Sona Comstar lines up Rs 1,000-cr capex to up EV play | The Financial Express

Sona Comstar lines up Rs 1,000-cr capex to up EV play

A major portion of the company’s capex will be for differential assembly, final gear and other EV transmission parts

Sona Comstar lines up Rs 1,000-cr capex to up EV play
Chief Finance Officer Sherry House told Reuters in an interview that Lucid would tap into the capital markets as it looks to build a factory in Saudi Arabia.

Sona BLW Precision Forgings (Sona Comstar) will invest Rs 1,000 crore for setting up of new production capacities that will make components for the electric vehicle (EV) industry. The Gurugram-based company is actively looking at acquisition opportunities in the EV ecosystem, according to a top company official.

Supplies to the EV segment, largely consisting of passenger vehicles followed by two- and three-wheelers, make up 68% or Rs 14,000 crore of the company’s net order book, which stands at Rs 20,500 crore. Capital expenditure (capex) for this year would be Rs 350-400 crore, of which Rs 166 crore has already been deployed.

Rohit Nanda, group chief financial officer, Sona Comstar, said: “Over a three-year time horizon starting this year, we expect the capex to be about Rs 1,000 crore based on the current order book. As we add to the order book, the requirement for capacity addition will also go up. Most of these would start production by FY25. There would be a few large orders that would fully ramp up by FY26.”

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Predictive active suspension integrated motor controller module, low voltage inverter, mid-mount drive motor, and hub wheel motor are some of the products that Sona Comstar has in its portfolio. ADAS sensors, liquid-cooled inverter, high voltage traction motor, and integrated controller with DC-DC converter are some of the component areas that the company intends to get into.

A major portion of the company’s capex will be for differential assembly, final gear and other EV transmission parts. The second-largest capex component will go towards the integrated suspension module products and the third-largest portion would be towards adding more differential gear capacity which also serves the differential assembly business.

From constituting around 27% of its revenues in FY20, the share of internal combustion engine (ICE) business for Sona Comstar dropped to 17% during H1FY23. The share of EV business during the same period has grown from 2% to 25%. The share of ICE business is expected to further decline given the increased thrust on EVs by automakers.

“Our historic Ebitda margins have been in the range of 25-27% and we continue to be in that range even now. Margins on EVs are largely the same as ICE,” Nanda added.

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After the merger between Sona BLW with Chennai-based Comstar Automotive following the completion of acquisition of 33% stake in Sona BLW in 2019, Sona Comstar is now preparing to look at acquisitions to fulfil its EV ambitions.

“Our vision is to become a significant electric, autonomous and connected vehicles player offering integrated solutions to our customers. We are exploring partnerships and acquisitions of technologies such as sensing hardware and software solutions that address the burgeoning autonomous and connected vehicles space,” group CTO Kiran Deshmukh said during an analyst call.

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First published on: 01-11-2022 at 00:05 IST