2QFY2012 Result Update | Auto Ancillary

November 8, 2011

Motherson Sumi Systems

Performance Highlights
Consolidated (` cr) Net sales EBITDA OPM (%) Reported PAT
Source: Company, Angel Research

ACCUMULATE
CMP Target Price `177 `193
12 Months
Angel est. 2,235 187 8.4 70 % diff 4.6 8.7 32bp (65.5)

2QFY12 2,339 204 8.7 24

2QFY11 1,958 192 9.8 86

% chg (yoy) 19.5 6.1 (110)bp (71.8)

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Auto Ancillary 6,861 0.4 256/162 58,696 1 17,594 5,289 MOSS.BO MSS@IN

For 2QFY2012, Motherson Sumi Systems (MSS) consolidated net profit was significantly below our as well consensus estimates, despite better-than-expected top-line and operating performance. Adjusted EBITDA margin at Samvardhana Motherson Reflectec (SMR) witnessed a 289bp yoy contraction due to lower utilization levels at the new plants in Hungary and Brazil. Further, MTM loss of `74cr primarily on foreign currency loans and higher interest expense severely impacted the companys profitability. We have revised our FY2012 earnings estimates downwards to factor in EBITDA margin pressures due to lower utilization levels at the new plants. However, we believe operating leverage benefits due to pick-up in order execution will enable MSS to restore its margin in FY2013. We maintain our Accumulate view on the stock. Lower utilization at new plants and notional forex loss affect overall performance: For 2QFY2012, MSS posted strong 19.5% yoy (1.7% qoq) growth in top-line to `2,339cr, led by a 13.4% (2.5% qoq) and 23.6% yoy (flat qoq) jump in domestic and overseas sales, respectively. Overseas performance was boosted by strong sales momentum at SMR, which grew by 21.6% yoy (down 2.2% qoq) in INR terms. Adjusted EBITDA margin fell by 110bp yoy to 8.7%, largely due to a sharp drop in operating margin at SMR. EBITDA margin at SMR fell by 289bp yoy to 3.3% due to unutilized capacities at the new plants in Hungary and Brazil. Net profit fell sharply by 71.8% yoy (62.8% qoq) to `24cr, led by notional loss of `61.4cr on foreign currency loans and a significant increase in interest cost. Outlook and valuation: We believe execution of orders at SMR will help MSS deliver volume and revenue growth going ahead. Further, ramp-up in new capacities will aid margin expansion in FY2013. We expect MSS to deliver a ~15% and ~10% CAGR in its top line and bottom line, respectively, over FY2011-13E. At `177, MSS is trading at 14.7x its FY2013E earnings. We maintain our Accumulate rating on the stock with a revised target price of `193.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 65.2 17.1 11.0 6.7

Abs. (%) Sensex MSS

3m 3.4 (18.7)

1yr (15.7)

3yr 76.6

(4.7) 190.2

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) Adj. EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010 6,924 162.3 248 41.4 7.9 6.4 26.8 5.7 25.4 14.1 1.1 14.1

FY2011 8,371 20.9 384 55.0 10.6 9.9 17.9 4.3 27.7 24.3 0.9 8.7

FY2012E 9,800 17.1 345 (10.0) 8.5 8.9 19.9 3.9 20.6 16.8 0.8 9.3

FY2013E 11,119 13.5 467 35.2 9.2 12.0 14.7 3.3 24.3 19.7 0.7 7.7

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Motherson Sumi Systems | 2QFY2012 Result Update

Exhibit 1: Quarterly performance (Consolidated)

Y/E March (` cr) Net sales (include Other Op. Inc.) Consumption of RM (% of Sales) Staff costs (% of Sales) Other expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other income Foreign exchange differences Profit before tax (% of Sales) Provision for taxation (% of PBT) PAT before minority interest Minority interest Share of profit/(loss) of associates Net profit PATM Equity capital (cr) EPS (`)
Source: Company, Angel Research

2QFY12 2QFY11 2,339 1,454 62.2 368 15.7 314 13.4 2,135 204 8.7 23 70 3 74 39 1.7 37 93.8 2 (22) 24 0.1 38.8 0.6 1,958 1,194 61.0 300 15.3 272 13.9 1,766 192 9.8 15 61 3 135 6.9 47 34.9 88 2 86 4.5 38.8 2.2

