Key Highlights

Strong demand from customers in India from OEM customers. Both CV and passenger car demand remained buoyant. There was strong growth in served models and new models that the company served.

In Farm Tractor segment, the group gained market share for manual steering gear and made breakthrough in power steering products. However production shortfall of valve train components resulted in lower growth

International front, 16% sales growth seen at group level. Some forex movements particularly for RBL was adverse.

Some margin pressure was witnessed in June 18 quarter. Raw material and manpower costs increases seen in June 18 quarter which resulted in some increase in overall cost and affected margins slightly. The full increase in raw material was already seen in the quarter. Discussions are going on with customers to pass on the rise which should happen.

For Rane Madras (RML), strong growth from OEM helped the 37.5% growth in standalone net sales. Indian sales grew by 45% while international operations grew by 15%. At standalone basis, the margins improved due to better economies of scale.

Due to demand from investors, RML published consolidated quarterly results for the first time.

Rane Precision die-casting (RPDC), the subsidiary company saw improvements however some tooling and maintenance costs issue was seen in the quarter. At the time of acquisition in Feb 16, the management anticipated a timeframe of around 3 years to break even this company. Due to operational set back, more losses than anticipated had happened. No new businesses were seen although enquiries are there. Now expects 4 years time frame for the turnaround.

RPDC's Indian business also has capacity operational issues. There is a significant surplus capacity which was created for exports, but the business for which the capacity was created was for the passenger car segment for US market. In US, utility vehicles are doing great, but passenger car segment is not doing well which is hurting the operations.

Aftermarket business in RML has seen a healthy growth of 66% in the quarter, however on a low base as June 16 was affected due to GST.

For Rane Engine Valve (REVL) the revival is underway. There is a strong demand from the customers both domestically and internationally. However high raw material costs lead to some margin pressure. Once efficiency starts improving, margins should improve going forward.

For Rane Brake lining (RBL), strong demand from utility vehicles and 2W resulted in 22% increase in net sales. However high material costs and employee cost hit the margins which resulted in a 6% fall in PAT for June 18 quarter.

In RML, in June 17 quarter, there was a reversal of Rs 5.5 crore on account of some excise duty. Such credit was not there in June 18. Similarly for RBL, the similar figure for June 17 was at Rs 1.5 crore vis a vis Nil for June 18.

In RBL the company is de-emphasising its focus on Railways except Metros.

In Rane TRW Steering Systems (RTSS), robust demand for occupant safety division from CV segment helped in reporting better sales. Net sales grew by around 42% in June 18 quarter. Higher operating leverage offset the increase in raw material costs. PBT was up by 75% YoY.

Steering and safety products expansion plan from RTRW is on track.

For Rane NSK Steering systems (RNSS), customer offtake from passenger car segment helped in increased sales. 68% of total sales is from passenger car segment and 27% is from M&HCV segment.

Emphasis on localisation to reduce the overall cost.

Overall, the demand environment continues to remain favourable. Overall outlook continues to remain positive.

Capex for FY 19 at group level is around Rs 200 crore.

There is no real benefit of GST so far visible in the business. May be in long term one will see some positive impact.

In US one of its customers has a Steering gear problem for some years now and some models were being called back. The customer has asked for a claim from Rane Group hence a contingent liability of Rs 104 crore was provided by the company. However, the customer has put the claim on hold after Rane group shared the designs which were given by the company on which the entire supply was made.