Brakes India Sets Sights on ₹1,000 Crore Capex for Five-Year Expansion Plan

Brakes India, a leading manufacturer and exporter of braking systems, has announced plans to sustain an annual capital expenditure of ₹250-300 crore over the next five years, driven by favorable growth opportunities. The company anticipates faster growth in international markets compared to domestic business in the medium to long term.

In FY25, capex is expected 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,” said Sriram Viji, Managing Director of Brakes India.

The company, which operates one of the largest iron foundry capacities in India, is doubling the foundry capacity in Gujarat to 60,000 tonnes, expected to be commissioned this fiscal year. Brakes India supplies brakes for three out of four buses and trucks in India, and its iron castings division provides parts for one in every three cars in Europe.

Viji emphasized the company’s commitment to reaching its five-year target, stating that domestic business is expected to double and exports to triple over five years. “The growth roadmap is absolutely on track. The first three years of the program 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, Brakes India, headquartered in Chennai and part of the T S Santhanam Group of the larger TVS Group, established offices in Germany and Japan, as well as a representative office in Korea, to support its export growth. Exports account for slightly 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 the challenges 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.”

Discussing the performance of FY24 and Q1 of FY25, Viji said the company had reasonably robust growth in FY24 compared to FY23. Its consolidated revenues were in the range of ₹7,500 crore in FY24, compared to 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

HBL