Key takeaways of the meeting

Sundaram Fasteners is now more an engineering company than a fasteners company. The company has now transformed itself from one product (fastners) one market (India) company to multi product and multiple market (geographies) company. Apart from forgings its products now include high tech products such as cold extruded parts, precision forged gears, transmission products.

The Company is also open to expansion by both organic and inorganic growth, subject to suitable synergies. The company by its continuous engagement with its customers explores opportunities for the creation of new product verticals and value added products.

FY 2016-2017 may augur well for automotive industry in view of the good monsoon, seventh pay commission, lower fuel prices. Strong foundation for revival of automobile industry has been laid. The kick starting of the new infrastructure projects may provide fillip to the CV industry. Increasing localization by Auto OEMs and aftermarket sales will give greater growth for auto components than the automobile sector.

Capex of the company is driven by customer demand. To company envisages a capital expenditure of Rs 150 crore for FY17. This will be spread across all the products and plants of the company including debottlenecking and brown-field capacity expansion. Raising funds is not an issue for the company its debt equity ratio at 0.57 is low giving room for further borrowing and moreover the company is generating enough cash to fund its capex projects.

The passenger vehicle industry has the potential to grow to 10-12 million car per annum size in next 10-15 years from current about 3 million cars per annum.

Given current order bookings the company expects highest ever sales for the company in FY17.

The revenue growth for FY16 and Q1FY17 is largely driven by volume growth as well as product mix as the company has not made any price increase. Realization of products that caters to CV segment is typically higher and with its contribution moving up has augured well. The company expects the trajectory in revenue growth is expected to sustain barring the Q3FY17 which typically a weak quarter given Christmas holidays in key overseas markets which impacts exports.

On raw material front the company which used to imports shifted to local sourcing of steel from Indian steel makers and could save on logistics cost. But if the prices are not comfortable the company will look at Chinese players.

The tractor industry accounts for 10-15% of sales and the company caters to OEMs such as TAFE, M&M, and Sonalika.

Internal rejection rates are lower. The company vigorously focuses on TQM. The implementation of TQM practices is progressing well across major divisions, which could aid in all round efficiency in operations.

The Company's investments for manufacture of new products are expected to result in further improvement in exports in the near future.

On request for bonus issue by shareholders the CMD replied the BOD will consider it at appropriate time.