ZF Commercial Vehicle control systems India hosted a conference call on Nov 10, 2022. In the conference call, the company was represented by Mr P Kaniappan – Managing Director and Mr RS Rajagopal Sastry – Chief Financial Officer.

Key takeaways of the call

In Q2 FY23, MHCV segment grew by around 50% YoY largely driven by government infra push. Road, Metro projects, Power and Water projects have seen the maximum increase in infrastructure spend allocation.

LCV segment grew driven by e-commerce, intracity last mile connectivity and increase in penetration of CNG/LNG Vehicle.

Company is working with several OEMs in the country to reduce the Total Cost of Ownership (TCO) by recommending the right value enhancers and by providing improved uptime for the fleets through its Fleet Management Solutions.

Regulations mandating high tech braking products is expected to provide tailwinds to company's tech product portfolio/solutions.

Company is strengthening its place in EV braking systems.

In H1 FY23, Company's aftermarket division achieved 40% YoY growth.

There are some light duty vehicles where company is having a small portfolio however; company is trying to expand this in the aftermarket space.

The company has been approved as applicant for PLI scheme. Going forward, it plans to develop new products under PLI scheme. This would potentially help in increasing content value.

Sales to OEM in Q2 FY23 stood at around Rs 348 crore and exports stood at around Rs 260 crore.

Company continues to witness inflationary pressures in certain commodities. Cost saving efforts are being taken to offset some pressure.

Company has built a connected vehicle solution portfolio. As of sept 2022, approx. one lakh vehicles are connected to its platform.

Growth of electric mobility also opened up opportunity to provide high value content products such as electric compressors.

Company has secured new business in e-mobility segment from three customers.

Company looks forward to the following strategic opportunities in the coming years: (1) Introduction of new product portfolio - Doors with door control system, air suspension systems, air disc brakes among others. (2) Introduction of e-Compressor, Electronic Braking System and (3) Introduction of AMT.

Capex for FY23 is expected to be around Rs 250 crore.