Staying ahead of the curve: Motherson Sumi's success mantra

 

Motherson Sumi acquires Hungarian auto parts maker Abraham es Tarsa

  Business Standard is republishing an excerpt from a 2015 story  which chalks out the grand journey of Motherson Sumi

When it started in the mid-1970s, automobile component manufacturer Motherson Sumi Systems Ltd (MSSL) was a trading company. It was only when Maruti Suzuki was formed in the early 1980s that Chairman Vivek Chaand Sehgal floated the automotive initiative. Sehgal, now a veteran in this space with experience spanning more than three decades, recalls that there were around 600 vendors vying for Maruti Udyog's wiring harness business. What turned the game in favour of his company was speed. "I had a friend working on electric parts in Noida. When I told him that I wanted to localise this particular component, he said it would take at least 15 days. We did not have that time. We got down to work and late into the night we managed to finish the moulding device. The JV was formed in a week," Sehgal says.

 

What has enabled Sehgal to deliver success since then is his persistent ability to stay ahead of the curve. In 1999, MSSL decided to shed its dependence on one client or geography. It also resolved to grow its content per car and be a one-stop solutions provider for OEMs, rather than a manufacturer of individual components and products. To achieve the scale it had in mind, MSSL had to look beyond India. Sehgal says, "By 1998-99, what we saw was that every growth forecast made about the passenger vehicle industry or two-wheeler sales was coming true. We decided to go all out and expand. But to do that we realised we not only had to supply but also own technology." He had no option but to go in for acquisitions overseas, making his first such purchase in 2002.

MSSL has since spotted opportunities during the downturn, made propitious acquisitions - Visiocorp in March 2009 (now renamed Samvardhana Motherson Reflectec), Peguform in November 2011 (now renamed Samvardhana Motherson Peguform), and Scherer & Trier at the end of 2014- and more than doubled its turnover in five years.

Overall, between 2002 and 2015, MSSL  made 15 acquisitions. Four of these - Stoneridge Inc, Magneti Marelli Shock Absorbers, Minda Schenk and Scherer & Trier - were made in 2014 itself.

The added benefit of the acquisitions was that they enabled MSSL to expand its core business of wiring harnesses abroad. "Setting up a greenfield facility in a new market is difficult. But in the countries where we gained presence overseas through our acquisitions, it became easier for us to establish additional units," Mittal adds. Currently, MSSL has over 150 manufacturing units spread across 25 countries, and new units are being put up in Germany and the US. The company plans to invest around Rs 800 crore each year for the next two years in expanding production capacity across countries.

Sehgal says MSSL believes in harnessing multiple growth engines to drive expansion. To this end, apart from acquisitions, the company has forged as many as 26 collaborations.