Sundram Fasteners to leverage US exports for growth

TVS Group firm Sundram Fasteners is betting on United States exports to improve business at a time when domestic demand is sluggish. The company's proposed Rs 100-crore capital expenditure this year will be to boost capabilities to develop and manufacture new products for exports, senior company officials said.

Speaking to the reporters on the sidelines of the annual general meeting of the company, Arathi Krishna, joint managing director, Sundram Fasteners said, "We are not the type to enjoy the Dollar appreciating against the Rupee, but it has increased our foreign currency earnings. We are looking at growing US exports and in fact, our Rs 100-crore cap-ex for the year is focussed on addressing the US market." However, European markets continued to be hit by recession and negative sentiment.

"While we expect the domestic market to be sluggish for the next two quarters, we expect our exports to grow. The US market has shown signs of recovery," Suresh Krishna, chairman and managing director of the company, said while addressing the shareholders.

Export sales accounted for about 34 per cent of overall sales revenue and the company's push to add new products and customers is expected to result in further improvement in exports in the short term . However, volatility in exchange rates and slow recovery in demand from European customers are causes for concern.

The company is expanding its capabilities in new products in precision components segment, used in the transmission segment of the cars. Demand for this value-added product is high, given its critical role in the safety of the vehicle.

The company is also cutting cost on importing raw materials by sourcing the same from the domestic market, helping it cope with the higher import cost as a result of the depreciation in the Rupee.

Arathi Krishna added the company is keen on cutting working capital costs. The firm has reduced about 30 per cent of the cost in power, by sourcing energy from third-party generators or distribution companies which are more cheaper than using gensets for power. The company also uses wind power and has made long-term arrangements with wind power generators for this.

The export sale during the financial year 2012-13 stood at Rs 678.25 crore, compared with Rs 645.88 crore in the previous year.The company's net profit dropped of 5.73 per cent to Rs 29.45 crore, for the quarter ended June 30, 2013, compared with Rs 31.24 crore for the same period in the last year. Total income stood at Rs 523.53 crore for the quarter, down 10 per cent from Rs 581.98 crore in the corresponding quarter of the last financial year.

During the AGM on Thursday, the shareholders approved the appointment of Arundathi Krishna as managing director (designated as deputy managing director).