Sundram Fasteners Ltd pins hopes on exports to maintain growth momentum

Having enjoyed a double-digit compounded annual growth rate (CAGR) of sales for the last five years, SFL is upbeat about its present and future. Exports crossing Rs 1,100 crore, contributing 30 per cent to sales and automation would be the key drivers to sustain its current momentum.

SFL Chairman Suresh Krishna and his daughters – Arathi Krishna (Managing Director) and Arundathi Krishna (Joint MD), to whom he has passed on the baton of a company that was established over five-decades ago, said, “The automotive industry is going through a big boom. Never have we witnessed such a buoyancy in the industry, which has been growing at 12 per cent.” 

From producing 3 million cars, the industry is projected to reach the 10 million-mark by 2030, raising the hopes of stakeholders such as SFL. Apart from cars, trucks too were doing good business and with the infrastructure spend on an upsurge, SFL feels “every aspect of the automotive industry is doing good.” 

Krishna also said this was the best time to invest in India as its economy growth was unmatched by any other country. “Even China (which had been growing in recent years) has plateaued,” he sought to point out. SFL, which has a factory there has done well with the 11-year-old facility reaching a turnover of Rs 250 crore. Last April, the auto component major also inaugurated a 10,000 tonnes foundry plant in China, where it has increased investments substantially. 

“There is a lot of demand for machined castings. We have invested more in the China factory, which is profitable. We have also put up a second plant there,” he said, stating unlike other Indian manufacturing companies, which have had to come back to India, SFL has been able to sustain. The company is confident of its Chinese operations reaching Rs 1,000 crore mark in future. 

While China, a powerhouse, cannot be ignored, it must be noted that it is a market which requires long-term vision. Even MNCs such as L&T, Nestle and Cadbury entered India when things were difficult but it is their patience and resilience that have paid off, Krishna said, drawing attention to the need for a time horizon of 25 years or so.  

On attrition, Arundathi Krishna said, it is very high for companies operating in China. But for SFL, the people’s preference to work for English-speaking companies had worked to its advantage with attrition lesser than a Chinese company. Also, the introduction of English-speaking classes and Chinese language classes for Indians and employee benefits had led to slightly lower attrition at SFL. 

Arathi Krishna said SFL had a dominant share but had to operate in a competitive landscape – be it Japanese imports or presence of other players. Banking on goodwill and market share, SFL is looking at exports (80 per cent of the export volume is in the US) to constitute half of the turnover within six years. 

It would continue to invest around Rs 200 to Rs 300 crore and move geographically along with its customers. A sum of Rs 350 crore capex had been earmarked for this year and SFL was willing to expand in Gujarat, AP and Uttarakhand to be closer to its customers.