Sundram runs into a Chinese wall

Hopes competitive pressure 3-4 years down the line will open up a 'relationship-based' market.

Sundram Fasteners' Chinese unit would find it difficult to sell in the local market till competition changes the way the auto components sector is run in that country, said a company official.

Sampathkumar Moorthy, president, Sundram Fasteners, said the components business in China was driven largely by relationships.

Only competitive pressures can change the nature of this market, he said, and sees the change coming about in the next 3 to 4 years.

This is expected to open up opportunities for the company.

Sundram Fasteners (Zhejiang), a wholly owned subsidiary of the Chennai firm, started production of high tensile fasteners about five months ago. Currently, the output of about 100 tonne a month is exported to Europe.

Sundram was the first engineering company to start a manufacturing unit in China. Moorthy said efforts are on to project the subsidiary as a Chinese company.

Most of the 25-30 strong workforce is Chinese. The company aims to scale up the workforce to 150 people in three years.

Sundram Fasteners' (Zhejiang) future growth can also come inorganically, said Moorthy. But that would not happen in the first three years of operations, he added.

He said that the first year of operations would be dedicated to consolidating manufacturing, while the second year's aim was to "participate with the customers."

Sundram Fasteners, which has been present in China for three years now, put up its plant in the last one year. The company initially invested $5 million there with the intent to increase investment in phases up to $12.5 million subject to market response and conditions. The high tensile fasteners plant has an installed capacity of 6,000 tonne a year.