% chg 1HFY12 1HFY11 19.5 21.8 22.3 15.6 20.9 6.1 53.6 14.9 11.9 (71.0) (22.1) (97.3) 4,639 2,909 62.7 723 15.6 616 13.3 4,248 391 8.4 45 132 7 63 158 3.4 88 55.8 70 (20) (71.8) 90 1.5 38.8 (71.8) 2.3 3,863 2,356 61.0 596 15.4 529 13.7 3,481 382 9.9 27 119 6 255 6.6 95 37.2 160 15 146 4.1 38.8 3.8

% chg 20.1 23.5 21.4 16.3 22.0 2.4 67.0 10.9 9.8 (38.1) (7.0) (56.4)

(16) (552.1)

(13) (600.2)

(38.5)

(38.5)

Better-than-expected net sales growth of 19.5% yoy: For 2QFY2012, MSS registered strong 19.5% yoy (1.7% qoq) growth in its top line to `2,339cr, driven by a 13.4% (2.5% qoq) and 23.6% yoy (flat qoq) jump in domestic and overseas sales, respectively. Domestic revenue stood at `862cr and overseas revenue came in at `1,428cr. Overseas performance was boosted by 21.6% yoy (down 2.2% qoq) revenue growth at SMR in INR terms. Despite a demand slowdown in the domestic passenger vehicle market and labor unrest at Maruti Suzuki one of the companys major clients, MSS posted strong top-line growth.

November 8, 2011

Motherson Sumi Systems | 2QFY2012 Result Update

Exhibit 2: Domestic revenue grows by 13.4% yoy

(` cr) 1,200 1,000 800 600 400 200 0
25.5 13.4 58.2 53.0 33.6

Exhibit 3: Overseas revenue jumps by 23.6% yoy

(%) 80 70 60 50 40 30 20 10 0 (` cr) 1,600 1,400 1,200 1,000 800 600 400 200 0
360.5 187.4 23.8 4.0 (2.3) 1.0 16.4 23.6

Within India
67.1 59.7

yoy change (RHS)

61.9 60.5

Outside India
496.8

yoy change (RHS)

(%) 600 500 400 300 200 100 0 (100)

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12
139

Source: Company, Angel Research

Source: Company, Angel Research

EBITDA margin declines by 110bp yoy to 8.7%: For 2QFY2012, MSS registered a 110bp yoy decline in its EBITDA margin to 8.7%, marginally ahead of our expectation of 8.4%. Margin contraction can be attributed to raw-material cost pressures, which led to a 118bp yoy increase and amounted to 62.2% of net sales. Standalone operating margin remained firm during the quarter, while margin at SMR declined sharply by 289bp yoy and 154bp qoq due to start-up costs and lower utilization levels at the new plants in Hungary and Brazil (utilization levels of around 5%).

Exhibit 4: EBITDA margin at 8.7%

(%) 70 60 50 40 30 20 10 0 7.7 9.3 16.2 16.5 15.7 12.3 15.9 15.7 9.8 15.3 11.5 14.8 11.0 15.6 16.0 61.8 EBITDA margin 62.4 61.9 Raw material cost/sales 62.5 62.3 63.5 63.2 Staff cost 64.1 63.5

Exhibit 5: Net profit impacted by forex fluctuations

(` cr) 200 150 100 50 0
1915 75

Foreign exchange loss/(gain)

142 106 86 60 4

Net profit

2QFY12
65 74 24

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

(50) (100)

(31)

(52)

Source: Company, Angel Research

Source: Company, Angel Research

Net profit nosedives by 71.8% yoy: Net profit for 2QFY2012 stood at `24cr, registering a substantial decline of 71.8% yoy (62.8% qoq). The bottom line nosedived sharply due to volatility in INR/USD and Euro/USD, as a result of which notional loss of `61.4cr on foreign loans was booked during the quarter. Further, a significant increase in interest cost negatively affected the companys profitability.

