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The company held its conference call on 20th November 2014 and was addressed by Mr Ganesh Chairman Rane Group and Mr. Anand CFO Rane Madras
Key Highlights
In Q2 FY'15, the automobile market showed some signs of improvement in passenger car and MHV segments. However there is no clear trend as such. Infact Oct 2014 was one of the most discouraging month for the industry as a whole except may be for 2 wheelers to certain extent.
Industry is struggling and although there is some improvement seen in some segment, it is well below the expectations. Momentum is not there and hence the trend is unclear.
Although net sales for H1 FY'15 have grown by about 17% management expects muted H2 FY'15, with growth of around 10%. Aftermarkets and exports were lower, which was compensated by growth in OEM segment. The company has received orders of around Rs 84 crore from OEMs and has also launched new hydraulic steering units in the farm tractor segment.
Rane Engine Valve (REV) merger is progressing well and management is confident of the same in next couple of months. REVL turned around operations, however higher interest burden hit the bottom line. The company is carrying debt of about Rs 40 crore which it expects to pay off with sale of land. The company has about 12 acre of land and it plans to sell half of it before Mar'15, which will realize good amount of funds for future capex.
Although exports were down, due to some loss in market share and some lower sales due to change in engine shift happening at customers end, overall US market continue to do well while EU was stable to down. The company has got a new client BMW and management is confident of higher exports in FY 2015-16.
Rane Madras Di cast business continues to grow at around 45% on lower base and the company is continuously adding new capacities and new business from North America. The 2nd plant to start soon wherein the Investments will be made in 3 phases. Phase 1 will see an investment of around Rs 30 crore till April 2015. As per the management, Electric power steering business particularly for cars such as Swift, A star and Ertiga saw a decent growth and so as the growth from the new Honda city car.
Raw material prices are stable in India although international prices have come down
Emphasis will be on exports which constitute about 20-22% of total sales.
The company has spent about Rs 111 crore capex in H1 and plans to spend about Rs 50-60 crore in H2 FY'15.
Overall, management is cautiously optimistic for H2 FY'15 while it's still not seeing the desired momentum of growth that is required for FY 2015-16.
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