A lot of other acquisitions are being looked into by Motherson and we believe that when the timing is right and the price is right, we will go for it, says Vivek Chaand Sehgal, Chairman, Motherson Sumi.
I have been tracking Motherson Sumi for almost 12 years. The first time you had announced a big European acquisition, one of the analysts told me that this is a company which will continue to grow, gain size, gain clients, gain technology via acquisition. So, what has the company done this time?
Three acquisitions were pending before Covid struck last year. One of these has fructified. Plast Met is a very important company that we have acquired and it is based in Turkey. It has two plants and this is the 42nd country where we have gone in. Turkey produces about 150,000 odd cars every month and it is a very important market to get into. We have a very reliable partner over here. We have bought 75% of this company.
Earlier when you used to do acquisitions, most of the analysts were concerned over the size. SMP SMR was relatively bigger, then you had the US acquisition which was also decent in size. Motherson has grown in size and now you can easily fund these decent size acquisitions?
Yes, you are right but one has to keep his head when there are a lot of acquisitions around you. We have to be focussed on what is important for our customers and what they need from us. We do not look at the size or the opportunity in the other sets. We work towards satisfying our customers’ needs and that has always held us in very good esteem.
It was a pending acquisition that we should have done last year but then the Covid outbreak happened and we were successful in working through these troubled times. A lot of other acquisitions are being looked into by Motherson and we believe that when the timing is right and the price is right, we will go for it.
How are the overall markets doing right now in Europe and in Turkey?
The markets are doing very well, the demand is very robust. The car makers are struggling to supply what is required because of shortages of parts. But there is a consistent demand which the customers want us to meet and so the demand is huge. There is a lot of footfall and in that sense, it is a struggle between trying to fulfil the demand and taking care of the constraints that are in the supply system.
What is the supply chain situation now?
It depends on which country you are talking about. Covid has not really been eradicated and there are some trouble spots. It could be shipping, it could be freighting, it could be a lot of things which are causing this particular disruption. But over time, people are getting used to it. We are supplying all over the world and we have not seen any reduction in numbers per se, but there are definitely some restraints and one has to be on his toes most of the time to respond to the challenges that the car makers are giving us.
How big are the challenges now that the commodity prices are particularly high?
The whole mindset has changed. People want to have their own personal mobility — be it a two-wheeler, three-wheeler or a four-wheeler. They do not want to take the risk of travelling in public transportations, For another year-and-a-half to two years, people are not going to use public transport too much. So the demand is robust and the rise in raw material prices will definitely be passed on but eventually they would all stabilise.
