Sakthi Auto eyes Far East for exports

Sakthi Auto Components Limited (SACL), a subsidiary of Sakthi Sugars, is eyeing the Far East countries for exporting both its castings and value-added machined components.

"There seems to be an increased demand for castings and auto components from companies in the region. We are holding talks with some of the auto majors in this regard and would be exporting our products to Korea and Thailand from the next financial year. But it is likely to be finalised in another four months," M Manickam, vice-president and managing director, Sakthi Sugars, told Business Standard.

SACL is already exporting its machined castings to the North American market. Besides, the company is also planning to tap the European market for its exports.

It has already set up a separate line of production for its customer, Delphi Automotive Systems, a subsidiary of General Motors, USA, for supplying steering knuckles.

The company was also considering setting up of such separate units for its other customers like Ford and Toyota at an estimated investment of Rs 35 crore, he added.

To cater to the growing domestic and export demand, SACL is putting up additional capacities at its foundry unit.

Close on the heels of acquiring the city-based Bonomi Belgium Venitel India, a company manufacturing industrial valves, SACL would be going in for a capacity expansion in the newly acquired plant as well as in its own plant by the end of 2006.

This would enhance the company's combined capacity from 3,000 tonnes per month to 5,000 tonnes per month.

In this regard, the company intends to spend around Rs 75 crore, of which around 15 per cent would be met through internal accruals and the rest from bank loans.

"Currently, 50 per cent of the company's total production is being exported. Post expansion, there will be a flip in this ratio to 75:25, with more importance given to the export market," Manickam said.

The revenue breakup from the domestic and overseas market is also poised for a change after the expansion. "Of the total income of Rs 200 crore, exports contribute about 40 per cent. This ratio is likely to increase after our expansion project," he added.

Sakthi Auto has already partnered with Denmark-based Disa Technologies for the supply of moulding line and with George Fisher Foundry Systems, Switzerland, for supplying melting lines. This apart, SACL is also looking forward for a joint venture with a Swedish company.