The Hindu Business Line : Sakthi Auto in expansion mode

SAKTHI Auto Components, a 100 per cent subsidiary of Sakthi Sugars, is planning to ramp up capacities at its foundry unit to cater to growing demand for auto components from the domestic and overseas markets.

The company has recently bagged an export order from Delphi, for supply of components such as steering knuckles, brake discs and drums, for the passenger car segment. US-based Delphi, is among the world's largest auto component companies.

"We have been shipping to Delphi for the past four months. We are probably the first company in South East Asia to bag an order from them," says Mr N. Manickam, Vice-Chairman and Managing Director of Sakthi Sugars.

At present, the monthly shipment size is at Rs12 crore, and the order is for a four-year period. But the company expects that revenues from this source may expand by 3-4 times, over a period of time. The auto components business is expected to close the year with a turnover of Rs 200 crore, against Rs 120 crore last fiscal.

The company is also putting up additional capacities at its foundry unit to cater to burgeoning domestic and export demand. The Rs 45 crore expansion plan is expected to take the foundry capacities from 1,800 tonnes per month, to about 3,000 tonnes per month.

While the equity portion of Rs 10-15 crore for the project may be raised by the promoters, the debt portion is at present, being tied up.

"We are planning to take in this debt as a part of the debt revamp exercise that is underway for our core business," says Mr Manickam. The company is in negotiations to replace high-cost debt with low-cost borrowings, as a part of a debt restructuring exercise.

Mr Manickam is confident that the additional capacities will help meet burgeoning demand from the passenger car segment. "We have a capacity constraint now, demand is at least 30 per cent in excess of what we can supply," he claims.

Asked whether the auto components business will be spun off as a separate company from Sakthi Sugars so that it could fetch better valuations, Mr Manickam categorically denied such plans.

"We are clear that the business will remain as a 100 per cent subsidiary of Sakthi Sugars. This business has been nurtured by cash flows from our sugar business and so we would like the sugar business to benefit from it," he said. He also pointed out that with the prospects for the sugar business looking up, the foundry unit will only help make the company's business mix more attractive to prospective investors.

Sakthi Auto Components is a major supplier of critical components such as steering knuckles, brake drums, brake discs, hubs, brake calipers and other products to domestic passenger car manufacturers.

Among its key clients are Maruti Udyog, Hyundai Motors, Ford, Honda Siel Cars and Tractors and Farm Equipment.

More Stories on : New Projects | Automobile Components

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Kinetic's Italijet to hit the road by Sept

India Inc warms up to tinsel town charms

RIL bags NTPC order to supply gas — Tariff fixed at Rs 2 per unit

Omax earmarks Rs 100 cr for acquisitions, capex

Sakthi Auto in expansion mode