November 8, 2011

2QFY12

10.0

8.1

8.7

(16)

(3)

(18)

(11)

Motherson Sumi Systems | 2QFY2012 Result Update

Exhibit 6: Quarterly performance (Standalone)

Y/E March (` cr) Net Sales (include Other Op. Inc.) Consumption of RM (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income Foreign exchange differences PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT PATM Equity capital (cr) EPS (`)
Source: Company, Angel Research

2QFY12 2QFY11 % chg 1HFY12 1HFY11 % chg 785 476 60.6 78 9.9 111 14.1 664 121 15.4 15 24 10 47 45 45 5.7 13 29.5 32 4.0 39 0.8 669 408 61.1 63 9.5 100 14.9 571 97 14.6 8 20 10 (11) 91 (50.7) 13.6 25 (47.2) 27.5 66 (52.1) 9.9 39 1.7 (52.1) 91 (50.7) 86.6 20.3 (1.2) 16.3 24.1 11.1 22.9 17.4 16.5 1,536 953 62.0 154 10.0 214 13.9 1,320 216 14.1 27 47 34 42 135 135 8.8 37 27.8 97 6.3 39 2.5 1,228 743 60.5 120 9.8 187 15.3 1,051 178 14.5 12 126.0 39 (9) 148 148 12.0 53 (28.9) 35.6 95 7.7 39 2.5 2.0 2.0 (9.0) (9.0) 21.3 12 183.3 25.6 21.7 14.0 28.1 25.1 28.2

Foreign exchange translation losses overshadow strong standalone operating performance: MSS posted strong top-line growth of 17.4% yoy (4.4% qoq) to `785cr on the back of 14.2% and 59.3% yoy growth in domestic and overseas revenue, respectively. Slowdown in the domestic passenger vehicle market and labor unrest at Maruti Suzuki restricted the growth in domestic revenue to a certain extent. On the operating front, EBITDA margin improved by 82bp yoy to 15.4%, largely due to a decline in raw-material and other operating expenses. Sequentially, however, EBITDA margin expanded sharply by 270bp on account of savings on the raw-material front. As a result, operating profit jumped by 24.1% yoy (26.4% qoq) to `121cr. Net profit, on the other hand, significantly declined by 52.1% yoy (51.8% qoq) to `32cr, as the company had to account for foreign exchange translation loss on foreign loans amounting to `41.9cr. Further, higher interest cost (up 86.6% yoy) and depreciation expense (up 20.3% yoy) negatively affected the companys bottom line during the quarter.

November 8, 2011

Motherson Sumi Systems | 2QFY2012 Result Update

Exhibit 7: Domestic revenue increases by 14.2% yoy

(` cr) 800 700 600 500 400 300 200 100 0
23.9 36.1 63.5

Exhibit 8: Overseas revenue up by 59.3% yoy

(` cr) 120 100 80 60 40 20 0
(22.1) (7.6) 15.2 16.4 17.7

Within India
77.8 63.3

yoy change (RHS)

76.8 58.5

76.0

(%) 90 80 70 60 50 40 30 20 14.2 10 0

Outside India

yoy change (RHS)

59.3 37.9 36.9 41.2

(%) 70 60 50 40 30 20 10 0 (10) (20) (30)

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12
115

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

2QFY12

Source: Company, Angel Research

Exhibit 9: EBITDA margin trend

(%) 70 60 50 40 30 20 10 0 17.5 17.6 15.8 14.4 10.4 14.6 9.7 16.6 18.2 12.7 10.2 15.4 10.1 EBITDA margins 58.6 60.7 59.4 Raw material cost/sales 62.5 62.2 62.1 61.8 Staff cost 64.4 61.4

Exhibit 10: Profitability impacted by forex fluctuations

(` cr) 140 120 100 80 60 40 20 0 (20) (40) (60)
20 30 3 29 60 69 66 78

Foreign exchange loss/(gain)

Net profit

66 47 32

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

(24)

(11)

(40)

Source: Company, Bloomberg, Angel Research

Source: Company, Angel Research

Exhibit 11: Segmental performance Standalone

Y/E Mar (` cr) Total net sales Auto Non-Auto Other segments Total EBIT Auto Non Auto EBIT margin (%) Auto Non-auto
Source: Company, Angel Research

