Sundram Fasteners Limited: history, ownership, mission, how it works & makes money

A Brief History of Sundram Fasteners Limited

Sundram Fasteners Limited (SFL), a subsidiary of the TVS Group, was established in 1962. The company specializes in manufacturing a wide range of fasteners, catering to the automotive and industrial sectors. Over the decades, SFL has evolved into one of the leading fastener manufacturers in India.

In 1984, SFL became the first Indian fasteners company to receive the prestigious ISO 9001 certification. This milestone marked the company's commitment to quality and standardization, which helped it gain a competitive edge in the market.

In 1999, Sundram Fasteners went public, listing on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) under the ticker symbol SUNDARAMFAST. The initial public offering helped the company raise funds for expansion and modernization efforts.

The company diversified its product range over the years, venturing into manufacturing various components such as high-tensile fasteners, bolts, nuts, and special fasteners for two-wheelers, four-wheelers, and industrial applications. As of March 2023, SFL's product portfolio included over 1,600 different types of fasteners.

Financial performance shows substantial growth in revenue and profitability. For the financial year 2021-2022, Sundram Fasteners reported a revenue of approximately ₹1,823 crores (approximately USD 243 million), which was a robust increase compared to ₹1,651 crores in the preceding year. The net profit for the same period stood at ₹195 crores (approximately USD 26 million), reflecting a growth of 16% year-over-year.

In recent years, SFL has made significant investments in R&D and technology, enhancing its manufacturing capabilities and product quality. The company has also focused on expanding its global footprint, exporting to markets in North America, Europe, and Asia.

As of October 2023, Sundram Fasteners has a market capitalization of approximately ₹8,900 crores (around USD 1.2 billion), reflecting its growth trajectory and investor confidence. The stock has delivered a return of over 60% in the past three years, outperforming many of its peers in the auto ancillary space.

Sundram Fasteners continues to focus on sustainability and efficiency, aiming to reduce its carbon footprint while meeting the growing demands from the automotive sector for innovation and quality. The company’s strategic initiatives are set to play a crucial role in maintaining its leadership position in the fasteners market.

A Who Owns Sundram Fasteners Limited

Sundram Fasteners Limited, a prominent player in the manufacturing sector, particularly known for automotive and industrial fasteners, showcases diverse ownership structures. As of the latest filings, the ownership can be categorized mainly into institutional investors, individual shareholders, and promoter groups.

The promoter group holds a substantial stake in the company. TVS Group, one of India's largest automotive conglomerates, is the principal promoter and holds approximately 52.33% of the company’s equity shares. The group's investment reflects its long-standing commitment to Sundram Fasteners and is a testament to the company’s growth trajectory and market potential.

Institutional ownership includes major mutual funds and insurance companies. According to the latest data, institutional investors hold around 24.79% of the total shares. Here’s a breakdown of significant institutional stakeholders:

Retail investors, including individual shareholders, constitute approximately 22.88% of the total ownership. This segment reflects the growing interest from individual investors in the fasteners manufacturing sector, buoyed by the company’s consistent performance and dividend policies.

As per the latest annual report, Sundram Fasteners' total equity stands at approximately ₹ 276.03 crore. The company reported a market capitalization of around ₹ 11,000 crore as of October 2023, reflecting a robust position in the stock market.

The shareholding structure has evolved over the past five fiscal years, with a slight increase in institutional ownership. The consistent performance, reflected in a compounded annual growth rate (CAGR) of around 12.5% over the previous five years, has bolstered confidence among both institutional and retail investors.

Additionally, Sundram Fasteners has been recognized for its commitment to corporate governance. As of the latest disclosures, the company has maintained a high compliance score of over 90% as assessed by various corporate governance watchdogs, further enhancing its appeal to investors.

Sundram Fasteners Limited Mission Statement

Sundram Fasteners Limited, a prominent player in the fasteners industry, has a clear mission statement that emphasizes quality, innovation, and customer satisfaction. Their commitment to excellence is reflected in their operational strategies and their pursuit of top-tier manufacturing practices.

The mission statement of Sundram Fasteners Limited speaks to their vision of being the preferred supplier of choice, dedicated to the manufacture of high-quality products that meet the needs of a diverse customer base. They focus on continuous improvement, sustainability, and operating with integrity.

In fiscal year 2023, Sundram Fasteners reported a revenue increase of approximately 20% compared to the previous year. This growth was fueled by rising demand in the automotive and industrial sectors. Their commitment to R&D has resulted in a significant increase in product innovation, contributing to a strong competitive edge in the market.

Sundram Fasteners Limited also places considerable emphasis on operational excellence. With a production capacity of over 50,000 tonnes annually, their manufacturing facilities are equipped with cutting-edge technology aimed at enhancing efficiency and product quality. They have implemented various sustainability initiatives, reducing their carbon footprint by 15% over the past three years.

In alignment with their mission statement, Sundram Fasteners Limited dedicates resources to employee development, fostering a culture of continuous learning. The company invests around 5% of its annual revenue in training and development programs. This investment not only boosts employee morale but also enhances productivity, thereby aligning with their goal of maintaining high operational standards.

