No spokes in the wheel

The boom in India’s auto industry has simultaneously led to a boom in the auto component industry. Sundram Fasteners is one such ancillary, a flagship company of $6 billion TVS Group, which manufactures sells and also exports automotive and industrial components. The company makes products as varied as high-tensile fasteners and cold extruded parts to radiator caps, automotive pumps, tappets, gears and couplings, hubs and shafts and, iron powder for its Indian as well as global clientele based in the UK, China, Malaysia and Germany.

Export focus The Company’s manufacture of value-added components and focus on exports has boosted its revenue base and led to margin

expansion. The company’s consolidated revenue grew 14.4 per cent to Rs.3, 072.09 crore and its net profit to Rs.131.79 crore in FY15. Its operating profit grew by 7 per cent to Rs.331.78 crore against Rs.310.19 crore in FY14.

Company’s standalone export sales grew 18 per cent to Rs.898.72 crore against Rs.760.75 crore in FY14. The company’s focus on adding new products and new customers is expected to only boost its exports.

Beneficiary of revival About three-fourths of the company’s domestic revenues are contributed from supplies to the truck, bus and passenger vehicle segments. During 2013-14, the automotive sector in India showed a weak growth and some important segments even posted negative growth.

However, with the revival in the last fiscal year (2014-15), the company is in a better position to gear up for any downfall in the sector. A market leader and supplier to the country’s biggest commercial vehicles manufacturers, it is all poised to reap benefit of a revival in the auto and the auto ancillary sector.

According to the Society of Indian Automobile Manufacturers (SIAM), 2015-16 has shown solid growth in the auto industry. The overall CV segment grew by 6.48 per cent in April 2015 compared to the corresponding period the previous year, which bodes well for the company. Its scrip has given a return of 226.4 per cent from January 2014 till date. Those with a medium- to long term investment objective can look at this Chennai-based auto-parts maker favourably.  

This story was first published in July 2015 in Outlook Money Magazine.

himali@outlookindia.com