Financial Daily from THE HINDU group of publications
Wednesday, Nov 19, 2003
Sona Koyo hopes to hit Rs 100-cr exports by '07
Vipin V. Nair
New Delhi , Nov. 18
SONA Koyo Steering Systems Ltd, a leading automobile ancillary maker, expects its revenues from exports to swell to 20 per cent of turnover by 2007 compared with just 2 per cent today, as the company is giving a new thrust to catering to global markets.
"Our aim is to achieve Rs 100 crore from exports by 2007, out of a turnover of Rs 500 crore we have targeted for the year," said Dr Surinder Kapur, Chairman and Managing Director of Sona Koyo.
Speaking to Business Line here, Dr Kapur said Sona Koyo, a joint venture between the Sona Group and Japan's Koyo Seiko Company, has recently bagged an order worth $35 million for supplying steering gear to the US and another order of about $10 million from South Korea.
These orders are to be executed over the next five years, he said, but declined to divulge names of the automobile manufacturers who have placed the orders.
"We will piggyback on our partner, Koyo Seiko, to increase our exports. We would be doing contract manufacturing for them," Dr Kapur said, adding that Sona Koyo would supply low-cost systems in large volumes to its partner.
India's potential to emerge as a global supplier of quality auto components is another factor that would help companies such as Sona Koyo, which recently won the Deming Prize for quality.
The auto component industry in the country has set a target of $2.5 billion worth of exports by 2010. In 2002-03, exports of components from India grew by 35 per cent to $800 million from $578 million in the previous year.
Another strategy is to target vehicle manufacturers of smaller size in other countries, for whom Sona Koyo would not only supply products, but also provide complete design and development of components.
The company plans to beef up its facility in Chennai, which is a 100 per cent export-oriented unit, in view of the anticipated increase in exports. "We will be investing Rs 15 crore in this facility," Dr Kapur, said.
Over the next two-and-a-half years, Sona Koyo would invest Rs 100 crore in expanding its facilities, situated in Chennai and Gurgaon. The company would use internal accruals and borrowings to fund this expansion.
In addition to this, the company is also toying with the idea of acquisitions of facilities abroad.
Dr Kapur said total revenues of Sona Koyo, which supplies steering gear and steering column assemblies to a number of domestic manufacturers, would touch Rs 260 crore this fiscal against Rs 220 crore in 2002-03.
"We will also be improving our profit margins to around 14 per cent as against 12 per cent last year," he said.
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