Highlights:

On the economic front, the high inflation has impacting the economic growth. However the automobile production has increased substantially by 14.3% in the first half of 2022. The core infrastructure sector growth has been healthy at 8.2% in YTD CY2022.

Two wheelers segment is witnessing slow growth on account of sluggish rural demand, high prices and deferred purchases. However, the segment is showing pick up in the quarter ended June 2022

The passenger vehicle segment is picking up, while semi conductor shortage is hampering production ramp ups.

Commercial vehicle segment has showing strong growth driven by strong infra push, fleet upgrades and low base effect.

Tractor sector has exhibited recovery in the quarter ended June 2022 after very weak performance for the previous few quarters. Better monsoon is expected to support demand for the tractor segment ahead.

The company continues to see pressure from higher input cost and inflation.

However, there is strong sales development across businesses due to diversified portfolio. The company has continued to win orders in both automotive and industrial businesses.

The margins remain consistent, while the company is on track for significant capex outlay.

The company has executed business transfer agreement with CATENSYS India for the sale of chain drive business of the Company. The divestment of chain business is a step in the direction towards emobility transition. Strategic global divestment is focused on technology shift in Automotive Technologies division.

The decision is also shaped by carbon-neutrality commitments Sale to CATENSYS India (part of CATENSYS Group Germany). The company aims to become carbon neutral by 2040.

Export segment which is the key focus area of the company has recorded 61.8% growth in the sales for the quarter ended June 2022.

The company has witnessed some increase in working capital due to higher receivables, while it has actions in a place and expects to correct situation soon.

In the automotive aftermarket segment, the company has increased market coverage with continuous product diversification.

The capex has been very strong for the quarter at 8% of sales compared to around 3.5-4% in the previous quarter as well as corresponding quarter last year.

The company is able to enhance its spends on localisation and capacity expansion.

The company has witness marginal decline in the gross margin on sequential basis mainly on account of higher input cost driven by increase in steel prices.

The pricing in some of the segment is indexed to inflation and in some of the segment is based on the negotiations. This helps the company to pass on the input cost to the customers.

The company has been able to substantially spread its wing on the exports front which contribute 16% of the revenues.

Most of the capex of Rs 150 crore in Q2 is towards capacity expansion.

The company is witnessing healthy demand in the automotive aftermarket segment for BSVI complaint equipments.

The content per vehicle for the company has been a continuously improving and the company expect its to further improve. The company expects the content per vehicle to double once the company starts to deliver e mobility offerings to customer.

The company is planning capex of Rs 250 crore for the second half of 2022 and the next year capex would be more higher than CY2022. The company is on track for capex of Rs 1000 crore for three year ending CY2023. Last year, the capex stood at Rs 200 crore.