Sundram Fasteners has commissioned a second foundry in China.
Team CV
Sundram Fasteners, a TVS Group company, entered China roughly a decade ago by setting up an offshore facility in Haiyan County. Since then, the company has steadily expanded its scope of business, in the process winning the confidence of Chinese OEMs. Finding the Chinese market big and interesting, SFL has commissioned a new foundry there. This is a part of the long-term plan of the company according to Suresh Krishna, Chairman, SFL. Terming the Chinese market as both, interesting as well as challenging, Krishna mentioned, “To be successful in the (Chinese) market, companies need to keep a long-term plan in place. It may not be worthy of expecting immediate results.” He cited the example of Chinese OEMs partnering with them after marking a presence in that market for over a decade. “This also reflects on the quality we offer, and our commitment to the Chinese market,” Krishna expressed.
Specialising in the manufacture of high tensile fasteners, cold extruded parts (like gear blanks, transmission shafts, cams, starter sleeves and pinions, CV joint parts, fan hubs), hot forged parts (like bevel and pinion gear, hub and hub rings, clutch hub, crankshaft sprocket, stainless steel turbocharger parts, connecting rods), powertrain components (like turbine shafts, output shafts, sungear shafts, slip yoke), pumps and assemblies (like water pumps, oil pumps, mechanical fuel feed pumps, manual and auto belt tensioners, rocker assemblies, suspension and precision parts, fan support, camshafts), radiator caps (metal and nylon), and powder metallurgy parts (like rotors and gears, synchroniser hubs, shock absorber parts, valvetrain parts, bushes, structural parts), SFL was the first engineering industry player to enter China in 2003 from India. It set up a Chinese subsidiary called Sundram Fasteners (Zhejiang) Ltd. Earning a revenue of Rs.250 crore 11 years after foraying into the dragon land, the company, in response to the rising demand for its products, has commissioned the second 10,000-tonne foundry there.
Built with an investment of Rs.100 crore, the foundry will enable SFL to backward integrate. It will enable the company to cater to the rising demand for machine castings in China. Recognised as a credible supplier of auto components among the MNCs, according to Krishna, the setting up of the second foundry will help the company to stay on par with the changes the Chinese OEMs are going through. Over the one decade that SFL has been operating in China, it has had a healthy learning curve. Overcoming the challenge of high attrition by deploying unique ways like helping its employees to learn English by providing a suitable incentive, SFL is keen to leverage the know-how it has gained in the Chinese market to maintain a strong position. Hoping to leverage the considerable technological edge in forging, metal forming, close-tolerance machining, heat treatment and surface finishing gained over the years, SFL is keen to grow in double digits in the next two to three years. Revealed Arathi Krishna, Managing Director, SFL, that the company is an investing Rs.200 to Rs.300 crore over the past few years.
With plans being chalked out to invest Rs.350 crore in the current fiscal, SFL, said Arathi, is keeping pace with customer requirements, and wants to move geographically closer to them. “We could potentially look for one or two more plants depending on how the OEMs expand. It would be in Gujarat or in Andhra Pradesh,” she expressed. Including the facility in Haiyan County, the company has 27 facilities across the world. The daring move to acquire the radiator cap business of General Motors in 1999 for Rupees-three crore, and shifting it to India, marked an important inorganic growth point for SFL. The company has since then grown to be a big exporter of automobile components from India. Today, exports contribute 30 per cent of its overall turnover at Rs.1,100 crore. Over 80 per cent of what is exported, is to the US. Other growing export markets like China are subject to much interest at SFL from a growth point of view. The aim, expressed Arathi, is to increase the export per centage to 50 per cent in the next five to six years.
Of the opinion that around 30 per cent of its product portfolio can cater to Electric Vehicles (EVs) if they were to happen tomorrow, Arathi mentioned,
“We have formed a taskforce internally to adopt and strengthen our capabilities. We are looking at design houses which can help us to carry the product to the market as the need for it is felt. We are enhancing our capabilities in this area, and could take an inorganic route too.” In FY2017-18, SFL recorded a total turnover of Rs.3,425 crore, growing by over 15 per cent year-on-year. Domestic sales of SFL was Rs.2,146 crore (+16.9 per cent) on the basis of a strong demand from manufacturers of passenger cars, UVs, light commercial vehicles and two-wheelers.