2QFY12 803 715 77 11 47 37 10 5.8 5.2 12.5

2QFY11 686 614 61 11

% chg 1HFY12 17.0 16.5 26.0 1,591 1,410 147 35 124 110 14 7.8 7.8 9.8

1HFY11 1,254 1,126 115 13

% chg 26.9 25.2 27.3

87 (46.6) 79 (53.4) 8 12.7 12.9 13.1 20.3

146 (15.0) 133 (17.5) 13 11.7 11.8 11.2 11.5

November 8, 2011

2QFY12

10.2

9.8

8.4

9.0

8.3

(2)

(10)

(6)

2QFY12

Motherson Sumi Systems | 2QFY2012 Result Update

SMR reports net loss: For 2QFY2012, SMR reported a strong 13.4% yoy increase in its net sales to 195mn; however, due to favorable currency movement, revenue in INR terms grew by 21.6% yoy. Adjusted EBITDA margin declined sharply by 289bp yoy and 154bp qoq to 3.3%, led by start-up costs and lower utilization levels (~5%) at the new facilities in Hungary and Brazil. The new plants in Hungary and Brazil have commenced production on a pilot basis and are expected to ramp up to a significant scale by 1QFY2013. SMR reported net loss of `18cr, led by a decline in operating performance and MTM loss of `19cr during the quarter.

Exhibit 12: SMR performance

(` cr) Net sales EBITDA EBITDA margin (%) Depreciation PBT Minority share PAT
Source: Company, Angel Research

2QFY12 1,265 42 3.3 33 (18) (21) (18)

2QFY11 1,040 65 6.2 31 31 7 7

% yoy chg 21.6 (35.0) 4.9 -

1QFY12 1,293 66 5.1 30 29 3 3

% qoq chg (2.2) (33.2) 7.2 -

Conference call Key highlights

Despite the demand slowdown in the passenger vehicle industry, management has not witnessed a decline in its order book position. The order book scenario remains strong at SMR and standalone level. Capital expenditure target for FY2012 stands at `700cr-750cr. MSS has outstanding foreign currency loans worth `745, ~3% of which are due for repayment in the current financial year.

November 8, 2011

Motherson Sumi Systems | 2QFY2012 Result Update

Investment arguments
Maintaining its leadership position: MSS is a leader in the wire harnessing segment, controlling over 65% of the domestic passenger vehicle market and around 48% market share in the domestic rear view mirror market. The company is now focusing on the supply of high-level assemblies and modules (MSS is a key supplier for the recently launched Ford Figo), where margins are comparatively high. MSS is also increasing its content per car in a bid to diversify its product portfolio. The company is laying emphasis on its global product plan (GPP), where it is looking at setting up joint ventures with leading tier-I suppliers to upgrade its technology base and bolster its clientele. Pick-up in order execution at SMR to boost performance: SMR has shown a substantial margin expansion since taken over by MSS and has bagged orders of about 800mn to be supplied over the life of the new models, which would be launched in the near future. MSS is gradually progressing towards achieving its target of ~8% EBITDA margin at the SMR front.

Exhibit 13: Five-year milestone set in FY2000

To cross `10bn in revenue by FY2005 To attain RoCE of 40% Not more than 25% from one customer To achieve 30% of sales from outside India To achieve dividend payout of 40% A chieved `10.2bn A chieved RoCE of 39% L a rgest customer constituted 27% of total turnover A chieved 29% from exports A chieved payout ratio 43%

Exhibit 14: Five-year milestone set in FY2005

To cross US $1bn in revenue by FY2010 To achieve 60% of sales from outside India Not more than 20% from one customer To strive to maintain business RoCE of 40% To achieve dividend payout of 40% on consolidated profit To achieve US $1.5bn A chieved over 65% of sales from outside India L argest customer constituted 15% of total turnover RoC E 37% standalone & 22% consolidated basis A chieved payout ratio of 23% for FY2010

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 15: MSSs targets for FY2015

Ma nagement Ou r view

To cross US $5bn in revenue on a consolidated basis To attain RoCE of 40% on a consolidated basis To achieve 70% of sales from outside India To achieve dividend payout of 40% of consolidated profit To increase reach from 21 countries to 26 countries
Source: Company, Angel Research

