Auto component maker Mohterson Sumi is looking at getting more exposure in passenger cars and other affiliates in automation in the next few years, said Laksh Vaaman Sehgal, director of the company.
The company is looking at more exposure into not just the passenger cars but also all the affiliates in the automotive world and as well as some other sectors, which are just stuck to the automotive but will give Motherson another exposure and drive future growth of it for the next five year period, said Sehgal.
"The ability to understand turbulence and then take it to your advantage is one of the great things that our team does very well," said Vivek Chaand Sehgal, chairman, Motherson Sumi.
"I think the other very strong point that we have is we are agnostic to half the things that people are looking at for disruptions," he said.
If you map the annual growth trends, you have grown your business from revenues of $1.5 billion in FY10 to an impressive $9.6 billion in FY18, that is a 6X growth in eight years. Laksh Vaaman Sehgal, you are the future of the company, what is your vision for the next ten years?
Laksh Vaaman: The next ten years are going to be super-exciting with all the changes and things that are happening in the automotive industry. There is going to be a lot of opportunities for us at Motherson but we are focused on our five-year goals.
So we are quite focused on 2020 target at the moment. We still have a little way to go and all the teams are quite focused on making sure that we can deliver that target for 2020. Once we get closer to 2020 target, we will set the next five-year plan for 2025 and hopefully, that will give you good colours to where we want to go in that five-year period.
You have a target of around $18 billion in terms of revenue by 2020. You can realistically achieve $11-12 billion through the organic route by 2020. That means that the remainder of that will have to come via acquisitions, isn’t it? What geographies and what areas are you looking at to achieve this target?
Vivek Chaand: The ability of Motherson is to give you a topline with the bottomline. The newspapers have been right three-four years ago telling you that we would be acquiring companies which would have easily given us the topline. It is all about $18 billion where we can have the visibility of delivering 40 percent growth to our investors.
I think one of the biggest things that we are very grateful for is that our investors are very well attuned to the fact that it is not a topline growth company, it is actually a cash in the bank or the ability to have a visual identification for the topline and bottomline.
We have a lot of companies which are in the pipeline that we have to acquire if the things are going right and if we had the visibility. However, I would have no shame or hesitation to come back after five years and tell the investors that sorry I didn’t find anything which was worthwhile for me to bring into the group and I cannot see the visibility of the bottomline.
Hence, I am sure, my investors would be very happy to see that we may not have hit bang on $18 billion but we definitely have met our bottomline targets. So it is all about a combination of these two things.
If it was only topline, believe me, it is relatively very easy in these turbulent times. It is very easy to go and pick up companies just for the topline.
The industry dynamics are changing rapidly. Electrification of vehicles, a slowdown in consumption of luxury cars, achieving more content per vehicle is the need of the hour, how are you going to adapt to these changes?
Laksh Vaaman: We at Motherson are focussing on three Cx15, that is no customer, no component, no country should be more than 15 percent of our business. We have also announced that we are moving into rolling stocks, we are moving into different verticals as the times progress.
So after this 2020 period, we will be looking at getting more exposure into not just the passenger cars but also all the affiliates in the automotive world and as well as some other sectors, which are just stick to the automotive but will give us another exposure and drive future growth of Motherson for the next five year period.
You are absolutely right, these are some very interesting times but if you can see the history that we are here to talk about a little bit of this 25 years. In the last 15 years, we have seen some of the most tumultuous times in recent history and that has thrown up a lot of opportunities.
In fact, SMR was bought at a time of the recession. We believe that these are times where more opportunities will come up and we have to just make sure that we are patient and we have the financial discipline to go after these opportunities at the right time.
You have said in the past that you are targeting around 20 percent of your business to come from the non-auto segment by 2025, can you elaborate, what are the non-auto segments you are looking at, medical and railways is something you have mentioned in the past, any technology partners you will be looking at?
Vivek Chaand: Definitely. Look at the Australian case of Motherson. In October 2017, Australia stopped producing cars totally. We have plants over there, they have completely pivoted out from automotive and gone into medical devices and things like that. They are doing very well, they are all profit making.
So the ability to understand turbulence and then take it to your advantage is one of the great things that our team does very well. I think the other very strong point that we have is we are agnostic to half the things that people are looking at for disruptions.
I do not agree with you that the luxury car segments are coming down in Europe and in America. If anything, it is going the other way.
The governments, the carmakers, the people, in general, are trying to figure out what is the real thing, which is going to pass them that particular benefit of cleaner fuels or cleaner air or whatever is the conditions over there. I think half the people do not even know what is happening. So it is a lot of news that is coming. We don’t know which is the right way to go.
Ten years ago, half the technology that we are talking about today didn’t exist and ten years from now, nobody knows what is going to be the new technology that is going to come and disrupt the whole world.
So I think in such scenario, what we are trying to tell Motherson people is that you have to be on your toes, you have to be very quick to respond, very quick to change, very quick to be able to take advantage of the trends and the things that are coming in.
So these are the exciting time because you have the right people, the right equipment, the plants and you have the geographical advantage to yourself. And also amazing kids are coming out of universities, so exciting times for us. We feel that it is going to be fun going in the next five-ten years.
First Published: IST