The Hindu Business Line : Sakthi Auto plans to double capacity

SAKTHI Auto Component Ltd (SACL), riding the crest of the automobile sector boom, is investing about Rs 40 crore to double the capacity of its unit near Perundurai in Erode district, Tamil Nadu.

SACL, which clocked sales of Rs 77 crore during 2002-03, expects a turnover of about Rs 120 crore-Rs 130 crore during the current fiscal, according to Mr M. Manickam, Managing Director, SACL. It expects turnover to touch Rs 200 crore by 2004-05 once capacity expansion works were completed.

Speaking to Business Line , Mr Manickam said the company expects its share of export income to go up to 40 per cent once the expansion works were completed. But so far no decision has been taken on hiving off SACL, now a completely owned subsidiary of Sakthi Sugars Ltd.

SACL has been supplying components to major manufacturers in India such as Maruti, Hyundai, Simpson and also IPI from the US. It has also secured a sizeable order from Delphi Energy and Chassis Systems, a subsidiary of US auto giant General Motors, for supply of steering knuckles and brake discs for its Mexican unit.

Mr Manickam said expects ramp-up work to be completed by the middle of next year. The company was not planning to expand the product range, he added.

On whether the boom witnessed by the auto component industry would continue, Mr Manickam said he expected a lot of auto component manufacturing activity to shift to India and other Asian countries from developed nations. He did not expect any downside for the next three or four years.

He said component makers were riding the crest of growth in demand witnessed by automobile manufacturers such as Tata Motors, Maruti, Hyundai and the others and auto component demand had gone up by 30 per cent to 40 per cent. Now almost all companies were running at capacity and were looking for expansion.

On fears that Thailand could be a threat to Indian auto component makers, he said Thai companies did not make castings but were engaged in manufacture of plastic components, fabrics, etc. and as such, did not pose any threat to Indian units.

Asked whether he was thinking of making SACL into a separate company, the SACL MD said, "As it is, it is a totally separate company." But whether "we take it public or not, whether we go for something else" was still being discussed.

He said the company was also not looking for any investment partner right now.

The capacity expansion work will be done at its existing location near Perundurai. But once exports picked up, the company may go nearer the port (for establishing a new unit), he said.

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