SFHL to up stake in Italy firm

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Sundaram Finance Holdings Limited is planning to invest up to Euro 2 million in Mind S.r.l., Italy, which focuses on carbon fiber components for the automotive industry in Europe.

The fresh investment is aimed at augmenting working capital needs and spurring growth.

The board has already approved the fresh investment, and the company is awaiting approval from the Reserve Bank of India (RBI).

SF Holdings has invested Rs 23.71 crore in the carbon fibre business of Mind S.r.l., Italy, for a 40.6 percent stake.

“In the long term, the carbon fibre operations could get partially shifted to India, which is expected to decrease manpower costs and expand margins,” SF Holdings director Srivats Ram had said some time ago.

With the proposed Euro 2 million fresh investments, its holding in Mind S.r.l. will go up to 48.9% from the existing 40.6%.

SF Holdings primarily operates as a holding company owning a portfolio of automotive businesses including foundries, wheels, brakes, turbo chargers, axles, and distribution of spare parts. As a result, dividend from portfolio companies forms a substantial part of the financial results

Sundaram Finance Holdings Ltd. (“SF Holdings”) registered a standalone net profit of Rs. 11.09 crore for the quarter ended September 30, 2021, an increase of 193% over the Rs. 3.78 crore for the corresponding period of the previous year. Consolidated profit for the six months ended September 30, 2021 was Rs. 50.86 crore compared to Rs. 9.41 crore for the corresponding period of the last financial year.

Driven by a strong recovery in the automobile sector, dividend received from portfolio companies was Rs. 29.13 crore for the half-year ended September already exceeding the full year’s dividend received for the financial year 2020-21 (Rs. 14.13 crore).

“We continue to use the automotive industry down-turn to consolidate our portfolio, investing further into our companies and undertaking business restructuring to unlock synergies in our foundry business,” said Harsha Viji, director of Sundaram Finance Holdings.

SF Holdings has been on an exercise to consolidate its investment in foundry business. It has increased its shareholding in the foundry business, Flometallic India Private Ltd. Flometallic has, in turn, filed a scheme of arrangement with the National Company Law Tribunal to merge its operations with those of Brakes India Private Ltd. Along with Dunes Oman (a subsidiary of Brakes India), this merger is expected to create a combined foundry capacity of 175,000 tonnes operating out of four locations – Sholingur, Naidupeta, Jagadia and the Sultanate of Oman. “This will create one of the largest ferrous casting businesses in the country and will increase the competitiveness of the foundry business as a whole,” a top company official said.

SFHL had invested Rs. 450 crore over the last year to buy out the foreign partners in two portfolio companies which it had co- promoted - Brakes India and Wheels India.

Sundaram Finance Holdings Ltd., originated as the demerged investment arm of Sundaram Finance Ltd., is listed on the National Stock Exchange. SFHL is an exempted core investment company. SFHL’s investments consist primarily of companies in the automotive space, mostly co-promoted with the TVS group. Its significant investments include, among others: Sundaram Clayton, WheelsIndia, IMPAL (all listed) and Brakes India, Turbo Energy (both unlisted).