Tuesday, Dec 23, 2003
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By Our Special Correspondent
Suresh Krishna, Chairman and Managing Director, Sundram Fasteners Limited, V. G. Jagannathan, President, Finance, and Sampath Kumar Moorthy, President, Operations, at a press conference in Chennai on Monday. — Photo: Shaju John
The unit is located at Cramlington, Northumberland in the U.K. The acquisition is done through Cramlington Precision Forge Ltd. (CPFL), a fully owned subsidiary of SFL floated with an initial capital of £1.7 million. The acquisition has cost the SFL subsidiary £1.5 million. The forgings business employs 37 people. It has achieved sales of over £3 million during the11 months ended December 2003. It is a profitably running business. The entire business has now come under the fold of CPFL, which is hoping to double the sales in the next couple of years. The deal with Dana was inked on Friday last. The agreement also provides for a definite supply arrangement. This will see CPFL continue to supply to Dana Automocion, an associate of DSEL. According to Suresh Krishna, Chairman of SFL, this arrangement is valid for three years and thereafter it will be reviewed. ICICI Securities acted as the sole financial advisor for the deal. Mr. Krishna said the acquisition of Cramlington unit was part of SFL's strategy to `create beach-heads' at various geographical locations across the globe. In this context, he pointed to the recent foray made by SFL to set up a greenfield project in China. Notwithstanding the SAARS-induced two months delay, the project was on course and should go on stream by April-May next, he said. Further, he said SFL was getting good enquiries for powder metal and fasteners from Europe. SFL, he said, was already supplying powder metals to ZF of Germany. Enquiries had also come from Opel, DaimlerChrysler and the like, he pointed out. The Cramlington division and Thyssin of Germany were the only two captive consumers among the makers of cold extruded steel parts to sell outside, he said. More than anything else, the U.K. takeover made enormous sense for SFL from the angle of customer acquisition. Besides selling bevel gears from Cramlinton unit to some of the big names in the OEM (original equipment manufacturer) segment, the acquisition of the U.K. division would provide SFL per se access to blue-chip customers of CPFL such as MSN, DAF Trucks, Albion Automotive, Scania and Parker besides Dana. Mr.Krishna justified the decision of SFL to run the newly acquired business in the U.K. itself on the ground that it provided customers that much comfort level. Further, it could avoid any conflict that might arise if it were to function as a division of SFL. Mr. Krishna further said that he went in for a small company rather than a big entity as he felt that ``a small boutique company lends itself to easy manoeuvrability.'' More over, keeping the acquired business under a new subsidiary company of SFL would help it ``to learn stay afloat by itself and avoid getting itself lost in the mainstream of SFL.'' Mr.Krishna said the current set-up at the acquired division would be left untouched. With its acquisition in the U.K., SFL has now presence in three countries. It has a subsidiary through the Autolec (which it had acquired few years ago) in Malaysia. It is building a greenfield project in China.
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