Audi’s Indian Supplier With 27 China Plants Vows to Keep Jobs
Motherson Sumi has no plan to cut any of its about 150,000 employees at 270 factories across 41 countries.
(Bloomberg) -- Motherson Sumi Systems Ltd., which counts Audi AG, Daimler AG and Volkswagen AG as its top customers, sees the worst of the coronavirus pandemic over in 45 days.
The firm has enough liquidity to manage 1.14 billion euro ($1.2 billion) of debt held by its holding company, top officials said on a call with analysts Wednesday. Motherson Sumi has no plan to cut any of its about 150,000 employees at 270 factories across 41 countries.
“We are only imagining it to be a short-term thing,” said Director Laksh Vaaman Sehgal. The worst-case scenario would be some of these factories shutting for 45 days, similar to its experience in China, he said.
The Noida, India-based maker of autoparts including rear-view mirrors and HVAC systems, has seen its stock lose more than half its value this year due to the global slump in demand for cars and more recently the virus outbreak. Indian authorities as well as other nations have asked companies to enforce work-from-home for private sector employees.
The company, which gets about a quarter of its revenue from Europe, expects its key customers in the region, especially in Germany and Spain, to shut plants for 15-20 days to contain the spread of infection while factories run by its U.S.-based clients continue to function. Motherson Sumi’s 27 plants in China are now functional after shutting down for weeks and all but one are operating at about 80% attendance.
“We have enough of liquidity, both in terms of the cash on the balance sheet as well as the unused credit facilities,” said Chief Financial Officer G.N. Gauba.
Motherson Sumi was set up in 1975 as a partnership between current Chairman Vivek Chaand Sehgal and his mother. The founders, who hold 62% of the company, aren’t considering buying back shares and will preserve cash to support global activities and possible acquisitions, Vivek Chaand Sehgal said.
He said the firm continues to consider acquisitions opportunities such as its $200 million deal for Reydel Automotive Group and the ongoing turmoil in global markets has “dramatically” brought down valuations of some of its targets. It will consider inorganic growth to meet revenue targets, he said.
Motherson Sumi has retained guidance for $18 billion revenue for the year through March 31, reflecting a 40% return on capital. It reported a 4% increase in April-December revenue to 477 billion rupees.
“We are not giving up, we have 11 days to go, watch this space,” Sehgal told analysts on the call. “A lot of companies need help and we are not giving up on targets.”
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