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

Ladies and gentlemen, good day, and welcome to the Q2 FY '23 Results Conference Call of Samvardhana Motherson International Limited. [Operator Instructions] I now hand the conference over to Mr. Vivek Sehgal. Thank you, and over to you, sir.

Thank you very much. Good evening, ladies and gentlemen. Thank you for joining us. The Board approved the second quarter results, and we are happy to report our improved performance. As a synopsis of the quarter, SAMIL has reported a strong improvement in operating performance with the highest ever quarterly revenue for the second time in a row and steady Q-on-Q growth for the last 5, 6 quarters. Improvements in profitability are back of - are on the back of efficiency programs and part realization of the inflationary cost pass-throughs. Automotive production volumes have grown this quarter as supply chain issues recede but are still below 10%, 15% pre-COVID levels at a global level. This improvement in external environment is a welcome change, but it still remains very volatile and uncertain and continued inflationary pressures. So there are improvements, but remains a work in progress quarter for us and we always say the best is yet to come. With this, I'd like to call upon Vaaman and Kunal to take us through the results quickly. And then we can take your questions as you may have. I have a full team here, Vaaman, Pankaj, Kunal, Rajat and Vipin Jain. Thank you all very much. Over to you, Vaaman.

Thank you, papa. Good evening to everyone. As papa was mentioning, we have posted our highest quarterly revenue for the second quarter in a row. It has actually grown 4% quarter-on-quarter and 30% year-on-year. All our business divisions have grown. You may want to note that this has happened in a quarter which has traditionally been a leaner quarter for us given the summer holiday shutdowns in Europe and America. Two things evaded this. One is the automotive production trends. From the industry perspective, better, more stable supply chain enabled production of over 21 million vehicles across the globe this quarter, with China being the clear outperformer, with more than 30% growth, as seen on Slide 8. India continues to grow with 8% volume increase. Commercial vehicles have, however, remained largely flat with China still showing a 6% decline quarter-on-quarter. The second is the premiumization trends. Even though Europe was down 10% quarter-on-quarter, as seen on Slide 9, the impact of premium vehicles was not really visible and continue to be flat -- or, in fact, growth was seen in North America. Our disproportionate share in premium vehicles has really helped. Premium also aids the content increase for us and also the impact of interest cycle on the payment vehicles should be less muted. It will also be heartening to note that our order book in SMRP BV as shown on Slide 18 has grown from about 13% from EUR 16.1 billion to EUR 18.2 billion. The other great thing is that the share of EVs in this has grown from 27% to 37% now and is reflective of our strong technological capabilities. For the first time, we have also provided our total order book of book business of EUR 33.9 billion for SMRP BV. On the profitability side, our EBITDA at 8.2% grew to nearly INR 1,500 crores, which is 30% growth quarter-on-quarter and 47% year-on-year. PAT at INR 246 crores grew by 70% -- 75% quarter-on-quarter and doubled versus Q2 FY '22. All business divisions, as seen on slides from 25 onwards, have reflected this improvement, of course, albeit at different levels. The growth is considering 2 one-off items. The first one, the geopolitical situation in Russia and Ukraine keeps getting elongated. So OEMs have limited or halted the activities in the region. We have thus considered a comprehensive impairment provision of our assets in Russia of INR 112 crores including write-back of deferred tax assets of INR 14 crores. The second one, we have received INR 46 crores so far on insurance claims that we filed for floods that happened in our plant in South Africa in Durban. Costs on these were already booked in the earlier quarter. Both of these have been highlighted in the financial slides, such as on Slide 11 and Slide 20. The improvement in profitability has to be seen against the backdrop of continued inflationary trends where, across the globe, unprecedented levels of inflation have prevailed as seen on Slide 5. Some commodities, like copper, has reduced. But generally, the environment remains very volatile and still unpredictable. On one hand, we are trying to actively manage risks such as energy costs through energy reduction measures, alternate sourcing. And these are all shown illustratively on Slide 6. At the same time, we continue to work with our customers to find win-win solutions. While some aspects of inflation have been passed through the price increases, it still remains a work in process. Kunal, would you like to add?

