Leading auto parts maker Sundram Fasteners (SFL), part of the TVS group, is going ahead with its capex plan amid challenging market conditions and has chalked out a budget of Rs 150 crore for the present financial year. However, it will keep the option open to shrink the capex budget if market conditions become worse.
“The vehicle sector has projected some improvements demand in the domestic market from festive season. We hope things will be better from that period, and so far, there is no change in our capex plan for the financial year,” a top company official told Financial Chronicle.
The company has proposed to spend the Rs 150-crore capex in specific areas, besides expanding its capacity of all its existing product lines. It also proposes to add secondary capacities to develop new products for its customers. Last year, the company had incurred a capex of Rs 137.73 crores on existing and new projects.
Meanwhile, the company is also making steady progress in wind power sector business after it forayed into the segment. It is reported to be the only Indian company to make fasteners for wind power generators. Wind equipment makers have been importing these components from other countries.
The Rs 2,147-crore Sundram Fasteners has set up fasteners production facility for the wind sector at Mittamandagapet in Tamil Nadu. Global demand for fasteners for wind energy industry is also high in view of the greater emphasis being placed on generation of clean power.
In export business, US markets showed signs of recovery and the confidence levels of customers have improved perceptibly, while European markets continued to be sluggish. The Company’s push for adding new products and new customers is expected to result in further improvement in exports in the near future. Volatility in exchange rates and slow recovery in demand from European customers are causes for concern, said company’s latest annual report.
During this fiscal, OEM demand growth is likely to continue moderating in view of the lower growth outlook across commercial vehicles, tractors and two-wheelers, while replacement demand growth outlook would remain stable in 2012-13. And, the threat of cheaper Chinese imports is also likely to persist.
Industry experts also point out that reasonably better demand in replacement demand export markets are likely to help domestic auto parts makers to partially weather the slowdown in vehicle industry.
source: http://www.mydigitalfc.com / Global business networking platform / Home> My Stocks / by G. Balachandar / Chennai, July 23rd, 2012