C a n be achieved as it has a strong execution track record C o uld be a potential upside risk to o ur EBITDA margins Requires turnaround in the o verseas market Will offer potential returns to in vestors Th rough JVs and acquisitions a cross geographies

November 8, 2011

Motherson Sumi Systems | 2QFY2012 Result Update

Outlook and valuation

We believe execution of orders at SMR from OEs such as BMW, Volkswagon, and Daimler will help MSS deliver volume and revenue growth going ahead. Further, ramp-up in new capacities will aid margin expansion in FY2013. We have revised our FY2012 earnings estimates downwards to factor in EBITDA margin pressures due to lower utilization levels at the new plants. However, we believe operating leverage benefits due to pick-up in order execution will enable MSS to restore its margin in FY2013.

Exhibit 16: Change in estimates

Y/E March (` cr) Net sales OPM (%) EPS Earlier Estimates FY2012E 9,572 9.6 9.5 FY2013E 10,961 9.8 12.0 Revised Estimates FY2012E 9,800 8.5 8.9 FY2013E 11,119 9.2 12.0 % chg FY2012E 2.4 (106)bp (6.3) FY2013E 1.4 (55)bp 0.4

Source: Company, Angel Research

We are not factoring in the acquisition of Peguform GmbH in our estimates currently, as we wait for the complete consolidation to take place. We expect MSS to deliver a ~15% and ~10% CAGR in its top line and bottom line, respectively, over FY2011-13E. At `177, MSS is trading at 14.7x its FY2013E earnings. We maintain our Accumulate rating on the stock with a revised target price of `193.

Exhibit 17: Key assumptions

Y/E March (` cr) Mirror Wiring Harness Group Polymer Group Rubber, Metals and other parts Total net sales % yoy growth Mirror Wiring Harness Group Polymer Group Rubber, Metals and other parts Total sales % of Total sales Mirror Wiring Harness Group Polymer Group Rubber, Metals and other parts Total sales
Source: Company, Angel Research

FY2008 1,335 437 256 2,028 36.2 11.3 65.5 32.8 65.8 21.5 12.6 100.0

FY2009 364 1,568 449 215 2,596 17.4 2.7 (15.9) 28.0 14.0 60.4 17.3 8.3 100.0

FY2010 4,153 1,810 561 178 6,702 1,040 15.5 25.0 (17.2) 158.2 62.0 27.0 8.4 2.7 100.0

FY2011 4,539 2,488 889 260 8,176 9.3 37.5 58.5 45.7 22.0 55.5 30.4 10.9 3.2 100.0

FY2012E 5,265 2,986 1,049 299 9,598 16.0 20.0 18.0 15.0 17.4 54.9 31.1 10.9 3.1 100.0

FY2013E 5,897 3,464 1,207 334 10,901 12.0 16.0 15.0 12.0 13.6 54.1 31.8 11.1 3.1 100.0

November 8, 2011

Motherson Sumi Systems | 2QFY2012 Result Update

Exhibit 18: Angel vs. consensus forecast

Angel estimates FY12E Total operating income (` cr) EPS (`)
Source: Bloomberg, Angel Research

Consensus FY12E 10,660 11.3 FY13E 12,895 14.8

Variation (%) FY12E (8.1) (21.2) FY13E (13.8) (18.6)

FY13E 11,119 12.0

9,800 8.9

Exhibit 19: One-year forward P/E band

(`) 300 250 200 150 100 50 0 Price (`) 7x 12x 17x 22x

Exhibit 20: One-year forward P/E chart

(x) 30 25 20 15 10 5 0 One-yr forward P/E Five-yr average P/E

Dec-07

Dec-08

Jun-08

Aug-05

Jan-07

Jun-09

Nov-09

Nov-10

Apr-11 Apr-11

Feb-06

May-05

Aug-08

Aug-09

Nov-04

Mar-10

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

Exhibit 21: One-year forward EV/EBITDA band

(` cr) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 EV (` cr) 4x 7x 10x 13x

