Chennai-based component supplier’s capex for ongoing fiscal could see it invest in new plants to get logistically closer to clientele in Gujarat and Andhra Pradesh.
Sundram Fasteners Ltd (SFL), part of the TVS Group and one of India’s leading component suppliers, is bullish on further demand coming its way this fiscal. The company, which supplies fasteners to all the major vehicle manufacturers across segments, has been notching double-digit growth since the past five years.
In FY2018, SFL recorded total revenues of Rs 3,425 crore, growing by over 15 percent YoY. While domestic sales stood at Rs 2,146 crore (+16.9%), as a result of strong demand from manufacturers of passenger cars, UVs, light commercial vehicles and two-wheelers, the company’s exports accounted for Rs 1,144 crore (+9.6%).
The five-decade-old company is well positioned to leverage its technical capabilities and deeper understanding of the automotive industry. “We are well poised for future growth and been the preferred supplier of automotive manufacturers. We will continue to enjoy customer confidence to become a Tier 1 supplier in the future,” said Suresh Krishna, chairman of SFL, who founded the company 50 years ago.
The company exports nearly 30 percent of its sales, with 80 percent of that to the US market which has seen robust growth. In the next 5-6 years, the company expects its export and domestic businesses to contribute equally to overall revenues.
“We are hopeful of growing in double digits for the next 2-3 years. We have been investing Rs 200-300 crore over the past few years and expect to invest Rs 350 crore in FY2019. We are keeping up with requirements from customers and also moving geographically closer to them. We could potentially look for 1-2 more plants, depending upon the expansion of OEMs, whether is Gujarat or Andhra Pradesh,” said Arathi Krishna, managing director, SFL.
With electric mobility picking up pace, SFL is also gearing up to supply new-age EV cars and has already started catering to two major OEMs. The company is looking to increase its product range to cover EVs and is eyeing supplies to EV manufacturers in India, China and the USA.
According to Suresh Krishna, EV adoption will take place gradually in India as there are several impediments still before there can be a mass shift to this greener form of motoring – things like government subsidy, acquisition cost, indigenisation of batteries and adequate charging infrastructure. The IC engine industry is a large one globally and will sustain for a longer time, says Krishna.
SFL’s product portfolio includes high-tensile fasteners, power metal components, cold extruded parts, hot forged components, radiators caps, automotive pumps, gear shifters, gear and coupling, hub and shafts, tappets and iron power. Over the years, SFL has gained technological competence in forging, metal forming, close-tolerance machining, heat treatment and surface finishing.
BULLISH ON CHINA
SFL’s investment in manufacturing operations in China is paying off. Since opening the unit there 10 years ago, the company has recorded a turnover of Rs 250 crore. Last month, SFL inaugurated a second 10,000 tonnes foundry plant to cater to burgeoning demand for machine castings in China. The company has invested Rs 100 crore in China in the second plant and is one of the few Indian component manufacturers to achieve success in the world’s largest automobile market. The China presence has been successful for the company given that there are few Indian manufacturing companies have successes in the country.
Krishna is bullish on the China business over the next 2-3 years. “I believe China is a big and attractive market for any manufacturing company but it is a challenging market too. To be successful in the market companies need to keep a longer-term horizon,” said Krishna.
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