Key takeaways of the call

Shutdown since 23rd March impacted the momentum of quarterly performance towards end of the quarter. Sales and operations momentum came to a halt due to COVID-19 crisis. QoQ revenue loss was caused by shutdown from March 23rd (COVID-19) and the YoY revenue loss is additionally caused by market volatility and demand slowdown in some sectors of automotive and industrial business.

Revenue mix for Q1CY20, mobility 80% and others 20%. Mobility revenue registered a QoQ fall of 9.1% and that of others was down by 15.3%QoQ.

Q1CY2020 profit margin at Q4CY2019 level despite shutdown of operations since 23rd March owing to COVID-19 crisis. PBT margin at 11.9% was nearly maintained on QoQ basis despite revenue loss due to better mix and cost level. The share of manufactured goods were higher compared to traded goods in the quarter.

The auto industry in transition from BS4 to BS6 with new emission norms become effective April 1, 2020. There was sudden spurt in demand for BS4 products in Q1CY20 which resulted in mix of old products and new BS6 products during the quarter. Further mining, tractors, off the road vehicles demand were better for major part of the quarter auguring well in case of mix.

Continue to manage COVID-19 crisis effectively, safety measures taken ahead of Government announcements. Staffs were asked to Work From Home from March 17, 2020. While the Maneja, Savli and Talegaon (Pune) plant was closed from March 23, 2020, the Hosur plant was shut from March 25, 2020. The company of the planned days has lost 8 days (10% of planned days) due to shutdown in Q1CY20 and 44 days (56% of planned days) in Q2CY20. All plants and warehouses have commenced operations partially as per government approvals. All four plants are currently operational with a workforce of 30-50%, with Maneja & Savli plant operating at a capacity utilisation of 30%, Talegaon at 20% and Hosur at 25%.

Expect to reach 100% utilisation levels (3 shifts) by June 2020. So H2CY20 to have normal plant utilisation.

The company decided to defer non critical investments that can be delayed but critical investments will continue. The company The company's investment strategy currently is striking a balance between performance and investment.

Though investment plans are shifted by one year from 2020 to 2021, the critical investment will continue in 2020.

Forecast of domestic vehicle production for 2020 is revised to 3.4 million, a fall of 19% from 4.5 million in 2019.

Industrial demand: The demand related to mining including off highway is good. As all major wind turbine manufacturers use India as sourcing hub, the demand for Wind is looking positive. The railway demand is also positive.

All cost overheads were continuously reviewed. Hiring is currently under freeze. The company is looking to improve efficiency and ability of the manpower. The company is looking at every variability in the fixed cost to prune costs.

Automotive After Market posted a strong performance in Q4CY19. Fundamentally this segment is seasonal/cyclical with last quarter being a strong one. So Q1CY20 was little low with additional impact from lockdown. The endeavour of the company to expand the range of offerings in automotive after-market such as clutch applications etc., augured well. The company will continue to expand its product offerings in automotive after-market. Expansion in product offerings as well as tendency of people service their vehicle than replacing vehicles to drive demand for after-market business of the company. The company estimates/expects the after-market demand is to be very good in CY2020.

Industrial After Market in Q1CY20 was little muted on the back drop of liquidity crunch and some of the common projects were on hold. However with government's new initiative the demand for Industrial after market is expected to pic-kup.

Compared to last year the content per vehicles has increased but it is not as per the expectation of the company that is, in the area where it wanted more. The company has almost doubled content per vehicles in LCV. The company's content to vehicle in PV increase but not to the expectation of the company and it is trying to increase content per vehicle in PV.

No major change in revenue mix percentage compared to 2019.

Exports accounts about 10-15% of the revenue. Looks to increase the share of Schaeffler India in Asia Pacific especially in Industrial segment which was currently importing from Europe.