Exhibit 22: One-year forward EV/EBITDA chart

(x) 18 16 14 12 10 8 6 4 2 0 One-yr forward EV/EBITDA Five-yr average EV/EBITDA

Jul-06

Jul-07

May-05

May-10

Feb-09

Sep-10

Jul-07

Dec-07

Dec-08

Jun-08

Jan-06

Dec-05

Dec-06

Aug-08

Aug-09

Aug-05

Jun-06

Jan-08

Jan-07

Jun-09

Nov-09

May-10

Feb-09

Dec-05

Dec-06

Sep-10

Jun-06

Jan-08

Apr-03

Apr-04

Apr-11

Oct-03

Oct-11

Nov-10

Mar-10

Apr-03

Apr-04

Nov-04

Apr-11

Source: Company, Bloomberg, Angel Research

Oct-03

Oct-11

Source: Company, Bloomberg, Angel Research

Exhibit 23: Auto Ancillary Recommendation summary

Company Amara Raja Automotive Axle^ Bharat Forge* Bosch India
#

Reco. Accumulate Buy Neutral Accumulate Neutral Accumulate Accumulate Neutral

#

CMP (`) 218 376 292 7,205 124 1,300 177 27

Tgt. price (`) 242 450 7,763 1,396 193 -

Upside (%) 11.5 19.5 7.7 7.4 8.9 -

P/E (x) FY12E 11.2 9.3 17.0 20.5 22.3 12.5 19.9 8.2 FY13E 9.9 8.4 14.5 18.6 16.1 11.4 14.7 6.6

EV/EBITDA (x) FY12E 6.4 5.4 8.6 12.7 13.7 6.9 9.3 4.7 FY13E 5.3 4.8 7.0 11.1 9.6 5.8 7.7 4.0

RoE (%) FY12E 22.9 27.6 18.3 21.2 16.3 26.4 20.6 8.3 FY13E 21.1 26.2 18.1 19.4 20.1 23.1 24.3 10.0

FY11-13E EPS CAGR (%) 12.9 24.2 26.9 19.2 1.7 25.1 10.3 (7.5)

Exide Industries FAG Bearings Subros Motherson Sumi*

Source: Company, Angel Research; Note: * Consolidated results; # December year end; ^ September year end

November 8, 2011

Oct-11

Oct-11

Jul-06

Jul-07

Jul-07

Motherson Sumi Systems | 2QFY2012 Result Update

Profit and loss statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Other Operating Income Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Recurring PBT % chg Extraordinary Items PBT Tax (% of PBT) PAT (reported) Less: Minority interest (MI) PAT after MI (reported) Adj. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY08 2,272 244 2,028 24 2,052 33.1 1,755 1,124 142 247 242 297 26.4 14.5 85 212 24.7 10.5 29 43 20.5 226 39.4 19 207 51 24.7 175 (3) 178 159 22.9 7.8 4.5 4.1 22.9 FY09 2,783 188 2,596 44 2,640 28.7 2,356 1,549 141 344 322 283 (4.6) 10.7 109 174 (17.9) 6.7 38 120 47.0 256 13.1 1 255 35 13.6 221 45 176 175 10.3 6.7 4.9 4.5 10.3 FY10 6,854 151 6,702 222 6,924 162.3 6,375 4,166 319 1,200 690 549 93.6 7.9 260 289 65.5 4.3 63 118 33.8 343 34.0 (5) 348 109 31.4 234 (9) 243 248 41.4 3.7 6.6 6.4 41.4 FY11 8,467 291 8,176 195 8,371 20.9 7,483 5,145 386 1,259 693 888 61.9 10.6 246 642 122.4 7.9 58 47 7.5 631 84.1 7 624 188 30.1 443 52 391 384 55.0 4.7 9.9 9.9 55.0 FY12E 246 201 17.1 6,143 461 1,488 873 835 (6.0) 8.5 282 552 (13.9) 5.8 91 56 10.9 518 (17.9) 0 518 155 30.0 363 17 345 345 (10.0) 3.6 8.9 8.9 (10.0) FY13E 280 217 13.5 6,922 458 1,711 1,003 1,024 22.7 9.2 304 721 30.4 6.6 91 62 9.0 692 33.5 0 692 208 30.0 484 17 467 467 35.2 4.3 12.0 12.0 35.2 9,845 11,181 9,598 10,901 9,800 11,119 8,965 10,094

