Chalks out Rs 150-crore capex plan for this year

With the domestic auto market slowing, components maker Sundram Fasteners Ltd (SFL) is fastening its grip on the US market.

“Our exports have just boomed. The rupee going down has boosted us quite a bit; the good-old greenback is getting its due,” said Suresh Krishna, Chairman and Managing Director.

“America is not stagnant anymore. It is growing slowly at 2-3 per cent. We expect most growth from US exports,” said Krishna.

Key contributor

The US accounts for over 70 per cent of SFL’s exports of Rs 646 crore in 2011-12. General Motors, Ford and Cummins are its big customers. The company’s revenue for FY 12 was Rs 2,147 crore.

Having established a brand name for itself exporting radiator caps to GM in the mid-90s, SFL is now set for the long haul in exports. “Our exports began by selling radiator caps to over 20 factories in America. This helped us get first-hand knowledge of how international business has to be conducted.”

Today, fasteners and shafts have completely overtaken radiator caps, which is only Rs 50 crore out of the company’s exports. The company is fully geared for exports, said Krishna – “whether it is meeting quality demands, delivery demands, warehousing or logistics. Exports have become a way of life for us.”

Exports rise

Exports rose 35 per cent in 2011-12 over the previous year. Production for export markets happens at its plants in Chennai.

However, Europe is not doing well. Sundram Fasteners bought Peiner Umformtechnik in Germany in 2005; things were going well for two years. “Now, Europe has just gone into a shell,” rued Krishna. The German company registered losses of Rs 28.81 crore in 2011.

The company’s subsidiary in Cramlington (SFL acquired Cramlington Precision Forge in 2003) is managing to “keep its head above water.”

The plant here supplies to both the UK and India.

However, exports still account for only 30-35 per cent of total revenue. While that will grow, “we cannot say we will completely go export-oriented. The domestic market is very important to us,” says Krishna.

SFL has chalked out a Rs 150-crore capex plan for this year. But with auto companies in India cutting back, the company does not see big room for expansion in the country. If things continue like this for a few more months, the company may have to rethink, says Krishna.

The company had invested in a Rs 50-crore plant to make seamless tappets (which lift valves) for Maruti’s new-gen engines in with technology from Hitachi. But with Maruti shut down in Manesar, SFL is looking to supply to other players.

vinay.kamath@thehindu.co.in

(This article was published on August 3, 2012)
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