Motherson Sumi plans to invest Rs2,000 crore this fiscal to build new capacities
Motherson Sumi Systems is awaiting final regulatory approvals for the acquisition of Reydel Automotive
New Delhi: Auto component major Motherson Sumi Systems Ltd (MSSL) plans to invest around Rs2,000 crore this fiscal to create new capacities to meet its growth target, according to a senior company official.
The company, which in April this year inked a pact to acquire interior components and modules manufacturer Reydel Automotive Group (Reydel) for $201 million (over Rs1,300 crore), is also keeping options open for future inorganic growth opportunities.
MSSL CFO G.N. Gauba told PTI that last fiscal, the company spent around Rs3,000 crore on capex, including significant amount on new facilities in group firm Samvardhana Motherson Peguform (SMP).
When asked about capex for the ongoing fiscal, he said, “Our current estimate is around Rs2,000 crore but depending upon some new acquisition happening or some other factors, like more orders, we will build more capacities”.
He further said, “This is going to be growth capex largely and not replacement capex. Our experience has been that 60-70% of the capex goes into building new capacities, expansion and growth”.
Asked if the company is actively scouting for acquisitions, Gauba said, “That is a continuous process...For so many years we keep on doing evaluations based on customers we have”.
At present, he said the company is awaiting final regulatory approvals for Reydel acquisition. The acquisition is Samvardhana Motherson Group’s 21st buy till date. With it, the company intends to further bolster its offerings in the automotive interior space as Reydel manufactures interior components and modules for global automotive customers.
On the overall growth outlook, Gauba said, “As we build new plants and new organic capacity, we will continue to grow”.
As the company is a 100% supplier to automobile companies directly, a lot would depend on the growth of the auto industry, he said, adding that the company is on track to achieve its target of achieving $18 billion by 2020.
In 2017-18, MSSL’s consolidated total revenue from operations stood at Rs56,521.30 crore. It was at Rs43,157.03 crore in 2016-17.
The company’s consolidated net profit was at Rs2,259.93 crore as against Rs2,172.38 crore in the previous fiscal, up 4%.
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