20. So we have also been able to cut down our CapEx further within our guidances for this year, and of course, please appreciate that this debt is also overstated -- not overstated exactly, but has the impact of higher exchange rate transformation by about INR 120 -- INR 130 crores.

And we took a conscious decision to not stop the CapEx of this INR 400-odd crores that was done because we know that the strike back of the carmakers, the coming back of the market is going to be very strong. So unlike what we heard there are lot of people who have postponed their CapEx', we have not done that because we know that the strike back is going to be very, very strong. So we did whatever was absolutely essential. That's the one that we have already done.

Great. I think I just missed what was the guidance for the full-year CapEx. Gauba sir, I think I missed that in the middle.

Our guidance for 2021 stays at INR 2,000 crores. I mean beside acquisition and those things, there could be some plus/minus due to exchange fluctuation, but that's the broader value.

We'll move on to the next question. That is from the line of Kapil Singh from Nomura.

Firstly, just a clarification. You mentioned that we are expecting revenues to reach pre-COVID levels or better than that by September. Is this for India or overseas or both?

No. By this thing is that near about that would happen by September, but I think October, December, definitely. We are talking globally.

Okay. And where are we currently in India and also overseas as a percentage of last year revenues, where would we be currently?

Your guess is as good as mine. Whatever you say. See, we don't make nuts and bolts. So it depends upon which car you buy. And that will then decide the amount that comes in. But on the overall, I think -- Gauba what could we say, we have...

About 80% plus we are reaching that.

At the moment, we are reaching about?

80%.

80% plus.

Of last year.

Of last year.

Last year, it was low.

Yes. I hope that helps

Yes, this is very helpful. Great. Second one is to Vaaman. Now just some more clarity on the Greenfields with EUR 66 million revenue we have done a fairly solid performance in terms of improvement in the losses. Now I can see that the normal run rate for Greenfield is roughly about double of that. So when we touch those levels, are we looking -- whenever we reach there, are we looking at profitability?

Look, all efforts are on to achieve that. Definitely, as the volumes go up, the impact should be much better. But I would really wait for the next quarter results to comment on that, as we are going through the increase in the numbers -- in the plants. And you will see that, that answer comes in, in the next quarter.

Okay. And if you look at efficiency of these plants, Tuscaloosa and Kecskemét, how far are we from where you would like them to be or from your other plants?

No. I think it's a continuous process. So you can't compare one plant with another plant. Everybody has their own, let's say, local situations, what programs they're supplying to or the programs they are doing. So you really can't generalize and say see this plant is doing this much, so why isn't the other plant doing that. My father always used to say, you can't compare your 2 children. Now that I have 2 children, I understand what he's saying very well. But to give you an idea, I think, look, the improvement, of course, in these Greenfields from where they are coming from to where -- where we believe that they can be. There is still a while to go. Whereas some of the mature plants, even in these tough times, continue to improve and push the benchmark even higher. But we benchmark them against themselves. So definitely, I think the first objective is to get them to EBITDA breakeven. And then, of course, PBT breakeven. So once they have reached a PBT breakeven, I think that's when you really set the bar even higher for them and try to be perhaps the best in the group. But right now, it's like a stage process. You can imagine the stress and pressure where they're coming from. So they take the targets, and we're supporting them. And like I said, first, first is the EBITDA breakeven, then it will be followed by a PBT breakeven, and then we push on from there.

Right. All the best for that. Sir, just 1 last question. You mentioned that this crisis also gave an opportunity to reduce costs and look at some of the other things, which may not have been looked at in normal course of business. So what are some of those things? And when we get back to normal revenues or higher than that, should we expect even better levels of profitability than the past?

That's almost...Sorry, Vaaman do you want to finish that?

Go ahead.

