August 3, 2012:

China, where Sundram Fasteners Ltd has local operations, is also in recession mode. But the company says it is investing in the dragon country for the long term.

The company set up a manufacturing plant in China six years ago, one of the first to set up shop there. “We now have enough savvy and know-how in this market. We are looking at China 25-30 years from now.”

SFL began its journey here by partly diverting production from India to gain traction in the Chinese market. Later, it approached its global customers who had factories in China. The company is now gearing up for the third phase – supplying to Chinese car makers.

“This is the most difficult phase because Chinese companies traditionally like to buy from Chinese companies. But China is upgrading its quality to compete internationally in serious engineering. So, they are looking at suppliers whom the MNCs buy from,” says Krishna.

The shift is happening slowly, says Krishna. “We are a Chinese company. Out of 200 people, only five to six are Indians. Right from salesman and production manager to chief accountant and personnel manager, all are Chinese.”

China car sales was around 18 million in 2011

source: http://www.TheHinduBusinessLine.com / Home> Companies / by Vinay Kamath & Swetha Kamath / August 03rd, 2012

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.

balachandarg@mydigitalfc.com

source: http://www.mydigitalfc.com / Global business networking platform / Home> My Stocks / by G. Balachandar / Chennai, July 23rd, 2012

SPECIAL FEATURE: CHENNAIT.S. SUBRAMANIAN / Photo: BIJOY GHOSH

Interview with M. Narendra, CMD, Indian Overseas Bank

M. Narendra: “ Our present business has crossed Rs.3,30,000 crore.” Indian Overseas Bank (IOB), which celebrated its platinum jubilee in 2011-12, was founded on February 10, 1937, by M.Ct. M. Chidambaram Chettiyar, a pioneer in insurance and industry in the country. On the very day of its foundation, IOB opened three branches – in Chennai and Karaikudi in Tamil Nadu and in Rangoon (now Yangon) in Burma (now Myanmar). Since then, IOB has expanded its operations in keeping with the rapid growth of Chennai, and Tamil Nadu itself. M. Narendra, the 58-year-old Chairman and Managing Director (CMD) of IOB, began his career as an officer-trainee in Corporation Bank. In November 2008, he joined the Bank of India as its executive director. He held that post until he took charge as the CMD of IOB on November 1, 2010.

Excerpts from an e-mail interview Narendra gave Frontline:

What are your plans to take IOB forward in the next five to 10 years?

IOB ranked 10th among the nationalised banks in terms of business when I took over as CMD. Conscious efforts to expand the business helped the bank rise to the seventh position. In the near future, we aim to be among the top five public sector banks. During 2012-13, we plan to increase our branch network and automated teller machine (ATM) network to 3,000 each. Our present business has crossed Rs.3,30,000 crore. We plan to reach the Rs.5,00,000-crore mark by the next financial year.

How do you plan to leverage the goodwill the bank has in the south, especially Tamil Nadu?

IOB has been enjoying the goodwill and patronage of its customers, especially in Tamil Nadu, where the bank was born. Many functions were organised during the year-long celebrations in many parts of the country. BANCON 2011, the annual Bankers’ Conference, was organised in Chennai as part of our platinum jubilee celebrations. All these events have enhanced the bank’s visibility. We have already seen this goodwill bringing in new customers [and]… more business and profits.

You have led a big movement of opening new branches and ATMs for IOB in the past few months. Do you feel the opening of branches will help in business growth? Many private sector banks and foreign banks do not have permanent bank buildings, have agency tie-ups for ATMs, and outsource operations.

Globally, it has been found that a bank’s brick-and-mortar presence symbolises its permanence. In the last decade, we have seen the failure of many Internet banks – banks with only Internet presence. In India, the general public is more comfortable interacting with people than with machines. Our branch expansion has vindicated our stand that new branches bring in more current account and saving account [CASA] deposits. The branches opened after November 2010 have nearly 50 per cent of their deposits in CASA, bringing down the cost of deposits. The expansion of the ATM network will ensure further reduction of transaction costs, bringing in more profits.

Among the 14 banks nationalised on July 19, 1969, IOB was the smallest. Today, it has a business mix of Rs.3,00,000 crore, up from the Rs.1,90,000 crore when you took over as CMD. So IOB’s growth has been tremendous after you took over. Is there anything unique about IOB which you have tapped?

When I joined the bank, I could feel that the growth was not commensurate with the brand image that the bank had gained over the years. In order to inject a new enthusiasm, I gave a call for a 100 days’ mission to reach a business mix of Rs.2,25,000 crore. On December 5, 2010, a mass outreach programme called “Walk-in-Bank” was undertaken, a campaign in which all the employees of the bank participated. I led the movement at Karaikudi, from where our founder hailed and where our first branch was opened. This was followed by a similar mass contact programme, “IOB Smile”, which was organised on January 23, 2011, to reach the unreached and to give a fillip to the financial inclusion programme. These initiatives energised the rank and file, and Mission 100 Days was accomplished successfully. The momentum built up created the buoyancy for creditable growth for the year ended March 31, 2011, and continued for the year ended March 31, 2012.

