Sterling Tools’ strategy to diversify into EV parts pays off, looks to supply to e-CV OEMs

Sterling Tools, the Delhi-NCR-based leading Tier-1 supplier, which clocked Rs 600 crore revenue in FY2923 in its legacy business of automotive fasteners, is eyeing speedy revenue generation growth from the EV industry in India. In mid-CY2021, the company began manufacture of 48V motor controller units (MCUs) for electric two- and three-wheelers in mid-CY2021, a diversification move which has paid dividends.

Having inked a technology transfer pact with China’s Jiangsu GTake Electric Company, Sterling Tools set up a subsidiary – Sterling GTake E-Mobility – to bring state-of-the art EV technology for its customers in India, and is now eyeing strategic expansion into more EV product lines. The company has a technology centre in Bengaluru, where around 35 engineers are engaged in application engineering and product development.

“While our core lies in automotive components and that is what defines the Sterling Group, having been in the fastener business for over four decades, we started planning our diversification strategy nearly five years ago by evaluating the industry trends. Clearly electrification is emerging as the most evident future technology, and we believe we have a place in the autonomous, connected, and electric domains out of the CASE megatrend,” says Jaideep Wadhwa, managing director, Sterling GTake E-Mobility.

“With its interface with the battery pack, motor, and instrument cluster, an MCU allows us to play a key role in the overall EV architecture, and that was one of the main criteria while shortlisting the right product,” he added.

In FY2023, Sterling GTake E-Mobility clocked Rs 175 crore in revenue by supplying EV components from its 300,000-unit capacity plant in Faridabad, Haryana. The EV powertrain company is bullish about future growth from the domestic market, and is undertaking capacity expansion at the same location this fiscal 48V motor controller units (MCUs) for electric two- and three-wheelers in mid-CY2021.

Although it is ramping up capacity to 600,000 units by end-FY2024, the company also aims to serve more categories of vehicles within its existing EV product line of MCUs, and is bullish about the underlying growth in the light commercial vehicle (LCV) segment.

“While today our EV business is centred around the two- and three-wheeler segments where a lot of the initial EV adoption is taking place, the LCV category is a promising domain, wherein both established players as well as startups are bringing their products. We see it becoming more attractive for electrification going forward,” says Wadhwa.

STRENGHENING IN-HOUSE COMPETENCIES

Having invested Rs 28 crore so far into its EV business, there is a similar capex aligned in Sterling GTake E-Mobility in FY24 through cash accruals and term debt. A major portion of this investment will go into engineering and product development, and take the total capital employed in the business to roughly Rs 50 crore by end-FY24. 

According to Atul Aggarwal, whole-time director, Sterling Tools, “The EV components business is a working-capital-intensive business, and it is also heavy on technology development - both hardware, and software. A lot of our people as well as financial resources go into that. We have our EV technology centre based out of Bengaluru, where around 35 engineers are stationed to do application engineering and product development. We aim to grow the headcount to 70 by the end of the current financial year."

The company had opened its Bengaluru technology centre last year, and aims to strengthen its competencies over time. “We continue to look beyond MCUs, and look for additional opportunities within the EV powertrain space. While we are looking at more JVs and technology collaborations, at no stage will we be mute recipients of a technology," Wadhwa says.

We need to have our own capabilities to develop new products. That is where our in-house capabilities will come into play, and will enable us to develop more India-specific solutions," adds Wadhwa.

While its agreement with Jiangsu GTake Electric Company allows it to undertake component exports from India, Sterling GTake E-Mobility has pinned its focus presently on the Indian market, which it believes has immense amount of activity going on. "We will be happy to explore export opportunities sometime in the future, but not at the cost of neglecting our domestic customers," affirms Wadhwa.

"In the long run, our aim is to grow our legacy business organically, and make incremental capacity expansions. We already have Rs 25 crore capex planned in FY2024. Going forward, we will also add complementary product lines in our fasteners business that will supplement our revenues. We are focusing on our new businesses – EV powertrains and supply chains for new-energy vehicles – which are our focus areas for the bulk of the growth in the future," concludes Aggarwal.

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