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    Motherson Out of Sync 08.06.2020 Web

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    Amit Mital
    This document provides a summary and analysis of Motherson Sumi Systems Limited (MSS IN), an automotive components manufacturer. It finds that MSS has been facing falling returns, poor asset efficiency, and mysterious subsidiaries. Further analysis uncovers impairments hiding the true financial situation, declining revenue, and poor earnings quality. Accounting checks also reduce confidence in the reported numbers. MSS's European subsidiaries may face additional risks from the COVID-19 pandemic. The document is an independent analysis of MSS's financials and business with the goal of providing forthright discussion and insights.

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    Motherson Out of Sync 08.06.2020 Web

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    Amit Mital
    73 views3 pages
    This document provides a summary and analysis of Motherson Sumi Systems Limited (MSS IN), an automotive components manufacturer. It finds that MSS has been facing falling returns, poor asset efficiency, and mysterious subsidiaries. Further analysis uncovers impairments hiding the true financial situation, declining revenue, and poor earnings quality. Accounting checks also reduce confidence in the reported numbers. MSS's European subsidiaries may face additional risks from the COVID-19 pandemic. The document is an independent analysis of MSS's financials and business with the goal of providing forthright discussion and insights.

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    This document provides a summary and analysis of Motherson Sumi Systems Limited (MSS IN), an automotive components manufacturer. It finds that MSS has been facing falling returns, poor asset efficiency, and mysterious subsidiaries. Further analysis uncovers impairments hiding the true financial situation, declining revenue, and poor earnings quality. Accounting checks also reduce confidence in the reported numbers. MSS's European subsidiaries may face additional risks from the COVID-19 pandemic. The document is an independent analysis of MSS's financials and business with the goal of providing forthright discussion and insights.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    73 views3 pages

    Motherson Out of Sync 08.06.2020 Web

    Uploaded by

    Amit Mital
    This document provides a summary and analysis of Motherson Sumi Systems Limited (MSS IN), an automotive components manufacturer. It finds that MSS has been facing falling returns, poor asset efficiency, and mysterious subsidiaries. Further analysis uncovers impairments hiding the true financial situation, declining revenue, and poor earnings quality. Accounting checks also reduce confidence in the reported numbers. MSS's European subsidiaries may face additional risks from the COVID-19 pandemic. The document is an independent analysis of MSS's financials and business with the goal of providing forthright discussion and insights.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Iii

    Iii India independent insight


    Independent, Unbiased
    Accounting + On-Ground Insights from India

    Motherson Sumi Systems Limited (MSS IN)


    Falling out of Sync

    Nitin Mangal Pranav Bhavsar


    Independent Founder,
    Research Analyst ASA Capital Management
    +91 82 249 00 841 +91 98 98 38 32 98
    [email protected] [email protected]
    SEBI Reg. INH 000004723 SEBI Reg. INA 000011510

    Iii | June 2020 Page 1 of 33 India Independent Insight

    For Exclusive Use of Iii Subscribers


    While Motherson faces the mother of all shocks owing to severe disruption of automotive markets triggered
    by COVID-19 lockdowns, a scrutiny of financials of Motherson and its subsidiaries also provides for a
    shocking spectacle.

    Table of Contents
    Falling out of Sync ..............................................................................................................................3
    Motherson Sumi Systems (MSSL) and the Art of turning around .....................................................3
    Where are the Cash Flows?.............................................................................................................4
    Deteriorating Return ratios Indicate Poor Capital Allocation.........................................................5
    Poor Asset Efficiency .....................................................................................................................6
    The Mysterious Subsidiaries ...........................................................................................................7
    Impairments - Hiding the truth .........................................................................................................15
    Segmental Revenue: Another mystery..............................................................................................17
    Poor Quality of earnings ...................................................................................................................19
    Accounting Checks further distil demeaning confidence .................................................................20
    SMRP BV: Declining ability to withstand covenants...................................................................21
    Diversification: The ultimate resort? ............................................................................................21
    Covid Related Risks could open cracks in the European Subsidiaries .............................................22
    Key Commentary from Major Customers & Global Competitors................................................23
    Appendix ...........................................................................................................................................26
    Disclaimer .........................................................................................................................................33

    Iii | June 2020 Page 2 of 33 India Independent Insight

    For Exclusive Use of Iii Subscribers


    Disclaimer
    This report is prepared by Research Analyst Nitin Mangal (SEBI Registration no. INH000004723) &
    Investment Advisor Pranav Bhavsar (SEBI Registration no. INA0000011510). Nitin Mangal (“Nitin”)
    & Pranav Bhavsar (“Pranav”)along with its officers, employees and their immediate families are
    prohibited from trading any position in the securities profiled in a report thirty (30) days before
    and five (5) days after the publication date where the report involves coverage initiation or a
    change of opinion. Nitin & Pranav have not offered any consulting, financial advisory, investment
    banking or underwriting services to the companies mentioned. Nitin & Pranav do not accept
    research fees from the companies profiled herein. The information contained in this report has
    been obtained from sources believed reliable however the accuracy and/or completeness of the
    information is not guaranteed by Nitin & Pranav, nor does Nitin & Pranav assume any responsibility
    or liability whatsoever. All opinions expressed are subject to change without notification. This
    report is for information purposes only and does not constitute and should in no way be construed
    as a solicitation to buy or sell any of the securities mentioned herein. The intention of this report
    is to provide a forthright discussion of business, accounting and financial reporting issues, as well
    as generally accepted accounting principles and the limits of their usefulness to investors. As such,
    please do not infer from this report that the accounting policies of any company mentioned herein
    are not allowed within the broad range of generally accepted accounting principles, or that the
    policies employed by that company were not approved by its auditor(s). This report may not be
    reproduced in whole or in part without the express prior written consent of Nitin & Pranav.

    Iii | June 2020 Page 33 of 33 India Independent Insight

    For Exclusive Use of Iii Subscribers

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