Motherson Sumi: The Rs 15,400 crore Daimler deal

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Business Mantra Newsdesk | New Delhi

Noida-based auto component maker Motherson Sumi Systems Ltd (MSSL) stunned its peers when it announced that it had closed a Rs.15,400 crore deal with Daimler AG to supply a range of parts for future generations of Mercedes-Benz cars, the biggest such deal in India till date.

For MSSL, India’s largest auto component maker, the Daimler deal has been a booster shot—one that will help it beef up its business in North America and more than triple its revenue to $18 billion (Rs.1.15 trillion) by 2020 from $5.5 billion in end-March 2015.

If this target is met, MSSL will become bigger than some of the car and motorcycle makers in the country, its clients. For example, Maruti Suzuki India Ltd, the largest car maker in the country, had reported revenue of $8 billion for the year ended 31 March, while Hero MotoCorp Ltd, the country’s largest two-wheeler manufacturer, generated revenue of $5 billion.

According to Mumbai-based brokerage Emkay Global Financial Services Ltd’s report of 18 May, the target, if achieved, would make MSSL “an auto component behemoth by 2020”.

The man behind MSSL’s ambitious plans is chairman Vivek Chaand Sehgal.Forbes magazine estimates his net worth at $2.7 billion. At 58, the Australian citizen who lives in Dubai and has the majority of his businesses based out of Europe and India, dismisses concerns about the goals being over-ambitious.

To silence the naysayers, Sehgal points to MSSL’s track record: over the past 15 years, it has registered multi-fold growth in revenue from Rs.100 crore in year 2000 to $5.5 billion (Rs.35,000 crore) currently, repeatedly beating its own five-year targets.

Photo Caption – A file photo of workers assembling wire harnesses at the Motherson Sumi Systems Ltd. wiring harness plant in Faridabad.

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