Motherson Sumi Open to Buying More Firms Abroad

Motherson Sumi Systems Ltd. is open to buying more companies abroad to expand its business, including into the higher-margin aerospace-parts business, the Indian auto-parts maker's chief executive said.

Motherson Sumi said March 6 it had completed the purchase of the rearview-mirror business of U.K.-based Visiocorp PLC for about €25 million ($32.5 million), jointly with group company Samvardhana Motherson Finance Ltd.
"Visiocorp is a good stepping platform for us for future acquisitions," Laksh Vaaman Sehgal told Dow Jones Newswires late Friday.

Indian auto-parts makers such as Motherson Sumi, Bharat Forge Ltd. and Amtek Auto Ltd. are acquiring overseas companies to gain new technology, enter new markets and boost sales.
The acquisition of Visiocorp includes "product rights worldwide" and global ownership of patents and assets, Mr. Sehgal said.

"So, that (the acquisition) allows us to grow and develop ourselves as a global tier-1 player for the automotive industry and with the freedom to grow in any country or geography."
Motherson Sumi, the flagship company of the Motherson Group, has more than 90 plants and offices worldwide. It is 27.3% owned by Sumitomo Wiring Systems Ltd., a unit of Japan's Sumitomo Electric Industries Ltd.

Japanese trading and investment company Sojitz Corp. holds another 9.6% in Motherson Sumi, which counts BMW AG, Daimler AG, Ford Motor Co. and Maruti Suzuki India Ltd. among its customers.

Mr. Sehgal said the company is keen to enter the aerospace component manufacturing business. "We are an automotive-focussed group, but if there are any other opportunities and synergies through aerospace, we are more than willing to look at that."
Companies such as Amtek Auto have said they plan to diversify into the aerospace business to reduce the risk of focussing on one sector.

"In 2005 we set a target that Motherson Sumi will be a $1 billion company by (March) 2010 and now, with this acquisition, we have already done that" in the current financial year ending March 31 2009, Mr. Seghal said.

The company's total revenue is now between $1.5 billion and $1.7 billion on a projected annualized basis, he added. The effects of the rearview-mirror business will reflect from March, though the full impact will come two years later after the integration of the business, he said.
Exports contribute about 40% of revenue currently, Sehgal said, but he declined to give an outlook for the next financial year ending March.

"It is a difficult time in the European and American markets .. I don't see a huge rise in export numbers," he said. "But, there is an opportunity to get into new (Indian) models which are going to be exported worldwide."