Motherson Sumi had a 2-day virtual analysts’ meet, detailing your vision for 2025. What steps are you planning to take to achieve your goals?
The biggest gain for all of us was that we could actually show to the investor fraternity that it is not one Mr Sehgal or Vaaman running the whole particular thing. Throughout the interactions, we allowed every single person who is responsible for their verticals to come out and talk with the people and all that and Vaaman and me chose to keep quiet. That particular thing was the biggest achievement from everybody’s point of view because they could actually touch and feel the global management. We are in 41 countries and have over 270 plus facilities. It was not that just one person sitting in India or London was doing it. Also, we could explain very easily to the people that there is pain in the system.
We are going through the Covid-19 repercussions and the group is learning to deal with it. It was a very good thing because it gave people confidence that there is tremendous opportunity here.
Your company is known for execution but the last plan was a miss, though it was a very decent miss. Why did the plan underachieve?
We are a brave organisation. We are very clear that we have to take a calculated risk and understood measurement of what the global situation is and then act accordingly. We could have easily done it for the top line. But in Motherson Sumi, we believe in the saying “top line vanity, bottom line sanity, cash-in-bank reality”. We did not want to get carried away as the opportunities are huge and the miss is temporary, a one-year sabbatical.
What are the new technologies you are looking at as a lever for products and processes?
This is something I would like to explain through you to the audience and the first thing is we are already the 21st largest auto component manufacturer in the world today with God’s grace.
If we touch $18 billion, we would have probably come in the top 14-15 companies in the world. There was a need for us to come out with something new which could be working together with automobiles. In the last five-year plan, we put a lot of attention towards these four verticals which are medical devices.
We are looking very strongly at logistics, we are looking at a lot of focus on aerospace and why we are looking at these particular things and software and security is basically because we have all the ingredients within our companies and plants at the moment. It is a very easy way to diversify this.
It is not something we are taking a bet on. The existing competencies and capabilities are already available with the group in physical form and so virtually no extra capex or new technology is required, but of course there are a lot of companies which we are already working with which are non-automotive in the medical side and all that.
These companies absolutely love Motherson because we have the complete wherewithal to deliver to them. We have taken these four particular verticals and given them a very ambitious target. We have got some young kids who are raring to go. So it was a very good way of putting out our new target in front of everybody because we care a lot for our shareholders and it is important for us to communicate to them that 25% of the target is going to come from these new divisions. We were educating our investors and also getting feedback from them.
How much homework has been done to achieve that 25% target from non-cyclicals? What makes you so confident of achieving it in the next five years?
Let us look at it in a very black and white manner. Of these four verticals, if not even one fires out for whatever reasons, Motherson loses nothing because everything is coming from our own resources. We are not setting up something new. So there is only a positive plus side to it. But if we are thinking of it in a smaller manner, then it would not make a big difference that we want to make.
For 45 years, we have not deviated from the automotive sector. We have not gone into any of the new horizons that people keep telling us. We are operating from our strengths. For example, in aerospace we are talking about wiring harnesses. We are very strong in the wiring harness. We are very good in machining and metal and we are very strong in aerospace. We have already started doing medical devices. Instead of closing down Australian product plant, we pivoted to medical devices and we are doing very well over there.
Are you also indicating that the margin profile and the profitability profile of the company will improve as we go deeper into that side?
Absolutely. One of the big advantages that we have is that we have a very strong balance sheet. Our debt levels are coming down and are probably at the lowest in the last 15-20 quarters. After the restructuring, we are on a different trajectory from our main collaborator Sumitomo. This will allow us to open up the vista all over the world and we are very excited.