Volkswagen's fiasco rocks Motherson Sumi Systems; Company on damage control mode

India's largest auto ancilliary supplier group, Motherson Sumi Systems, has called the selloff in the stock market as "overreaction". Motherson Sumi arranged an analyst call to allay the fear in minds of the investors, as there is growing opinion that the probe will spill over to other parts of Europe's car making industry.

Motherson Sumi Systems went on damage control mode, after its share prices nosedived 7.72% at the bourses yesterday, as news emerged that one of its key clients Volkswagen had used illegal software to alter the emission test results in its diesel cars to clear stringent US norms, which could result in the German automaker facing penalties upto $18bn. 

Motherson Sumi arranged an analyst call to allay the fear in minds of the investors, as there is growing opinion that the probe will spill over to other parts of Europe's car making industry. Vivek Chaand Sehgal, Group Chairman of Motherson Sumi said that there is no reason to panic as this event is similar to a vehicle recall which other car manufacturers have carried in the past.

GN Gauba, CFO, Motherson Sumi has explained that there has been very little impact of this development on the business of the company and the stock market is "over-reacting".

In the past two trading sessions in the global markets, shares of German automaker Volkswagen, which is world's largest car company by sales volume, have been hammered and has crashed by nearly 46%.

Motherson Sumi is one of the major supplier to Volkswagen Group, and nearly 44% of its revenues come from the German automaker.