Sundram Fasteners Ltd’s (SFL) China bet has started to pay off handsomely. About 11 years after the company’s foray into the dragon land, its subsidiary — Sundram Fasteners (Zhejiang) Ltd — has clocked revenue in excess of ₹250 crore.

Rising demand for its product has forced the company to expand its foundry capacity recently at ₹100 crore. This was revealed by Suresh Krishna, Chairman of the auto-component major.

He was addressing a press conference to announce the company’s 2017-18 annual results and introduce its new leadership team.

He retired as Managing Director recently after more than 50 years at the helm handing over the reins to his daughters — Arathi Krishna, Managing Director and Arundathi Krishna, Joint Managing Director, SFL.

“We should do well in China in the next few years with a 15-20 per cent annual growth,” he said, adding, “we are among very few Indian companies that have succeeded there”.

He attributed the success to patience and stamina. “You need to be a long-term player. I am looking at China 25 years from now,” he added.

High attrition

The company has also managed to deal with the high attrition rate there.

“Attrition rates are high there and people leave their jobs at the drop of a hat,” said Arundathi Krishna who manages SFL’s foreign subsidiaries.

The company took advantage of locals penchant to work in an English-speaking company by offering special incentives such as conducting English classes. “Our attrition rate is thus less than Chinese companies,” she added.

As the next generation takes complete charge at SFL, Suresh Krishna is very optimistic about the future of both the Indian economy and the company.

“In my last 52 years in the company, I have never seen such growth and optimism in the economy,” he said.

Every aspect of the automotive sector is doing well and SFL is well positioned to take advantage of it.

The TVS Group company has indeed come a long way from the 1990s when Suresh Krishna made his most daring bet then -- acquiring the General Motors (GM) radiator caps business in early 1990s for ₹3 crore and shifting the unit to India.

Glory days

Today, the company makes an annual profit of ₹10 crore from that business. Obsessive focus on quality saw the company’s exports rise even when ‘Made in India’ products were frowned upon across the world. Today, it accounts for 30 per cent (₹1,100 crore) of its overall turnover.

“We continue to be a preferred source of supply and that privilege we continue to enjoy,” he said. Not surprising that SFL has enjoyed double digit compounded annual growth rate (CAGR) of sales in the last five years.

His optimism has rubbed off on his elder daughter Arathi Krishna too. She is confident of maintaining the double-digit growth rate in the next five years too. “We have the advantage of a good brand name, dominant market share and lots of goodwill,” she said.

Arathi is also readying the company for the future when electric vehicles will replace internal combustion engine-powered cars. A task force has been formed to study the impact and the opportunities the development offers. “We have about 20 years to make the transition and we will be ready well in time,” she added.

For the year 2017-18, the company posted a revenue of ₹3,425.73 crore (₹2,960.19 crore) and a profit after tax of ₹367.47 crore (₹315.48 crore) with both topline and the bottomline registering a growth of about 16 per cent.

TVS to go the Tata way in branding

TVS Group is all set to follow the Tatas in monetising its brand. The group, its Chairman Suresh Krishna revealed, is looking at ways to charge the group companies a royalty for the use of TVS brand.

Presently, the group allows a company to use the TVS brand as long as the holding company or its subsidiaries hold a 25 per cent stake in it.

“We are discussing it,” he said. The discussion is in early stages and the exact contours of the policy is yet to take shape.

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