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Title: Significance/ Relationship of Samvardhana Motherson International Ltd with Nifty
Author: Sadhvi Vishnu Jaiswal
Introduction: Samvardhana Motherson International Ltd Samvardhana Motherson (formerly known as Motherson Sumi Systems Limited) is an Indian manufacturer of wiring harnesses, plastic components and rearview mirrors for passenger cars. The company was established in 1986 as a joint venture with the Sumitomo Group of Japan In 1975, Vivek Chaand Sehgal and his mother established the Motherson Group as a silver trading business.[5] Two years later, Sehgal set up a power cables factory.
Objectives: Calculation of Beta of Samvardhana Motherson International Ltd
Literature review:
1. Top-line vanity with bottom-line sanity is Vivek Chaand Sehgal’s success mantra In times when ‘under-promise and over-deliver’ is the order of the day, few would dare to place lofty targets before stakeholders. And those who do this successfully tend to create history. This is exactly what billionaire Vivek Chaand Sehgal, co-founder and chairman of the $6.9 billion Samvardhana Motherson Group, is in the process of doing. Over the last two decades, Sehgal has taken the flagship company Motherson Sumi’s revenues from Rs 10 crore (back in 1996) to Rs 34,600 crore in 2014-15. And he isn’t done yet. Sehgal’s journey in the world of business started at the age of 18, when he tried his hand at silver trading. In 1977, he set up Motherson along with his mother to manufacture power cables. His foray into the auto component sector began in 1983, when his company entered into a technical agreement with Tokai Electric (now Sumitomo Wiring Systems) to manufacture wiring harnesses for Maruti Udyog. In 1986, Sehgal formed his first joint venture with Sum.
2. NEW DELHI: India’s largest auto component maker, by turnover Motherson Sumi Systems (MSSL) has announced acquisition of US-based Stoneridge Inc’s wiring harness business for $65.7 million (around Rs 385 crore).
MSSL, the flagship company of the $5.4 Bn Samvardhana Motherson Group has acquired Stoneridge through a wholly owned subsidiary. The US company with annual revenues of approximately $300 million has six manufacturing facilities spread across Portland, Indiana in the US, Chihuahua, Saltillo and Monclova, all in Mexico as well as an engineering and administrative centre located in Warren, Ohio, the company said in a statement.
“With this acquisition, MSSL gets one of the most experienced wiring harness manufacturing operations in the region, which would increase our customer reach and help us to service the customers in these diverse geographies,” said Vivek Chaand Sehgal Chairman of the Samvardhana Motherson Group.
Data Collection:
Data was collected from Yahoo finance sites. The data was manipulated by the final closing, where the weekly return of Nifty is Y and the weekly return for the company is X.
Data Analysis: Y^= -0.48+1.39
Samvardhana Motherson return = -0.483888649
Nifty return = 1.390862213, (t-stat = 3.98)
N = 50, R2 = 0.248242688487924, F = 15.8503932917571, Significance = 0.000231319293250877,
Conclusion: The above equation shows the relationship between Y and X. Positive sign means there is a direct relationship, which means X and Y are both rising simultaneously. Figure in the bracket is T-stats for b it is more than the table value. R2 is 24% of Y is explained by X. F is 15.85. The beta is 1.39 which means it is more than one and is good for short term investment.
Reference: Bhupta, Malini (10 February 2016). “The acquisition machine”. www.business-standard.com. Retrieved 23 September 2022.
Chauhan, Chanchal Pal. “Motherson Sumi Systems Ltd to buy Stoneridge Inc’s wiring business for $65.7 million”. The Economic Times. Retrieved 23 September 2022.