The One Strategy That Has Helped Motherson Sumi Weather The Viral Storm
Motherson Sumi Systems Ltd., one of the world’s largest makers of automotive wiring harnesses and mirrors for passenger cars, has started to see business normalise in most of the 41 countries it operates in, according to Chairman Vivek Chaand Sehgal.
That’s because the auto parts maker—which counts Audi AG, Daimler AG and Volkswagen AG as its top customers—has always followed the 'Vocal for Local’ ideology, popularised after Prime Minister Narendra Modi's speech on 'Atmanirbhar Bharat' to tide over the Covid-19 crisis. “We are kind of vindicated,” Sehgal said, as he explained that the company has been producing locally in all countries it is established in.
That spared the company some pain when the coronavirus outbreak came to the forefront, disrupting global supply chains, he said.
Motherson Sumi's global presence also helped it prepare for the different stages of disruption in different countries. “We had a premonition of what's going to happen. We saw it happen in Europe, America, Mexico and in India on March 24," he said. "In the same manner when things were opening up, things opened up in China first, we could see the demand coming back. We could relive the whole thing,” he said.
According to Sehgal, the company is witnessing a rise in demand for automobiles as the world is fueled by the need for personal mobility. “We are currently working at 100-120% capacity across the 27 plants [in China] because the demand is so huge.” On the other side of the world, in the U.S., even bicycles are sold out, he said.
India, too, is seeing a “great amount of pull” as the demand for personal mobility is aided by the switch to the stricter emission norms, he said.
The global auto ancillary company said it is receiving “very much strong” orders in India and the rest of the world, despite companies producing only certain models that sell more. “We haven’t has the plants at 100% capacity but I think we are in a sweet spot because all the two-wheelers and four-wheelers, whatever is being produced, we have to be there because wiring is an integral part of the business,” he said.
India accounts for 11% of the company’s total revenue, the chairman said, adding it is the preferred ratio for the global company, with all due importance to the country’s market.
Even in terms of exporting, the company’s ideology is clear. If exports to a country increase to more than 10%, the company would rather open a branch in that nation, Sehgal said.
The company is in the process of restructuring its group business through which it will demerge its domestic wiring harness business into a new entity that will eventually be listed. According to Sehgal, it is also looking to branch into sectors other than automobiles, using the expertise and strengths it has garnered over the last 45 years. The company plans to procure 25% of its revenue from non-auto business over the next five years.
“For the last 45-47 years, we have only focused on automotive, so it's high time we start to look at other things.”
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