Detailed Rationale

Crisil Ratings has reaffirmed its ratings on the bank facilities of Motherson Sumi Wiring India Limited (MSWIL) at ‘Crisil AA+/Stable/Crisil A1+’.

 

The ratings continue to reflect established market position of MSWIL in the wiring harness segment of domestic automotive components industry, long term relationships with most major auto original equipment manufacturers (OEMs), robust financial risk profile and strong parentage of Samvardhana Motherson International Limited and Sumitomo Wiring Systems. These strengths are partially offset by single product portfolio of MSWIL in automotive component industry, geographical concentration in the domestic market and exposure to cyclicality in auto sector.

 

The revenue is expected to increase by 8-10% in fiscal 2026. The growth in revenue will be driven by an increase in the content per vehicle on account of premiumization. The portfolio mix, with SUV share increasing, is another driver of growth. MSWIL revenue has continued to register healthy growth in fiscal 2025, registering a growth of ~12% to Rs. 9300 crores, compared to Rs. 8300 crores in fiscal 2024. The growth was backed by healthy demand in the Indian automotive industry.

 

Operating profitability is expected to sustain at around 11-12% in the medium term, due to an increase in revenues and better absorption of fixed costs. The localization of component manufacturing also contributes to the margin improvement.  The margins in fiscal 2025 were 10.7% compared to 12.2% in fiscal 2024 as the company doesn’t capitalize costs related to capex as a policy. The accruals stood at Rs. 209 crores in fiscal 2025 due to high dividend payout of Rs. 574 crores including interim dividend of INR 221 cr  declared in the previous fiscal. The accruals are expected to be above Rs. 500 crores in fiscal 2026, and payout of above 40% is expected to be maintained.

 

The company has planned a capex of Rs. 200-220 crores this fiscal, funded entirely by internal accruals. This would be utilized for growth, expansion, productivity, quality improvement, as well as the maintenance and replacement of the assets which have lived their useful life.

 

The company set up 3 new plants in Pune, Gujarat and Haryana in fiscal 2025. The capex had been incurred as the company had reached capacity utilization of 80-90%. The Pune plant is expected to fully ramp up this fiscal with Gujarat and Haryana to ramp up by early next fiscal which will lead to higher revenue growth in fiscal 2027. The new facilities will cater to both ICE as well as EVs. The plans are in line with the company’s policy of adding capacity as soon as the capacity utilization hits 80-85% subject to the confirmation of order.

 

MSWIL is focused on organic growth through increasing content per car. With domestic wiring harness segment of automotive components industry dominated by few players and MSWIL being the market leader, opportunities for inorganic growth through acquisitions are limited. Hence, leverage of MSWIL is expected to remain low.

Analytical Approach

Crisil Ratings has taken a standalone approach for MSWIL.

Key Rating Drivers - Strengths 

Established market position in domestic wiring harness industry

MSWIL has an established market position and is the market leader in domestic wiring harness segment. Its dominant market position is further supported by established long term relationships with most major auto OEMs in India. MSWIL is focused on organic growth in domestic wiring harness industry. The revenue is expected to increase by 8-10% in fiscal 2026. The growth in revenue will be driven by an increase in the content per vehicle on account of premiumization.

 

Diversified revenue profile across customers and vehicle segments

MSWIL’s revenue profile is well diversified across various domestic customers and segments, with top 10 customers contributing around 70%-80% of overall revenues. Healthy customer diversity is expected to moderate impact in case of slowdown in demand.

 

Further, MSWIL’s also enjoys moderate diversification in vehicle segment with around (61%) of revenues being contributed by Passenger Vehicles (PV) segment and remaining revenues being contributed by Commercial Vehicles, 2 wheelers, off road vehicles etc.

 

With auto component sector revenues expected to grow by 7-9% this fiscal, MSWIL is expected to benefit from the same. In the previous decade, MSWIL’s revenues have grown by CAGR of more than 10% whereas PV segment production has grown at around 2%.

     

Strong parentage of Samvardhana Motherson International Limited and Sumitomo Wiring Systems

MSWIL enjoys strong parentage of Samvardhana Motherson International and Sumitomo Wiring Systems (SWS) which holds 33.4% stake and 25.1% stake in MSWIL respectively. SAMIL and SWS both have strong financial flexibility backed by robust financial position.

 

Further, MSWIL is also backward integrated with SAMIL and a significant percentage of raw materials and components are being sourced directly from parent companies SAMIL and SWS. MSWIL also utilizes manufacturing facilities of SAMIL as per lease agreement at the time of group reorganization and demerger of domestic wiring harness business from SAMIL. 

 

Strong financial risk profile 

Financial risk profile of the company is strong backed by minimal long term borrowings and repayment obligations in the medium term. Capital structure to remain robust with gearing expected to be below 0.1 times. The networth of the company is expected to improve Rs. 2100-2500 crores over the medium term due to healthy profitability. The TOL/TNW is expected to be below 1 times. With 3-4 players dominating the domestic wiring harness market and opportunity for inorganic expansion through acquisitions remaining low, leverage is not expected to materially increase.

