Plans to increase the revenue share from non-automotive segments in the upcoming years.
Sundram Fasteners Ltd, a prominent manufacturer of auto parts, is seeing substantial growth in its electric vehicle (EV) order book. The company currently boasts approximately ₹4,000 crore in EV orders and anticipates further contracts. Despite some hurdles, India’s shift towards EV technology is gaining momentum, driven by government incentives, heightened awareness, and an increase in diverse product launches. This surge has led to a significant influx of orders for EV components at Sundram Fasteners.
Based in Chennai, the company produces key components like fasteners, machine parts such as bevel gears and pinions, battery coolant caps, and various shafts for EV Original Equipment Manufacturers (OEMs). It is also working on developing an electric water pump.
The existing ₹4,000-crore order book is set to be executed over the next 5-6 years, with expectations for further growth as Sundram Fasteners continues discussions for new EV contracts, according to R Dilip Kumar, the Chief Financial Officer, during a recent earnings call. To support this expansion, the company plans to increase capacity at its plants in Mahindra City and Sri City near Chennai, allocating a capital expenditure of ₹350-400 crore for this year, primarily for the fastener division to cater to export demands and bolster the EV segment. Last year, the company invested ₹343 crore in capex, funded entirely through internal accruals, avoiding additional debt.
The management envisions a phased adoption of EVs, transitioning from internal combustion engines to plug-in hybrids and eventually to fully electric models. With the EV order book expanding, Sundram Fasteners anticipates the EV segment’s revenue contribution to rise from about 6% currently to 10-15% in the near future.
In anticipation of a decrease in vehicle content due to the transition from ICE to EV, Sundram Fasteners is also diversifying into non-automotive sectors like renewable energy, focusing on wind energy and supplying fasteners for industrial and off-highway uses. The company expects to double its revenue in the wind power sector from ₹250 crore to over ₹500 crore in the next 2-3 years.
Consequently, Sundram Fasteners projects an increase in non-automotive revenue from 30% to 50% within five years.
Kumar also highlighted the company’s new venture into copper heatsinks, catering to needs in EVs, aerospace, defense, IT, telecommunications, and healthcare, driven by the crucial role of system cooling and rapid heat dissipation in these industries.
Overall, the company is strategically positioning itself with several growth drivers: the execution of a significant EV order book, expansion in wind energy, and active engagement with multiple domestic and international customers for future EV business growth, as reported by the brokerage firm Sharekhan.