So I think, basically, what Vaaman was trying to explain to you is we ask every company, every unit to do better than what we have budgeted, what they are doing and irrespective of whatever the conditions are. So it's a given that we will continue to strive to do better and better and better. And I think sometimes we have to make huge investments because we have huge orders that are there. And that kind of disturbs the whole thing. But I think all the other companies have also done a phenomenal job. They have increased their profitability to help offset the kind of losses of the Greenfield. But anyway, this is a special situation. Definitely, you can count on that.

The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.

My question, firstly, is to Vaaman. With respect to the Greenfield plants, both Hungary and U.S., we read about EUR 360 million revenues last year. What would be on a more steady-state basis than all the orders are -- all the launches have happened? What kind of revenues should we expect from these 2 plants?

So look, it depends on -- so when you get an order, the order is really 5 years. So you really kind of peak into that order somewhere around that third year, second and a half, third year, depending again on the launches. And then you start tapering down again after the fourth year. So you have 2 years of kind of peakish revenue, and the first year is really ramping up to that. So the timing of the 2 plants is different. Hungary was a little bit older. So it's already into its peak, whereas we said that U.S., Alabama will hit its peak this year. But then again with COVID, there has been some redistribution of how those launches and how the volumes will happen. So it's difficult to say right now. I think we're getting clarity from the customers for a very short notice right now, as they're also dealing with the entire COVID situation and things are getting back on track. So really, I think $360 million can be better. But again, depending on the COVID situation and how strong the market is and how the demand comes back, that we'll have to see in the next couple of quarters. So I can't really comment on that until we don't have the firm visibility, which would perhaps take a little bit more time.

But directionally, yes, $360 million or better should be matched.

Okay. Got it. And the second question to Gaubaji. From SMP and SMR perspective or in fact even PKC as well, what would be the quantum of government supports, which should have gotten our European or even U.S. plants both in terms of support to the furloughed employees as well as little more on the interest subvention side?

See, it will be difficult to quantify, but more grants have come or more support has come in terms of a debt level. So not in terms of a direct PE level. So we would say that it will be more reflected in the additional debt, which is there.

Actually, 1 of the reasons why the debt looks a bit higher is also because we've taken that.

Because we have taken that. Because if you see liquidity remains at the same level of INR 10,500 crores. So the incremental debt apart from INR 500 crores, which we raised from NCD in India. Rest of it is -- most of it has come from that government guarantee kind of a situation.

Okay. But no support on the staff cost side because many of the European countries announced between 60% to 80%, 90% of staff cost being borne by them during the lockdown period, so.

There may be some states, but it is not that significant as we are.

The next question is from the line of Chirag Shah from Edelweiss Securities Limited.

Vaaman, first question for me is, will it be right statement that Tuscaloosa plant is much more capital-intensive and much high on fixed cost. Given the nature of that sector, and hence, the operating leverage angle could play out much sharper than other SMP plants?

No. Not really. I think it's a newer plant. So definitely, a lot of investment has gone to there into a new location. But it's not really anything different to what we have at the other plants. But I think you have to understand that being in Alabama, where -- still a newish kind of state for seeing a lot of people in the automotive. You have to attract talent from outside, which actually increases the cost of having people to relocate to support some of the sophisticated stuff that we have over there supplying to Daimler. The costs are perhaps in line or perhaps even a little bit more at the start in places like these. So I don't think that it will play out like that. But yes, as we improve the efficiencies, the productivity and the place gets more mature, definitely, there's a high chance to further improve the profitabilities in the region as it gets more mature.

Also, Chirag, you must understand that this was a Greenfield plant in U.S.A. and all our other SMP plants and all that are in the European domain and Mexico, of course. So the manpower in Alabama before COVID, the unemployment was less than 1% at that time. It's after COVID that the unemployment numbers have gone up to almost 10%, 12%, and the 2 months that Vaaman is talking about, may give us enough time to ask the people to come in from different parts of U.S. from our companies and also from other focused attraction of people to come into Alabama. So that has also allowed us to be done -- that in those 2 months. So that's a huge add up. That's one of the reasons why Vaaman and the team have been able to bring down their people from almost, I think, 3,000 something, Vaaman, to about 1,800 now. But go down even further.

