Dear Shareholders,
FY 2022-23 has been a strong and positive year for SAMIL. The consolidated revenue of
your company for FY 2022-23 grew by 23% to INR 78,701 crores (USD 9.6 billion). The share
of electric vehicles (EVs) in our revenues in FY 2022-23 has increased to more than 6%, up
from ~4% last year. Our current product portfolio is largely powertrain agnostic and
aligned with new energy vehicles such as EVs and Fuel Cell Electric Vehicles (FCEVs) to
support the transition towards clean mobility. The total SAMIL automotive booked business
till March 31st 2023, stands at USD 69.1 billion, out of which 20% is for EVs.
We have announced six acquisitions in FY 2022-23, with a proforma gross revenue of USD
4.9 billion and net revenues of ~USD 1.1 billion. Total EBITDA ended at INR 6,394 crores
with an EBITDA margin of 8.1%, up from 7.6% in FY 2021-22.
We have remained dedicated to our sustainability goals in our focus areas of Planet,
People, and Governance. We have made advancements in these areas for Vision 2025 and
beyond, including new actions to lower our environmental impact, promote diversity and
inclusivity in our organisation, and maintain strong governance and ethical practices in
all our operations. It has brought us closer to our vision: 'to become a globally
preferred sustainable solutions provider'.
The Sustainability section of this report will give you a deeper insight into this
topic.
These results demonstrate that FY 2022-23 has been a remarkable year for Motherson.
Despite the uncertain economic environment and challenging global geopolitical situation,
our growth has exceeded the industry average. This is an achievement that we are very
proud of as it has brought us closer to our Vision 2025 targets. All of it is made
possible by the continued trust of our customers and the amazing work of our teams around
the world, and I am extremely grateful for this.
The theme of this annual report
Against this background, our theme for this year is, All our dreams can come true, if
we have the courage to pursue them.' This quote, which you see on the cover of this annual
report, is from Walt Disney — surely one of the most powerful imaginators of the past
century. We chose it because it reminds us that it is not external circumstances that
determine whether we achieve our goals but our own perseverance in going after them. After
all, we cannot control the world around us. We always have to work with what we meet on
our path. In our case, that path is Route 36, the road to our Vision 2025 targets.
That is also why we do not lower our targets when we face adversity. For us, that would
defeat the purpose. We do not set goals that we are guaranteed to achieve.
We believe in setting targets that stretch us, that pull us out of our comfort zone.
This helps us make the most of any situation and create the most value for all
stakeholders: our customers, employees, investors, and the communities in which we work.
Ambitious goals ensure that we keep moving forward — not only for Vision 2025 but
also for the long term. It may not be up to us whether we actually achieve everything we
set out to do in life — it is the universe that decides that. But it is up to us to
give everything we have towards achieving our goals and that is what we are doing. As we
like to say at Motherson, 'Full effort is full victory'.
Keeping our eyes on the road
The global economic and geopolitical reality is still difficult for our customers and
for Motherson. We are in constant dialogue with our customers about the cost implications
of the current environment. There is not one permanent solution for passing on all
inflationary pressures, but we believe we are making progress.
We are trying to be as responsive as possible, as always.
What is critical for us in navigating today's realities is to remain focussed on
serving the evolving needs of our customers and following their guidance on where they
want our support. We believe that delivering outstanding performance on all the dimensions
that our customers measure us in will help us earn their trust, which in turn allows them
to give us more opportunities.
One tangible result of this is that we have six new Greenfields coming up in India.
Some of these are to support the growing demands from our automotive customers, others are
to support non-automotive customers in our new divisions. We are very excited about these
new plants and the teams are working very hard to get them up and running as quickly as we
can.
Similarly, we have announced six acquisitions in FY 2022-23 at the behest of our
customers. This is a record for Motherson and it was possible because we have been patient
and disciplined. Not so long ago, capital was freely available at low rates for
acquisitions. However, valuations were so high that we did not see a path to also
achieving a ROCE of 40% over time, and hence we held back. In today's inflationary
environment with higher interest rates, we are seeing many acquisition opportunities. In
fact, thanks to the trust we have earned over the years and our strong balance sheet,
customers see us as a preferred partner to take over some of these companies. Indeed, OEMs
are asking us to acquire distressed assets or integrate a critical part of the supply
chain into Motherson.
