Motherson Sumi has lost more than 20% of its value since the beginning of the year.
Shares in Motherson Sumi Systems (MSS) have fallen by more than 20% since the beginning of 2019, with most of that drop coming in the last few months. This has prompted a number of questions from investors, who are concerned about what is happening to one of India’s largest auto components manufacturers. This article explains why MSS shares have been falling and what investors can expect from this company in the future.
What is Motherson Sumi Systems?
Motherson Sumi Systems (MSS) is an Indian auto components manufacturer based in Pune. It was founded in 1969 and was initially known as the Sumitomo Wiring Systems Company Limited. The company changed its name to Motherson Industries Limited (MIL) after it acquired another Indian auto parts manufacturer called Motherson & Co. Ltd. MIL changed its name again to Motherson Sumi Systems Limited (MSSL) after it went public on March 25th 2010. The company now trades under the ticker symbol MSS.
Why are MSS shares falling?
MSS shares have been falling for a number of reasons, including concerns over slowing demand for automobiles and difficulties at some other companies that supply MSS with key components.
Reuters reported(March 26th 2019), that Japan’s Aisin Seiki Co Ltd had decided (link is external) not to renew a contract with MSS when it expires at the end of March 2020. Aisin supplies a range of parts to MSS, including transmission systems and drive shaft assemblies.
“Reuters also reported that demand for automobiles in India had slowed due to rising interest rates and economic uncertainty.
“Finally, there were concerns over the financial health(link is external)of Motherson Corporate Finance Ltd (MCFL), which owns 21%(link is external)of MSS’ outstanding shares.
“MCFL
