Motherson Sumi ‘on the verge’ of announcing multiple buyouts

While several governments around the world had stepped in to provide financial assistance to companies hit by COVID-19 and the subsequent lockdowns, which crippled demand, many companies continue to be in bad shape, according to MSSL officials.

“Because of COVID-19, there will be a lot of pain in the system. As a result, a lot of companies are going to be in trouble, including larger ones. We are keeping our minds open and telling the teams to be ready for some big numbers. They haven’t disappointed us; they have worked with our customers and built everything from scratch,” added Sehgal.

External dependence

Nearly 90 percent of MSSL’s revenues emerge from outside of India. Half of its revenues came from Germany, France, Spain and the US, as per disclosures made by MSSL for FY20. Daimler Group, Audi and Volkswagen are the company’s biggest customers, accounting for 35 percent of the revenues. In the past, MSSL’s acquisitions have been propounded by its clients.

Further, MSSL is also waiting to get clarity on the monetary assistance provided by governments. It remains unclear if the assistance was in the form of a grant or a loan. The UK government, for example, agreed to pay 80 percent of salary a month -- up to £2,500 -- for staff employed.

“We don’t know if that was a grant or a loan or the methodology for accounting them. We have been telling this on what happens in the next 3-4 months. Our money is on the bet, that from January onwards, we will see a lot of pain in the system,” Vivek Sehgal added.

Kunal Malani, Head of Merger & Acquisitions, MSSL, said: “Our ability to get it at terms that make sense for us is determined by how the governments behave in the next few months because several companies have received government financing. It is also to be seen how much support the government continues to provide, going ahead. We should be able to do a few at least in the next few months.”