SUNDRAM FASTENERS LIMITED

SFL is one of India's largest and most diversified auto components company.

Product High Tensile Fasteners

Details Standard Fasteners Special Fasteners-Engine fasteners, Wheel & under-carriage fasteners, Chassis fasteners Engine components,Transmission parts, Suspension parts, others Engine components, Suspension parts,Transmission parts, Two wheeler Parts, Auto Electrical Parts Oil Pump,Water Pump, Fuel Pump, Rocker arm assemblies Standard metal, radiator Caps,Special Metal Caps and Caps to customer drawing Type carriers, Gear shifters, Hot forged parts

Background
Sundram Fasteners Limited (SFL) is a part of the US$ 3 billion TVS group, based in South India. It was set up in 1966 for manufacture of high-tensile fasteners. It has diversified over the years into other products like cold extruded parts, powdered metal parts / iron powder, precision formed gears, pump assemblies (water, oil and fuel), rocker arm assemblies, belt tensioners, radiator caps, gear shifters and spare wheel tyre carriers. It was one of the first Indian auto component companies to tap the global markets for its products and set up operations outside India. Its first manufacturing facility was set up at Padi (Tamil Nadu) to manufacture high tensile fasteners

Powder Metal Parts & Iron Powders Cold extruded parts and Precision formed gears

Engine components

Radiator Caps

Others

for OEM. In order to meet the increasing customer requirements and to cater to international markets, two additional manufacturing facilities were set up at Krishnapuram near Madurai (Tamil Nadu) and Pondicherry. Facilities for cold extruded parts and powder metal parts exist at Hosur (Tamil Nadu) and iron powder in Hyderabad (Andhra Pradesh). SFL also has manufacturing facilities in UK, Malaysia and China.

Company Sundram Fasteners

Products Auto components

Established 1966

Founder TVS Group

Distribution India, USA, Europe, Asia

Production plants India, Germany, UK, Malaysia, China

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The company's promoters, hold the majority stake in SFL (nearly 50 per cent).The next largest shareholder is the Indian public with 27 per cent stake. Banks, financial institutions, private corporate bodies and foreign institutional investors hold the residual shares.

1999.The net profit has grown at around 15 per cent CAGR over the period to reach US$ 15.6 million in 2005. The company has faced issues on controlling cost, especially on key inputs like steel and aluminium. The buoyant market scenario in both the domestic and export markets and increase in volumes enabled the company to post record profits despite steep hike in steel and aluminium prices.The operating and net margins have decreased marginally to 13 per cent and 6.6 per cent respectively in 2005.

Products and Brands

SFL manufactures and supplies a wide range of auto / industrial components such as fasteners, radiator caps, extruded parts, gear shifters and engine parts. Fasteners have the largest contribution at 47 per cent of the revenues. Engine components are the next largest contributor with 25 per cent of the revenues, with powdered metal parts and cold extruded parts contributing to around 10 per cent of revenues each. In addition to supplying components to all manufacturers in the Indian auto industry, SFL also supplies to global automotive and tractors manufacturers in key markets like North America, Europe, Australia and Japan. Some of its important customers include GM, John Deere, New Holland, Daimler Chrysler and Cummins.

SFL's contribution in making Made in India global

SFL was one of the earliest Indian auto component companies that adopted the strategy of accessing the global markets. As a result, presently around 25 per cent of its turnover is from exports to its customers across the world. SFL has followed the route of acquisitions as well as establishing new ventures with manufacturing locations in markets outside India to support its global customers. In 2003, the company had acquired the precision forged components business of Dana Spicer, UK, through its wholly owned subsidiary, Cramlington Precision Forge Ltd.The manufacturing facility located in Northumberland produces precision forged components for application on heavy vehicles for on-highway and off-highway applications.This acquisition has given

Financial analysis
The gross revenues of the company have grown to US$ 237 million in the year 2005, at a CAGR of 19.6 per cent over the last 6 years. Exports have exhibited an impressive CAGR of 28 per cent and presently contribute to 25 per cent of the company's revenues, up from only 17 per cent in

