Sundaram-Clayton expects 10-12% price hike ahead

1305 Investors following Sundaram-Clayto. Share this News with them.

0

Like this story, share it with millions of investors on M3

Sundaram-Clayton expects 10-12% price hike ahead

Prices seem to be getting unbearable for players in the auto ancillary space with many asking OEM's to spike up prices. The last OEM price hike was in 2009. For executive director of Sundaram-Clayton, H Lakshmanam, a price increase in the range of 10-12% is what he is hopeful for. He also expects a 20-25% increase in sales by year end.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Sundaram-Clayton reports Rs 176.05 crore turnover for quarter ended Jun 2010 ALSO READ See latest News about Sundaram-Clayto See previous management interviews See what other Experts & Brokerages are saying about Sundaram-Clayto

Prices seem to be getting unbearable for players in the auto ancillary space with original equipment manufacturer's (OEM's) expected to spike up prices. The last OEM price hike was in 2009.

For executive director of Sundaram Clayton , H Lakshmanam, a price increase in the range of 10-12% is what he is hopeful for. He also expects a 20-25% increase in sales by year end.

Here is the verbatim transcript of his interview with CNBC-TV18's Sonia Shenoy and Reema Tendulkar. Also watch the accompanying video.

Q: Can you tell us how much of an order uptake are you expecting, because of the way the entire auto sector or the OEM's have been moving and where does the order book currently stand at?

A: Our order book is not only dependent on domestic market but also export market. Nearly 33% of the sales go for export. We expect about 20-25% increase in sales this year because the orders are already there. The components are being developed therefore we expect a rise of at least 25% this year. Last year we had a turnover of Rs 520 crore and we expect this to cross Rs 650 crore this year.

Q: There is talk that the component suppliers will be asking for or rather are talking to OEM's to hike the prices as well. Are there any price hikes on the anvil?

A: We are an Aluminum Die Casting Unit and as the cost of aluminum is volatile to that extent, we will also be requesting for price adjustments.

Q: How much of a price increase would you be undertaking?

A: This year we are expecting a price increase of total 10-12%.

Q: What will this do to your margins?

A: We expect the margins to improve. We expect a turnover of about 5- 7% profit before tax (PBT).
.
Q: Apart from that you also have some restructuring plans. You plan to demerge your non-automotive related business. Could you provide some update on that?

A: For Sundaram Clayton, in addition to having this manufacturing die casting unit, its also got investments in companies like TVS Motor and other companies like TVS Electronics . There is also a venture capital fund. We have got about 18 investment companies. Some of them are auto related like TVS Motor company. Some are non-auto related like TVS Electronics, TVS Capital Funds etc. What we are planning to do is that we are segregating the non-auto into separate company and demerge it in a subsidiary company.

Q: Would you be listing that subsidiary company then?

A: Yes, it will be listed in the same way as Sundaram Clayton is.

Q: What about the growth that you were talking about in terms of a 25% to 30%? How much of that will come from the replacement market? Do you get any revenues from the replacement market at all?

A: No, our entire business is only OEM Die Casting.

Q: For the export segment you were talking about a growth. What kind of a percentage growth are you expecting from the export segment?

A: The major point in the export segment is that the volume for each component may have not yet reached the pre-2006 level. This is a product where the least time for development takes at least 18 to 24 months. Therefore many of the components which had taken up for development now are manufacturing and we will be commencing supply. Therefore the volume increase by exporting would be similar to the percentage as would be growth, which is 20% - 25%.