Sure Vaaman, thanks. Hi, everyone. Good evening. In addition you may want to note that India remains a very significant portion of our business, with over 25 -- 24% of our gross revenues coming from India in the half year period. And that has grown by 40%. 30% of our EBITDA comes from India and over half of our profitability is coming from India. This is reflected on Slide 15 as well. Given our presence, our home country being India, we continue to invest in it both to meet existing growth requirements as well as to expand product portfolio. In fact, as you would have seen on Slide 22, we have a disproportionate presence in emerging markets, comprising more than -- emerging markets comprising nearly 50% of our sales. We plan to share these on a half yearly basis for you to understand the developments that occur during that period. Also on the leverage side, you would have seen on Slide 12 that our debt has increased by nearly INR 300 crores to INR 8,500 crores. This is largely driven by enhanced working capital requirements. Between pre COVID and post COVID you would have seen a 10-day increase in inventory. We've shown that on Slide 13, which on a 10-day basis has an impact of around about INR 2,000 crores. That's the additional amount of capital that we have invested in inventory. As Vaaman was mentioning, some of the supply chain received, we should expect this to normalize going forward and hence the reduction as well as release of capital from working capital going forward. On the leverage side, because of the improved EBITDA on the leverage ratio side, the net debt-to-EBITDA has come down from 2.1 to 2. And with some of the deleveraging parts on working capital as well as improved performance, we expect the net debt leverage to further improve from here. On the CapEx side, we continue to monitor the situation very closely. We had guided the market to INR 2,500 crores plus/minus 250. We spent only around about INR 850 crores of it. Given the environment, this might go up a little bit next quarter. But at an aggregate level for the year, we should still be within the mid- to lower end of our range of INR 2,500 crores, plus/minus 250. On the inorganic side, we announced 2 transactions. One was the acquisition of the same manufacturing business from Bangalore in India and the acquisition of mirror business of Ichikoh industries in Japan. Both of these are great testaments of our strong customer relationships. The mirror one also adds a much needed stronger presence for us in Japan. This has traditionally been a white space opportunity for us. And with Ichikoh coming in, we should be able to leverage the presence now in Japan to grow all our divisions in there. Finally, I guess, on the strong balance sheet that we have with the improving profitability trends, it does provide the right mix to enhance our growth both organically and inorganically going forward. Thank you. Over to you sir.

Okay. Thank you very much. That was just an introduction [indiscernible] because we've changed a lot of our presentations and all that. But over to you for question and answer, please.

[Operator Instructions] The first question is from the line of Kapil Singh from Nomura.

Congratulations on a very strong set of results. My first question is on the revenues itself. If you look at the Vision Systems division, we have grown by 16% on a quarter-on-quarter basis. I just wanted to understand that if you look at underlying industry growth that we have seen in the presentation for Modules and Polymer products division, growth is around 4% Q-on-Q. So if you could just talk us through what are the drivers for this growth? And do you expect a further build-out of revenues from these levels as we go ahead?

Sure. Vaaman and team, who would like to take this.

As a matter, I...

Go ahead. Go ahead, Vaaman.

So I think a lot of our market came back in North America and China of course China was muted in the last few quarters due to lockdowns, et cetera. We saw -- we saw those markets bounce back. And in general, I think launch of the programs and good take from the customers on our products has resulted in the [ slow ] growth that you see in this quarter. As you know, with the acquisitions that have come in, of course, this will further help our growth opportunities and growth prospects for the future as well.

And if I might add, look, the disproportionate share of growth that you are seeing in Vision versus some of the other divisions on a quarter-on-quarter is largely getting driven out of China, as Vaaman was mentioning. As you know SMR has the largest presence in China, and that is capturing the growth that we saw in China which is not necessarily true in other divisions. The sort of business in China is much less. In fact, commercial vehicles in the Wiring Harness business has degrown in China, which is also impacting it. So it is the geographic mix of the businesses that exist is why you're seeing difference in growth rates.

