Billionaire car-part provider goals to triple gross sales in 5 years

NEW DELHI: Vivek Chaand Sehgal has a observe file of attaining the seemingly unimaginable. His firm, a sprawling elements provider to the world’s largest carmakers, has exceeded its five-year goal each time bar one up to now quarter century.
His newest purpose is equally daunting — Motherson Sumi Methods Ltd is focusing on to triple annual gross sales to $36 billion by 2025. Sehgal, 63, plans to realize that by doing what he does greatest: dealing. Or extra particularly, in gentle of the coronavirus pandemic, shopping for up distressed firms as they run out of cash.
For Sehgal to realize that, nevertheless, issues should enhance dramatically. 5 years in the past, Motherson set a goal of consolidated internet gross sales of $18 billion by 2020, and it managed lower than $12 billion because the virus hit and India noticed its worst-ever slowdown in vehicle gross sales. The inventory has crashed virtually 60% through the interval, earlier than doubling to this point this monetary yr.
Sehgal admits there’s “plenty of ache within the system.” However he believes the corporate’s concentrate on fixing issues with its clients, teamed with an eye fixed for offers, will “give us a number of alternatives within the coming months.” “Someplace round October, November, you’ll begin to see and listen to that we’re going forward and taking on firms,” he stated.
It’s an method that’s turn out to be an indicator of Sehgal’s Samvardhana Motherson Group, which he based along with his mom — therefore the title — in 1975. A three way partnership in 1986 with Japan’s Sumitomo Wiring Methods Ltd to produce to India’s first domestically manufactured automobile, amongst others, set the small buying and selling home on the highway to a lot higher issues. Since 2007, Motherson Sumi has accomplished greater than a dozen M&A transactions globally, generally shopping for corporations twice its measurement. It now sells all the pieces from inside trims to wiring harnesses, bumper bars, door panels and lighting.
Carmaking elite
A first-rate instance of Sehgal’s eye for affordable property is the 2009 acquisition of UK group Visiocorp Plc. With the worldwide financial system in tatters after the collapse of Lehman Brothers Holdings Inc, a German buyer approached Motherson to save lots of the corporate. After a lot deliberation, it purchased Visiocorp — twice its measurement with 660 million euros ($782 million) in gross sales — for simply 26.5 million euros, turning into the world’s largest maker of rearview mirrors in a single day.
As a lot as 80% of Motherson’s focused consolidated income over the subsequent 5 years will come by acquisitions, in addition to entry into new segments like medical units, aerospace, safety methods and logistics, Sehgal stated. Small- to medium-sized firms will run out of money earlier than greater corporations, offering Motherson with new targets, he stated.
Motherson doesn’t have any pre-determined measurement or geography with regards to M&A. Fairly it maintains a concentrate on serving to clients preserve their manufacturing strains working. The collapse of even a small provider can halt output, Sehgal stated. “The answer doesn’t search for a measurement. Resolution means if it’s a 10-million-euro firm, I’ll nonetheless take it over if it’s stopping the road of my buyer, and even when it’s a $10 billion firm, I’ll take it over.”
The group’s clients are a who’s who of carmaking elite, together with Normal Motors Co, Jaguar Land Rover, BMW AG, Daimler AG and Volkswagen AG. Based mostly on the household’s 36% curiosity in Motherson Sumi, the publicly listed entity, Sehgal is price round $2 billion, in accordance with the Bloomberg Billionaires Index. Sehgal declined to remark.
Billionaire enhance
His precise internet price together with different property is sort of undoubtedly increased, and should turn out to be clearer as quickly as July subsequent yr after a gaggle restructuring. That course of will spinoff Motherson Sumi’s native wiring harness enterprise into a brand new wholly owned firm, and the unlisted property of Samvardhana Motherson shall be tipped into the unique agency. Each entities shall be individually listed, which analysts say will assist in discovering the companies’ worth, permitting them to be higher benchmarked towards international friends.
Whereas something associated to electrical automobiles is having its time within the inventory market solar, Sehgal is much less optimistic. In contrast to most carmakers and governments which are speaking up trendy applied sciences and cleaner, automated automobiles, he says insufficient infrastructure and geopolitical tensions will imply inner combustion engines stay related for many years.
“For the subsequent 20 years, automotive will stay just about the identical,” Sehgal stated. Carmakers “are asking me to get into all the pieces else, however they’re not asking me to get into electrical automobiles.”
In speaking concerning the future, Sehgal ceaselessly brings up his age — “I’m 63 plus,” he retains saying — inevitably prompting questions on succession. Like most Indian family-owned companies, Sehgal’s son, Laksh Vaaman, who’s now vice chairman, is about to take over.
“I’ll retire after I go on 4 shoulders,” Sehgal stated, referring to an Indian customized of carrying the deceased on their technique to cremation. “My job is to show all the pieces that I can to my son. The following five-year plan is my handing over to him. So someplace round 68, I’ll begin spending time with my grandchildren, I’ve 4 of them.”
It’s a deserving future for Sehgal, who began out incomes Re 1 for each kilogram of silver he transported for his grandfather 45 years in the past. The household on his mom’s aspect had been jewelers, and within the film enterprise on his father’s. Motherson Sumi listed in Mumbai in 1993. Those that have stayed the course have seen their funding develop 32% yearly on a complete returns foundation. That’s thrice greater than the common yearly achieve within the benchmark S&P BSE sensex Index over the interval.
Sehgal credit plenty of the success to his entrepreneurial mom.
“I wasn’t excellent in research, so my mom was very apprehensive about me. So she stated let’s get into enterprise. From there, we by no means regarded again actually,” Sehgal stated. “It’s an unblemished file, so very grateful to the massive boss up there.”

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