According to the company management, Sona Comstar has just inaugurated its second plant in Mexico and will likely next look at a greenfield plant in India even as it expands its product range. However, the Red Sea crisis has hit its margins by 0.35-0.4% this quarter, adding 9-15 days of shipping time and a three-fold jump in freight rates which is a temporary headwind.
Vivek Vikram Singh, MD & Group CEO, Sona Comstar, said: “From FY22 to FY24, the order book has gone from INR 14,000 crore to INR 22,600 crore of which 79% or just under INR 18,000 crore is from the EV segment. Of the EV orders, 80% is global business and 20% is domestic. Of the INR 18,000 crore EV orders, 63% is e-passenger vehicles, 10% for e-two wheelers and three wheelers and 6% for commercial and off highway vehicles. EV growth is high priority for us,” he added.
The INR 1,200 crore capex spend will be almost entirely EV driven. From 2 plants in 2016, the company now has 10 plants with north America commanding 40% of its revenue, India 28% and Europe 26%, he added. In terms of products, Sona Comstar, which makes starter motors and differential gears among other parts, has seen the EV share of its revenue go from 14% in FY21 to 29% in FY24.
However, the geopolitical issues in the Middle East and the Red Sea crisis have pinched margins and hit production cycles, said Singh. “We make 28% margin so it is a relatively smaller pinch this quarter at 0.35-0.4% of revenue as extra expenses, but freight rates have gone up almost three times,” he added.
