Auto component maker Motherson Sumi Systems Ltd (MSSL), through its subsidiary Samvardhana Motherson Automotive Systems Group BV (SMRPBV), has further cemented its relationship with global auto major Daimler by signing deals for the supply of a range of exterior and interior systems for its Mercedes-Benz vehicle models of the future.

The company believes that these orders, delivery for which are expected to begin from calendar 2018, would generate revenue of approximately Rs 15,400 crore (Euro 2.2 billion approximately) over its lifetime.

In a communication to the stock exchanges, MSSL said with a view to back Daimler’s expansion activities, it will invest in two new plants — one each in the US and Hungary — that would enable its subsidiary SMRP BV to be nearer to Daimler’s vehicle assembly plants, apart from capacity expansion in existing plants in Germany as well as new machines, tools, and product development efforts.

These were related to operations of SMRPBV’s division SMP (Samvardhana Motherson Peguform) that was bought in 2011. SMP was a technology and market leader for bumpers, door panels and cockpits with a strong footprint in Europe, Mexico, Brazil and China, and was a prominent supplier to car manufacturers in Europe, particularly the German car makers.

MSSL said the new plant of SMP in Hungary would be located close to Daimler’s operations in Kecskemet. With the establishment of the new plant around Tuscaloosa, close to Daimler’s assembly plant, SSMP enters an important growth market — the US — that had been a ‘white spot’ for SMP so far.

However, the company did not disclose the size of the investments it would be making in the new and existing plants to meet the latest commitments.

Vivek Chaand Sehgal, Chairman, MSSL, while declining to get into the specifics of these orders, said the ‘preparatory work for the establishment of the two new plants has already begun’ and was ‘eager to start producing products matching Motherson’s global quality’ in them. Motherson’s relationship with Daimler dated back to 1997 when it began supplying cockpits and wire harnesses to Daimler in India. MSSL said it had made significant investment in expanding capacities, modernisation and its geographical footprint mainly in Germany, Hungary, China, Czech Republic and Slovakia to support Daimler’s global expansion.

The range of products that Daimler sources from Motherson now includes exterior mirrors, door panels, bumpers, water deflectors, exterior and interior trim parts, etc, and MSSL’s earnings from its supplies to Daimler has gone up 20-fold in the same period, the statement said.

Shares of MSSL (face value Re 1) are up by Rs 13 at Rs 477 on the BSE.

Related Topics