Sundram Fasteners Ltd, a prominent manufacturer of auto components, is witnessing substantial growth in its electric vehicle (EV) orders, currently amounting to Rs 40 billion with additional contracts in the pipeline.

Despite challenges, the shift towards EV technology in India is accelerating, supported by government incentives, heightened awareness, and frequent product launches across various sectors. Consequently, Sundram Fasteners has experienced a strong influx of orders for EV components.

Based in Chennai, the company supplies a range of components including fasteners, hot-forged machine parts like bevel gears and pinions, battery coolant caps, and various shaft types to EV OEMs. Additionally, it is in the process of developing an electric water pump.

The current Rs 40 billion order book is scheduled for fulfilment over the next 5-6 years. Sundram Fasteners anticipates further growth in this segment as it engages with multiple customers for new EV projects, as highlighted by R Dilip Kumar, Chief Financial Officer, during a recent earnings call.

To meet the demands of its expanding EV business, the company is enhancing production capacities at its facilities in Mahindra City and Sri City near Chennai. For the current fiscal year, Sundram Fasteners has allocated a capital expenditure of Rs 3.5-4 billion, primarily directed towards its fastener division to cater to export requirements and bolster the EV segment. In FY23, the company invested Rs 3.43 billion in capex, entirely funded through internal accruals without additional borrowings.

Emphasising a phased transition to EVs, starting from internal combustion engines (ICE) to plug-in hybrids and fully electric vehicles, Sundram Fasteners anticipates the EV segment's contribution to total revenue to grow from the current 6% to 10-15% in the coming years.

Furthermore, to mitigate the anticipated reduction in content per vehicle due to the ICE-to-EV shift, Sundram Fasteners is diversifying into non-automotive sectors such as renewable energy. The company is focusing on wind energy, where it supplies fasteners for industrial and off-highway applications. With ambitions to double its revenue from the current ?250 crore to over ?500 crore in the next 2-3 years, the wind power segment is poised for significant growth.

As part of its strategic expansion, Sundram Fasteners aims to increase the share of non-automotive revenue from 30% to 50% over the next five years. The company is also venturing into new product lines like copper heatsinks, catering to EVs, aerospace, defence, IT, telecommunications, and healthcare sectors.

Overall, the company identifies three primary drivers for long-term growth: the execution of the Rs 40 billion EV order book, scaling up its wind energy projects, and the anticipated expansion of the EV order book through engagements with domestic and international clients, as per a report by Sharekhan brokerage.

(Source: BusinessLine)