Brakes India, a leading manufacturer and exporter of braking systems, plans to continue an annual capital expenditure of ₹250-300 crore over the next five years, citing favourable growth opportunities. The company is optimistic about its export prospects, expecting faster growth in international markets than domestic business in the medium to long term.
But, capex in FY25 is likely to be higher due to new projects. “We typically invest ₹250-300 crore annually. Given our growth projections, we will need to maintain this investment. However, capex might be higher this year due to capacity expansions in the foundry and the Advics JV. Over a five-year plan, our CapEx will exceed ₹1,000 crore, and we remain committed to this expansion strategy,” Sriram Viji, Managing Director of Brakes India, told businessline.
The company, which operates one of the largest iron foundry capacities in India, is doubling the foundry capacity in Gujarat to 60,000 tonnes, which is expected to be commissioned during this fiscal year. While 3 out 4 buses and trucks in India have the company’s brakes, its iron castings division supplies parts to every third car in Europe.
Viji emphasized the company’s commitment to reaching its five-year target. In June 2022, he indicated that domestic business would double and exports would triple over five years. “The growth roadmap is absolutely on track. The first three years of the programme have gone extremely well. While we see some slowdown in the domestic market, we are still quite optimistic about getting close to that doubling target. Our focus on international markets remains strong,” he added.
In FY24, the Chennai-headquartered company, which is part of the T S Santhanam Group, which is, in turn, a faction of the larger TVS Group, set up its offices in Germany and Japan, as well as a representative office in Korea, to support its export growth. Exports account for a little less than one-fourth of its revenue.
Explaining the trend of supply chain de-risking strategies among global firms, Viji noted that many companies are considering shifting from China to India. However, he acknowledged that this transition is challenging due to China’s vast capacity, competitive pricing, advanced technology, and reliable delivery. While “China plus one” strategies are frequently discussed, they are not easy to implement. Nevertheless, India is benefiting in some cases as supply chains move in its direction.
Viji also highlighted the trend of nearshoring, pointing out that North American companies are likely to consider Mexico for their “Plus One” strategy, while European firms might look to Eastern Europe and Northern Africa, in addition to India.
“There are many forces at play,” he said. “But we are very optimistic. As manufacturing becomes more difficult in the US and Western Europe, India will see significant opportunities. We are confident that our exports will grow faster than our domestic business in the medium to long term.”
Financial performance
Discussing the performance of FY24 and Q1 of FY25, Viji said the company had reasonably robust growth in FY24 when compared with FY23. Its consolidated revenues were in the range of ₹7,500 crore in FY24, compared with about ₹6,900 crore in FY23.
“Ongoing businesses and ramp-up of volumes mostly drove the growth. On the export side, we didn’t see much growth in FY24. However, we were quite satisfied with the year gone by. Passenger car demand has been reasonably strong in Q1 of this fiscal. Commercial vehicle demand has been a little sluggish,” he added.