Led by GenNext, Sundram Fasteners eyes buyouts in defence, EV segments

G Balachandar Chennai | Updated on November 04, 2020

Arathi Krishna, MD, Sundram Fasteners

Q2 profit up 37% on better auto demand and cost control

GenNext women at the helm of Sundram Fasteners Ltd (SFL), a leading auto parts company of the TVS Group, are not only boldly venturing into newer business areas, but also pursuing inorganic growth opportunities for scale and future growth.

Over the years, Suresh Krishna, a doyen of the auto component industry and Chairman of SFL, has built the company into a globally-reputed and well-managed auto parts firm in India.

Building up on the momentum, the company’s Managing Director Arathi Krishna (second daughter of Suresh Krishna), has been aggressively pursuing growth in segments such as aerospace and defence and electric vehicle. Suresh Krishna’s third daughter Arundathi Krishna is the Joint Managing Director, while the eldest daughter Preethi Krishna is on the Board of the company.

SFL is looking to acquire companies in aerospace, defence and electric vehicle segments, which are seen as lucrative areas, though their share in total business is in single digits now.

Two big orders

The company is already supplying forging and other parts to companies in the aerospace, defence and electric vehicle segments, both in India and abroad.

“We are currently pursuing two big orders from global companies in the aerospace business. We are not in a position to disclose the details, but these are promising [orders] and it will be a big entry for us in this business. The offset policy has started to show a positive impact and we are looking at acquisition opportunities in aerospace and defence segments,” Arathi Krishna told BusinessLine.

She said there are a host of small companies that have been struggling for growth in the aerospace segment and Sundram Fasteners would look at them.

In the electric vehicle space too, the company has been supplying parts to almost all leading companies. It hopes to double the current EV business of ₹50 crore soon.

“If you don’t include batteries in EVs, then we are supplying all other parts. While we are looking at acquisitions in this space as well, we can also explore the supply of parts to batteries,” she said.

But, she asserted that the management would not lose focus on maintaining double-digit growth in business and delivering value for the shareholders.

“Over the last three years, we have spent about ₹930 crore on building new capacities and capabilities. This will help us maintain our growth. Currently, about 25 per cent business comes from the new products portfolio,” she said.

Domestic sales improve

Helped by improved demand in the vehicle segments and cost control measures, the company has posted a 37 per cent increase in its net profit at ₹97 crore for the quarter ended September 30, 2020 as against ₹71 crore in the same period the previous year.

Revenue was flat at ₹767 crore with domestic sales growing to ₹484 crore (₹450 crore), signalling improving demand. Capacity utilisation improved to 64 per cent in Q2, up from 35 per cent in Q1. The Board has declared an interim dividend of ₹1.30 per share.

The company’s subsidiary TVS Upasana Ltd has established a new division Vallam Vadagal plant near Chennai to produce plastic parts for supply to domestic and global firms. About ₹17 crore will be spent over three years on this project.

Published on November 04, 2020

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