Craftsman Automation Ltd, a diversified engineering company supplying parts to automotive and industrial sectors, has revised its FY24 capex upwards by an additional ₹150-160 crore to ₹470-480 crore as the company plans to put up a new greenfield unit in Coimbatore to take advantage of the emerging opportunities that arise of China +1 and Make in India programmes.
“We had guided for about ₹320 crore capex for this fiscal. But now we see huge opportunities for the powertrain as well as the aluminium business going forward because of the geopolitical situation and make-in-India policy. There are various policies the government is bringing up to reduce the quantum of imports. So, there will be no dumping from other countries. So, we started to prepare for that scenario,” Srinivasan Ravi, Managing Director of the company said during the company’s Q2FY24 earnings call.
The Coimbatore-headquartered company has chalked out a new investment of about ₹209 crore, of which ₹150-160 crore will be spent in this fiscal, to set up a new manufacturing complex. The proposed factory will be set up on the company’s 48-acre site at Kothavadi near Coimbatore. The existing and the new plant are within 45 km reach and operation management is easy as both plants will have better synergy of operations.
“We are going ahead with the Greenfield project very close to the mother plant in Coimbatore. We are going to create one more premise for future expansions of all our three businesses – automotive powertrains, aluminium products and industrial and engineering,” he said.
During H1 of this fiscal, the company incurred a net capex of ₹258 crore in existing business expansion, which also included technology upgradation and automation.
The company expects the automotive powertrain business to grow in the high single digits to low double digits over the next two years due to a high base of FY23. It is expected to grow at a rapid pace in FY26. It is working with one of the largest customers for an export order, which is expected to start in FY26. Also, the company is revamping its capacities to cater to demand for the off-highway segment.
“While we continue to increase our exposure to the commercial vehicle business for overseas markets, directly or indirectly, this is a segment (off-highway), which has got a lot of potential given the geopolitical situation and also the reduction of dependence on China,” he said.
In the aluminium die-casting business, the company is in on ramp-up phase. In the industrial and engineering business, which is essentially a non-automotive business vertical and comprises storage solutions and high-end sub-assembly and contract manufacturing and others, there was a pause in the storage solution business during the first half, but H2 looks bright. It carries an order book of ₹100 crore in automated storage.