Sundram Fasteners Grows By Focusing On Quality

Sundram Fasteners Grows By Focusing On Quality

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Sundram Fasteners - Stock Market Position

� Quantity Traded
Deliverable Quantity (gross across client level)
% of Deliverable Quantity to Traded Quantity
65112
41481
63.71
 
 
 
Sundram Fasteners - Stock Market Position

Sundram Fasteners Grows By Focusing On Quality

Suresh Krishna, CMD of Sundram Fasteners
Suresh Krishna, CMD of Sundram Fasteners | Source

Sundram Fasteners Grows By Focusing On Quality


A TVS Group Company

Sundram Fasteners has not produced good results for the quarter ended 30.09.11 as compared to the previous quarter. While revenue has increased, net profit has declined by nearly 50% (see tables above). Sundram Fasteners belongs to the famous TVS group of companies. The company is engaged in the manufacture of automobile parts and equipments. The shares of Sundram Fasteners are traded in the Indian stock exchanges at Rs.56.20 now (BSE 10.02.12). The shares of Sundram Fasteners are available in both BSE and NSE. The face value of the company’s shares is Rs.1.

Staff Cost Increase

For the quarter ended 31.12.11, the company’s net profit increased by 30% to Rs.28 crore from Rs.21.45 crore in the corresponding period of the previous year. Net sales increased by 29% to Rs.465 crore from Rs.359 crore in the corresponding period of the previous year. For the first nine months of the current financial year ending 31.12.11, the company’s net profit increased by 42% to Rs.81.42 crore from Rs.57.35 crore in the corresponding period of the previous year. Net sales in the same period increased by 37% to Rs.1335 crore from Rs.974 crore in the corresponding period of the previous year. Sundram Fasteners’ operating margins were under pressure due to high raw materials’ cost. Staff cost also rose steeply due to long term settlements. One of the plus points of the company this year was that all its subsidiaries together reported a net profit of Rs.7.82 crore as against a net loss of Rs.28.04 crore in the previous year.

German And UK Subsidiaries Come To Help With Technology

For 2011-12, Sundram Fasteners has planned a record capital expenditure of Rs.200 crore to target automotive and wind energy sectors with innovative products. Suresh Krishna is the CMD of the company. Sundram Fasteners is tapping the knowledge of two of its overseas subsidiaries to launch these innovative products. Sundram Fasteners will use the technology of its German subsidiary Peiner Umformtechnik GmbH to produce wind turbine fasteners. The company’s British subsidiary Cramlington Precision Forge supplies its technology for the production of bevel gears. Wind turbine fasteners will be manufactured at a facility to be set up near Puducherry at an investment cost of Rs.50 crore by August this year. This is a clever move on the part of Sundram Fasteners. The two subsidiaries cannot make use of their technology in their respective zones because of high cost. But the same technology when used in Indian production centres will be a valuable asset for the company. India is giving lot of importance to renewable energy programmes like wind energy and solar power energy. International players are making a beeline to start their operations in India. Existing wind turbines are also upgraded and their capacity increased. This will create more demand for the wind turbine fasteners of the company in future.

Sundram Fasteners - Latest Financial Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
545.57
521.85
1,812.36
Net Profit
18.43
34.93
105.43
EPS
0.88
1.66
5.02
Cash EPS
1.65
2.39
7.61
OPM %
14.56
14.72
12.61
NPM %
3.38
6.69
5.82
Sundram Fasteners - Latest Financial Results

Sundram Fasteners - Share Price Movement

 
 
 
Weekly H/L
57.95
52
Monthly H/L
57.95
47.55
52 Weeks H/L
67.4
45.1
 
( 7 Jul 11 )
( 8 Mar 11 )
Delivery / Var+ELM %
57.28
12.87
Sundram Fasteners - Share Price Movement

Younger generation in action

Arathi Krishna and Arundathi Krishna, the younger  generation scions of the TVS family.
Arathi Krishna and Arundathi Krishna, the younger generation scions of the TVS family. | Source

Younger generation inducted into the company


Growth With Quality

45 years back the company started its production with just two machines in its factory. Today its strength has increased to 23 production facilities, out of which 20 are in India. Along with its growth, the company’s quality and excellence in its products has also grown. It has recently won General Motors’ ‘Supplier of the Year’ award for the fifth consecutive time. Wind power sector is growing at 15% p.a. in India. Nearly $2 bullion was invested in installing wind power blades in 2009. The investment could double in 2015. During the current year, Sundram Fasteners invested Rs.150 crore in its production facilities. The previous year’s investment was at Rs.66 crore. The current financial year may be an eventful year for the company as its sales turnover is likely to cross the coveted mark of Rs.2000 crore.

Daughters Inducted Into The Board

Sundram Fasteners’ Chinese subsidiary was set up six years back. For the first time, it has moved to black this year. Sundram Fasteners has basically followed a commodity business of manufacturing nuts and bolts. But because of its quality, the company has been competitive at the international level. Sundram Fasteners has built a strong tool library of over 10000 kinds of fasteners. The company possesses over 50000 tools in its stores. Sundram Fasteners’ Managing Director Suresh Krishna has inducted into the company’s board his two daughters Arathi Krishna and Arundathi Krishna. The latter has been made as a joint Managing Director.

Replacement Market Helps At Times Of Recession

Sundram Fasteners has not been affected much by the slowdown in the automobile industry both in India and abroad. This is because the company has been manufacturing fasteners for both original equipment players and replacement market. As the company is a part of $5 billion TVS group, it enjoys a brand image. Over the last several years, Sundram Fasteners has recorded consistent growth. Recently the cyclone Thane affected the company’s plant at Korkadu village near Puducherry and at Mittarantagapet village in Villupuram district in Tamil Nadu. But the company has adequately insured all the assets in the above two facilities. Now the company has restored normal operations in these two plants.

Buy For Medium And Long Term

Investors may buy the shares of Sundram Fasteners at the current market price of Rs.56 for medium to long term investment because of the brand image of the company, its financial strength, export performance and quality focus.

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