Yes. That's correct. Around 2,800, perhaps at the peak, perhaps even a little bit more, but yes, getting down to around 1,800, and we have further plans to reduce as things stabilize further.

And our another question would be that post that -- the effort that you have put on training and various aspects of labor over there, how would you rate the efficiency of the -- I know it's a new plant, new location, but trying to understand that Umicore established cases in Europe. Is there still a significant scope of improvement in the efficiencies post the efforts that you have put in. So if Europe stays at 10, the gap has been bridged in terms of ranking or is there still good amount of scope over next 2 years, we can actually have much sharper improvement on the efficiency aspect of manpower?

No. Definitely more is possible. As I said, as you have a new plant, you have new processes, new systems. And as they get more and more mature, you can drive further efficiency improvements. And again, it also really depends on the maturity of the people that are working in the plant. I'm very proud of our team in SMP Alabama and all the people of Alabama because they're really giving it everything. But there's nothing that you can do to increase the time that only come through as they get into the entire grips of the processes, the machines, how we really want to run our model plants. And it's a buildup in time, the quality circle, the people over there. As they do more and more, they get exposed to more, they see that further improvements are possible. And literally, the last few months were picking up some of the low-hanging fruit. And as you clean that up, then things get a little bit tougher, but that doesn't mean that it's not possible to do. You just need the maturity to do it, which comes a little bit with time. So we are really, really enthused by the progress that we are making. It's still a long way to go. But like I said, quarter-on-quarter, you should see the improvement.

So double-digit margin at things utilization is what we can aim to achieve, right?

Sorry, I didn't understand.

There is lot of disturbances at the back.

There is lot of disturbance at the back.

I hope it's better now.

Yes, a little better.

Yes. go ahead.

Yes. Just one. There is a double-digit margin at fiscal, sir, what peak level is achievable?

Definitely achievable, question is time, when we get there.

The next question is from the line of Prateek Poddar from Nippon India.

Sir, just 1 small question. If I were to think of loss of revenue and the contribution margins, which is the new plant, which is the new Greenfield plants, which would have given you this quarter. Is it fair to say that, that would have flown into the bottom line or EBITDA level and then basis, whatever rough maths you do, you are almost at EBITDA breakeven level?

No. It's a little bit difficult to use this quarter as a benchmark when the plants are not running, you have fixed costs and you have a lot of those things. So really, we have been very clear on the earlier calls as well. I think this quarter, definitely, we've controlled the cost in a good way. But it should not really be a benchmark for you to be deciding anything on what's going to happen. We'll give you the confidence that we are making the necessary improvements. The teams are working hard. The results are coming well. But please don't take that in benchmark to a quarter, where 2 out of the 3 months were 0 production months. So please be patient. Please give us another quarter since the volumes are starting to come back. And you will have the answer that you're looking for perhaps after this quarter when things are a bit more normalized, and that would be a better place for us to have these discussions, where, again, like I said, it's very hard to really benchmark or take trends out of things which are 2 months out of 3 closed.

Sure. So directionally, can you give us a sense whether July, August would be much, much better than what -- in terms of efficiencies of those plants, be much, much better than what it was in April, May, June? I'm just trying to understand the direction, right? Would the direction be upwards? Or how should I think about it?

Definitely upwards. Definitely upwards. I'm sure that you will all be very pleased with the efforts that Vaaman and the whole team is doing. Really amazing every day that we have got to see what's happening there.

We'll move on to the next question. That is from the line of Suhrid Deorah from Paladin Capital Management.

I just want to ask you what is the current landscape for your M&A opportunities that I recall you mentioned earlier that towards the second and third quarter you'll start to see some opportunities emerge based on moratoriums expiring in different parts of the world. So I'd like to get your thoughts on that.

