Sundram Fasteners Q2 net up 45% to Rs 104 cr on better cost control

Revenue from operations during the quarter was flat at Rs 889 cr; China operations back to normal

Sundram Fasteners Limited's consolidated net profit for the quarter ended September 30, 2020 was up 45.3 per cent, at Rs 103.64 crore, from Rs 71.33 crore during the same period the previous year.   

Revenue from operations during the quarter was flat at Rs 889.33 crore (Rs 889.18 crore a year ago).

The Company proposes to de-risk its business model and shelter itself against the cyclical nature of the auto industry, by strengthening aerospace defence and plastic.

Arathi Krishna, managing director of the company, said things are improving month after month and that almost all the segments of the auto industry have started seeing uptake, though the M&HCV segment is relatively low.

She added that the non-auto segments are also growing and account for nearly 20 per cent of the revenue. The company wants to take the share to 25 per cent. The segments include windmill, aerospace and defence, among others.

Krishna said with the gradual opening up of the economy post lockdown, there has been an upward trend in the OEMs production levels. The company has efficiently managed its supply chain and operating costs. The operations in its factories have gradually increased to three shifts to meet the improved demand. She believes that the festive season and increased industrial activity augur well for the continued better performance.

The company has efficiently managed its supply chain and operating costs. The operations in its factories have gradually increased to three shifts to meet the improved demand. The Company believes that the festive season and increased industrial activity augur well for the continued better performance.

After the impact of the coronavirus pandemic, the activities of the plant of Sundram Fasteners (Zhejiang) Limited, China, the step-down overseas subsidiary, have returned to normal levels, the company said.

Exports for the quarter ended September 30, were Rs 260.28 crore as against Rs 290.88 crore a year earlier. The export market has been slower to pick up.

Sundram Fasteners posted a higher EBITDA margin on revenue from operations at 21.7 per cent as against 18.8 per cent, due to stable material prices and stringent cost control measures adopted by the Company.

Krishna said the Company proposes to de-risk its business model and shelter itself against the cyclical nature of the auto industry. The Company is focussing on non-auto segments such as aerospace and defence sectors. In order to further SFL’s growth in the non-auto segment, the Company incorporated a wholly-owned subsidiary named ‘TVS Engineering Limited’.

The company will manufacture a wide spectrum of forged, machined parts, missile parts, precision machined parts, titanium and stainless steel fasteners, torsion bars, transmission parts and engine parts like con rods, crank shafts engine liners pumps & critical fasteners. 

Sundram Fasteners has earmarked Rs 100 crore of its capacities for defence opportunities.

Commenting on capex, Krishna said of the Rs 150 crore for 2020-2021, Rs 63 crore has already been spent. The company will be prudent about its capex programme for the current Financial Year.