Motherson Sumi Systems Ltd (MSSL) is looking for an acquisition in Europe to complement its main automotive business, a top executive said.
Chief financial officer G N Gauba told just-auto on Friday: “We are looking for an acquisition driven out of Europe. We are studying the feasibility of such an acquisition including economies of scale, size of acquisition etc.”
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But he declined to comment further. “It is too early to comment on the stage and time frame of the acquisition,” he added.
The company has previously announced it will spend INR400–500 crore (INR4-5bn or about US$80–100m) both to expand capacity here and the new plant planned for Europe.
It plans to spend around INR300 crore (INR3bn; US$60m) on its Indian plants and rest on the European plant.
“The fresh investment would go towards expanding the capacity at our three plants in Chennai, Haldwani (Uttrakhand) and Bangalore as [orders are coming both] to India as well as to our European arm Samvardhana Motherson Reflectec (SMR),” Gauba said.
Motherson Sumi is also building a second mirror plant in Hungary. “We already have [the original] plant in Hungary and this is going to be our second plant which is likely to commence production by March 2011.” Gauba added.
The supplier has plants in the UK, Spain, France, Hungary, US, Mexico, South Korea, China and Australia. It has recently won contracts to supply wiring harnesses and plastic parts for some of the new, locally-built car models launched here in Indiaby OEMs including Nissan, Toyota, and Maruti Suzuki.
Meanwhile, European subsidiary SMR, known prior to acquisition as Visiocorp, has won many new orders from OEMs in Europe. The company was acquired by MSSL in March 2009 for US$31.63m and renamed SMR.
Though demand for new vehicles in India grew 35% in the first four months of the current fiscal year thanks to sound economic prospects and new models, auto demand in Europe, a key market for Motherson Sumi, is likely to slow due to the removal of government incentives to purchase new cars.
This was reflected in first quarter revenues which grew 53% in India but only 24% at the international operations.
Mahindra & Mahindra, Tata Motors, Maruti Suzuki and Hyundai are among Motherson Sumi’s major car OEM customers.
