"Craftsman to Establish Greenfield Factory in Readiness for China+1 and Make in India Opportunities"

Craftsman Automation Ltd, a diversified engineering company that provides components to the automotive and industrial sectors, has increased its capital expenditure (capex) for the fiscal year 2024. The company has raised its capex by an additional ₹150-160 crore, resulting in a total of ₹470-480 crore allocated for investments. This adjustment is part of Craftsman's strategy to establish a new greenfield unit in Coimbatore, positioning itself to capitalize on emerging opportunities associated with the China+1 and Make in India programs.
The company initially budgeted ₹320 crore for capex for the current fiscal year. However, it has now identified substantial prospects within the powertrain and aluminum businesses due to the geopolitical landscape and the Indian government's Make in India policy. These opportunities stem from various government initiatives aimed at reducing the volume of imports and preventing dumping from other countries. Consequently, Craftsman Automation is proactively preparing for this scenario.
Srinivasan Ravi, the Managing Director of Craftsman Automation, discussed the company's revised capex during the Q2FY24 earnings call. The Coimbatore-based company has outlined an investment of approximately ₹209 crore, with a significant portion (₹150-160 crore) scheduled for this fiscal year. The proposed manufacturing complex will be situated on the company's 48-acre site at Kothavadi near Coimbatore. The close proximity of the existing and new plants, within 45 km of each other, will facilitate efficient operational management and synergy across all three businesses – automotive powertrains, aluminum products, and industrial and engineering.
Ravi stated, "We are going ahead with the Greenfield project very close to the mother plant in Coimbatore. We are going to create one more premise for future expansions of all our three businesses – automotive powertrains, aluminum products, and industrial and engineering."
In the first half of this fiscal year, Craftsman Automation already invested a net capex of ₹258 crore in expanding its existing businesses, which included technology upgrades and automation.
The company foresees growth in the automotive powertrain business, expecting high single-digit to low double-digit expansion over the next two years, followed by accelerated growth in FY26. It is also working on an export order with one of its largest customers, set to commence in FY26. Furthermore, Craftsman Automation is enhancing its capacities to meet the demands of the off-highway segment.
Ravi pointed out that while the company continues to increase its involvement in the commercial vehicle business for overseas markets, the off-highway segment holds significant potential, given the geopolitical situation and the desire to reduce dependence on China.
In the aluminum die-casting business, Craftsman Automation is in the ramp-up phase. In the industrial and engineering business, which includes storage solutions and high-end sub-assembly and contract manufacturing, the first half experienced a pause in the storage solution business. However, the second half of the fiscal year is anticipated to be more promising, as the company holds an order book of ₹100 crore in automated storage.
HBL