We Are on a Good Wicket; Have Home-Grown Advantage: MD, Sundram Fasteners
The new MD and JMD of Sundram Fasteners speak on how the company is placed to grow and face the challenges in the future
In their first interview the sisters spoke to Business Standard about their vision and strategy. Edited Excerpts:
What is your vision and what will be your strategy?
Arathi: We have been behind the target of reaching a billion dollar now, but the dollar value has been going up. In 2006, when I joined, it was Rs 38-40.
Every year there were real challenges like power, political climate, raw material, the OE market tanked, recession and the global financial crisis happened. We had enough things happening in the last 10 years. Few exists even now and we can manage it, but we know how to handle it.
Auto is a sunrise industry as penetration is only 15-20 per cent. Infrastructure and rural metropolis need to be built, goods need to be moved. These things cannot happen without transport. Car population is expected to touch 10 million from around 3 million by 2030. Two-wheeler market is expected to grow faster. Overall, I am optimistic and expecting double digit growth.
We are on a very good wicket since we have home-grown advantage. Multinationals are attracted to India, but only we know how difficult it is to operate in India.
Do you have enough capacity and capabilities to tap the opportunities, especially when it comes to new technologies like Electric Vehicles?
Aarthi: As far as capacity concerned today we have 27 facilities, including China. We will be investing around Rs 3.5 billion this year, while every year our general capex is Rs 2-3 billion, on expansion. We may look at green fields in line with our customers.
As far as EV concerned, we are working with all our customers, right from the start on designing electric vehicles. Though we don't see EVs getting adopted immediately, SFL's 30 per cent of the portfolio is geared up to cater to EVs. We also formed a task force internally to adopt and strengthen our capabilities.
Are you open to partnerships or acquisitions in order to build your capability?
Aarthi: Very much. We are looking at the design and R&D space. We need to bolster our capabilities in this area to bring in outside capabilities or buy in to some design house. We are working with Anna University and IIT Madras on material science, where 40 per cent of my cost is related to. China has been a very good parallel, because Chinese government is subsidising EVs quite heavily. We have a lot of customers who can help us there.
How is your Chinese operation performing? Have you started exporting from the facility?
Arundathi: It continues to be profitable. For now it is catering to domestic market and clocked Rs 2.5 billion. We are expanding in China with Rs 1 billion investment for a second plant.
What is your strategy for exports? Will it help to mitigate the challenge related to currency rates?
Arathi: Today exports account for 30 per cent and 80 % of it is to US, which is a quality conscious market. As we expand geography and acquire new customers exports will increase to 50 per cent in 5-6 years.
SFL also caters to non-auto industry including solar and wind business. How is it growing?
Arathi:The adjacent areas have been pretty profitable for us. The non-automotive is around eight per cent of the business. The contribution is very good, the size has to go up. We were targeting doubling it to 15 per cent, but everything changed in between since prices of wind and solar energy dropped. But we are well poised and capacitised. When the demand comes in, we will be ready to address it. Solar, wind, construction, oil and gas, aerospace and defence we are well poised to scale.
Reference - http://www.business-standard.com/article/companies/we-are-on-a-good-wicket-have-home-grown-advantage-md-sundram-fasteners-118051000149_1.html
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