November 8, 2011

10

Motherson Sumi Systems | 2QFY2012 Result Update

Balance sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 949 346 603 28 5 904 95 190 618 531 373 42 1,052 2,947 1,599 1,349 176 55 1,884 277 383 1,224 1,597 286 27 1,893 3,182 1,727 1,455 181 47 2,097 343 310 1,444 1,592 505 2 2,190 3,821 2,055 1,766 460 45 2,793 356 443 1,993 1,963 830 3,101 4,705 2,338 2,367 235 52 3,032 417 518 2,097 2,194 837 3,493 5,059 2,641 2,417 253 58 3,551 457 589 2,506 2,445 1,107 3,835 36 500 536 23 489 4 1,052 36 748 783 200 895 15 1,893 37 1,127 1,165 203 818 4 2,190 39 1,570 1,609 228 1,263 1 3,101 39 1,712 1,750 228 1,513 1 3,493 39 2,054 2,093 228 1,513 1 3,835 FY08 FY09 FY10 FY11 FY12E FY13E

November 8, 2011

11

Motherson Sumi Systems | 2QFY2012 Result Update

Cash flow statement (Consolidated)

Y/E March (`` cr) Profit before tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in loans and advances Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY08 207 85 37 115 51 163 (0) (55) 43 12 29 42 (128) (45) (93) 99 95 FY09 255 109 (429) (220) 35 120 (50) (192) 120 406 56 1,454 1,916 (233) 95 277 FY10 348 260 231 459 109 271 (239) 8 74 118 (40) 2 (77) 57 (121) (139) 92 277 343 FY11 624 246 245 547 188 380 (918) 2 (113) 47 (982) 1 446 80 (231) 296 (306) 343 356 FY12E 518 282 (163) (603) 155 1,085 (659) (7) (79) 56 (689) 250 128 (714) (336) 60 356 417 FY13E 692 304 185 289 208 684 (371) (5) (64) 62 (378) 113 (379) (266) 40 417 457

(197) (2,146)

(210) (2,268)

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Motherson Sumi Systems | 2QFY2012 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 0.7 1.3 7.4 0.7 2.0 4.5 0.4 0.8 4.5 0.5 1.0 11.1 0.6 1.3 6.1 0.5 1.0 7.9 2.4 44 51 56 42 1.4 63 66 113 20 2.3 35 38 69 5 2.4 38 38 66 14 2.3 40 39 68 17 2.3 40 41 68 18 22.2 22.3 34.7 11.8 10.8 26.6 14.1 15.6 25.4 24.3 23.5 27.7 16.8 18.0 20.6 19.7 21.4 24.3 10.5 0.8 2.4 18.9 4.6 0.8 30.5 6.7 0.9 2.1 11.9 4.8 0.7 17.1 4.3 0.7 4.0 11.8 5.1 0.5 15.3 7.9 0.7 3.7 20.1 3.9 0.5 27.6 5.8 0.7 3.4 13.6 4.6 0.6 18.7 6.6 0.7 3.5 16.0 4.2 0.5 22.3 4.5 4.1 7.3 1.3 15.0 4.9 4.5 9.3 1.3 22.0 6.6 6.4 13.6 1.8 31.0 9.9 9.9 16.3 2.8 41.3 8.9 8.9 16.2 2.5 44.9 12.0 12.0 19.9 2.8 53.8 39.7 24.2 11.8 0.8 3.4 26.0 6.9 35.9 19.1 8.1 0.8 2.8 27.2 3.9 26.8 13.1 5.7 1.0 1.1 14.1 3.3 17.9 10.9 4.3 1.6 0.9 8.7 2.5 19.9 10.9 3.9 1.4 0.8 9.3 2.3 14.7 8.9 3.3 1.6 0.7 7.7 2.0 FY08 FY09 FY10 FY11E FY12E FY13E

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Motherson Sumi Systems | 2QFY2012 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Motherson Sumi Systems No No No No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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