Yes. I think, first of all, you are aware that we only pick up a company or something like that, which the customer wants us to do that. So at the moment, a lot of the money has been given by the governments and all that, so people's survivability has gone up by about 3, 6 months. But we know that there are a lot of problems over there. We can see it because these companies are stopping the line, and we can -- we know what's happening in the open over there. So I think we are waiting back because of the money. At the moment, they have money to burn, so we are okay with that. I think somewhere around September onwards, December, that's the time when we'd be looking for making up those acquisitions, which should have been done by March last year -- this year. And of course, new opportunities are coming time again.

The next question is from the line of Alpha Investment -- from Alpha Investments. As there is no response from the current participant, we'll move on to the next, that is from the line of Chirag Shah from Edelweiss Securities Limited.

Just 1 clarification, if I can ask. In India, would there be a requirement of any CapEx, at least for next 12 months?

Chirag, we have given guidance for the total CapEx. Of course, in India, a larger part of the CapEx mode is in land and building. So there could be some construction, which may be happening or some land to be acquired for future projects. So as Mr. Sehgal said, we don't stop something just because -- we have to make sure that we conserve our resources and yet ensure that we are prepared for future.

[Operator Instructions] The next question is from the line of Nishant Vass from ICICI Securities.

Congratulations on the improvements on the Greenfield. Just -- but my question is more with -- away from the Greenfield. Vaaman and obviously, Gauba sir, could you highlight what else are you doing possibly other than Greenfield in terms of utilizing this time for cost reduction in other segments, say, for example, India and PKC? Could you highlight some of the efforts there, if any?

I think PKC, you all will be pleased to know that the truck -- this thing is way back, very strong in USA. Pankaj, can you give them any details on that?

Day by day, the markets are bouncing back. In China, the rebound was very strong in this quarter, and also, Europe is showing the strength. And now as we move forward, we see the American market also coming back. So in this time, you see 2 things have happened. We are a very manpower intensive company. So while there are certain costs, which we have to incur in terms of safe operations for people in terms of making social distancing and other things. But the teams always take up this time to challenge for doing a lot of [indiscernible] activities. That's where we create win-win situations with our customers. And the customers are also more than happy to make those changes because everybody is under pressure to find solutions, which do not impact ultimate functionality, but can bring about cost reduction. So when we did a lot of -- as was [indiscernible] in terms of relay outing in terms of bringing out efficiency, so all these things are the works, which during the pandemic time, when the lockdowns were there, it was not that people were not working, all the people were -- even from home were working and using their energy to maximum. So it was first time for us that even our designers were working because the carmakers didn't want it to delay the launch of their vehicles. So they gave us access, and people are working from home on the workstations, which were transported to them, and they were given access so that they can work from home. So the work continued, and that's how we have been trying to ensure that whatever is an impact of the changes, which lead to the COVID impact, how we can negate them and actually improve them.

Yes. Actually the whole -- actually I congratulated everybody because it is very evident that every department, every cluster of company in the group has actually improved their productive performance and all that. So it's very evident that there was a lot of hard work done by all of us.

Pankaj sir, if I could just have an additional point on PKC. Now that from a China joint venture standpoint, and you're obviously seeing China rebound much faster. So have you seen any -- or have you been able to create a distinct -- differential in terms of the profitability threshold that is now working in China vis-à-vis Europe? Or do you think that's more on a blended basis similar?

I mean, see, as Vaaman sir said that we don't compare companies. So definitely, we do see some of our units doing better than the others. And the whole idea is to make and ensure that every company does the best. So we have 3 joint ventures in China, and they were all tending to improve their own performance, so what they were performing last year or a quarter before, so the whole endeavor is that. And at the moment, they were in an expansion mode also. So we expanded our facilities, that's where we actually invested in new machines to expand at a very short notice to take the demand from the customers.

