Net profit soars 80% to Rs 5 cr, Auto News, ET Auto

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The company’s significant investments include Sundaram-Clayton, WheelsIndia, IMPAL and Brakes India, Turbo Energy.

Chennai: Sundaram Finance Holdings Ltd reported net income of Rs 5.13 crore for the quarter ending June 30, 2021, up 80%, the company said on Thursday.

The city-based company had recorded a net profit of Rs 2.85 crore in the corresponding quarter of the previous year.

Revenues in the quarter under review reached Rs 10.50 crore, compared to Rs 9.30 crore in the corresponding quarter of the previous year, according to a company statement.

Sundaram Finance Holdings operates primarily as a holding company, owning a portfolio of companies engaged in automotive manufacturing, including brakes, turbochargers, ferrous castings, axles, wheels and fuel injection.

The company’s significant investments include Sundaram-Clayton, WheelsIndia, IMPAL and Brakes India, Turbo Energy.

According to the press release, although the performance of the portfolio companies is improving, they are still below their results for fiscal year 2019-2020 due to the slowdown in the automotive industry driven by cyclical factors as well as the impact of the COVID-19 pandemic.

“We remain optimistic about the recovery and growth of the automotive sector over the medium term and therefore expect a pick-up in the company’s future results,” said Harsha Viji, director of Sundaram Finance Holdings Ltd.

According to TT company president Srinivasaraghavan, the decline provided an opportunity to further consolidate the portfolio’s long-term holdings.

“We bought foreign partners in Wheels India and Brakes India with an investment of Rs 450 crore,” he said.

The company increased its stake in Wheels India Ltd, a manufacturer of steel wheels for cars and commercial vehicles, from 13.58% to 23.28% through the acquisition of an additional 9.70% from its overseas partner TitanEurope for Rs 100 crore.

The combined shareholding of Indian developers in Wheels India amounts to 57.53 percent.

During the first quarter of the current fiscal year, Sundaram Finance Holdings completed the acquisition of an additional 7.71 percent stake in Brakes India Pvt Ltd for a consideration of Rs 350 crore from foreign partner ZF International, increasing its stake from 6.67 percent to 14.38 percent, resulting in Indian promoters holding 100 percent of the capital.

The investment was financed by a rights issue that was finalized on June 11, 2021, he said.

SF Holdings also consolidated its stake in its foundry portfolio by acquiring 6.84% stake in Flometallic India Pvt Ltd and as a result its stake increased from 40% to 46.84%.

Flometallic India operates ferrous metal foundries in Gujarat and mainly supplies automotive components for domestic and overseas markets.

SF Holdings said that in October 2020, it had invested Rs 23.71 crore in the carbon fiber business of Italy-based Mind Srl for a 40.6% stake.

“The carbon fiber market, although nascent in India today, has strong potential for long-term growth and Mind SrL’s technology and expertise will help position SF Holdings well in the market,” said the director of the company Srivats Ram.

“In the long term, carbon fiber operations could be partially moved to India, which should reduce labor costs and increase margins,” he said.

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