Apart from the six acquisitions in FY 2022-23, we have announced five additional
acquisitions in FY 2023-24 until mid-July. One of our biggest acquisitions in FY23 is
Ichikoh Industries (Japan), a leading manufacturer of rearview mirrors. This is a
significant win for the group as it provides us with our own manufacturing facilities in
Japan and China, as well as increased access to customers in these regions, creating
numerous growth opportunities. Another acquisition announced in the last fiscal year is
SAS Autosystemtechnik GmbH (Germany), a leading provider of assembly and logistics
services to the automotive industry. SAS has a presence in Europe, Asia, and America. The
capabilities of SAS will complement our own, thereby strengthening our Tier 0.5 position
with customers. This acquisition will help transform Motherson into a global leader in the
assembly of cockpit modules, with a special focus on EV models.
Furthermore, we have recently announced a strategic partnership with Honda Motor.
Motherson will acquire an 81% stake in the 4W business of Yachiyo Industry, a Honda Motor
subsidiary in Japan. Yachiyo manufactures sunroofs, fuel tanks, and plastic products for
the automotive industry, among others.
The company employs approximately 3,200 employees across 13 manufacturing facilities in
the USA, Brazil, Mexico, China, Japan, Thailand, Indonesia, and India, and three R&D
centres in the USA and Japan. Yachiyo has revenues of JPY ~116 billion/ EUR 824 million
for FY23.
We are grateful and excited to have earned the trust of Honda Motor to enter into a
global partnership with them. Together, we will take Yachiyo to new heights on the world
stage. This is a meaningful step for us as the history of Motherson is closely tied to
Japan. Motherson would not be where it is today without the support, guidance, and
mentorship of our partners and friends in Japan over the past decades. This partnership
strengthens our ability to give back to Japan, and being able to reciprocate our teachers
is very touching and heartwarming for us.
Motherson is thrilled about these partnerships and the tremendous capabilities they
bring to us. This brings me to my final topic.
Motherson as a platform for growth
My hope and dream has always been for Motherson to be an enduring great company. With
that I do not just mean that we would be large in terms of revenues, but a company that is
of value for all our stakeholders and that is a force for good in the world. We want
Motherson to provide sustainable jobs for our people in a supportive environment in which
they are excited to work hard to delight our customers.
By earning the trust of our customers, we receive more and more orders from them. This
translates into good returns for our investors, who are then inspired to invest in our
future, allowing us to create more sustainable jobs for our people, so they can support
our customers even better, thus continuing the cycle.
To keep this upward spiral going, we have developed several strengths over the years
that reinforce each other and together form a 'platform for growth'. We have done our best
to embed the lessons learned from past successes into our organisation.
That means to remain clear of what we do and why we do it and to be conscious of
changing circumstances so we adapt and respond quickly.
It took us more than four decades to build Motherson from our humble beginnings to the
size and scale we have reached today. Thanks to our platform for growth, however, I
believe our success in the new industries we are now entering can proceed much faster.
That is how I believe we will be successful along Route 36 on our way to Vision 2025 and
beyond.
Vaaman will address the topic of 'Motherson as a platform for growth' in his article on
Pg. 14-25 in more detail. Based on this, I hope you will see that our targets may be
ambitious but not unreasonable.
Closing Thoughts
In these fast-changing times, we are heartened by the strength of the relationships
with our customers, partners, investors, and local communities as well as within the
entire Motherson family. We have built a strong foundation upon which we can flourish
together in the years to come. I want to express my gratefulness to our customers. Your
faith in us means everything to us; without you, there would be no Motherson. To our
investors, we thank you for your guidance and continued trust. To our collaborators, thank
you for your knowledge and expertise and your commitment to putting our customers first
under all circumstances.
To our employees and teams, your endurance and love for Motherson is the foundation of
our strength.
We would like to thank all local, state, and national governments, concerned bodies,
and the banks and financial institutions in all countries where we operate for their
collaboration. On behalf of SAMIL, thank you all.
May God bless us with wisdom and prosperity.
And let's remember, All our dreams can come true if we have the courage to pursue
them.'
Sincerely,
Vivek Chaand Sehgal
Chairman,
Samvardhana Motherson International Limited.