Sundram Fasteners plans Rs 25-cr capex

By siliconindia   |   Friday, 03 October 2003, 19:30 IST
Printer Print Email Email
CHENNAI: Sundram Fasteners will be investing Rs 25 crore in the current year as part of its expansion plan to remain a strong player in the domestic market and tap the huge outsourcing opportunity in exports. SFL Chairman and MD Suresh Krishna informed shareholders at the 40th AGM in Chennai on Thursday that the company has substantial built-up capacities which are being fully utilised now. The fresh capex is primarily for investing in balancing equipment to meet a surge in demand. It will be funded out of internal accruals. Souning bullish on SFL’s outlook for the next two to three years, he said in the first five months of the current fiscal, sales have gone up by 16% and exports by 27%. “The manufacturing sector is booming with a good demand in the automotive and engineering industry. We are rapidly expanding. I am not ruling out SFL looking at other markets apart from its decision to go to China. As a truly Indian company, we want to become a MNC eventually”. He said: “We are very sanguine about the future outlook. I have never been so sanguine in the last 40 years of my association with SFL. There is big growth in the two-wheeler industry. The CV industry is benefited by the Golden Quadrilateral project. Interest rates are falling. And there is a huge outsourcing opportunity for auto components”. The only worrying factor is the steep increase in steel prices due to the high cost of coke, scrap and pig iron. The whole steel consuming industry is reeling under this impact. SFL has to work out ways to mitigate the pressure on the margin, he pointed out. He said the hot forgings project set up at a cost of Rs 16 crore in Pondicherry is expected to contribute to sales and profits this year. The ERP solutions project will be ready by this year end. The venture in China is expected to go on stream in April next. Krishna said it has no plans to become a debt free but will leverage more on the low cost forex loans using the Dollar earnings as collateral. Of the Rs 100 crore exports, 70 % is from the US and rest from other countries. Responding to members’ demand for a bonus, he said when SFL has reserves of Rs 203 crore on a paid- up capital of Rs 10.2 crore, it draws attention. “I will discuss with the board the stock split proposal for increasing liquidity”, he said