Since Sehgal spends much of his time abroad – he travels for over 250 days in a year on an average – meeting the most important stakeholder he has, his customers, I should perhaps consider myself lucky to get a meeting with him. Sehgal’s style is low-key. However, it's a clear focus on his business, his staff and his dedication to meeting customers’ expectations that underpin a tough and aggressive approach to business. That has helped him transform a small business of Rs 12-13 crore in the early 1990s to SMG with a turnover of close to Rs 10,000 crore in this year 2010.
Few home-grown automotive companies have achieved the scale and sheer variety of product portfolio that the Motherson Group has been able to. With 25 alliances and a product portfolio to the tune of a few thousands, Sehgal and his top team have handled the challenges in a remarkable way. But Sehgal is not about to take things easy. He told Autocar Professional, “We are a family of workaholics.”
Sehgal’s family owns 3.85 percent (Samvardhana Motherson Finance Ltd holds 36.34 percent) of the Group’s flagship, but it is the breadth of his vision which encompasses stakeholders across the world.
In March 2009, Sehgal made his biggest move ever by acquiring the UK-based Visiocorp Plc, a key supplier of external and interior rearview mirrors to some of the big names in the auto world: BMW, Daimler, Volkswagen-Audi and PSA Peugeot Citroën, to mention a few. Visiocorp was mired in financial woes but having worked with the company in its earlier avatar as the Schefenacker (and then later as Visiocorp) as a joint venture partner, Sehgal knew the company’s true potential.
Motherson Sumi Systems Ltd's (MSSL) chief operating officer Pankaj Mital, a 21-year veteran of the Motherson Group, puts it this way: "We took over the company, were able to motivate the staff, and a year or so down the line have been to improve the company’s rating, stanched the bleeding and made it profitable.”
Indeed, the acquisition has catapulted SMG to global leadership with 90 locations in 22 countries and a staff of close to 40,000 people.
Writing in Automotive World, Colin Whitbread said, “A collective sigh of relief is almost audible among leading OEMs at the acquisition of Visiocorp by Motherson Sumi Systems Ltd. They were anxious not to see Magna and Ficosa gain duopolistic dominance in the rearview mirror systems.”
For SMG, it was the first outright acquisition in the European auto sector and marked a milestone of sorts for a company that has a veritable store of business acumen as a result of its overseas expansion and technical development through a variety of joint ventures. It’s a tribute to Sehgal’s grand vision, and for this and the ability to handle a sprawling empire with diverse interests and a breath-taking variety of products that Vivek Chaand Sehgal is our Man of the Year 2010. Indeed, our ‘Man of the Year' has typically been an OEM but this year, we have selected a person who heads one of India’s largest automotive suppliers.
So how did it all begin? Sehgal’s journey to a position of global standing began with a single company that manufactured just one product at a single location. Ask him how that happened and Sehgal talks about his business mantra, “We have been a ‘not yet’ company right from the beginning. When our customers ask whether or not we make a particular product we have two answers. Not ‘yes’ or ‘no’; instead we say ‘yes’ or ‘not yet.’ It was this attitude that made us expand our business.”
Sehgal began working at 18 assisting his grandfather in the family-run silver trade. Since his college was located close to the airport, the young Sehgal started coordinating the business and other paperwork that involved, among other things, dealing with custom clearance authorities. This is perhaps where he discovered his own entrepreneurial bent that he was to hone over his life.
On December 6, 1975, Sehgal along with his mother established ‘Motherson’ and two years later, he started his first industrial venture by setting up Motherson Sehgal Cables, manufacturing domestic and power control cables.
However, the real breakthrough came in 1983 when Maruti Udyog (now Maruti Suzuki), wanted to localise some components. Since a wiring harness was a logical extension to wires, Sehgal decided to expand his business and entered into a technical tie-up with Tokai Electric Company, Japan (since renamed Sumitomo Wiring Systems) for making wiring harnesses.
Over the years, the relationship between the two partners evolved from strength to strength which resulted in a series of joint ventures and collaborations between them. SWS provided technology for manufacturing of core inputs for wiring harnesses such as wires, press stamped terminals, injection moulding of connectors, binders and fuse boxes and also for manufacturing of high precision injection moulding tools.
The injection moulding and tool manufacturing operations grew as an independent business vertical. In order to develop self-reliance, have control on critical inputs and to develop a full system solution provider capability, the Group focused on backward integration in every product vertical. Working with the Japanese was a great learning experience helping Sehgal incorporate the Japanese style of attention to detail to his own, unique style.
Three years later, he formed the first joint venture with SWS and MSSL was established. It was to become the Group’s flagship company.
In the mid-1990s, Sehgal took what was the most momentous decision ever. He gave up his position as managing director and devoted himself to meeting existing and future clients. It was that key step that laid the basis for the Group’s great thrust forward.
About four years ago, SMG was formed as a holding group for all the companies that Sehgal had got into his fold. The Group now has 25 collaborators and multiple joint ventures with some of the collaborators.
