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Sundram Fasteners completes UK plant acquisition

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Mr Suresh Krishna, Chairman and Managing Director, Sundram Fasteners Ltd, Mr V.G. Jagannathan, President, Finance, and Mr Sampath Kumar Moorthy, President, Operations, at a press conference in Chennai on Monday. - Shaju John

Chennai , Dec. 22

CUSTOMER acquisition is the main reason for Sundram Fasteners' purchase of the precision forging plant in the UK, according to the company's Chairman and Managing Director, Mr Suresh Krishna.

Sundram Fasteners has just concluded the purchase of the precision forging unit of Dana Spicer Europe, located at Cramlington(near Newcastle), UK . The acquisition has cost Sundram Fasteners about Rs 12 crore.

A separate company, Cramlington Precision Forge Ltd, has been formed as a wholly-owned subsidiary of Sundram Fasteners, and the purchased forging unit has been vested with this subsidiary. Under the agreement with Dana Spicer Europe, its associate company, Dana Automocion, would continue to buy its existing requirement of precision forgings from Cramlington for three years.

The forging unit produces mainly warm forged bevel gears. In the 11 months up to November, the unit's turnover was about Rs 25 crore (3 million). This figure is expected to double in two to three years.

But more than the business itself, Mr Suresh Krishna sees larger benefits in terms of customer acquisition.

The precision forge unit has at least eight customers, to whom it might be possible for Sundram Fasteners to sell the products it makes in India — high tensile fasteners, cold and hot forgings, powder metal parts and radiator caps.

The customers of the precision forge unit include MAN, DAF Trucks, Albion Automotive, Scania and Parker, besides Dana.

Mr Suresh Krishna estimates that it might be possible to sell products worth about $10 million to $12 million (around Rs 50 crore) in the next 3-4 years' time.

Sundram Fasteners will invest an undisclosed sum of money in expanding Cramlington Precision Forge's capacity and the UK unit's business to double in the next two years.

Also, the technical expertise available with Cramlington Precision Forge, such as the technology for manufacturing warm-forged bevel gears, could be brought to India, for making the products here, Mr Suresh Krishna said.

Sundram Fasteners intends to make no change in the management of the UK unit. The manpower could be marginally raised from the present 37.

Mr Suresh Krishna also ruled out a merger of the UK unit with Sundram Fasteners "for the time being."

To a question, he replied that Sundram Fasteners would continue to operate the plant in the UK itself and not close down the company and ship the plant to India (as it did in the case of radiator caps). Why disturb the operation when it is profitable, he asked, and added that it is also to provide some level of comfort to the UK plant's customers.

The European market was growing for Sundram Fasteners. There were serious enquiries from DaimlerChrysler and Opel for powder metal parts and fasteners. He said that Sundram Fasteners' strategy would be to go in for acquisitions that brought in customers to whom it would be able to sell its other products.

The acquisition of the UK plant came through Axles India, another TVS group company, in which Dana is a collaborator, Mr Suresh Krishna said.

The company was on the look out for acquisitions of companies manufacturing water pumps and oil pumps, and also radiator caps. Sundram Fasteners' China plant is expected to be ready by May 2004, he said.

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