Motherson Sumi Systems Ltd announced a new corporate structure, wherein the domestic wiring harness business will be demerged into a separate entity, which will be subsequently listed. As part of the new structure, Samvardhana Motherson International Limited, the holding company, will be merged with the existing organization, which will include the rest of the automotive component businesses.
After the new organization structure receives approval from regulatory authorities, Motherson Sumi Systems will be renamed as Samvardhana Motherson International Limited.
In a board meeting, the directors approved the new structure which has been a long-standing demand of Sumitomo Wiring Systems, the joint venture partner. The new company will be listed on the bourses and will mirror the existing shareholding pattern of Motherson Sumi Systems.
On the other hand, for every ten shares of Samvardhana Motherson International Limited, fifty-one shares of Motherson Sumi Systems would be allotted. According to the company, both the transactions are likely to be completed by the second quarter of the next fiscal year.
This transaction will enable pursuance of independent strategic priorities for both the listed entities, while at the same time both will continue to enjoy the benefit of the parentage of the Motherson Group as well as its strategic partner Sumitomo Wiring Systems. The new structure also provides greater flexibility to raise capital (debt and equity) at respective entities basis their requirement, the company said in a statement issued.
“The demerger of the domestic wiring business will create the largest listed automotive wiring harness player in India with diversified and pan-India industrial footprint with strong customer relationships across OEMs which will have access to world class technology,” the statement further mentioned.
Motherson Sumi Systems Ltd announced a 68.40% year-on-year decline in consolidated net profit to Rs 135.66 crore for the quarter ending March 31, on account of the shutdown of the factories across the globe due to the outbreak of the Covid-19 pandemic. The revenue during the quarter declined by 11.7% year-on-year to Rs 15159.05 crore when compared to Rs 17169.47 crore, in the year ago period.
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