SLR Metaliks continues capacity expansion on hopes OEMs logging V-shaped growth

New Delhi: SLR Metaliks , a leading supplier of alloy steel to automobile industry, is planning its production in expectation of a "V-shaped growth" by vehicle manufacturers and has not held back capacity enhancement during the lockdown, according to a top company official.

The company, which supplies to original equipment manufacturers (OEMs) including Tata Motors, Daimler, Mahindra, Swaraz Mazda and Bajaj Auto, among others, is expecting recovery in demand from auto sector from September onwards and reach "pre-COVID levels" by December provided there are no further lockdowns and worsening of the coronavirus pandemic.

"OEMs are talking about a V-shaped growth as the tractor industry is doing very well now. Whenever there is a boom in the tractor industry, it means the agri sector is doing very well. It results in robust demand in two-wheeler and entry-level cars," SLR Metaliks Managing Director Rajkumar Goel told .

While April sales were zero, in May it was almost 20 per cent and in June it reached near about 50 per cent in the auto sector, he added.

"We are expecting July to be around 50-60 per cent...You leave out the second quarter, after that it will be good provided there is no lockdown again or the coronavirus pandemic doesn't worsen. From September onwards and by the time we reach December we will reach pre-COVID levels. We are fully prepared to meet the expected demand." Goel said.

When asked if the company has changed its investment and expansion plans due to COVID-19, he replied in the negative.

"We have utilised the lockdown to carry out our expansion plans. Our existing capacity is 3 lakh tonnes per annum and we are enhancing it to 4 lakh tonnes per annum, an increase of 33 per cent...We are investing Rs 60 crore for the same. The fresh capacity will be available by August 10," Goel said.

The company's manufacturing plant is located at Hospet in Karnataka and almost 99 per cent of its production is for domestic consumption.

On the financial impact of the health crisis, he said, "There is recovery of the topline but bottomline will be a struggle. Today we are not talking about the bottomline. Our priority is on topline. If the industry is functioning and if we are able to sell our products, we will be able to take care of bottomline although it may be up or down a bit."

Last fiscal, the company had posted a turnover of over Rs 1,200 crore.
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