Leading auto parts maker Sundram Fasteners Ltd said it has resumed its capex cycle and has planned a 3-year capex of Rs 1,000 crore in view of a favourable growth outlook in both auto and non-auto segments.
The proposed capex will be spent on ramping up capacity to supply parts in the wind energy and electric vehicle (EV) segments as the order book continues to raise.
“The last three years were muted for expansion as we took a pause in capex. But we resumed it in FY23 and spent about Rs 300 crore during the last fiscal, and we are on course to spend the remaining Rs 700 crore over the next two years,” R Dilip Kumar, Chief Financial Officer, Sundram Fasteners, said during the Q4FY23 earnings’ call.
The company’s EV business has been witnessing a surge in orders for parts meant for electric cars from both domestic and global OEMs. Recently, the company bagged an order of $250 million (about 2,050 crore) from a leading global OEM to supply parts over six years. This project is expected to deliver peak revenue of $52 million (about Rs 426 crore) in FY26.
Its EV order book now stands at $375 million, and the company is expected to incur a capex of Rs 300 crore (as part of the proposed Rs 1,000 crore capex programme) to serve the EV business.
Approximately one-third of Sundram Fasteners’ standalone sales came from its non-auto sector, which includes the wind energy industry, after-market segment, tractor business, and industrial divisions. As part of its strategy to de-risk its overall business from cyclicity, it aims to grow the share of the nonauto business to about 50% of its total revenue over the medium to long term.
The aftermarket industry generated Rs 600 crore revenue in FY23, and the industrial segment accounted for 50% of that figure. The company is also preparing to launch steps to cut variable expenses. Energy prices are a significant concern, and it is attempting to reduce the cost increase by getting more green energy and buying electricity from captive power suppliers.
