11 May 2017 07:44:10 IST

Bolted by trust, transparency and communication

Building on the TVS family legacy, Sundram Fasteners is riding the automotive boom

At 80 years of age, Suresh Krishna has earned the right to put his feet up and enjoy the pleasures of life. But the Chairman and Managing Director of Sundram Fasteners Ltd is in his office a little after 8 am most days, and keeps up a fairly busy daily routine.

Agile and fit, Krishna, an excellent raconteur, has numerous anecdotes to narrate about his company, which turned 50 this year, the lessons he has learnton this journey and the ease with which he carries the TVS legacy.

“The first 25 years of the company,” he says without a trace of rancour, “were dark years.” He could not expand capacity even if he wanted to, because Sundram Fasteners belonged to a large group, and hence, came under the MRTP Act. His competitors, one in Mumbai and the other in Kolkata, faced no such restrictions.

More galling was that fasteners were not classified under automotive components but along with nuts and bolts as mild steel fasteners, despite the automotive sector accounting for a bulk of Sundram Fasteners’ sales; that sector accounts for as much as 95 per cent of its sales now.

In 1962, Krishna, a third-generation member of the TVS family, had completed a Master’s in Comparative Literature abroad, after graduating in chemistry from the Madras Christian College; upon his return to India, his uncle, TS Srinivasan, who more or less charted the TVS group’s manufacturing strategy, asked him to help the group as it took its first steps in manufacturing.

The early days

Sitting in his elegant office on the seventh floor of an office building on a busy Chennai road, Krishna says he apprenticed for six months in Lucas TVS and for about a year in Wheels India. It was then that his uncle called him and said that someone they knew had got a licence to produce 450 tonnes of high-tensile fasteners but was unable to execute the project. Srinivasan wanted Krishna to take up the company and run it. When Krishna professed his ignorance about fasteners, Srinivasan’s reply was simple: learn as much as you can and then learn on the job. Krishna immersed himself in books and studied about fasteners. He started off with two machines that he bought from the US. “I was young and raring to go,” Krishna says, quoting a Tamil proverb.

It was in a small shed in the Ambattur Industrial Estate – C9 spread over 7,000 sq ft – that Sundram Fasteners commenced its journey. “The Ambattur industrial estate was just coming up. We were one of the first to move in. We were only eight people in 1966. The turnover for the first year was ₹4 lakh and we made a loss of about ₹1,000,” says Krishna. Sundram Fasteners’ initial capital was ₹7 lakh. But in just five years in Ambattur, the turnover jumped to ₹56 lakh, and the company was making a profit. It had outgrown the space in the estate, but since the TVS group had land in nearby Padi, where Lucas TVS and Wheels India had their plants, Sundram Fasteners relocated there. After much persuasion, the government allowed the company to expand its capacity to 2,400 tonnes from the initial 450 tonnes. “Just to give you an idea, we now make 80,000 tonnes,” points out Krishna.

In the early 1970s, Tamil Nadu and Chennai were beset with labour problems, including at the Lucas TVS plant. Sundram Fasteners, however, did not face any labour trouble; in fact, it has not had a single day’s break in production all these years due to labour issues, a record that Krishna is proud of. He attributes it to the excellent relationship he has had with the workers, communicating with them frequently and running the business in a fair and transparent manner.

Growing, but with strings attached

By the early 1980s, Sundram Fasteners had maxed its capacity of 2,400 tonnes. The company’s main competitors were Guest Keen Williams in Kolkata and Fit Tight Nuts and Bolts in Mumbai. When Krishna approached the government again seeking permission to expand, he was first told that he was not eligible for expansion, but the company would be given permission if it sold its shares – 49 per cent of equity – to the public and also set up the plant in a backward area. Krishna argued that since 95 per cent of his customers were automotive companies, all of which had their plants in cities, he should be permitted to expand within city limits, but the officials were unmoved. Thus came up Sundram Fasteners’ plant at Aviyur, a notified backward area, near Madurai, now in Virudhunagar district.

Krishna says the company reluctantly agreed to go public even though it did not need the money. It offered shares of the face value of ₹10 to the public at ₹14, the price fixed by the Controller of Capital Issues, even though it could have commanded a higher premium.

Even as the Madurai plant started production, Fit Tight Nuts and Bolts collapsed due to labour problems. “All of Fit Tight’s customers turned to us. The Madurai plant just took off,” recalls Krishna. Along with the setting up of the Madurai plant, Sundram Fasteners expanded into making cold extruded parts, powder metal parts and set up a plant in Hosur. For these, it bought technology from two German companies.

Management guru CK Prahalad used to say that every company has its core competence, which it must identify and develop. Krishna, who says he is inspired by Prahalad’s ideas, realised that Sundram Fasteners’ core competence was in tool making. “We were very good in designing tools and manufacturing tools.”