The next question is from the line of Rushabh Sharedalal from Pravin Ratilal Shares

I just had 1 question pertaining to -- when the -- when you say that more than 50 -- I mean, globally, 84% of our plants are running at more than 50% capacity. If you can just let me know that, which are the plants which are running at the highest capacity and which regions are they located in, so we get an idea as to which economies are actually trying to come up out of COVID?

So generally, I mean, we can generalize it as we can't be more specific on this. But by the way, China, Korea are more than 70%.

Yes. Even plants from India are doing -- reaching that level. So it's a mix in different economies depending on, which kind of business has taken off much faster, so that...

Korea has been -- Korea has done well.

China was timing well. They were the first ones to get that number.

So sir, if I'm just getting it right, China and Korea, you said 70%. Can you just please repeat the other?

See even 70%, maybe higher. So even if you ask me, I would say that even a plant in U.K. is doing that number. So we have so many different plants. So our plant in Derby, which is supplying for rolling stuff is because there have been a backlog of orders and the customer wants to do that. They are doing their highest numbers. So different geographies, there will be certain plants, which are doing this kind of a number, and that's what you can see in the pie that -- which plants are doing more than 75% and how many of the plants. So that's the pie, which we have given on Page Number 3.

And also, I think you must understand that some of those plants are for internal consumption also. So you can't take anything. It becomes really crazy if we have to try to show something to you, please believe me, it becomes really very difficult for us to do it. But what we do is we just take it as is even if the capacity is 100%, we are doing 75%, we just put it at 75%. So a lot of confusion there. But at the end of the day, the trend is going higher and higher and higher every day, every month.

The next question is from the line of Rajat Chandak from ICICI Prudential.

Am I audible?

Yes, please . Go ahead.

Yes. First of all congratulations to the whole team for coming off with such strong results in such tough times. I have 2 questions. One is on Tuscaloosa plant. In terms of the support, which we may be getting from Daimler or we would have got, any color on that in terms of -- are we in discussions to help me go to some kind of losses by price negotiations going ahead? Or any other kind of support, which the customer -- we are under negotiations with the customer?

Look, we... Yes, look we are not at liberty to disclose any of the contractual information that we have with Daimler. All I can tell you is that Daimler is very, very happy [indiscernible] any customer. Those are contractual things that we have with the customers. And as you can understand, the relationship business, this plant is definitely very important for Daimler. And as we are solving all the delivery quality issues as we have done post this -- the time that we have had, I'm sure they are always wanting to support good supply companies like us in whatever way. It doesn't always have to be in a monetary sense, but also looking towards -- working with them to give you an example, we get a heads up of about 3 hours when they have the first broadcast of the day. And that's kind of eaten up 90 minutes because the kind of the interior options that we get also come from a supplier, and for that to happen, it takes about a good 90 minutes for that to reach. So it kind of eats in into that time. But together during the shutdown, we've been able to increase some of these -- the holding periods, increase some of the storage areas together at us and at Daimler, which helps to decrease this 90-minute loss that we have. Talking about perhaps different variants that are perhaps not -- the demand is not there so to remove them from the inventory completely. Things like that, more value engineering that we do together with the customer. So those kind of things we're working together, that definitely, they have been supporting tremendously and are a big reason why we've been able to also improve our operations. But it's a work together thing -- together with our customers. We definitely would not be able to do it without their support.

Sure. Fair enough. And my second question is any color we can throw in terms of how the order inflows have been. I know that we hear that data half yearly. But in general, any trend that orders are flowing in for SMRP BV?

Rajat, we are getting -- time and again, we are getting orders. We have -- I mean, the last week, we have picked up a lot of orders. But the thing is, it's very difficult to try to give you every time the order book and all that because it will only going to confuse you more. So we try to maintain that in 6 months period, but definitely, I can assure you that we are getting a lot of orders. There's a lot of faith in the system. And that is forcing the car makers to look at things differently. So the weaker players, probably in the COVID period, the carmaker identifies them, and tries to give the orders away from them to the stock of peers. So we definitely have -- when the next quarter we would declare the new, I'm sure you will be -- see how proud that our team will be [indiscernible].

