The board of auto components major Motherson Sumi Systems Ltd (MSSL) has given in-principle approval to raise Rs 1,000 crore to enhance liquidity during the uncertain times of coronavirus pandemic, according to a company statement.
The firm, which has plants in India, Europe and Americas that are currently temporarily closed, said it has received positive reopening dates for vast majority of the plants by end of April/early May.
However, the situation being dynamic there could be further delays in reopening plants in case the local governments extend lockdowns, of which there are no current clear indications, the company said in a statement.
Stating that the company is fully prepared to tackle the Covid-19 situation, MSSL said it has created multiple internal task forces to monitor the situation on a daily basis across all its plants.
Reassuring its investors, MSSL said it had instituted many projects across the globe aimed at cost rationalisation, controlling non-critical business investments and generate cash flows.
"To further enhance liquidity in these uncertain times, the board of directors has accorded in-principle approval to raise up to Rs 10 billion and delegated its committee of directors to evaluate and decide on various borrowing proposals," the statement said.
It further said, "We are also proactively working to leverage on various government support schemes to enhance liquidity."
Stating that its liquidity is strong, the company said as of March 31, 2020, it had a consolidated cash Rs 4,690 crore.
MSSL Chairman Vivek Chaand said: "Our team has done a phenomenal job in almost doubling MSSL''s turnover over the last five years to USD 9.6 billion on an unaudited basis.”
He further said, "Our aspirational 5-year plans cannot be timed perfectly, and the unprecedented Covid-19 situation has hindered us in closing many target acquisitions. However, we believe that these same opportunities have become more attractive in valuations since the Covid-19 crisis."
With the company''s strong financial position and with customer faith intact, Chaand said, "We are also being asked by many of our customers to look at more specific companies which are in trouble and we believe can be acquired at low valuations."
He said MSSL had planned to showcase its plans to investors in June but keeping in mind the current environment, it will probably do so in October.
On the impact of the pandemic on employment, MSSL said governments in various parts of the world have instituted employment protection schemes during this shutdown period where they are bearing part of the employee costs.
"We are actively working with the governments to further reduce fixed costs during this period of non-production," it said.
At present, the company said all of its plants and offices are adhering to all local and international safety guidelines. It has also instituted work from home wherever possible, while all domestic and international travels for employees have been temporarily suspended since early March.
"Wherever manufacturing facilities are deemed essential or have opened adhering to local guidelines, we have provided them a safe environment, meeting all safety guidelines," the company said.
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