CIE Automotive hosted a conference call on Feb 23, 2022. In the conference call the company was represented by Mr. Ander Arenaza Alvarez- CEO, Mr. K. Jayaprakash- CFO and Mr. Vikas Sinha- Sr. VP.

Key takeaways of the call

In India Significant part of new orders (greater than 20%) in many divisions are for EV and Hybrid parts, especially in divisions focused on two wheelers. Company also received orders from leading 2W, 3W and 4W EV OEMs (Traditional as well as new entrants).

In Europe, company received new orders focused on non-engine and EV parts.

In CY2021, forgings contributed 59% of total revenue, aluminum 12%, stampings 11%, gears 10%, casting 6%, magnetics 2% and composites 1%.

Board approved dividend of Rs 2.50 per ordinary equity share of face value of Rs 10 each for the financial year ended 31st December 2021. Record date for the purpose is 18th April 2022.

General cost inflation is affecting the business, especially raw materials, energy and logistic costs. Raw material price increase were passed to customers without margin, Company had a downwards margin impact of approx 2% over sales.

In CY2021, PAT includes the one-time negative impact Rs 142.6 crore of Deferred tax liability on Billforge goodwill and a one time positive impact of Rs 29.2 crore of collections of previous years income tax.

Company generated strong operating cash flow in both regions.

Company expects tractors and two wheelers segment to be sluggish for next 2 quarters. However management expects two wheeler exports to continue to do well.

Company's strategy going forward is to diversify customer base, plant locations and technologies and continuous improvement in profitability.

Company's capex is concentrated mainly in India and Mexico to continue business organic growth strategy. Company's order Book is better than expected in India, which is reflected in the additional capex and new capacity being put up.

Company expects India business to contribute more in total revenue than Europe business going forward.

Management expects chip shortage situation to gradually improve in CY2022.

Despite weak last quarter for Europe business, CY 2021 shows a relevant improvement on margins due to restructuring actions taken in 2020.

In CY2021, CIE increased stake in MCIE from 60.18% to 60.76%. Company expects effective tax rate (ETR) for CY22 to be around 24%.

In India, MHCV sales during Q4CY21 grew by 21.6%, tractors sales fell by 27.4%, two wheelers sales fell by 22.7% and <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) fell by 11.1% compared to Q4CY20.

In India, MHCV sales for CY2021 grew by 89.5%, tractors sales grew by 23.7%, two wheelers sales grew by 10.7% and <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) grew by 27.7% compared to CY2020.

Europe Highlights

In Q4CY21, MHCV sales fell by 4.7% and <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) fell by 25.3% compared to Q4CY20.

In CY2021, MHCV sales grew by 16.3% and <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) fell by 4.4% compared to CY2020.