Home / Auto News / Many opportunities to pick up inflation-hit suppliers: Vivek Chaand Sehgal
Listen to this article

NEW DELHI : Automotive parts maker Samvardhana Motherson International Ltd, which recently separated its domestic wiring harness division, is betting on expanding its aerospace business and seizing opportunities to acquire diverse businesses to support customers, chairman Vivek Chaand Sehgal said in an interview. Edited excerpts:

Is the high-inflation scenario presenting you with acquisition opportunities, given smaller suppliers would be finding business unviable?

Yes, we are getting a lot of calls from our customers asking us to look at customers to support them. Many of the smaller companies are in trouble, but the larger ones are struggling for reasons unique to them. We are inundated by requests from the customers to support their supply chain. We will definitely look at acquiring them if it makes sense for our group. And I think this is a good way to grow. The reason why 29 of our acquisitions are doing very well is that they are all supported by the customer.

How has the China + 1 theme to de-risk the supply chain played out for you?

Actually, the trend is quite different. It is onshoring rather than offshoring. We are probably much better off than our peers because we are in 41 countries, and with the kind of logistics disaster that has happened in the past six-eight months. We are much better off because we are sourcing in the country where the demand is, and more and more people will go in that direction. So I don’t think the low-cost thing played out to a huge advantage. In fact, with the war going on in Europe, many companies faced a lot of problems because many had wiring harness companies based there, and then suddenly, they had to move out from there. So I think the world is constantly changing. And I think the best way is to have multiple channels open for the industry. And that’s what we are doing. That’s the way we are thinking about the future in the next three-four years.

What’s your view about entering segments beyond the three key verticals of wiring harnesses, vision systems and polymers, such as electric vehicle batteries? Will you look at acquisitions in these new areas?

Definitely, a lot of collaboration is needed because these are very interesting and wide fields. So we need collaborations and a lot of investments. We have already announced four new verticals that we will focus on in our five-year plan, which is logistics—in which we have a joint venture with a Japanese company, besides growing our logistics business in India.

The second is medical devices. We do a lot of medical equipment, and we want to grow that.

We are into information technology and related services, and now the aerospace industry.

We’ve just acquired the Bengaluru-based CIM Tools. We believe it is time to take advantage of what we have built on the automotive side and move into new verticals.

On batteries, electric vehicle components, etc., our strategy is not to have a strategy. We are focusing on our customers, and if we have a strategy, it’s going to be at variance with our customers.

Do you think the conflict in Taiwan could snowball into a large semiconductor supply disruption?

Taiwan is a very important country for semiconductors. But automotive companies have been seeing various geopolitical disruptions playing out for the last two years, and they have taken a lot of care to ensure that their sourcing is happening, and that’s why you can see a good jump in the automotive numbers.

So I don’t think it will get derailed by these conflicts or blips. I’d believe that carmakers are perhaps much better positioned and that the hit will be more to the electronic side.

What’s your vision for building out the aerospace part of your business from about 12.5% of your non-auto business at present. How big is the opportunity?

Aerospace is going to be a big part of our growth plans. It is very similar to the automotive industry—the kind of rigour and the kind of sense of responsibility that you have in automotive also applies in a more magnified way in the aerospace industry. So we are a natural choice for the aerospace companies to educate us and ask us to move into bigger and bigger spaces.

Aerospace by itself will be a $2-3 billion part of our turnover in the coming time, and we are looking at a lot of acquisitions over there also. We’ve already grown CIM Tool’s booked business from 1,500 crore to 2,500 crore since our acquisition was announced.

Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout