Motherson Sumi Systems to acquire electrical wiring interconnection systems business in Mexico; stock opens 1.01 per cent higher

Motherson Sumi Systems Limited (MSSL) via its Mexican subsidiary, Motherson Rolling Stocks S de RL de CV (MRS), has signed an asset sale and purchase agreement to acquire the electrical wiring interconnection systems (EWIS) business of Bombardier Transportation, Mexico (BT Ensambles México).

Earlier in 2019, the company through its subsidiary, Motherson Rolling Stock Systems GB Limited, UK (MRSS) acquired Bombardier’s UK rolling stock electrical component and systems business in Derby. Now, with this deal, the relationship will further expand to Mexico.

The transaction includes the transfer of assets, employees and inventories, on a debt-free and cash-free basis and is valued at approximately USD 10 million approx. (subject to customary adjustments). The revenue of the said business was USD 25 million for the calendar year 2019. The transaction is expected to complete in Q4FY20-21.

BT Electrical Wiring Interconnection Systems (EWIS) provides harness and electrical assembly based on standard solutions. MRS will continue manufacturing the same electrical harness product as today at the Huehuetoca site in Mexico with enhanced efficiency in time-to-market, on-time delivery, and cost structure.

The wiring and harness segment contributed nearly 25.3 per cent of the revenue in FY20. This share has reduced from 27.5 per cent in FY15. The company is trying to reduce the contribution of various countries and components in the overall business mix. It calls this a 5-year plan: ‘Vision 2025’ 3CX10 - No country, customer, or component should contribute more than 10 per cent to revenues.

The stock opened at Rs 110.35, 1.01 per cent higher than its previous day’s close.