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FEATURES/Work in Progress | Feb 13, 2013 | 21470 views

How Motherson Sumi Became a Giant Auto Parts Manufacturer

From a non-descript business, Vivek Chand Sehgal has set up one of the top automotive parts companies in the world
How Motherson Sumi Became a Giant Auto Parts Manufacturer
Image: Kamran Jebreili / AP for ForbesIndia
Motherson’s other big challenge is competition on the global stage. Especially, in the new businesses it has ventured into

V

ivek Chand Sehgal, 56, runs a crazy schedule. He travels almost 300 days in a year. We met him at the Motherson Sumi’s corporate office in Noida, where he’d driven down straight after landing in Delhi that morning. He told us he’ll be in town for a couple of days before leaving for Australia. Sehgal is an Australian citizen. A day ago, he was in Chennai meeting some customers. The week before, he was in Germany meeting some of his other customers. That’s how far back he can remember. “After some time, you stop counting,” he says.

With a lifestyle like this, you would expect Sehgal to complain of jetlag. But there’s none of it. He says the secret lies in sleeping well. Nevertheless, if the schedule does get to him, all he needs is a cup of truckers’ tea—lots of milk, lots of sugar and lots of ginger. “For the next three hours, your headlights are on. Bright! You should have one,” he adds.

We did. But while the tea was good, it wasn’t essential. The growth story of Motherson Sumi is interesting enough to draw attention. Motherson’s turnover has grown from Rs 10 crore in 1993 to about Rs 14,702 crore in 2011-12. In 1999, Maruti Suzuki, India’s largest car manufacturer, accounted for almost 80 percent of Motherson Sumi’s total business. Today, Motherson has spread to 25 countries with 124 plants. And 76 percent of the company’s business now comes from outside India. The company’s stock price outperformed the Sensex almost five times in the last year.

Add to this, in the last decade, Motherson made nine acquisitions. “Whenever we made such projections, the analysts were laughing. No company can grow 10 times in five years. Well, here we are and we have our projections ready for the next five years,” says Sehgal.

With the birth of Maruti Udyog in 1983, several auto component manufacturers came into existence in India. Almost everyone started with a technology collaboration or joint venture with a Japanese counterpart. As multinationals started coming in, new collaborations were formed with either American or German companies.

But while most of its peers were content with their India business, Motherson Sumi went global with gusto. The only Indian company that comes close is Bharat Forge, one of the largest forgings companies in the world. “Our exports in 2000 were less than $10,000 a year. Then we thought of a policy called 3CX15. Which means no commodity, no country and no company should constitute more than 15 percent of our turnover,” says Sehgal. 

Several component companies, who stick to a particular manufacturer or a market, go through a rough time when the industry goes through a rough patch. The only way to beat it is to diversify your risk to several geographies across multiple manufacturers.  

Motherson has followed this to the T. Today, Samvardhana Motherson Group (SMG is the holding company with nine business divisions) is one of the world’s largest manufacturers of wiring harness, mirrors and cockpits (plastic parts), among other products. “The Daimler Benz C, E and S class cockpits and instrument panels are all done by Motherson,” says Sehgal.

The financial world has taken note of Motherson’s rise. A fund manager who has followed the company says Motherson has three big trends in its favour.

“One is that the company’s content per car is increasing. Second, the Indian market is moving towards bigger cars, which means more electronics. So we see an upside for its wiring harness business. Finally, exports out of India by global manufacturers like Hyundai and Nissan are on the rise. We see Motherson’s products getting in those,” he said.

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Comments (12)
Rohit Kumar Dec 10, 2013
Mr.Vivek chand sehgal is identified his own might and self intution with self control and confidence.
we must learn from him.
great work.
Kirti Nag Jul 29, 2013
i want to appreciate his work.he did the inspirational work
Bhupendra Singh Jul 12, 2013
Sehgal Sir, is the real indian HERO...........

What he did next to impossible...
we love you...
and...

a Grand slute to you from all indians......
Sambit Chakraborty Mar 12, 2013
This is a well articulated piece on Motherson Sumi. Motherson Sumi is certainly growing by leaps and bounds; a little too fast as some conservative analysts might like to call it. Diversification is good for business since it spreads out the risks across geographies and clients, however Motherson needs to ensure that the acquired companies are integrated with the parent organization. The several acquisitions should not create disparate pulls. Many acquisitions in the recent past have not delivered the required synergy benefits due to improper integration of operational businesses and cultural differences. Having acquired these new businesses, the management should work towards creating value by integrating their supply chains and weeding out operational inefficiencies. Diversification often leads to organizations losing focus and the road ahead becomes and is, in this case more complex and challenging. However Sehgal’s has in the past shown consistency and has provided strong direction and leadership. Motherson should be able to its investors more reasons to cheer about.
Waltnewman Feb 26, 2013
I thought this was going to be a win for India, but Sehgal is an Australian! But either way, good article. I'm hopeful that GM parts will outsource to India.
Anuj Sharma Feb 19, 2013
Good article. The author seems to be consumed by the success of the entrepreneur, which are quite a few in India these days. Havells? What is the auto ancillary business about - in India and globally? Is it hot and what are the pitfalls for someone who grows up this fast? The article would have gone down much better if it more than what looks like hero worship.
Rafath Alam L Feb 19, 2013
Really Amazing Growth from Rs 10 crore to Rs 14,702 crore . Hats off to Vivek Sehgal Sir . we only highlight Infosys , wipro etc., Thanks Forbes for sharing this inspirational
Anurag Luthra Feb 18, 2013
People are the key to any organization. Motherson has the right mix with a visionary leadership. Way back in 2004, I had the chance to interact with one of their plant CEOs in connection with component painting. The intent with which Mr Sehgal got the connectors overnight was very much visible in his next line as well.
M R Aravindan Feb 15, 2013
Good article and a great rags to riches story (without the attendant govt lobbying that is the norm in such cases)

Also, it is refreshing to note a promoter willing to delegate operations in order to grow - He has understood that the key to success in this business is customer relationship and focuses his energy on that.
Ishwar Singh Feb 15, 2013
Because of hard work ,committments , Highly focused ,Mr Sehgal has taken the company Globaly . i wish him sound health,long life so that he can go higher
Ishwar Singh Feb 15, 2013
We all should learn alesson from the efforts made by honrable Mr Sehgal . he has taken the Motherson Group to Global market . wishing him good health ,long life so that he can go further higher
Harendra Sethi Feb 15, 2013
It is really inspiring! Wish more succes to Motherson Sumi’s.
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