Okay. And any indication, sir, what kind of mix do we have from China for that Vision system?

I think the Ichikoh thing will come in by May. But dimensions, which they have on -- Rajat, are you there? Would you take this?

Yes. So we are primarily with the global OEMs in China. But then we are also growing -- gradually, we're growing stronger with the local Chinese OEMs as well. So amongst the organized manufacturers, we are one of the major suppliers. So we have a very strong market presence in China.

Okay. Sir, the second question is if you look at the presentation, we have also talked about inflation as well as gas prices or energy prices have seen a big spike in September quarter. Is this something that is already reflecting? Or should we be expecting some impacts from these costs? And it will -- how is the negotiation on this front going on with the customers?

We would not want to comment too much about the negotiations and all that. But Kunal, can you explain the -- how much we have taken -- if you follow the mercantile system whatever is in the bank is what we have reported. There are still many customers who are not or for want of better words, maybe their negotiation style is to do it in the 6 month or in the 9 and the end of the year. So all those particular challenges are there. So I think what is in the bank is already shown to you, but still negotiations are going on for all the customers because we are not fully satisfied that all has been paid. But Kunal, you want to add something on that?

Yes. So, Kapil, just to let you understand how volatile the situation is if I take energy price as an example over the last 6 to I think 9 months from the time the Russia Ukraine crisis has kickstarted, the energy -- variation in energy prices from, let's say, EUR 30, EUR 40 where it used to be went at a point in time as high as EUR 700 and seemingly on now at EUR 100-odd. So that's the degree of volatility that is there on that price. And it keeps on varying depending upon what the news is, what's happening at ground, what the governments are doing and so on and so forth. So from our perspective, we have been -- trying to be as reactive as possible, we started looking at actively trying to reduce the energy consumption, look at ensuring long-term contracts are in place to get energy availability with us and continuously monitor those situations to find opportunities as and when to reduce the risk associated with it. If you look at last quarter, as you would have seen on one our slides, where the energy price has spiked, those costs, as Mr. Sehgal was mentioning was already embedded in this quarter itself. But the environment is such that it's not that we can finish our conversations with the customers in one go and say all inflation passed. Because it remains volatile for us, it will remain volatile for the customer as well and hence a constant quarter-on-quarter conversation is what is occurring now. And we keep on having this conversation, depending how things play out in that particular month, quarter and so on and so forth. And it varies by different customers. So it is, I would say, a proactive way of dealing with it in some way, but we can only react to the market variables. We are not predicting the market variables and then trying to find a reaction for it. And we -- another quarter -- part of some of these past things were come as price rises, et cetera in this the particular quarter, but a lot more is work in address and there is a constant dialogue with the customers to see how some of these risks can be mitigated through win-win solutions.

The next question is from the line of Raghunandhan N. L. from Emkay Global.

And congratulations on a very strong set of numbers. Sir, on the EV side, the share of order book has been increasing for EV programs. How do you see the share of EV revenues contributing over the next few years? Just to get a general sense on the ramp-up. And related to that, given that EV components are more premium and the realization would be higher than that of IC components, with scale picking up in these components, would profitability be similar or better to IC components?

Definitely better. I mean you guys are going to pay much more for electric car. So the components also by requirements have additional requirements. So the pricing is always a little bit on the higher side. But Rajat, do you have a view of this or Kunal? Would you want to go?

Rajat, you want to start?

So look, I think as you would have already noticed, we are getting more and more nominations from -- on the EV platforms. And I think the big shift that is coming is that it's not just the new generation EV makers, but all the traditional OEMs are also getting very strong on their new EV platform introduction. So basically, that is what is getting reflected in the order book also. So what you see in the order book is basically a reflection of how the OEMs are moving with their EV strategy.

And if I might add, I think our 37% share in our order book is also reflective of the product capability to go to the premium end. You all aware as EVs are particularly carrying more content and are more expensive and that requires more premium features to come into it, which is what we have traditionally been well at, and that's again getting reflected in the order book. In addition, our business today is slightly more than 5% on EVs and when you see our order book, which is growing quite substantially, the share of this will become more and more in our revenues going forward.

