Key Points of the call:

• The domestic auto industry grew by 6.4% in Q3 yoy in terms of volume. It was against a decline of 4% in Q2 FY 13 over Q2 FY 12. Higher sales came from 3 wheeler segment -13% growth in Passenger vehicle segment in Q3. SIAM has increased its forecast slightly in this segment for FY 13.

• Industry continues to suffer from weak macroeconomic sentiments and low consumer confidence.

• Demand outlook remains cautious due to higher interest rates, volatility in raw material prices and volatility in forex.

• Industry expects 8% volume growth for FY 13 in the automotive sector.

• Cost of ownership continues to remain high. Forex fluctuation remains another concern though yen depreciation will definitely benefit.

• Outlook on India's auto sector remains positive in long term. Next 3-5 years should be good due to infrastructure development, rural focus etc.

• In terms of earnings, the consolidated total income was at Rs 360.7 crore versus Rs 316.9 crore in Q3. The company's Q3 consolidated net profit was down at Rs 9.4 crore versus Rs 10.4 crore. The company's standalone Total Revenues up 9.4% QoQ from Rs 3,29.8 crore to Rs3,60.71 crore. EBITDA for the quarter up 24% QoQ to reach Rs 41.8 crore. EBITDA margin improved sequentially from 10.2% in Q2FY13 to 11.6% in Q3FY13

• Raw material cost as a % of revenues remained constant at ~70.4% in Q3FY13 and Q2FY13. it improved on a y-o-y basis though.

• Staff cost declined QoQ from 10.0% in Q2FY13 to 9.3% in Q3FY13

• Other expenses declined QoQ from 10.1% in Q2FY13 to 9.6% in Q3FY13

• It is seeing some volatility in raw material prices as well as foreign exchange fluctuation and of course, customer sentiments is still being a little low and expect them sort of improving

• Shifting the focus to localisation, alternate sourcing. Raw material cost reduction was achieved despite the rupee depreciation and higher import costs. And this really has happened because of the localization programs that have been put into place.

• Capex plan is on track. For 9 m this year – it is Rs 62.6 cr. As reported it had 2 new projects. One was on backward integration in aluminum die casting and other in in-sourcing. The project is up and ready to run. One was commissioned in July (in-sourcing), one in December (al dye casting).

• Phase 4 of localisation programme - It will bring down the import content of the product from 28% to 22%. Capex budget of Rs 12.8 crore for this.

• EPAM business - tremendous response in US business. Has earned revenue of Rs 13 crore from this business this quarter. Expect more than Rs 30 crore in the coming year. Talking to other tractor manufacturers also on this in India.

• Sales to Hyundai reduced from 20% to 12%. This was due to overall technology change. They also shifted from hydraulic to electronic power steering.

• Capacity Utilization across product categories during 9M FY'13 (YTD): Steering Products – 62% , Driveline Products – 29%

• Productwise sales mix - 90.8% from steering and column and 9.2% from driveline business in Q3 against 87.2% and 12.2% in Q3 Fy 12.

• Outlook for Next year – Should slightly improve. Now it is sluggish. SCV – growth should continue. In PV, it will continue but on higher base. Hub and spoke model should play important role in SCV sector.