Key Rating Drivers - Weaknesses 

Product and geographic concentration

MSWIL derives its revenues from a single product line i.e. wiring harnesses. The product concentration exposes MSWIL’s operating performance to demand moderation in auto sector. Also, entire revenues are generated from sales within India, resulting in a concentration risk in case of an economic downturn in the domestic market.

 

Further, in case of slowdown in auto sector demand, premiumization of passenger vehicles may reduce which may also impact operating performance of MSWIL.

 

Exposure to cyclicality in demand in automobile industry

MSWIL’s revenues, though diversified, remains closely aligned with performance and demand in automobile industry. Due to dependence on auto OEMs, MSWIL’s business prospects are exposed to cyclical demand patterns inherent to automobile industry and ability of auto OEMs to sustain their operating performance.

Liquidity: Strong

MSWIL has strong liquidity driven by expected cash accruals of more than Rs. 500 crores per annum in fiscal 2026 and fiscal 2027 and cash and cash equivalents of Rs. 238 crores as on March 31, 2025. MSWIL also has access to fund-based limits of Rs. 600 crores, with nil utilization on average (including NFB limits) over the 12 months ended July 2025. The company has negligible long-term debt and plans to incur capex of around Rs. 200 crore per annum funded by internal accruals. Crisil believes the company has sufficient accruals to finance its capex requirements. Its unutilized bank lines are more than adequate to meet its incremental working capital needs over the next one year.

 

ESG Profile:

Crisil Ratings believes that MSWIL’s Environment, Social, and Governance (ESG) profile supports its already strong credit risk profile.

 

Key ESG Highlights:

• MSWIL has set a goal to become carbon net zero across its operations by 2040 (with baseline of FY 2022-23).
• The company’s performance on key environmental parameters such as intensities of Scope 1 and 2 emissions (~2,680 kg CO2E per Rs crore of revenue), energy consumption (~4 MWh per Rs crore of revenue), and waste generation was better than its listed peers. The waste recycling rate was high at 100% in fiscal 2025.
• The company reported nil lost-time injury frequency rate and fatalities of its workforce in fiscal 2025, 100% of its workers were trained in skills and safety, and there were nil stakeholders (customer, value chain partners and local communities) complaints.
• The gender diversity of workers was relatively high at ~47% and the attrition rate of permanent workforce was lower than peers at ~8%
• MSWIL’s governance structure is characterized by ~50% share of independent directors on the Board, moderate representation of women directors (~20%), 100% investor complaints redressal rate and presence of extensive financial disclosures.

Outlook: Stable

Crisil Ratings believes that MSWIL's credit profile will continue to remain robust backed by established market position in domestic wiring harness industry alongwith strong parentage of Samvardhana Motherson International Limited (SAMIL) and Sumitomo Wiring Systems (SWS).

Rating Sensitivity Factors

Upward factors:

• Increased diversity in product profile and geographic presence
• Significant ramp up of operations with cash accruals sustaining above Rs 1000 crore

 

Downward factors:

• Significant deterioration in business profile marked by decline in revenue and/or weakening of operating margins leading to annual cash accruals of less than Rs 250 crore for prolonged time
• Sharp deterioration in financial risk profile due to any large capex or debt funded acquisition or deterioration in liquidity profile.

About the Company

MSWIL was established on July 02, 2020 and started operations from April 01, 2021 as a result of reorganization of Samvardhana Motherson International Limited (erstwhile Motherson Sumi Systems Limited) wherein the automotive wiring harness business for Indian OEMs was demerged from the parent company and established under MSWIL.

 

MSWIL is a joint venture with Sumitomo Wiring Systems, Ltd., a global leader in the manufacture of wiring harnesses, harness components, and other electric wires. The company is a full system solutions provider to its customers and is equipped to cater to their requirements in every step of the supply chain from the initial product design and validation, through tool design and manufacturing, finishing, and processing, assembly, production of integrated cutting edge Electrical & Electronic Distribution Systems for the power supply or data transfer across vehicles to sequencing in-line supplies.

 

MSWIL operates through its 30 facilities, consisting of manufacturing and assembly sites and technical centres across India and employs more than 45,000 people.

About the Group

Samvardhana Motherson International Limited (SAMIL; formerly Motherson Sumi Systems Limited (erstwhile MSSL)), the flagship company of the Samvardhana Motherson group, was incorporated as a JV between erstwhile Samvardhana Motherson International Ltd (erstwhile SAMIL) and SWS in 1986.

 

On July 02, 2020, board of directors of erstwhile MSSL and erstwhile SAMIL have approved reorganization of business which entails demerger of the domestic wiring harness business from erstwhile MSSL into a new company, with similar shareholding structure as that of MSSL and subsequent merger of erstwhile SAMIL into erstwhile MSSL with the merged entity renamed as SAMIL. SAMIL now holds 100% stake in Samvardhana Motherson Automotive Systems Group BV ('SMRP BV, rated 'BB/Stable' by S&P Global Ratings'). Besides, SAMIL also holds 33.4% stake in the demerged DWH business housed under newly created entity Motherson Sumi Wiring Harness Limited (MSWIL) subsequent to completion of the transaction.

Any other information: Not Applicable