On gas prices, 80% to 90% of gas requirements are hedged for some of your peers like Faurecia. Just wanted to understand your thoughts on how -- hello, am I audible?

Yes, please don't take comparison with other companies. You can ask us about us, we will tell you. We don't know what they are doing, how we can respond to that.

Yes, sir. So just wanted to your thoughts on how you are trying to hedge the requirements? And what is the kind of cost increase expected based on the hedging rate?

Kunal, can you take that? I don't want any comparisons with other companies. We have to -- we will respond from our own -- for our case. Go ahead, please.

We don't even know what the other companies are doing, so very difficult to make any compariso, Jinesh. But so look, from our perspective, as I mentioned, we've been actively Pursuing the market to understand between variables and seeing what's the best way of doing it. As if I were to put it in different stages, what is controllable with us is something obviously that we want to do upfront and as quickly as possible, which is trying to see wherever there are energy reduction opportunities, we are able to capture those. So that's an activity that is being undertaken and hopefully delivers these energy reduction elements. It's also part of our sustainability endeavor in any case. So it was always there. It's just getting in some fashion accelerated to see what we can get these benefit as quickly as possible. The hedging, if you were to look at it, if we would have done the hedge a couple of months back, the price was close to 600. Today, it is at 100. So ad we done the hedge, we would have got -- sitting on a big loss to do on that account. So we've been taking it opportunistically, depending upon what things come our way. And it's not something that we are doing it as a strategy to see that there is -- a hedge that's there. What we have done more importantly is got into longer-term contracts to make sure there is availability of energy. So some of the countries we have taken these long-term contracts, so the pricing may not be on our long term hedge basis.

On Slide 7, you have given about geopolitical crisis on how 20% of SAMIL revenue is coming from 4 countries where there is some dependence on Russia. Would you see the rationing of gas as a threat? Or would that not make a difference on the industrial side?

Kunal?

look, that estimate is driven by whatever are the public sources, there would be enough number of public analysis around it. Whether it will have an impact, not as an impact is frankly the government is doing. It's not that we can do anything about it, we can only react to it. So what we know today is the German government has got its, natural gas pretty much filled up of 96% or 98% of its requirements are already in the form of reserves so the availability should not really be a concern. If I look at Hungary, which is the other dependent one, their relationship with Russia really seems to be a little bit more positively inclined on gas availability and we've been able to sign some long-term contracts with the German producers -- sorry, Russian producers. So -- and then you have someone like Germany offering a EUR 200 billion subsidy program on the energy where the exact details of this, I believe, is still being worked out. So how much of this starts playing out, don't know as yet. But needless to say the governments are doing as much and more as they can to make sure this is as strictly mitigated as possible.

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

Yes. Sir, my question pertains to how are we positioned in the volatile ForEx environment given our global operations? So 2-part question one is how should we see our exposure to ForEx in the oil businesses? And two, was there any positive or negative impacts of ForEx in our current quarters.

Kunal, again, can you take this, please?

Yes. So a couple as you know, and if you look at things at the last slide of our presentation, it has the different exchange rates. You would see that on the INR to dollar side, things are depreciated. On the euro side, things have appreciated. As you're aware, on one end, we have tried to do an asset liability matching up as well. So we have dollar loans as well euro loans as well, which to some extent has mitigated with the change in exchange -- and correspondingly the businesses exist both in euros as well as in dollars and for an INR basis, again things are mitigated to some extent. But beyond that, are we doing any active translation exchange rate management? Answer is no. Our -- the policies are driven by making sure that we are able to produce and have an exposure in the same currency in which we are selling. So what we are ultimately getting exposed to is only the profitability part and the exchange rate associated with that and not at an operating level we tried to make sure that the currencies are getting matched up to the best extent possible. So hence, it is only the translation piece which may have some impact, but there also you have the liabilities to support some of the impact. And at least in this particular quarter dollar and euro have moved in opposite direction. So the impact is negated a...