RBI Governor D. Subbarao recently exhorted banks to “reoccupy the last mile” in lending to small borrowers, which is now occupied by the micro-finance institutions (MFIs). What is IOB’s performance in this area?

IOB has always been a front-runner in extending micro-credit. More than 1,300 business correspondents (BCs) have been engaged by the bank. Training is being imparted to them to carry out their duties effectively. About 738 BCs have been trained until now through 36 programmes.

There is the feeling that banks often focus on big borrowers, lending them money at favourable terms, and do not lend to small and medium enterprises (SMEs) on the same terms.

The public sector banks, in general, have been focussing more on the SME segment than on the big borrowers. I can proudly say that IOB has been number one in terms of financing SMEs. The Government of India recognised it by awarding us the first prize in the National Awards for Excellence in MSE Lending for 2010-11.

IOB’s business mix is much higher than Indian Bank’s, the other household name in Tamil Nadu. Its profits also have always been more than that of Indian Bank. But Indian Bank’s stocks are always quoted higher than IOB’s. What could be the reason for this?

The market value of IOB shares has always been beneath the inherent value. All efforts are being taken to bring benefits to all stakeholders.

Does IOB have any special plans for Chennai and neighbouring districts?

Though we do not have any specific plans for Chennai, we have a well-laid-out branch and ATM expansion plan for 2012-13. During this platinum jubilee year, we have launched many loan products catering to the SME sector and students.

source: http://www.frontline.in / Magazine / Vol 29, Issue 15 – July 28th -August 10th, 2012

Karur Vysya Bank (KVB) has started implementing the recommendations of management consultancy Boston Consulting Group (BCG), including organisational restructuring and business re-engineering, in a bid to meet the private sector lender’s Rs 1.25 lakh crore business target by 2016. “Even amid the slowdown in economic growth and increasing competition in the market, the bank has managed to focus on execution of its strategic agenda and delivered results which would ensure that the bank is on the right track to achieve its centenary year (2016) goals,” said K Venkataraman, managing director and chief executive officer.

“We have started implementing the recommendations of BCG under Golden Vision Initiatives and are periodically reviewing the progress of the project implementation,” he said in a communication to the shareholders. The bank appointed BCG in 2009 to prepare its long-term business plans. In all major business parameters, KVB’s growth in 2011-12 was higher than its compound annual growth rate for the past five years.

During the year, the lender implemented the BCG recommendations like organisational restructuring at the central office and at divisional offices, ramping up key business development and support initiatives across the banking network and targeting the crucial areas for transmission.

The organisational structure has undergone major changes with verticalisation of business strategy group, operations group, risk, inspection and audit and human resources departments.

The business strategy group is further organised into business segments such as personal banking, commercial banking, corporate and institutional banking, international banking and treasury and funds management.

“While we are generally optimistic of the economy picking up momentum and growing in the future, we have formulated our near-term strategies based on the prevailing economic scenario,” said Venkataraman.

For 2012-13, the bank has set a gross business target of Rs 72,000 crore. The bank has crossed its projected level of Rs 55,000 crore in 2011-12 and reached the business level of Rs 56,317 crore, after the initiatives being undertaken.

Total deposits increased to Rs 32,112 crore from 24,722 crore, an increase of 29.89 per cent. Current account, savings account (CASA) deposits accounted for 19.16 per cent in aggregate deposits. The average deposits stood at Rs 27,156 crore in 2011-12, compared with Rs 20,973 crore in 2010-11, an increase of 29.48 per cent.

KVB will give a major thrust to improve the CASA ratio, recovery of non-performing assets (NPAs), improving fee-based income by effectively focussing on parabanking, leveraging technology and offering new innovative products to target young and tech savvy clientele, he said.

CASA deposits of the bank were at Rs 6,152 crore as on March 31, 2012 against Rs 5,755 crore as on March 31, 2011. The gross NPA of the bank as on March 31 was at Rs 321 crore (1.33 per cent) against Rs 228 crore (1.45 per cent) a year ago.

This is mainly on account of large amounts of slippages to NPAs despite the best efforts. The net NPAs of the the bank stood at Rs 79 crore (0.33 per cent) at the end of the 2011-12, up by 0.26 per cent over the year-ago figure of 0.07 per cent.

source: http://www.business-standard.com / Home> Banking & Finance / by T. E. Narasimhan / Chennai, July 20th, 2012