Winning Mindset | Not having a strategy is a great strategy, says Vivek Chaand Sehgal

He had an idea for a startup in 1975 — he wanted a piece of the silver trading business. His mother was his business partner. His father came up with an apt name for the venture, Motherson. However, in a few short years, the company would move away from silver trading to making electrical wires for homes and then came the big pivot.

The year was 1983 and India was on the cusp of an automotive revolution. The Maruti Suzuki 800, the first affordable assembled car locally in India, had arrived and Motherson’s automotive journey had begun.

Motherson Sumi Systems, an entity which was incubated by a mother-son pair, have accelerated a long way since its incorporation in 1986. Now bifurcated into two entities, the flagship Samvardhana Motherson, with about Rs 55,000 crore market capitalisation, occupies the top spot among the listed auto ancillary space. While Bosch commands a marketcap of Rs 52,000 crore, UNO Minda comes third with a market cap of Rs 30,000 crore.

In January 2020, the company had spun off its domestic wiring harness business into a separate entity called Motherson Sumi Wiring, which is now valued at Rs 23,000 crore. Motherson Sumi Wiring reported a net profit of Rs 411 crore in the 2021-22 fiscal on the back of Rs 5,635 crore in revenue.

The former company, Motherson Sumi Systems, has distributed over a third of its profit as dividend over the last 10 years, has seen its revenue growing at a computed rate of 16 percent between FY13-FY22. The growth in top-line is commendable, especially from a sector, which witnessed multiple headwinds in the recent past including that of disruptions caused by global semiconductor shortage followed by the pandemic. Yet, Motherson continued to deploy about Rs 2,500 crore as capex every year since 2016-17. It has followed an inorganic led growth model. In the worst of the years, in the last two-and-a-half years, the company has completed seven acquisitions.

Samvardhana Motherson International markets its products worldwide with over 300 factories in 41 countries across six continents. From Mercedes-Benz to Ford, most premium car manufacturers are associated with the company, which it generates about 95 percent of its revenue from outside India.

With 30 percent gains over the last four months, the shares of Motherson have outdone both Nifty Auto index and benchmark Nifty50 so far in 2023. While the stock of Motherson has surged 8 percent between January and now, Nifty Auto has gained about 4.2 percent whereas the benchmark Nifty50 is trading in the red with about 1 percent loss.