BackMotherson aims to diversify operations
In the next five years, around 23-25% of our revenues will be diversified out of non-automotive, says Laksh Vaaman Sehgal
PremiumMotherson Sumi Systems Ltd expects to garner as much as a quarter of its revenue from new segments such as aerospace, defence, healthcare and information technology over the next five years as part of a strategy to reduce its dependence on the automotive component business that is facing the brunt of turmoil caused by the covid-19 pandemic.
Laksh Vaaman Sehgal, director, Motherson Sumi Systems said in an interview that the company will scout for acquisitions and joint ventures to grow in its new businesses. The Noida-based company will inform investors in November about its plans for these businesses, he said.
“We are envisaging that in the next five years around 23-25% of our revenues will be diversified out of non-automotive; so that we have other avenues of growth," Sehgal said. “We will build on the same strength that we have done in the automotive space. To reach the target of 20-25%, there has to be acquisitions as well and we will use similar strategies that we used in automotive."
In August, Motherson Sumi announced a new corporate structure, wherein the domestic wiring harness business will be demerged into a separate entity, which will be subsequently listed. As part of the new structure, Samvardhana Motherson International Ltd, the holding company, will be merged with the existing organization that will include the rest of the auto parts business.
After the new organization structure is approved by regulators, Motherson Sumi will be renamed as Samvardhana Motherson International Ltd.
The company’s senior management has already begun exploring joint ventures and other forms of collaboration with companies in aerospace, IT, healthcare and logistics space.
“All of these verticals have been chosen particularly because we have strength in these fields and is linked to what we are already doing. So, we believe each of these verticals have the potential to become a large part of our plans," said Sehgal.
“We have announced our corporate restructuring which will create one common platform and that will also enable us to go for more joint ventures. We are open to partnerships and collaborations with companies willing to come to India. Motherson can make things easy for companies looking to do contract manufacturing in India and we can offer them flexible and convenient services," he added.
Motherson recently raised ₹2,130 crore through unsecured non-convertible debentures, which will be utilized to repay costly loans taken earlier.
The company reported a consolidated net loss ₹1,191.65 crore for the June quarter as it had to shut factories in India and other countries due to the pandemic. Revenue during the quarter fell 49.5% year-on-year to ₹8,431.23 crore due to the sharp impact on its domestic business.
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