Sundaram Fasteners Ltd is planning to invest around Rs 150 crore in 2011-12, which is an increase of around 11 per cent over last year. Besides, the company also said it is looking at acquisitions in the automotive space.
Suresh Krishna, chairman and managing director, Sundaram Fasteners Ltd, said the total capital expenditure commitments in 2011-12 is likely to be around Rs 150 crore, subject to market conditions and internal accruals.
The company is setting up facilities at Mittamandagapet in Tamil Nadu to manufacture fasteners for use in Wind Energy Generators at an initial investment of Rs 30 crore. Presently, a substantial portion of the demand of Indian wind turbine manufacturers is met through imports.
The global demand for fasteners for wind energy industry will be quite high considering the emphasis being placed on generation of clean power, added Arathi Krishna, joint managing director, Sundaram Fasteners Ltd.
“Our German plant has excellent technology for wind energy through which we can tap the market which has not been tapped so far,” she said.
V G Jaganathan, executive director and secretary, Sundaram Fasteners, added Mittamandagapet facility would go on stream by September or October 2011.
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Company’s project to manufacture sprockets at the factory at the special economic zone, Maralaimalai Nagar, will see an initial investment of Rs 25 crore, he added.
Other proposed investments will be spread across other factories. It may be noted, the company has 24 factories.
It will be difficult to quantify the quantity by which capacity would increase as the proposed investments will be mostly made on machines.
In some factories it would go up 10-15 per cent,” said Jaganathan.
The company will expand capacity further on manufacturing sintered metal products, hubs and shafts and fasteners. The company also proposes to add secondary capacities to develop new products for its customers and expand wherever necessary to meet customer requirements, said Krishna.
During the year, the company started bulk supply of shimless tappets for Maruti-Suzuki India Ltd for use in their K-series engines. The company also commenced bulk supply to Tata Motors Ltd for use in the Nano vehicles.
“As part of expansion, we are also looking at inorganic growth on the automotive space,” added Krishna.
Commenting on subsidiaries, he said, all the subsidiaries are contributing profit. The company has 11 subsidiaries, including one in China, Germany and United Kingdom.
China and UK subsidiaries have reported a profit of Rs 3.4 crore and Rs 2.66 crore respectively last year, while Germany reduced loss substantially. During the six months ended June 2011, all the subsidiaries made a cash profit.
“Uncertain economic conditions prevailing in Europe continue to impact German operations. There has been a slight improvement in 2011. Substantial improvement will only happen when European markets return to normal,” he said.
Commenting on exports, Krishna said, export contribution to the total turn over of the company increased to 28.6 per cent during the first quarter of 2012 as compared to 25.4 per cent during the same period last year.
Company’s total sales during April to June 2001 rose by 28 per cent to Rs 521 crore as compared to Rs 406 crore, a year ago. Net profit rose by 55 per cent to Rs 34.93 crore from Rs 22.55 crore, he said.
Sundaram Fasteners foreign customers includes General Motors, Caterpillar, Ford, Chrysler, Cummins, Honey Well etc.,
On the outlook, he said, during 2011-12, the pace of growth in domestic market will moderate as the rate of growth in 2010-11 was above normal.
“Last year was exciting, but difficult also,” he said. The company expects to improve overall performance through development of new products for existing customers and by winning new customers besides increased exports, said Krishna.