Okay. So basically, not much of cash flow impact? Except for the translational impact, there is not much impact on the business.

We have our next question from the line of Chirag Shah from Nuvama.

Congratulations on a good set of numbers. Sir, I have a question that when you look at our historical performance over the last few years, our updated EBITDA number is largely in a range. I understand there is a demerger impact also in this. But even if I adjust for that, our observed EBITDA number is largely in a particular range. Now given a lot of effort that you have put in restructuring the businesses and bringing in a strong operating leverage when the revenue comes back, from here on, how should we look at this absolute EBITDA number? What are the drivers internally that you're seeing would drive the absolute number on the higher side? So if I adjust for this convenience like, annualize the 1H performance of INR 2,500-odd crores of EBITDA that you have done, if you want to see a significant ramp-up, question number one, what kind of revenue is required? Is there a big change in the revenue structure that will be required? And at what level operating leverage will actually start playing out for us to see the benefits of the efforts that you have put in over the last 2, 3 years?

Well, Chirag, you want to -- want us to lay out the whole thing...

It's more of qualitative sir, I understand that you will not share the detailed financials, but I'm trying to qualitatively understand how should we look at it. Given a lot of uncertainties around, it would be really helpful if you can guide us on this.

Look, first the answer is already embedded in your question. If there's going to be uncertainty, then there's going to be a lot of opportunities as well. So I think what is important for you to understand is how good we are with the acquisitions, the kind of numbers that we are putting on the floor and as well in our projections. So there is a huge drive that's going to come because of the uncertainty that you say is there -- going to be there in the future. That itself will drive, but I'll encourage Vaaman to answer this question because it's important for...

Thanks, Chirag. So, I think the question would perhaps be more relevant as we have a couple of more quarters of stability in the business and then see a breakout as the revenues continue to grow with the book business, we'll give you more clarity on the order book also the combined business for SMRP BV and hopefully in the future for the other businesses as well. So I'm confident that as things settle down a little bit with the cost. We are driving really hard the operational efficiencies. Of course, we don't guide on EBITDA margins. I've given you the example before that look at the technology, et cetera, is also changing. So we should look at the absolute growth in EBITDA and growth rather than just looking at percentages because really, because our product is constantly changing, I don't think it's the most relevant thing to look at. And we should look at all those businesses that have been in Motherson for larger than 5 years. So taking out greenfield, taking out recent acquisitions, all of those investments that we have made which have been with us for more than 5 years and seeing the growth that they are delivering and the absolute growth in the return, I think that's relevant. But of course, in an environment where you're having constant pressures such as hyperinflation, you're having energy prices which are out of our control, you're having start-and-stop production, semiconductor shortages, it's kind of really hard to answer your question, but it's not really business as usual. So I'm just likely to be [indiscernible]. I think the team has done extremely well that even in these challenging conditions we bought the costs under control, got support from our customers and continue to chip away at more cost and continue to drive the business even though we have some of the toughest conditions to really work under. So kindly be patient and let's have these answers to this question when having a couple more quarters, where there's a little bit more stability, and you see that the team's efforts at reducing the cost base and increasing the efficiencies does really plays out even more.

Second question would be that if I take Q2 as a revenue base, can we assume that in this revenue growth, most of our fixed costs are covered in that sense? And incremental revenue, whatever flows through, that operating leverage angle would start flow through? Or there are certain fixed costs which are yet to be fully covered or which are linked to our -- as more revenue and more projects start, there will be certain more fixed costs lined up? Or all that part is largely cover in this revenue keeps growing from here.

Chirag, if you see the first quarter results, that's what we were telling, that in spite of all the things of not getting the payments from the price increase or whatever, yet we were profitable, and yet we were growing. That is already proof in your bag. But Vaaman, definitely, if you can -- if you have an answer to this as well?

