L Ganesh, chairman, Rane Group addressed the call:

Highlights of the call:

Rane Brake Lining

The quarter was a good quarter for the group.

Vehicle sales growth supported by utility Vehicle segment.

CV saw good sales growth due to growth in economy and mining activity.

RBL saw strong performance during the quarter supported by favourable market demand.

Favourable material cost and strategic cost savings supported to deliver strong operating margin.

The management expects demand environment to remain positive in the upcoming quarters

December 2017 quarter sales grew 12% to Rs 128.14 crore. PAT grew 33% to Rs 13.19 crore.

Strong offtake from Indian OE customers and recovery of demand from Aftermarket segment helped post good sales growth

Nine months sales stood at Rs 340.45 crore against Rs 339.35 crore. PAT fell 2% to Rs 29.82 crore.

Favorable commodity prices, foreign exchange movement and higher cost savings realization helped to sustain lower raw material cost.

The company is witnessing strong demand from Indian OE customers particularly passenger vehicle and two wheeler customers.

The company has launched various new products in aftermarket.

The company will continue to realize higher cost savings through various operational and strategic initiatives that it had undertaken in the past.

Aftermarket business stabilized and grew by a strong 28% post GST.

The management expects the demand revival to continue in Q4.

Share of business improvement with key customers in CV segment helped post better growth

The company has not finalized capex plan. But since CV has seen revival and will continue growing next year the company will increase capacity.

OE spares sales for RBL was muted due to GST effect. This seems to be now on recovery path.

Margins of 19% in RBL will be impacted due to increasing commodity prices.

Rane Madras

Net sales increased 31.7% to Rs 317.9 crore in Q3 FY18. Sales grew due to strong demand from Indian OE customers across vehicle segments and higher demand from Indian Aftermarket.

PBT increased 586.9% to Rs 19.8 crore.

The company saw strong demand for Steering products from Indian OE customers across vehicle segments.

All plants achieved their highest production volumes during the quarter to meet increased demand for Steering products.

Steering sales also saw strong demand from International customers.

RML is seeing lower demand for die-casting products from International customers however it is seeing strong sales growth from Indian customers.

Steering business saw growth across all customers namely Ashok Leyland, Eicher, Volvo, Mahindra etc.

Performance in 2-Wheeler segment was supported by better growth for Disc Pad products and commencement of die cast products supply to 2-Wheeler customer.

There is definitely scope of returns ratios exceeding 20%. If the current buoyant scenario persists the ratios can grow further.

Rane Engine Valve

In December 2017 quarter net sales increased 15.8% to Rs 92.7 crore. Sales grew due to strong demand from Indian OE customers and International customers.

However Indian Aftermarket segment continued to experience lower offtake.

Loss before tax for Q3 FY18 was Rs 5.3 crore against loss of Rs. 5.0 crore.

The plants are improving capacity realization and operational performance.

The business is marred by delivery issues and higher rejection at select manufacturing facilities.

Engine valves sales was affected due to debottlenecking.

Group financial performance

The group registered superior growth in passenger vehicle segment as it supplies to some of the successful new models of OE.

Net Sales increased 29.6% to Rs 1,224.6 crore in Q3 FY18.

Revenue from Indian OE customers grew by 34% supported by increased offtake across major vehicle segments.

Revenues from International customers grew 18% driven by new businesses for Occupant safety products.

Revenue from Indian aftermarket segment grew 25% indicating recovery of demand post GST implementation.

There is no debt reduction plan for the company as a whole as the management is comfortable with the debt situation.