Sundram Fasteners Ltd, a leading auto parts manufacturer, is experiencing significant growth in its electric vehicle (EV) order book. The company currently holds around ₹4,000 crore worth of EV orders, with more contracts in the pipeline.

Despite some challenges, the transition to EV technology in India is accelerating, fueled by government subsidies, increased awareness, and more frequent product launches across various categories. Consequently, Sundram Fasteners has seen a robust inflow of orders for EV parts.

The Chennai-headquartered company supplies components such as fasteners, hot-forged machine parts like bevel gears and pinions, battery coolant caps, and various types of shafts to OEMs in the EV sector. Additionally, it is developing an electric water pump.

The current ₹4,000-crore order book is to be fulfilled over the next 5-6 years. The order book is expected to grow as Sundram Fasteners negotiates with several customers for new EV orders, R Dilip Kumar, Chief Financial Officer, Sundram Fasteners said during the recent earnings call.

Capex plans

To execute the current and future orders in the EV business, Sundram Fasteners is expanding capacity at its factories in Mahindra City and Sri City near Chennai. For the current year, the company has planned a capex of ₹350-400 crore, primarily focused on the fastener division to meet export requirements and support the EV business. In FY23, it incurred a capex of ₹343 crore, which was fully funded through internal accruals without any incremental borrowings.

The company’s management believes in a gradual transition to EVs, starting with internal combustion engines (ICE) to plug-in hybrids, and then to fully electric vehicles. With a growing EV order book, Sundram Fasteners expects the EV segment’s contribution to total revenue to increase from about 6 per cent now to 10-15 per cent in the coming years.

Renewables focus

To sustain growth and prepare for the expected reduction in content per vehicle due to the shift from ICE to EV, Sundram Fasteners is also expanding into non-automotive sectors such as renewable energy. The company is focusing on wind energy and supplying fasteners for industrial and off-highway applications. The wind power segment has the potential to double its revenue from the current ₹250 crore to more than ₹500 crore in the next 2-3 years.

Thus, the company expects the share of non-automotive revenue to increase from 30 per cent to 50 per cent over the next five years.

“With the advent of electronic systems into automotive and consumer electronics, system cooling and faster heat dissipation assume primary importance. SFL is happy to announce its foray into a new product line, copper heatsink serving marquee customers. This has greater potential for all Evs, aerospace and defence, IT and telecommunications and healthcare,” Kumar told businessline.

“We broadly identified three key structural growth drivers for SFL in the long term – The beginning of execution of EV order book of ₹4,000 crore, ramp up of wind energy project, which has already been started and hopes of an increase in the order book for EV business as the management has been engaged with multiple customers in domestic and overseas customers,” according a report of brokerage house Sharekhan.