Companies

Sundram Fasteners to resume capex cycle from FY22

G Balachandar Chennai | Updated on February 04, 2021

Arathi Krishna, Managing Director   -  Bijoy Ghosh

Sees promising outlook for both domestic and export business

With impressive performance in the third quarter and positive growth outlook, leading auto parts player Sundram Fasteners expects to resume its capex cycle from the next fiscal year.

The TVS Group company’s capex halved during 2020-21 due to the impact of Covid-19, after spends of about ₹300 crore annually the previous three years.

“We are pleased with the uptick in business and due to which we did good ramp up. We have reported the highest-ever quarterly standalone and consolidated net profit in Q3 of this fiscal. We are optimistic about the outlook at this point. Both domestic and exports businesses look promising and we will be back to previous level of capex spend — about ₹300 crore — from FY22,” Arathi Krishna, Managing Director, told BusinessLine while discussing the Q3 performance of the company.

While improved business scenario and continued cost-control measures boosted the company’s margins significantly compared with last year, she said the cost-efficiency measures would continue going forward too for profitable growth.

With a double-digit increase in Q3, exports have started to grow aided by new business flows from the US, while Europe is showing signs of recovery, she said. The company’s capacity utilisation level is reaching 75 per cent and is expected to increase further with improving prospects in commercial vehicles and in exports business.

Sundram Fasteners also sees momentum in its new businesses such as defence, aerospace and electric vehicles. It hopes to make further investments in creating more capacity for new businesses in the coming years. It has already earmarked ₹100 crore worth of capacities at a plant in Chennai for defence parts production.

The share of non-auto business has now increased to about 20 per cent in total revenue from 16-17 per cent last year. “The non-auto business is expected to grow to 25 per cent in the future,” said Krishna.

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Published on February 04, 2021

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