Motherson Sumi tumbles on announcing new organizational restructuring

The auto components major said the move will simplify group structure and benefit all shareholders.

Shares of Motherson Sumi Systems (MSSL) slumped 6.32% to Rs 97.10. The stock hit a high of Rs 100.70 and a low of Rs 94.30 so far.

MSSL- India's largest automotive component manufacturer - on Tuesday (2 July) announced a new corporate structure, entailing demerger of domestic wiring harness business from MSSL into a new company which is in the process of being incorporated as a wholly owned subsidiary of MSSL ('new company') and subsequent merger of Samvardhana Motherson International Limited (SAMIL) into MSSL to consolidate 100% shareholding in Samvardhana Motherson Automotive Systems Group BV (SMRP BV) as well as to bring all auto component and allied businesses in SAMIL under MSSL.

To give effect to the proposed reorganization, the board of directors of MSSL approved the demerger of domestic wiring harness business of the company into a new company, which will eventually be listed, with mirror shareholding as that of the company. For every one share held in MSSL, one share of new company would be allotted.

The board also approved the merger of SAMIL, the principal holding company of Motherson Group and promoter of MSSL, into MSSL. For every 10 shares held in SAMIL (of face value Rs 10 each), 51 shares of MSSL (of face value Re 1 each) would be allotted. MSSL will be renamed as Samvardhana Motherson International.

The transaction is to be effected pursuant to a composite scheme of amalgamation and arrangement and is subject to receipt of regulatory and other approvals as may be applicable. The transaction is likely to be completed by Q2FY22.

Vivek Chaand Sehgal, chairman, MSSL said, "We are happy to receive approval from the Board of Directors for the Scheme. The simplification of group structure has been a long-standing request from our shareholders and the proposed reorganization is a step in that direction. The Transaction helps create strong business platforms under the Motherson umbrella which will enhance stakeholder value for the long term."

Laksh Vaaman Sehgal, director, MSSL said, "This Transaction provides MSSL shareholders with the opportunity to participate in 100% value of SMRP BV and also brings all auto related businesses under listed entities, which aligns interest of all stakeholders. It demonstrates our commitment towards taking actions that meet expectations of our stakeholders. The Transaction further strengthens our position as a leading, globally diversified and preferred auto component supplier that serves the world's most admired brands."

The auto component maker reported 55.3% decline in consolidated net profit to Rs 183.38 crore on 12.1% fall in net sales to Rs 14870.32 crore in Q4 March 2020 over Q4 March 2019.

Motherson Sumi Systems is one of the world's leading specialised automotive component manufacturing companies for original equipment manufacturers. With a diverse global customer base of nearly all leading automobile manufacturers globally, the company has a presence in 41 countries across five continents.

Powered by Capital Market - Live News