Sundram Fasteners to cut capex by ₹100 crore to ₹300 crore

The powder metal press and products, at Sundram Fasteners, Hosur plant.
| Photo Credit: By special arrangement

Sundram Fasteners Ltd. (SFL) has decided to cut down its capital expenditure for FY23 by ₹100 crore to ₹300 crore due to current input and business conditions, said CFO R. Dilip Kumar.

The auto components maker had earlier planned a capex of ₹1,000 crore for three years beginning FY23 with ₹400 crore.

“But given the current inputs and the business conditions, we are set to incur about ₹300 crore this year,” the CFO said in an earnings call.

“I think the capex would get incurred at this level…. about ₹300 crore over the next two years as well, but we are watching the situation quite closely and will align the capital expenditure programme to our customer schedules,” he added.

The capex reduction was mainly due to the slowdown in the passenger vehicle sector and was not triggered by the EV or wind energy sectors, Mr. Kumar said. The wind energy project was going on as per schedule.

Stating that SFL would spend about ₹80 crore on wind energy this year, he said, “We hope to take the revenue from the current ₹150-180 crore to about ₹300-350 crore in the next 18 months.”

“That is the plan. It is on course and we are looking at further resourcing opportunities from a European customer and that is under negotiation,” he said.

Mr. Kumar said that SFL was planning to strike a balance between exports and non-auto in terms of revenue in the ratio of 50:50 to insulate itself from the cyclical nature of auto sector. Non-auto accounts for 32% of SFL’s revenue.

“Currently, one-third of our revenue comes from exports and two-thirds from domestic markets, and within that segment about 30% would be passenger vehicles and the remaining from commercial vehicles, agri applications, stationary engines, oil and gas,” he said.

SFL would be ending the fiscal with an export revenue of $185-190 million against $180 million last year due to the slowdown in passenger vehicle segment in Q2. The company had set itself a target of $200 million. “The schedule is likely to improve in the coming quarters,” Mr. Kumar said.