Winds of change

By this time, Krishna was active in the Confederation of Engineering Industry, as the Confederation of Indian Industry (CII) was then called. He was its president in 1987-88 and used to talk of the need to be competitive and for companies to export. It must have been sheer prescience as the Indian economy and industry were to go through a major transformation just three years later. The Narasimha Rao Government ushered in economic liberalisation in 1991, and, says Krishna, “it was as if you were suddenly free and you were able to run.”

The automotive industry, as most other industries in the country, went through a dramatic change. From just two car makers, Hindustan Motors and Premier Automobiles, a host of new manufacturers, led by Maruti, came up. The demand for fasteners, says Krishna, just went up and “we started adding plants.”

Quality is one aspect that Sundram Fasteners has always prided itself on. It was the first company, points out Krishna, to go in for ISO9000 certification. Along with it came concepts such as Total Productivity Management and Total Quality Management, subjects close to Krishna’s heart.

Sundram Fasteners had been supplying fasteners to General Motors, and based on that relationship, the US automobile giant asked if the company would be interested in making radiator caps. Sundram Fasteners had no experience of making the product, but Krishna unhesitatingly agreed to buy out GM’s plant if the car maker taught it how to make the caps. Sundram Fasteners got some of its staff trained, paid ₹3 crore to buy the plant, shipped it to India and started making radiator caps for GM. Now, it makes them for others too.

A world of opportunities

Sundram Fasteners started exports in 1977, to Daimler Benz, but that ended after the German luxury car maker buckled under commercial pressure from the main supplier. The company took the setback in its stride. Today, exports account for nearly ₹1,000 crore or about 40 per cent of sales.

If the first 25 years of Sundram Fasteners’s journey were marked by licensing and government controls, the next 25 years saw it expand and grow, thanks to the lifting of controls. “It was as if the mist had lifted, and the chains had been removed,” he says.

The company expanded its product range, set up new plants, bought out Autolec, which was into fuel pumps, set up a plant in China — among the earliest Indian companies to do so — and bought out a company in the UK. One of the defining features of the company’s growth is its resolve to not enter into joint ventures. “It is easier for me to sit at my desk and take a decision rather than ask a foreigner who doesn’t understand the conditions in India to guide us,” explains Krishna, of the company’s philosophy. Here again, he quotes Prahalad, who used to derisively speak of joint ventures as “two partners, one foreign and the other Indian, in the same bed but with different dreams.”

Krishna believes in steady, organic growth, not in diversifying on a whim or because you have secured a licence to make another product. He reckons that the Indian automobile market, of about three million cars and vans and 16 million two-wheelers now, can absorb 10-12 million cars and 50-60 million motorcycles. “To me, the automotive industry is a sunrise industry and we are well-placed on a growth trajectory. Everybody knows us, we know everybody. Our products are well-accepted by everybody. As they grow, we will grow. Sundram Fasteners’ future is completely assured because of the kind of growth we see,” says Krishna.

Krishna also believes that Sundram Fasteners is not about its products, it is about its people. From eight employees in 1966, it has over 8,000 now, including in China and the United Kingdom. His biggest achievement: in the past 50 years, the company has not had a single hour of work stoppage because of labour issues. How did he manage that? Purely by communication, replies Krishna.

Right from the early years, he made it a point to address workers regularly. He does so even now, though not as frequently. This was something he picked up from his father TS Krishna. The TVS group ran a city bus service in Madurai, and TS Krishna would address workers around midnight when all of them returned to the depot with their buses. His father, Krishna recalls, would talk to the workers about the problems, the complaints he had received, and the issues that needed to be addressed.

“In 1966, when I started in Ambattur Industrial Estate, I started communicating with the workers,” he says.

He did the same at the other plants, even in China, talking about the company, the balance sheet, the customers, the trends in foreign automotive companies and developments around the world. “One good thing about communicating is that over a period of time, they realise you are telling the truth. The biggest advantage of telling the truth is that you don’t have to remember what you said the last time. And truth creates trust,” says Krishna.

Finding his dharma

A Carnatic music aficionado (his mother Ambujam Krishna was a composer) and a photography buff — he used to go out and shoot pictures with his Nikon digital SLR camera till recently — Krishna says he used to wonder what his dharma was in running the company.

“Over time, I realised that making a good product, satisfying customers, increasing productivity, satisfying shareholders... these are only the ‘tooling’. The final product is raising the standard of living of workers,” he says. He recalls the numerous instances when retiring employees, who had served long years in the company, would tell him how they and their families had benefited from the company. Nothing gives him greater satisfaction than this.

His two daughters, Arathi and Arundathi, are in the company, with Arathi, Joint Managing Director, looking after domestic operations, and Arundathi, Deputy Managing Director, taking care of the international business.

Does this student of comparative literature have any regrets about the way his life changed on his return to India in the 1960s? “No. Manufacturing has now become part of my life. I have done it for 50 years now. A lot of people think I am an engineer,” says Krishna.

(The article first appeared in The Hindu BusinessLine.)