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SFL the distinction of becoming the second largest manufacturer of finished, cold forged, bevel gears in Europe, after Thyssen of Germany. It now supplies to major OEM clients of Dana - MAN, DAF Trucks, Albion Automotive, Scania, Gratzino,Tractech and Cook Defence. In 2004, SFL's subsidiary, Sundram Fasteners (Zhejiang) Limited, set up a factory for the manufacture of high tensile fasteners in the Zhejiang province in China.The company plans to invest upto US$ 12.5 million to manufacture 6000 metric tonnes of standard and value added fasteners. The subsidiary would export fasteners to various customers in Europe as well as nearby Asian market, in addition to meeting domestic market needs. SFL's subsidiary in Malaysia, RBI Autoparts Sdn Bhd, is engaged in assembling oil pumps and water pumps for supply to Proton, the Malaysian car manufacturer. Currently the company is looking at new product development and scaling up of capacity to strengthen its presence in the ASEAN region. Recently, the company has acquired Peiner Umformtechnik GmbH (Peiner), located at Peine in Germany, from Textron Deutschland Beteiligungs GmbH, Bonn. Peiner manufactures standard and special fasteners catering to automobile, industrial and construction sectors. It supplies its products directly to OEM customers as well as through a strong network of distributors.This acquisition has given SFL access to relationships with blue-chip customers including Daimler Chrysler, BPW, DAF Trucks, Sofrasar (Renault), Reyher etc. besides Textron. It will also help SFL to increase exports of its own products manufactured in India, including fasteners, not currently in the manufacturing programme of Peiner. SFL will also be able gain access to retail market through the strong distributor network of Peiner.

During 2005, Sundram Bleistahl Ltd, a subsidiary of the company and a collaboration with Bleistahl Produktions GmbH and Co KG, Germany, set up a factory at Hosur for manufacture of valve seat inserts.These would be exported Bleistahl in Germany.

Factors fuelling Sundram's global initiatives

SFL has been quick to realise the global nature of the auto component industry and the need to service customers all around the world. It has established the footprints of a global business with operations in many continents. Some of the key factors that would drive future performance are: Global outlook: SFL was one of the first Indian auto component companies to realise the need to operate on a global scale and has adopted appropriate strategies including acquisitions and setting up new ventures abroad. As a result, the company has been able to access large global players like General Motors, Delphi Automotive, Cummins Engine Co and Deere and Co, Daimler Benz, Deutz Motors, Holset, Iveco, MTU, Proton, Valeo and ZF as its clients. It is on the lookout

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for attracting new customers either through market expansion plans or through acquisitions of existing companies. Technical competence: SFL has over three decades of technical expertise in developing special (made to drawing) fasteners for a wide range of applications.The special fasteners range includes cylinder head bolts/studs, connecting rod bolts/nuts, main bearing cap bolts, hub/wheel bolts, wheel studs, hub nuts, two piece wheel nuts, track shoe bolts/nuts, two wheeler spindles etc. It has two dedicated plants to cater to the socket products market and an exclusive hot nut former module to manufacture large nuts. Further it offers a range of surface finish options along with the fluoro carbon and dacromet coating with various topcoats and microencapsulation on threads. China manufacturing base: SFL is the first engineering company from India to set up manufacturing facility in China and engineer products for the market. China is the fastest growing auto market in the world and is expected to emerge as one of the top three auto markets in the future.The manufacturing facility in China provides Sundram Fasteners an access to the growing Chinese domestic market and other Asian markets. Focus on quality: The company's quality systems have been accredited with ISO:9000 2001, QS-9000, ISO-TS-16949 and ISO-14001. The company has focused on meeting stringent quality requirements of its global customers and has adopted a number of measures to meet the same. It adopted the Total Productive Maintenance Program in 1995 with an aim of achieving high quality and low cost operations and was the first Indian engineering company to get the TPM Excellence Award in 1998 and TPM consistency award in 2004-05.

Future plans
SFL continues an aggressive policy of inorganic and organic growth. Its recent acquisition of Peiner Umformtechnik, a German fasteners company, would provide SFL with access to leading European manufacturers.The company would continue to focus on exports and plans to increase the share of non-Indian revenues to around 50 per cent of total revenues by 2010.The Chinese operations and the other operations abroad would have an increasingly larger role to play in increasing export contribution.The company targets to set up new ventures or acquire new companies, wherever it provides it with a competitive advantage like an access to market or to new customers.

Globalisation at a glance

Exports currently constitute nearly 25 per cent of total sales First company in the Indian engineering industry to set up a green field venture in China to manufacture high tensile fasteners for the Chinese and international market Acquisitions made to support its globalisation plans - Dana Spicer, UK, manufacturing precision forged components for heavy vehicles, and Peiner Umformtechnik GmbH, Germany, manufacturing standard and special fasteners

www.sundram.com

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