A decade ago, Motherson made its first foray overseas acquiring the assets of Wexford Electronics. Recalling that time, COO of MSSL, Pankaj Mital says: “Once we decided to acquire it, we shifted the entire running plant to Sharjah and continued to operate it without impacting our clients.” For Sehgal, speed was of the essence.
And to this date the company has been able to acquire about 10 companies with each bringing to its fold not only new products but also new technologies besides offering the opportunity to spread its tentacles into new geographies and catering to a new customer base.
Today, the flagship company MSSL makes a range of products that include wiring harnesses, rearview mirrors, moulded plastic parts including car interior and exterior parts, bumpers, dashboards and door trims, complete modules, rubber components for automotive and industrial applications, high precision machined metal parts, injection moulding tools and HVAC systems.
Over the years, MSSL has collaborated with global technology leaders and has further leveraged its competency in existing areas to create products that meet the technical needs of its customers. MSSL continues to strengthen its position as a globally preferred solution provider by offering end-to-end solutions that include designing from basic data to prototyping, tooling, moulding, assembly and integrated modules.
This helped the company to pitch itself as a preferred supplier. Sehgal’s vision has resulted in MSSL developing a network of manufacturing bases, design centres, logistics centres, marketing support and sourcing hubs across a diversified geographical base.
On the diversified locations, Sehgal says, “We follow our philosophy — Nearness to Customer.” SMG has facilities near all the major global automobile manufacturing hubs and currently it has 15 design centres and 10 representative offices covering 22 countries across five continents.
In the automotive ancillary space, it has truly evolved as an Indian multinational group. Since SMG mostly makes products for OEMs, most of the products are not marketed as separate brands. The brands that SMG owns include Motherson (group range); SMR, Visiocorp, Engelmann, Reflectec (rearview mirrors); Aerobin (waste management systems); and Dagger Forst (gear cutting tools). Collaborator brands that SMG produces/ sells include Webasto (sunroofs), Spheros (bus ACs), Zanotti (vehicle and stationary refrigeration systems), Motoman (industrial robots), Sumitomo, BIG, Hule (cutting tools), Nachi (band saw blades), Anest Iwata (compressors and paint coating equipment), and Matsui (auxiliary equipment for injection moulding machines).
The great leap
It was all this expertise with handling alliances and establishing a global footprint that undoubtedly gave Sehgal the confidence to target Visiocorp, its biggest ever acquisition. Visiocorp was one of the world’s largest manufacturers of rearview mirrors. Interestingly Visiocorp itself was formed by merger of the rearview mirror business of Britax and Engelmann with Schefenacker AG, Germany which was later changed to Visiocorp. This acquisition was done at the behest of customers. When one of the major customers asked Sehgal if he would be interested in acquiring Visiocorp, his thirst to excel and expand business propelled him to go ahead. Visiocorp had financial issues but what attracted Sehgal was its strong technology and good reputation as a supplier besides being a global player with a presence in a dozen countries. Moreover, rearview mirrors are assembly-based products and since Motherson specialises in assemblies, clearly SMG saw a strategic fit of sorts and wanted to have this company in its kitty.
The Group has also implemented backward integration for major ingredients required for these assemblies. Within one year of taking over the renamed Visiocorp, which was now Samvardhana Motherson Reflectec (SMR), it received new orders worth an estimated 800 million euros which will be executed over the life of the vehicle programmes starting 2011.
With the company back in growth mode, the Group is setting up a new plant in Hungary. In addition, it plans to establish new facilities in Brazil and Thailand. This acquisition was a game-changer for MSSL as it heralded MSSL and SMG to an established global Tier-1 supplier catering to most of the major automobile manufacturers in the world.
Sehgal also propagated an organisational culture that is based on openness, creativity and a positive attitude. He believes in the ownership concept wherein every employee owns his work. Each process has a process owner.
Even as the company has expanded and has employees from around the world, Mital says that first and foremost, “Mr Sehgal sees people as professionals.”
And given that within India, one works with people from so many backgrounds, Sehgal realises that people can work together when they have common goals. The bottomline is to deliver value. The level of employee involvement in all the Group companies is very high. Mital recalls how Sehgal listens not only to the voice of the customer but also that of the employee. He knows if people are urged to aim at high targets, they can deliver. To an employee, he can readily play the role of a coach. In board meets, Mital says that Sehgal’s style is to push for consensus.
He has promoted global best practices and concepts like Pika-Pika (Japanese showroom concept), G-Stars (benchmarking activities)
and Skill Olympics. He also drove the Quality Circle concept, which has now taken the form of a global competition with over 200 quality circles from within the Group companies participating in it. The Group organises regular programmes for employee involvement that include both in-office and out of office activities. One such example is how in 2008, MSSL Sharjah created three Guinness Book world records for the longest balloon chain, longest contra line dance and highest number of face painting in three hours.
The diversified companies in several locations end up in a hectic travel schedule for Sehgal. Going forward, SMG has drawn extensive plans. In five years, MSSL will be a $ 5 billion company while the Group itself will reach $ 10 billion.
As someone who has worked closely with Sehgal, Mital describes Sehgal essentially as a vibrant person, who can break the ice and even joke on himself. He can laugh even when times are tough. He is a frank and open-hearted person, he adds