The acquisition of an 80 per cent stake in Peguform by Motherson Sumi (MSSL) is yet another instance of the latter's strategy of growing through acquisitions.
Manufacturing bumpers and plastic components such as cockpits and dashboards for the European auto industry, Peguform will help scale up MSSL's revenues in its polymers division. While this division currently brings in only about 11 per cent of the consolidated revenues, post-acquisition, the contribution could be expected to go up to about 50 per cent.
It must be remembered that after the acquisition of Visiocorp (Samvardhana Motherson Reflectec — SMR ) in 2009, it is the mirrors division that brings in the bulk of the consolidated revenues (about 56 per cent), followed by the wiring harness division (30 per cent).
Providing fully-assembled cockpits, bumpers and door-trims to premium clients such as Volkswagen, BMW and Daimler, the Peguform acquisition will serve as a forward integration to the company's existing presence in Europe. MSSL already has plastic moulding facilities in Germany and the Czech Republic to manufacture small plastic parts for supplies to tier-1 component makers. Incidentally, the company already has such a facility for direct supply to OEMs (Original Equipment Manufacturers) in India and in South Africa.
The acquisition will also help MSSL spread its wings to complement Peguform's offerings globally. Peguform has plants in Brazil, Mexico and China where MSSL has a presence only in its mirrors business. Also, since Peguform is a major global supplier to premium carmakers, it will help the company gain new orders whenever new platforms are launched across the world. Besides, the acquisition will also help the company increase its content supplied per car as many of Peguform's clients are also clients of SMR.