Automobile Parts Maker Sundram Fasteners Banks on US for Growth
Sundram Fasteners Ltd, an automobile parts maker, expects an increase in exports to the US will offset slowing demand in India.
“We will invest Rs. 100 crore this year, which will largely cater to the growing US market. We do not intend to increase manufacturing capacity in India as the demand in the domestic market has been down,” chairman Suresh Krishna told shareholders at its 50th annual meeting. Automobile makers in India have been hit by a slowing economy, high interest rates and rising fuel prices, prompting buyers to postpone purchases. In the year ended 31 March, India’s economy grew 5%, the slowest pace in a decade.
“We are seeing green shoots in the US. Despite single-digit growth it is however on a larger base,” said Arathi Krishna, joint managing director of the company. The auto parts maker supplies to General Motors, Ford Motor and Daimler AG among other vehicle makers.
“North American automakers are experiencing a rebound, and to what extent Asian component manufacturers can take advantage of it will depend on their capabilities, product portfolio, cost structure. The rupee devaluation will definitely shore up their profits,” said an auto consultant with an international firm, who did not want to be named.
Exports accounted for 34% of total sales of Sundram Fasteners in the year ended 31 March. The company is evaluating options to revive its money-losing German subsidiary. Sundram Fasteners will also consider selling it if there is no change in current policy decision on wind energy in Germany, Arathi said. The company is also looking at various measures to cut costs.
