At Sundram Fasteners, Arathi Krishna focuses on quality, diversification

A new feather in Arathi Krishna’s cap came six months after taking over as Sundram Fasteners’ managing director in November, when she won the equivalent of an Oscar for a manufacturer, the Deming Prize for quality control. 

The auto parts manufacturer, which is part of the $8.4-billion TVS Group, won the award late last year for all its 17 plants which are located across geographies and engaged in different aspects of manufacturing, a first for any company not just in India, but also globally.

Now Krishna, 50, is busy preparing the ground for the next phase of growth at the company. She has lined up around Rs 500 crore in capex for 2019-20, and the bulk of this money will be spent on improving the company’s market share in non-automotive businesses, including defence and aerospace and entering new geographies, in particular the US where the company plans to set up a manufacturing unit.

The company currently has 27 facilities across the world, including one in China, and Krishna is looking at a greenfield facility in the US

Winds of change have been blowing at Sundram Fasteners ever since the second-eldest daughter of the company chairman and manufacturing veteran Suresh Krishna took the helm last year. She is among a handful of women leading an automobile company in the country, but her rise to the top wasn’t an overnight decision. As her father was keen that she learnt the ropes of the business from the factory floor up rather than succeeding at the top, Krishna invested over two-and-a-half decades in the company, a period during which she worked her way up through the ranks. 

She is, however, not the only woman in senior positions within group companies. The TVS group has quite a few of them in various senior roles. Apart from Krishna and her sister, Arundhati, who is joint managing director at Sundram Fasteners, Preetha Muthanna is joint managing director at Sundaram Industries, Shobhana Ramachandran is the managing director for TVS Tyres and Lakshmi Venu at Sundaram Clayton.

“I had an easy transition into the company and was easily accepted by employees,” says Krishna, who joined Sundram Fasteners in 1990 at the age of 20 after completing her MBA from the University of Michigan Business School. 

Krishna’s grounding in the company began on the factory floor, where she would interact with employees and try to understand the technologies involved in the manufacturing process. Her early days gave her a deep understanding of labour issues and, to her credit, the company has not lost a single day’s work to labour strife so far. 

“She has her expertise in corporate strategy and general management, and under her leadership several new product lines have been set up and stabilised at the company, leading to a robust growth and operating performance,” says a senior executive at Sundram Fasteners.

One of her earliest initiatives at the company was to make the workforce younger, and the work culture more performance-based and technology-oriented. At present, the average age of employees at the company is 37.

The validation of her strategy came when she won the Deming Prize, a quality award presented by the Union of Japanese Scientists and Engineers to companies that have achieved breakthrough results by applying  Total Quality Management. The award  recognised the group’s quality leadership for a range of technologies, including casting and forging.

The preparation for Deming began in earnest in November 2012 when the company roped in  89-year-old Yasutoshi Washio, a world renowned TQM expert from Japan,  to guide in its goal. The campaign was led by Krishna herself. 

A key challenge was to reduce defect rates by about 80 per cent. “It is important for a Tier-I supplier like Sundram Fasteners to focus on zero defects as customers have raised the bar on quality by benchmarking incidents per billion. Winning this award is a confirmation of the practices that we have been implementing at all our plants,” says Krishna.

With its systems and processes at par with the best in the world, Krishna has now set her sights on overseas expansion in a big way along with strengthening her position in the domestic market. 

 “We are on a good wicket; have home-grown advantage. Multinationals are attracted to India, but only we know how difficult it is to operate in India,” says Krishna.

“We had enough things happening in the last 10 years. Few exist even now, but we know how to handle them.” The challenges she is referring to have come in the form of erratic power supply, tepid market and political upheaval, among others. 

What’s lending optimism to her plans is the underlying strength of the country’s auto industry and the sunrise status that it enjoys given its relatively small reach (15-20 per cent) currently. As the economy grows and expands, the demand for auto parts is expected to increase as  goods will need to be moved from one place to another, she says. At the same time, car population is expected to touch 10 million from around 3 million by 2030.  “Overall, I am optimistic and expecting double-digit growth,” she  says.

The company currently has 27 facilities across the world, including one in China, and Krishna is looking at a greenfield facility in the US. It is also expanding its footprint in the electric vehicle (EV) market by forging partnerships with manufacturers and getting associated with them at the design stage itself. Currently, 30 per cent of its portfolio is geared towards the EV market.

Over the next five years, the company is targeting around 40 per cent of the revenue to come from non-auto so as to attenuate the effects of cyclicality on its traditional business. Automobile currently accounts for 80 per cent of the revenue and the goal is to reduce its share and increase that of wind, aerospace and defence.

“We don’t get into any new products if we don’t see 5-8 years of visibility at least,” she says.