Yes. I think Chirag, it's kind of difficult to generalize. You're really generalizing us as a company that has one product and one set of fixed costs. We are growing. We are expanding. We are into multiple products. So really, I think we should get into perhaps product-wise if you really want to have those kind of granular discussions. But definitely, all business have a certain level of fixed costs and then the operating leverages play out. But very difficult to give you a very general answer I think in the challenging conditions that there is. I mean, I think we have to look at it in that context. So definitely when we talk about some of the investments that we have made in increasing our capacities, et cetera, they all have been done. So all the additional business that will come and the growth that will come based on these capacities, they should definitely play out. But again, very hard to give you an answer on such a diverse set of products because I think if we move relevant, if we will only do one product and then you could decide to what the fixed cost is for manufacturing that.

And the last question, a housekeeping one, if I can squeeze in. Is there any lag effect of price increases coming from OEM that we have accounted in this quarter, which could be for earlier quarters? Is there -- is there any of that thing which has helped us in this quarter?

Kunal?

Yes, so Chirag as I mentioned earlier you today go and talk about that price of energy is INR 100, EUR 100, you will come back on next day morning, it will be EUR 120. So as I was mentioning, it's an everyday affair of trying and managing the inflation, the different cost structures that exist. And it's a constant endeavor to work with the customers to try and see what are the best win-win solutions. I mean the solution is not only frankly price either, there are engineering changes that can be done to improve some of the parameters associated with this and so on. Hence, there are multiple different kinds of conversations that are ongoing. We did think about how do we showcase what is past, what is current and so on and so forth. And frankly, the reality is, if we think it's past in some of the cases, like commodities may have also eased out to some extent or stabilized in some extent, and some of the other situation, something may have tied up like wage inflation in Mexico spiked up. So there are so many different variables that play that it became very, very difficult to find a common theme to be able to highlight that. So the best I can say is, frankly, it is work in progress. There are some portions of it which has got pass through, which is what we are referring to in our presentation, and there is still a fair amount of conversations ongoing which would hopefully fortify in the next few quarters.

The next question is from the line of Pramod Amthe from InCred Capital.

First question is with regards to the EV order book. It seems to be a pretty impressive jump from 27% to 37%. Considering you have wide areas of businesses and each of them have different technical capabilities within these orders, would you help us understand which regions might have helped you to jump up drastically on this plan?

Okay. That itself is a really right question, but Kunal, can you give him the taste of variety. But maybe what's very important is the ability of Motherson is that we are giving this average and that also creates tremendous moat for us because we are becoming more and more suppliers of choice. And you will see that time and again in the order book and the executional [indiscernible]. Even in the difficult times, we have put up over $2 billion worth of orders which a lot of people thought would be very difficult for us. But anyway, Kunal, can you try to answer.

Pramod, number one, I think you just want -- may want to note this is in reference to the order book that we have for SMRP BV, which is largely the Vision vertical and the Module and Polymer vertical. So those are the 2 large verticals represented in SMRP BV. And that's where the share has gone to 37. Maybe if Rajat, you want to give you specific examples of how we've been able to win share of business in EVs, anything special that we are doing. Maybe that will help some more.

I'm happy to have that address this for now. So if you look at Modules & Polymer, we have a very, very healthy order book in the range of over EUR 12 billion that is going to be coming up into realization or SOPs, if you will, within next year, year or 2 years. If you look at the portfolio of where those revenues are coming from, we continue increasing our proliferation of different regions. So historically, you will see very strong presence in Europe. We still maintain that strong presence in Europe, but other regions like China, like America, North America, South America are becoming larger and larger part of our portfolio helping us derisking localization dependent on specific region. We also have large growth in electrical regions. So you will see this I think on the Page 6 [indiscernible]. There is a page that is showing our order book. And -- I'm sorry, it's Page 18 you will see in detail of what we are talking about. Working for of course, on diversification of customer portfolio where premium vehicles or premium carmakers are significantly larger part of our portfolio in polymer group, which works for us very well under the current circumstances. But we also have a very good presence in mid segment and [indiscernible] segment in other regions than Europe. So I think all I know this is a very good portfolio and order book strong growth and good future. Rajat, would you like to add something for Mirror division?

