The Hindu Business Line : A lesson or two from Dragon Land for Sundram Fasteners

THE experience of one and a half years in China has taught Sundram Fasteners some useful lessons. The Dragon had some surprises for the TVS group company, but it did not disappoint in terms of business.

The Sundram Fasteners Chairman and Managing Director, Mr Suresh Krishna, expects Sundram Fasteners (Zhejiang) Ltd, to breakeven in December, and start making full-year profits from 2006 — a year earlier than projected. But "it has not been easy."

Myths: Sundram Fasteners discovered that it was a "myth" that China is cheaper than India. Sure, there are advantages — power costs less, water is available aplenty. But compare the cost-sheets and China is at best some 4 per cent cheaper than India. (At least for engineering companies.)

Other senior officials of Sundram Fasteners point out that even the "4 per cent advantage" is chopped off by savvy customers. "If you are supplying from China, supply cheaper."

Attrition rate: The second lesson the company learnt was that it was not easy to retain employees. Sundram Fasteners (Zhejiang) has some 70 Chinese working for it, about half of whom are women. "The attrition rate is very high," Mr Suresh Krishna told Business Line. "They will leave you for just 14 dollars more."

Observes another official of the company, "there is high attrition rate even here, in IT and BPO sectors. But at least, they give you a resignation letter before they leave."

Sundram Fasteners (Zhejiang) has tried to battle this problem with measures such as free uniform, shoes and lunch, but the attrition rate continues to be high.

Mr Suresh Krishna said that China is about 10 years behind India in automotive technology, but is surely catching up.

Sundram Fasteners (Zhejiang) expects to achieve a turnover of around Rs 10 crore in the current year.

UK subsidiary: Meanwhile, Sundram Fasteners plans to invest further in its UK-based subsidiary, Cramlington Precision Forge Ltd. The quantum of investment is being worked out.

The Hosur plant of Sundram Bleistahl Pvt Ltd, a joint venture between Sundram Fasteners and Bleistahl Produktions GmbH of Germany, is expected to go on stream next month.

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