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Saturday, May 29, 2004

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Sundram Fasteners' China plant starts commercial sales

Raghuvir Srinivasan

Chennai , May 28

THE newly inaugurated plant of Sundram Fasteners Ltd (SFL) in China has begun contributing to the revenues of the company though profits from the unit are not expected until after 2005-06.

The plant began commercial sales last week with its first consignment being despatched to a Taiwanese buyer.

``I expect that it will take 1- 1 years for the plant to break-even,'' said Mr Suresh Krishna, Chairman and Managing Director, adding that the first year will be spent mainly on training the Chinese workforce.

Mr Krishna said that initially the plant would be exporting to SFL's overseas customers before commencing supplies to the Chinese domestic market.

``We will sell abroad first, then to multinationals operating in China and finally to the domestic buyers. The idea is to show domestic customers a running factory... once we export and sell to multinationals in China, the domestic Chinese companies will be comfortable with us,'' he said. The internal assessment in SFL is that it will take 1-2 years for the company to first understand China before it can begin to leverage on its presence there.

The plant, where SFL has invested Rs 23 crore till now, will have a capacity of 6,000 tonnes. Currently, it has 33 employees but that will go up to 50 eventually when it works to full capacity of three-shifts, 6 days a week. The workforce is very young comprising those passed out of technical school with the average age being around 18 years. Interestingly, there are also a few girls as part of the work force.

Mr Krishna said that compensation levels match that of its units in India with the workers now being paid about $60 a month in their training period on completion of which they would get a salary of $100 per month.

The plant is expected to have double the productivity of SFL's existing Indian plants. ``Machines are faster, people are younger and TPM has begun from day one,'' Mr Krishna said on the reasons contributing to the higher productivity at the plant.

Sundram Fasteners (Zhejiang) Ltd is a 100 per cent subsidiary of SFL, which is the first engineering company from India to set up operations in China.

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