Yes. Look, I think maybe [indiscernible] explained how we've grown across the regions. But if we look at the driving factors of what is, I think, pulling more nominations on the EV per se, I think it is the ability of the organization to deliver very quickly on the new programs. Because most of the EV makers are trying to capture, and that is where they are looking at a very short time line. So that is one of the big drivers, our ability to engineer very quickly. Also, it is about the content. So most of the EV mirrors are again coming with very high content, and that's where I think competitiveness also plays in a big role. So our larger market share or growing nomination on the EV side is also a reflection of our strength in that. And then I think overall capability and trust that we have from the customer is also helping us gain more share. So overall, I think it is very well placed to get more and more EV share and I think that's what is getting reflected in the order book as well.

My second question is to Kunal, if I can ask, on the Slide 14 where you have detailed, talked about working capital inventory day. Post COVID, it seems like structurally it has been elevated. How do you see normalizing? Are there any chances of normalizing or where are the levels we expect the inventory to normalize and some rundown to happen on these inventory deals against your working capital debt?

Sure, Pramod. So you would see a very stark increase in inventory as seen on that slide, which is consuming over INR 2,000 crores of capital right now or extra inventory that we are getting. This is an impact or effect of the supply chain volatility where inventory obviously becomes the first measure to try and see that customer lines are not impacted the supply chain volatility. Now as you would have seen in the like the supply chain pressure index, which is looking downward now, some of these issues seems to be resolving or at least receding to some extent. Remain volatile, but directionally at least receding hopefully. And that as more confidence comes into the supply chain, we should be able to reduce the inventory levels back to more normalized volumes. How quickly is a little bit of an unknown animal. But yes, we should hopefully see directionally improvement coming as one drives more confidence on the supply chain.

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

Just on Slide 32, you've called out USD 400 million worth of order books on the aerospace side? Is that understanding correct?

That is correct.

Okay. So over what period is this supposed to get executed, sir? And how much of -- and I'm assuming that you follow the same rules which were there when SMRP BV order books were disclosed. So a moment the order gets into SOP, you completely knock it out of your order book.

Yes, that's always followed. But the new order, this thing, we are giving additional information, Kunal, maybe it's a good idea to explain that.

Yes, sure. So number one, Prateek you may want to know this is book business, not order book, the difference being this includes working production. Number two, you should think about this as potentially 6, 7 years kind of a space.

Okay. Okay. Kunal, and when you say 30% growth, it is, let's say, last quarter this was roughly around 300-odd million, which has now become 400 million, right?

Absolutely right.

Okay. Okay. And secondly, just Kunal, one small help, if you can. If I were to just go back to this India share of business, which you have highlighted on one of the slides, could you call out how much was your EBITDA coming in H2 FY '22 from India business and H1 FY '22 also? If it's possible?

H1 this year, I can tell you. [indiscernible] last year, this year...

This year, it's 30%, right? And can you -- okay, so you don't have that offhand. Could you disclose this? Is it possible for you to disclose H2 FY '22 and H1?

We have disclosed it, I think the PAT number, if I remember right, it was I think, 55% if I remember, right, or greater than 55% or 45%, something like that. I can get back to you. I think we have disclosed this at least last. It wasn't very different to the current share of profit give or take 5%.

The next question is from the line of Arvind Sharma from Citi Group.

Sir, just a question on this one-off thing on Slide 3. Could you please let us know where exactly it is accounted for, if it is SMRP BV than the euro terms? And also if you could share SMRP BV, PBT and PAT.

Kunal, can you take that?

Just to clarify, you're referring to the Russia impairment? Is that what you're referring to?

Yes. Slide 3, the notes that you have given, those INR 98 crores, INR 14 crores, total impact, which entity are they sitting in? If it's SMRP BV within the euro terms and the SMRP BV with PBT and PAT.

