Inside a Motherson Sumi Systems Limited Auto Parts factory.(Photographer: Brent Lewin/Bloomberg)

Motherson Sumi To Invest Rs 2,000 Crore In FY19

Auto components major Motherson Sumi Systems Ltd. plans to invest around Rs 2,000 crore this fiscal to create new capacities to meet its growth target, according to a senior company official.

The company, which in April this year inked a pact to acquire interior components and modules manufacturer Reydel Automotive Group for $201 million (over Rs 1,300 crore), is also keeping its options open for future inorganic growth opportunities.

Motherson Sumi Chief Financial Officer G N Gauba told PTI that last fiscal, the company spent around Rs 3,000 crore on capex, including a significant amount on new facilities in group firm Samvardhana Motherson Peguform (SMP).

When asked about capex for the ongoing fiscal, he said, “Our current estimate is around Rs 2,000 crore but depending upon some new acquisition happening or some other factors, like more orders, we will build more capacities.” The capex, he said is mostly for growth and not for replacement. “Our experience has been that 60-70 percent of the capex goes into building new capacities, expansion and growth,” he added.

Also read: Reydel Buyout Will Help Motherson Sumi Diversify Customer Base, Say Brokerages

Commenting on the company’s foreseeable acquisitions, Gauba said, “That is a continuous process...For so many years we keep on doing evaluations based on customers we have.” For now, the company is awaiting final regulatory approvals for the Reydel acquisition, he added.

The acquisition is Samvardhana Motherson Group’s 21st buy till date. With it, the company intends to further bolster its offerings in the automotive interior space as Reydel manufactures interior components and modules for global automotive customers.

Commenting on the overall growth outlook, Gauba said, “As we build new plants and new organic capacity, we will continue to grow.” As the company is a 100 percent supplier to automobile companies directly, a lot would depend on the growth of the auto industry, he said, adding that the company is on track to achieve its target of achieving $18 billion by 2020.

In 2017-18, Motherson Sumi’s consolidated total revenue from operations for the year stood at Rs 56,521.3 crore. It was at Rs 43,157 crore in 2016-17. The company’s fourth quarter consolidated net profit was up 4 percent to Rs 2,259.9 on a yearly basis.