Furthermore, the company is actively pursuing international expansion strategies to tap into new markets. As of the latest financial year, approximately 18% of their revenue was generated from exports, highlighting their global footprint. Their mission is reinforced by these strategic moves aimed at increasing market share and enhancing brand recognition worldwide.

How Sundram Fasteners Limited Works

Sundram Fasteners Limited (SFL) is a leading manufacturer of a wide range of fasteners and components for various industries. Founded in 1966, the company operates under the umbrella of the TVS Group, a well-respected automotive components conglomerate in India. SFL primarily caters to the automotive, industrial, and consumer sectors, producing high-quality fasteners, which include nuts, bolts, and screws.

The company operates multiple manufacturing facilities, strategically located across India, which enhances its production capabilities and reduces logistics costs. As of the latest financial year ended March 2023, SFL reported a consolidated revenue of ₹2,450 crores, marking a year-on-year growth of **12%** from ₹2,189 crores in FY 2022.

Here is a breakdown of key financial metrics for Sundram Fasteners Limited for the FY 2023:

Sundram Fasteners Limited operates through four primary business segments: Fasteners, Forgings, Engine Valves, and Sub-assemblies. The Fasteners segment is the largest contributor, accounting for approximately **65%** of total revenue. The company has established long-term relationships with major automotive OEMs, including Tata Motors, Mahindra & Mahindra, and Hyundai, which facilitates a steady demand for its products.

The company's commitment to quality is evident through its various certifications, including ISO/TS 16949, which standardizes quality management systems across the automotive supply chain. SFL's R&D efforts focus on developing innovative products and enhancing manufacturing processes, which reinforces its competitive edge.

Sundram Fasteners has been proactive in sustainability initiatives, focusing on reducing carbon footprints and energy consumption. In FY 2023, the company reported a **25%** reduction in energy consumption per unit produced compared to FY 2020. This aligns with the growing emphasis on Environmental, Social, and Governance (ESG) factors in investment decision-making.

The company’s stock is listed on the Bombay Stock Exchange (BSE: 505790) and National Stock Exchange (NSE: SUNDRMFAST). As of October 2023, SFL's market capitalization stood at approximately ₹11,000 crores, with the share price fluctuating around ₹450 per share. The stock has shown a **20%** increase year to date, reflecting positive investor sentiment and growth prospects in the automotive sector.

In terms of dividends, SFL has maintained a healthy payout ratio of about **30%**, distributing dividends consistently over the years. For the fiscal year 2023, the company announced a dividend of ₹2.5 per share, supporting a return for its investors while also reinvesting in business expansion and modernization efforts.

Furthermore, Sundram Fasteners has expanded its footprint in international markets, exporting its products to over **30 countries**, including the USA, Germany, and Japan. This strategic expansion not only diversifies revenue streams but also mitigates regional risks associated with the Indian domestic market.

The company’s robust supply chain management, coupled with advanced manufacturing technologies such as automation and robotics, enhances production efficiency and cost-effectiveness. SFL continues to adapt to changing market conditions and technological advancements, positioning itself for long-term growth in the fastener industry.

How Sundram Fasteners Limited Makes Money

Sundram Fasteners Limited (SFL) primarily generates revenue through the production and sale of a diverse range of fasteners, primarily catering to the automotive segment, as well as several industrial applications. The company's revenue streams can be broken down as follows:

• Automotive Components: SFL is a leading supplier of fasteners, including nuts, bolts, and screws, to major automotive manufacturers. In FY 2022, approximately 64% of the total revenue was derived from this segment.
• Industrial Fasteners: This segment contributes around 21% of the total revenue, supplying to sectors such as construction, aerospace, and general engineering.
• Other Products: This includes miscellaneous items such as pre-coated fasteners and automotive parts, contributing about 15% to the revenue.

For the fiscal year ended March 2023, Sundram Fasteners reported total revenue of ₹ 2,759 crore (approximately USD 335 million). Following is the breakdown of revenue by segment for FY 2022-2023:

Sundram Fasteners has a robust market presence in India and has expanded its operations internationally, diversifying its customer base. Key customers include major automotive manufacturers such as Tata Motors, Mahindra & Mahindra, and Bajaj Auto. The company benefits from long-term supply contracts, ensuring consistent revenue streams.

Cost management plays a crucial role in SFL’s profitability. The company reported a gross profit margin of approximately 30% in FY 2022-2023, emphasizing efficient production processes and economies of scale. Operating profit for the same period stood at ₹ 504 crore, yielding an operating margin of 18.2%.

In addition to product sales, SFL is involved in joint ventures and collaborations that enhance its revenue capabilities. For instance, the partnership with IFB Industries focuses on manufacturing high-precision fasteners for industrial applications, further expanding its market reach and technical capabilities.

The company's performance indicators reflect its financial health and operational efficiency. As per the latest quarterly results (Q2 FY 2023), SFL reported:

To support its production capabilities, Sundram Fasteners invests significantly in research and development, with a R&D budget amounting to approximately ₹ 50 crore annually. This investment underpins their commitment to innovation and the development of advanced manufacturing techniques, which enhances product quality and opens up new market opportunities.

Overall, Sundram Fasteners Limited leverages its extensive product portfolio, strategic partnerships, cost management initiatives, and international operations to generate significant revenue and maintain profitability in a competitive market landscape.