Sure, sir. One more thing, we mentioned that customer has also seen how some of the players are a little weaker, the suppliers, and we may benefit. In that context, again, in terms of M&A, that should really not have got pushed out, right, because the customer eventually knows that the supplier is weak and would probably need to be taken over. So why should there be any...

You're right. So what has happened, a lot of the governments, especially the European governments, the American government has given a lot of money to the people, the companies and all that to support them and to start with the workforce, with closure and all these things, and that money is substantial. So what it has done is it has given breathing time for those companies to either get out of trouble or some more extension to their situation. So actually the real boil will come probably around September, October because by that time, I think the money would have dried out. So that's the reason why the push out is happening, not because of the customer really, but because the governments have supported a lot of the companies, every company, I mean name it. I mean, we also got lot of health and support. So I'm sure these guys are there. And I think there is no point in going and pursuing them at this moment because we always wait for the carmaker to come and tell us, buddy, look at this company, look at this company. So that's the reason why we are not sort of giving you any sort of inputs at the moment.

The next question is from the line of Alpha Investments.

Hello. Am I audible?

Yes. Yes. Yes.

Hello sir, this is [ Preet Gopani ] here. Sir government recently came up with a plan to localize the defense products. And going ahead, defense and medical will also be a part of our next 5-year plan. So could you please elaborate a bit on that?

So everybody has their own focus area. And I would make an excuse from you that I can't take away the thunder from my teams, which I'm looking forward to present to you somewhere around October end and November when we announce our next 5-year targets. And they're going to make some excellent presentations for you. So all these things are great. We hope that all of you will be quite pleased at the efforts that these guys have put in, and hopefully, a lot of good news, we will give you, just a matter of 2 months.

[Operator Instructions] As there are no further questions. I now hand the conference over to Mr. VC Sehgal for his closing comments.

Thank you very much for all your questions. I hope we have answered to perfection your concerns. I just want to reassure you that on the part of Motherson, we have also added 2 particular slides to the presentation, which is the SAMIL portion, which a lot of people who are a bit -- there are some quiet questions that were being asked. That constitutes -- Kunal, you are on the line, so that constitutes out 85% of the joint ventures that are going to -- go into the new SAMIL that's going to be coming. And you can see the strong position where those companies are coming from. Kunal, would you want to just give a very quick something on those 2 slides, please?

Yes, sure. So we've just given you how the SAMIL data is for the last 3 years as well as for the quarter. It shows that SAMIL has been growing consistently over the last 3 years, even though the market has been little topsy-turvy as it does, both automotive and some of which are non-automotive business as well. Even in the current quarter, the EBITDA is just about breakeven, minus 3%, 4% is what it is. Because part of the business of SAMIL continued to run, which was on the IT services side, on the engineering side and so on. So business was not as much impacted as we saw what we saw in MSSL. We've provided you also on the second page, the top 10 JVs and subsidiaries that we have in SAMIL, which constitute around about 85%, 90% of both the revenues and EBITDA. And we'll give you a perspective of what the ROCs of this businesses are. That's the additional data also that we have provided and just to give you a sense of the nature of the profitability and cash flow generation associated with these businesses. The debt largely remains the same. There is a slight increase, again, on account of working capital expansion, largely, which will normalize as we move forward.

Thanks, Kunal. I hope that's also interesting for everybody to -- listen, if you have any questions, you can ask Gauba or Kunal or any of us. We can assure you that the next quarters, we will try to catch up with this particular quarter, which was totally beyond our control, nothing we could do. But hopefully, you will see a big come back. So till that time, stay safe, stay healthy and keep hoping for the best. Thank you very much. Bye-bye.

Thank you.

Thanks.

Ladies and gentlemen, on behalf of Motherson Sumi Systems Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.