Motherson Sumi to cut dependence on auto parts biz, tap four other sectors2 min read . Updated: 16 Sep 2020, 06:26 PM IST
- The Noida-based company aims to generate around 25% of the total revenues from these new business ventures in the next five years and will look at acquisitions and joint ventures to grow in these sectors
NEW DELHI: To reduce dependence on the automotive component manufacturing business, Motherson Sumi Systems Ltd plans to diversify into sectors like aerospace, defense, healthcare and information technology, a senior executive of the company told Mint.
The Noida-based company aims to generate around 25% of its total revenues from these new business ventures in the next five years, and will look at acquisitions and joint ventures to grow in these sectors.
According to Laksh Vaaman Sehgal, director, Motherson Sumi Systems, the company will unveil its plans regarding the new businesses in November.
“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. 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," Sehgal told Mint.
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 Limited, the holding company, will be merged with the existing organization, which will include the rest of the automotive component businesses.
After the new organization structure receives approval from regulatory authorities, Motherson Sumi Systems will be renamed Samvardhana Motherson International Limited.
The senior management of the company is already exploring opportunities to form joint ventures and other forms of collaboration with companies in the 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.
The company reported a consolidated net loss ₹1191.65 crore for the June quarter, as result of the shutdown of its factories in India and other markets due to the outbreak of the Covid-19 pandemic. Revenue during the quarter declined by 49.48% year-on-year to ₹8431.23 crore due to a substantial fall in the turnover of the domestic business.
Vehicle manufacturers and their component suppliers had to close their factories from 22 March, following the lockdown announced by the union and state governments to contain the spread of the Covid-19 pandemic.
The company is optimistic that gradual improvement in vehicle sales across the globe and the upcoming festive season in the domestic market will improve the financials of its automotive business.