Sundaram-Clayton Ltd. has proposed to reorganise and segregate the businesses of manufacturing non-ferrous gravity and pressure die castings from its other businesses.
In its 60th annual report, released for 2022, company chairman R. Gopalan said given SCL’s diversified business, it has also ‘become imperative to reorient and reorganise the company in a manner that allows imparting greater focus on each of its businesses’.
Segregation and unbundling of the businesses of the company would enable enhanced focus on each of the businesses and will further unlock value for shareholders, he said.
As part of the overall restructuring exercise, it is also proposed to consolidate promoter holding entities with the company by way of mergers, the company said in the report.
Pursuant to the said consolidation, the promoters of the company will effectively surrender their non-convertible redeemable preference shares held in lieu of the monetary obligations of the promoter companies.
He also said that after the scheme of amalgamation and arrangement with the TVS group, TVS Holdings Pvt. Ltd. has become the holding company of SCL.
With regard to reserves, Mr. Gopalan said the surplus reserves are well above the current and future business needs. It was expected to improve further even after considering cash requirements for the capex programme and working capital requirements.
Accordingly, these excess funds could be optimally used to reward shareholders in such difficult and unprecedented times, the chairman said.
SCL supplies aluminium castings for commercial vehicles, passenger cars and two wheelers. About 63% revenue comes for Medium & Heavy vehicles, followed by 21% from two-wheelers and 16% from the car industry.
On the outlook, he said that in the short to medium term, on account of a low base, all auto segments were expected to register a ‘better Q1’. But, the overall growth was expected to be negative for the Indian two-wheeler segment whereas passenger cars and commercial vehicles would perform better, he added.
Regarding the TVSM Singapore subsidiary - U.K.-based Norton Motorcycle Co., he said that production of motorcycles at the newly established facility had commenced and that the vehicles were expected to be in the market ‘soon’.
