Following a weak demand in the domestic market, Sundram Fasteners (SFL), part of the $8.5-billion TVS Group, has reported a 13% drop in its net profit for the June quarter to Rs 93.11 crore, against Rs 106.65 crore in the corresponding quarter last financial year. Revenue during the quarter declined 2.5% to Rs 945 crore, against Rs 969 crore in the same quarter of the previous year.

The company, which had incurred Rs 442 crore towards capital expenditure in last fiscal, will be investing Rs 350 crore in the current fiscal, of which the significant portion will be towards projects for exports.

Hit hard by poor sales in the domestic market, revenue fell sharply to Rs 557.22 crore, against Rs 614.29 crore during the same period in the previous year. However, exports grew 8.3% to Rs 348 crore, Rs 322 crore in the year-ago period, said SFL on Thursday.

In a message to shareholders earlier on Thursday, chairman Suresh Krishna said the automobile industry had been experiencing a slowdown for months now, as the manufacturers had cut down their production to keep inventory in check in the wake of subdued consumer sentiments. The prolonged slowdown in the industry is resulting in drop in revenues of the company.

The company has initiated various cost-reduction measures to ensure that there wouldn’t be significant adverse impact on margins. While the SEZ units I and II at Mahindra World City near Chennai are fully operational, the company has set up another SEZ unit at Mahindra World City (unit III), which commenced production in January 2019. The unit manufactures and exports high precision parts for crossover and mini trucks.

The company is in the process of setting up a new SEZ unit at Sri City, Andhra Pradesh, to manufacture and export high precision engineering components. To further SFL’s growth in non-auto segments, the company incorporated a new wholly-owned subsidiary named Sunfast TVS, he said. The new company focuses on growth opportunities in aerospace and defence segments. The firm would continue to grow SFL’s existing business in aerospace segment and also focus on parts for armoured vehicle and trucks, he added.