BackMotherson Sumi wins mega order to supply parts to Daimler
Motherson Sumi will build factories next to Daimler facilities in the US and Hungary; supplies will start in 2018
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Motherson Sumi Systems Ltd, a Delhi-based auto parts maker, on Wednesday said it will supply a range of parts for future generations of Mercedes-Benz cars, in a deal worth more than ₹ 15,400 crore.
The company, which signed an agreement with Daimler AG of Germany in this respect, said the orders were secured through its subsidiary Samvardhana Motherson Automotive Systems Group BV (SMRP BV).
Motherson Sumi will build factories next to Daimler facilities in the US and Hungary, and supplies will start in 2018.
Motherson Sumi’s shares jumped 3.35% to ₹ 480 on BSE, while the benchmark Sensex fell 0.62% to 27,226 points.
Motherson Sumi is one of the largest manufacturers of rear view mirrors for passenger cars in the world.
It is also dominant in manufacturing IP modules, door trims and bumpers for European original equipment manufacturers, and a leading supplier of plastic components globally.
The deal is likely to help Motherson Sumi double its revenue to more than $10 billion by 2024.
Motherson Sumi Systems chief operating officer Pankaj Mittal said in a phone interview that the company cannot offer any projections at the moment as it is close to announcing its annual earnings on 12 May.
“We will be adding ₹ 3,000 crore every year to our revenues from this deal. So, you can imagine where we can reach from here," Mittal said.
The new plant in Hungary will be located close to Daimler’s operations in Kecskemet, while its US plant will be built in Tuscaloosa in Alabama.
“(Plants) will enable SMRP BV to be closer to Daimler’s vehicle assembly plants, along with capacity expansion in existing plants in Germany as well as new machines, tools and product development efforts," the company said in a statement.
Mittal said the company is in the process of buying land in these countries.
Vivek Chaand Sehgal, chairman of Motherson Sumi, said the preparatory work for the establishment of the two new plants has already begun.
“We are eager to start producing products matching Motherson’s global quality in these two plants," Sehgal said.
Currently, the company gets 50% of its revenue by selling parts to European car makers such as Volkswagen AG, Audi AG and Daimler AG.
The management does not see any weakness in overall demand in Europe.
According to a 22 February report by Mumbai-based brokerage firm India Infoline Ltd, Motherson Sumi expects its volume growth momentum to accelerate and the firm will commission 14 new plants to drive faster execution of orders.
The company has “received close to €9 billion orders since FY13 against their total revenue base of €3 billion", the IIFL report said. It is also setting up a plant in China.
“The management expects even a small market share gain in the two biggest automotive markets, to drive substantial volume growth for the company," the report added.
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