Right. There is an SMRP BV presentation that has been uploaded as well, so you will get it there. But then maybe you can help me with SMRP BV on the -- here, you will see the PKC piece that is over and above what is there in SMRP BV, PKC also has presence in Russia. So the Wiring Harness piece is -- I think if I remember right, is EUR 7.7 million is what has been booked in fennel, the rest is coming in, in SMRP BV. The other portion, which is the Durban insurance claims that is lined in SAMIL directly that was part of the Module Polymer business of erstwhile MSSL and now SAMIL.

All right, sir. And if you could share the SMRP BV and PAT number, unfortunately, I could not see that in the presentation. Maybe I'm missing it, but if possible, can you share that?

Vipin, you have that?

Yes. So I don't have the number offhand with me, but just to clarify that complete Interim report, which is the complete consolidated financial statement on an unaudited basis are already uploaded on the website. From there, we can see the PBT and PAT number.

The next question is from the line of Kapil Singh from Nomura.

Yes, Just follow up on. The external environment and the concern that we are seeing, If you could comment both from the point of view of how the customers are looking at Motherson from market share perspective or incremental orders perspective. And also from an acquisition perspective because I remember some of our best acquisitions have happened in periods when the external environment has been quite tough. So how are you thinking about it? What are the kind of opportunities you have seen? Just some qualitative color on that would be helpful.

Definitely, The thing is that people forget that more problems that happen in the world that many more opportunity doors also open up. Our M&A teams are being requested time and again for more solutions. You noticed it's been appearing in the papers also. But we would only take a company over if we think that that's going to be EPS accretive. It's going to be something where the customer is standing behind us. So obviously, all these things are going to sort of give you a little bit of concern. But we in Motherson have a huge plethora of companies that actually support acquisitions and all that. But Vaaman, would you want to add something over here?

No, papa, I think you covered it. Lots of opportunities, absolutely. And with the performance that the team is putting up, it opens up more opportunities and the confidence of the customers is even more there.

Yes. And I think one thing is very important, which you asked, it's important for me to cover it, you asked me if the customers are worried about the market share that we might have or something like that. But think about it, there are so many companies which are not there anymore, who were supposed to be our competitors in the products that we're getting into. So it's something which is very interesting. A lot of our competitors or so-called competitors, themselves are in very big trouble and are extended beyond this thing. So more and more, we are seeing the big companies, car companies coming to us, asking us to solve their problems. That's going to be there when we announce the other acquisitions which will come as per the time limits at the moment which is there. But you see that the customer confidence in Motherson is only increasing.

[Operator Instructions] The next question is from the line of Jay Kale from Elara Capital.

Sir, just one question, clarification on your income from JV and associates line item in your consol results, clarification, that includes profits from Motherson Sumi wiring, right? And Motherson Sumi Wiring profits have been quite steady. This line item over the last 4 quarters odd has been quite volatile with some bit of losses also coming in. So can you just throw some light how to look at this line item going forward? And what are the other JVs which may be under pressure, if at all?

Sure. Kunal, Can you give that?

So you're right. the profitability of MS will. But then that is only one of the many, many JVs that we have, probably I think 26 or 27 different ventures in there. It's a fairly long list of things some doing well, some not doing so well, some in the investment phase and so on and so forth. So different JVs being in different forms of growth than it's -- that's a majority that the business has. So difficult to really say. I mean, it will frankly remain bit volatile given the nature of the number of JVs that are...

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

Thank you very much. We are trying to improve the information that we are giving. The presentation is a good way to understand that. Secondly, we are asking all the top people in the group to be present in this call, so that you can get some straight answers from those guys. Still for us, doubt about what will happen in the energy crisis which is going to be around the corner in Europe. But I think it's fair to say that a lot of countries have taken good measures to make sure that people are not without the job and all that. So believe me it has very tough, I think -- of the whole -- good, sorry. All the countries over there. I think the system of Motherson is very clear, whatever is in mercantile system, whatever is in the bank is what we are going to show you. And whatever is in the negotiations and not yet with us in our bank account. As my guruji would say, cash in bank is reality. So we are very, very sure to follow that. And wish you all the best, and thank you all very much for attending this call. Over to you.

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