Mahindra CIE Automotive hosted a conference call on July 22, 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 both India and Europe, sales have been outperforming the underlying market.

In India, Sales evolution remains strong despite 2W and tractor sector weakness.

In India, tractors sales during Q2 CY22 grew by 14.4%, two wheelers sales went up 38.2%, MHCV sales went up 68.5% and <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) went up by 31.7% compared to Q2 CY21.

In India, tractors sales in H1 CY22 fell by 12.6%, two wheelers sales went up 1.6%, MHCV sales went up 22.6% and <6T vehicles went up by 16.4% compared to H1 CY21.

In short term, management expects uncertain market environment in Europe due to potential gas shortage (Russia/Ukraine conflict) together with high inflation and interest rate increase. However management remains optimistic for long term.

In Europe, <6T vehicles (include Passenger Vehicles, Utility Vehicles, Vans and Light Commercial Vehicles) sales in Q2 CY22 fell by 5.4% and MHCV sales fell 19.8% compared to Q2 CY21.

In Europe, <6T vehicles sales in H1 CY22 fell by 12.5% and MHCV sales fell 15% compared to H1 CY21.

In Europe, Margins were affected by raw material, energy and inflation impacts.

Company's capex was concentrated mainly in India business organic growth strategy. Total capex was about 5% of total sales.

OEMs are expected to ramp up the production in India to meet festive demand. This along with increased demand for personal mobility is expected to support demand.

Company generated strong operative cash flow in both regions. Management is focused on expansion of value added products and efficiency improvement

In India, many divisions are increasing value added products e.g., foundry is targeting increasing their machine value add, magnetic division is aiming for better grade magnets, gears division has benefited from more complex gears due to BSVI transition etc.

All the business verticals in India are making a push to increase exports.

The company is increasing the non power train products so as to limit the impact of growth of Electric vehicles. Currently the focus in Europe is to sustain and gradually improve profitability in the face of a slowly recovering market demand.

CIE reinforced their faith in MCIE by increasing their shareholding in MCIE to 63.44%.