InvestorQ : Is it true that Motherson Sumi has enhanced its borrowing plans for the year?
Arusha Ray made post

Is it true that Motherson Sumi has enhanced its borrowing plans for the year?

Answer
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3 weeks ago


Motherson Sumi Systems announced the successful completion of its maiden issue of unsecured non-convertible debenture or NCDs with 3-years term to maturity. A total of 24 investors participated in the NCD investment on a private placement basis.

Motherson confirmed that against the original issue size of Rs.1500 crore, the company received substantially higher response as a result of which the eventual issue was re-sized upward to Rs.2130 crore. The company exercised its green shoe option.

Motherson Sumi has managed to raise the funds at an attractive rate of 6.65% considering its rating of AAA- assigned to the instrument by India Ratings. This issue has given the company access to the deep and liquid domestic institutional market for debt.

The proceeds from the NCD will be used to partly pre-pay its debt on the balance sheet so as to create a more deleveraged business. Motherson Sumi has set the target to substantially reduce its debt over the next 3-5 years to ensure financial longevity.

Motherson Sumi Systems is India’s largest auto ancillary company and is one of the preferred suppliers of auto components to the global auto industry with marquee clients across the length and breadth of the United States, UK and Continental Europe.

Motherson has set very aggressive growth plans for the next few years and wants to be able to meet its growth targets after missed its targets in the 2015-2020 period. For that, debt reduction is a must.