Sundaram Finance Holdings Ltd (SF Holdings) said it invested about ₹480 crore in consolidating holdings in a few portfolio companies in the past one year or so.

SF Holdings primarily operates as a holding company owning a portfolio of businesses engaged in various aspects of automotive manufacturing. Significant investments include Sundaram Clayton, Wheels India, IMPAL (all listed) and Brakes India and Turbo Energy (both unlisted).

While the performance of portfolio companies is improving, it is still below their results in FY20 due to the downturn in the automotive industry driven by cyclical factors as well as the impact of the pandemic, according to a statement.

“We remain optimistic on the recovery and growth of the automotive sector in the medium term and consequently we expect a recovery in the future results of the company,” said Harsha Viji, Director, SF Holdings.

Consolidating holdings

In the past one year, the holding company utilised the opportunity to further consolidate its long-term holdings in its portfolio. “We have bought out foreign partners in Wheels India and Brakes India with an investment of ₹450 crore,” said TT Srinivasaraghavan, Chairman, Sundaram Finance Holdings Ltd.

The company increased its stake in Wheels India from 13.58 per cent to 23.28 per cent, through an acquisition of an additional 9.70 er cent stake from the foreign partner (Titan Europe) for a total consideration of ₹100 crore. The combined holding of the Indian promoters in Wheels India now stands at 57.53 per cent.

In Q1 this year, SF Holdings completed the acquisition of an additional 7.71 per cent stake in Brakes India Pvt Ltd for a total consideration of ₹350 crore from the foreign partner ZF International, taking its stake from 6.67 per cent to 14.38 per cent. The Indian promoters now own 100 per cent of the company.

The company also consolidated its shareholding in its foundry portfolio by acquiring a 6.84 per cent stake in Flometallic India Pvt Ltd and consequently the stake in Flometallic has increased from 40 per cent to 46.84 per cent.

Carbon fiber biz

SF Holdings made an investment of ₹23.71 crore in the carbon fiber business of Mind S.r.l., Italy for a 40.6 per cent stake.

“The carbon fibre market, though nascent in India now, has solid potential to grow in the long term, and the technology and expertise from Mind S.r.l will help position SF Holdings well in the market. In the long term, the carbon fiber operations could get partially shifted to India, which is expected to decrease manpower cost and expand margins,” said Srivats Ram, Director, SF Holdings.

SF Holdings reported net profit of ₹5.13 crore for the quarter ended June 30, compared to ₹2.85 crore in the year-ago quarter. Revenue stood at ₹10.50 crore (₹9.30 crore). Consolidated profit, including share of associate’s profit, was ₹31.58 crore against a loss of ₹9.89 crore a year ago.