Not content with the five acquisitions in the recent past, auto component maker Motherson Sumi Systems is scouting for more buys, expecting to add about $6-8 billion to its revenues by 2020.

The New Delhi-based company’s intention pretty much sums ups the mood of the sector, with as much as 15 Indian companies on the lookout for buys across Europe and Asia, including India.

“Indian auto component companies are not only looking to acquire companies in India, but also outside India. Within India, we expect as much as 20-30 deals to happen in the next two years with average ticket sizes of $10-30 million. The total size of the deals would be about $500 million in India, while outside the country the spend would be about $2-3 billion,” said Mahesh Singhi, Founder and Managing Director at investment banking firm Singhi Advisors said.

Singhi is advising a number of Indian companies for buyouts.

On the lookout

New Delhi-based Motherson Sumi Systems, with a revenue forecast of $18 billion by 2020, expects $6-8 billion addition through acquisitions. It had been on an acquisition spree since 2009, the latest being that of Hungary-based Abraham es Tarsa Kft’s Automotive Business Unit in September 2016. The others being Stoneridge Inc’s wiring harness business (2014), Scherer & Trier’s assets (2014), Peguform (2011) and Visiocorp’s rear view mirror business in 2009.

“We are always looking into possibilities for acquisitions. They are at the behest of customers and to the best interest for our stakeholders,” said Motherson Sumi Chairman Vivek Chaand Sehgal.

Motherson Sumi Systems is learnt to be in talks for an acquisition. However, the company declined to comment.

JBM Auto, another New Delhi-based auto parts manufacturer, has mandated big four consultancy firms and investment bankers to scout for buys across Europe and Asia, and also has a war-chest ready. The firm is looking for companies with capabilities in engineering and design and technological know-how on alternate materials.

“We are always evaluating good opportunities and as we locate them, we will conclude it. We are looking at acquisitions to enhance our technology and create global platforms,” said JBM Auto Executive Director Nishant Arya.

Arya said the Indian auto component industry would see a consolidation in the next 2-3 years as many tier-I companies are also looking for acquisitions.

There are about 750 manufacturers in the country’s organised auto component sector and a lot in the unorganised sector.

Technology upgradation

“Now, the stage has been set for Indian companies to move to the crucial technology upgradation, and one way to do that is to acquire and there is a lot of surplus capacity available,” said Jiten Divgi, Managing Director, Divgi TorqTransfer Systems. Divgi TorqTransfer Systems is scouting for talent acquisition.

“Most companies are looking to acquire technology, while many are looking at all-out acquisitions. We expect some deals to be finalised by the third or fourth quarter of the calendar year 2017 , ” said Bhairav Kothari, Founder and Managing Director at SuperCFO Services, a firm that outsources CFO services.

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