Automotive Axles hosted a conference call on Feb 6, 2023. In the conference call the company was represented by Dr N Muthukumar – President & COO Meritor HVS India, Mr Nagaraja Gargeshwari – President & Whole Time Director, Automotive Axles and Mr S Ranganathan – Chief Financial Officer, Automotive Axles.

Key takeaways of the call

In Q3 FY23, commodity prices has soften, however focus continues on improving conversion and material cost performances. Management expects margin to improve in coming quarters.

Management expects Q4 FY23 to be similar to Q3 FY23 in terms of demand.

Company has long-term agreements with its customers and going forward it intends to focus on export business opportunities.

Company continues to be leading supplier of axles and second biggest supplier of brakes.

Cummins-Meritor acquisition process is legally under way in India.

In terms of sustainability, company expects renewable energy to contribute 80% of its energy requirement in FY24.

Company aims to replace LPG with LNG reduce cost and CO2 emission by Dec 2023. Management is aiming to achieve sustainability across end-to-end Supply chain.

Company has geared up with capacity to cater to rising market demand. Management expects M&HCV Production Volume in FY23 to be around 400,000 units compared to 297,000 units in FY22.

Going forward, company's strategic focus include: (1) launching new products, (2) improving operational performance along with increasing share of business with OEMs and (3) driving e-mobility business.

Company is supplying axles to defense customers indirectly through OEMs.

Management expects revenue growth of around 15% in FY24. Company will continue to focus on e-axles.

The company is focusing on growth through its ‘Mission 25' strategy of growing revenues, enhancing profitability, new business wins, generating operating excellence, and creating customer value.

Company has taken cost reduction measures at organization and plant level. Company continuous to focus on M25 initiatives and significant savings are expected through M2025 timeframe.

Going forward, company expects to continue outperforming the industry supported by an increase in the share of business with customers, strengthening product portfolios, focus on export and increase in contribution from new products.