Sundram Fasteners going ahead with capex plans
Despite a slowdown in the auto industry, Sundram Fasteners (SFL), part of the TVS Group, said it was going ahead with its capex plans as it was confident that the future of the sector looks promising. To address the cyclical challenge, the company has started expanding into new areas, including defence and aerospace.
Sundram Fasteners Chairman Suresh Krishna said the company was not shying away from investments since it wanted to be ready when the economy and the sector bounce back.
The industry is known for its cyclical nature and the last slowdown was in 2008 and the industry had a good run for a decade now. “At some point, downturn will happen. We can’t expect to keep growing. A good company should manage good and bad turns,” he told the company’s share in Chennai.
The company invested ~440 crore in 2018-19 and plans to pump in around ~350 crore in 2019-20. He said on an average, the company invested ~300400 crore. The ~800 crore investment will add around ~1,100 crore to the top line.
Arathi Krishna, managing director, Sundram Fasteners, said one of the reasons the company was not affected much was because it diversified into areas like retail, exports, both of which account for 45 per cent of the company’s sales now. While domestic sales of the company dropped to ~557.22 crore during the quarter ended June 30, from ~614.29 crore a year ago, exports grew to ~348.28 crore from ~321.71 crore during the same period.
SFL floated a wholly-owned subsidiary Sunfast TVS to tap
The company started expanding into new areas, including defence and aerospace, to address the cyclical challenge holders
opportunities in defence and aerospace sector and Arathi is confident that the new firm would clock around ~100 crore in the next one or two years.
Now, Sundram is not just a fastener company but also a broad-based engineering major capable of undertaking manufacture of components and assembly systems for automotive and other engineering applications in India and abroad, said Suresh.
Currently, of the around ~4,002 crore, only 30-35 per cent comes from fasteners.
Commenting on electric vehicles, Suresh said the company had built capabilities to cater to electric vehicles.