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Sundaram Finance Holdings Ltd (SF Holdings) said it has taken steps to consolidate investments in the foundry business.
Increased shareholding
The company has increased its shareholding in Flometallic India. Flometallic has, in turn, filed a scheme of arrangement with the NCLT to merge its operations with those of Brakes India. Along with Dunes Oman (a subsidiary of Brakes India), the merger will create a combined foundry capacity of 1,75,000 tonnes operating at four locations — Sholingur, Naidupeta, Jagadia and the Sultanate of Oman.
“This will create one of the largest ferrous casting businesses in the country and will increase the competitiveness of the foundry business as a whole,” according to a statement.
Portfolio investment
SF Holdings will also make an additional investment of up to €2 million in its portfolio company, Italy-based Mind S.r.l, which focuses on carbon fiber components for the automotive industry in Europe. A year-ago, SF Holdings had invested about ₹24 crore in the company for a 40.6 per cent stake.
The additional investment is to augment working capital needs and invest in further growth, it added.
Profits rise
SF Holdings reported a standalone net profit of ₹11.09 crore for the quarter ended September 30 compared to ₹3.78 crore for the corresponding period of the previous year.
SF Holdings is engaged in the business of making investments — primarily companies in the automotive space — many of them co-promoted with the TVS group. It holds significant investments in companies such as Sundaram Clayton, Wheels India and IMPAL (all listed), and Brakes India and Turbo Energy (both unlisted).
Also see: Sundaram Finance Holdings: Why you should accumulate this oft-ignored small-cap stock
As a result, dividends from portfolio companies form a substantial part of the financial results, according to a statement.
For the half year ended September 30, consolidated net profit was ₹50.86 crore compared to ₹9.41 crore in the year-ago period.
Automotive holdings
Supported by a strong recovery in the automobile sector, the dividend received from portfolio companies was at ₹29.13 crore for the half-year period, already exceeding the full year’s dividend received for FY21 (₹14.13 crore).
“We continue to use the automotive industry down-turn to consolidate our portfolio, investing further into our companies and undertaking business restructuring to unlock synergies in our foundry business,” said Harsha Viji, Director, SF Holdings.
The company’s performance is also an extension of its long-term strategy of consolidating its automotive holdings.
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