Motherson Sumi shares fall 9% after board okays reorganization plan1 min read . Updated: 03 Jul 2020, 11:58 AM IST
- The auto component major wants to reorganize the company to simplify group structure and to benefit shareholders
- The board has also approved the merger of the principal holding company of Motherson Group with MSSL
Shares of Motherson Sumi Systems Ltd. (MSSL) slumped as much as 9.02% during early trade on Friday after the board approved a group reorganization plan.
At 11:20 am, MSSL was trading at ₹98.35, down 5.11% from its previous close, while the benchmark index, Sensex gained 0.31% to 35955.94.
The auto components major has maintained that move to reorganize the company will simplify group structure and benefit shareholders. MSSL is working on a demerger of domestic wiring harness business from MSSL to be incorporated as a wholly owned subsidiary of MSSL. Subsequently it is to merge Samvardhana Motherson International Limited (SAMIL) into MSSL to consolidate 100% shareholding in Samvardhana Motherson Automotive Systems Group BV (SMRP BV) and to bring all auto component and allied businesses in SAMIL under MSSL.
The board has also approved the merger of SAMIL, the principal holding company of Motherson Group and promoter of MSSL, into MSSL. For every 10 shares held in SAMIL of face value ₹10 each, 51 shares of MSSL of face value Re 1 each would be allotted. MSSL will be renamed Samvardhana Motherson International.
From the beginning of the year, MSSL lost 33% against a fall of 13% in the benchmark index, Sensex. But from the March lows, MSSL gains have doubled, while Sensex gained 40%.
The auto component maker reported 55.3% decline in consolidated net profit to ₹183.38 crore for the quarter ended 31 March against ₹409.96 crore for the same quarter last year. Net Sales fell 12.1% to ₹14,870.32 crore in Q4 March 2020 over ₹16,921.40 crore in Q4 March 2019.