Highlights of the call:

Rane Group is engaged primarily in manufacturing auto components for well over five decades.

Rane Group is a preferred supplier to major OEMs in lndia and abroad.

Through its group companies, it manufactures Steering and Suspension systems, Friction materials, Valve train components, Occupant safety systems and Die-casting products.

lts products serve a variety of industry segments including Passenger Vehicles, Commercial Vehicles, Farm Tractors, Two-wheelers Three-wheelers, Raiways and stationery Engines.

Group sales stands at Rs Group Sales of 4,688 crore or $ 714 mn.

63% of sales come from Steering and Suspension Systems, 11% from Occupant Safety Systems, 10% from Friction Material Components, 8% from Valve Train Componentsm 7% from Aluminium Diecast Components and 1% from others.

71% of its sales comes from India OEM, 18% from International OEM, 10% from India Aftermarket and 1% from International Aftermarket. .

64% of the group's sales come from Passenger Vehicle, 25% from Commercial Vehicle, 6% from Tractors, 3% from 2-Wheeler/3-Wheeler and 2% from others.

Rane (Madras)

Rane (Madras) manufactures steering and suspension systems.

Net Sales increased 23.3% to Rs 1171.8 crore in 2018 on the back of 29% growth in India sales and 7% growth in International business. Also Steering business grew with strong demand from new programs in passenger vehicle segment.

EBITDA margin improved by 145 bps due to increased volume and improved operational performance

Lower Finance cost helped to improve PBT margin.

Rane Madras maintained healthy capacity utilization as plants sustained higher production to meet increased demand for Steering products.

It ramped up of production of Rack & Pinion at Varanavasi Plant.

The company continued to improve operational performance and achieved reduction in internal rejections and premium freight in Die-cast division

If the market continues to grow as it is growing now the performance of RML is sustainable.  

Group  

Rane Group's net sales grew 17.5% to Rs 4,687.7 crore in FY'18.

FY18 was good year for the Group supported by strong demand environment and new business launches.

The turnaround of operations is underway in few businesses.

Revenue from Indian OE customers grew by 25% supported by increased offtake across major vehicle segments.

Revenues from International customers grew 19% YoY driven by new businesses for Occupant safety products.

Revenue from Indian aftermarket segment de-grew by 1% as the sales were affected by GST related transition in the first half.

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

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

In Farm Tractor segment, it gained market share for manual steering gear and made breakthrough in power steering products

Performance in 2-Wheeler segment was supported by better growth for Disc Pad products and share improvement for Valve train components

Operational leverage and various cost control initiatives across group companies helped in improving the overall profitability.

Group Capex was Rs 165 crore in FY 2018.

Rising commodity price is a matter of concern.

Prices of special steel prices, metals and alloys are going up. This could put pressure on the margins. However the company hopes to pass it on to the customers. Various global trade barriers are also cause for concern.

The company continues to pursue inorganic growth in India and overseas.

Volumes were good in Q4.

Expect the demand environment to remain favourable.

It wants to reduce dependency on Auto industry and so it is looking at aerospace and other industries.