Key Highlights

While passenger car segment grew by 5-6% in FY 17, Rane group sales to passenger car segment grew by around 14%, as the company supplied to new customers and new variants and models of existing customers in FY 17. The group was able to outperform the industry and the new model sales to OE passenger car segment are doing very well for the group.

In Farm tractor segment while the industry grew by around 21%, Rane group sales predominately through Rane Madras, grew by only 7%, as the markets like West and North, where the company is not present, did very well in FY 17 compared to Southern markets.

ROC for Rane Holdings as on Mar 17 stood at 15.6% and management endeavours to improve further. BV stood at Rs 505.

For Rane Madras (RM), Indian business which stood around 75% of total sales grew by 13% whereas international business grew by 28% in FY 17 on YoY basis. New customers in passenger car segment helped achieving the growth. Company now has 30% market share of Maruti in Die casting business. It supplied to all new launches of Maruti and Honda in FY 17.

The company incurred capex of around Rs 75 crore in RM in FY 17 for ramping up plant in Hyderabad and capacity creation of steering gears at Varanavasi facility. This has resulted in good volumes for RM in FY 17.

Around 36% of total sales came from passenger car segment, 23% from M&HCV, 19% from tractors and rest from SCV and others for RM in FY 17.

ROCE stood at 11.6% for RM in FY 17.

The company acquired Rane Precision Die-casting company in USA which is currently in losses. Consolidated PAT and ROC thus got affected due to the losses. Expects a turnaround of this company in next 24 months.

RM got a setback from USA, as one of the OE major GM cancelled its order for the Opel model which was supposed to commence business in FY 19. RM had incurred necessary capex for the line of business expected from this model. The company is in talks with GM to compensate the capex. Meanwhile majority of the new capacity will be used for domestic business so there won't be much loss of cash due to the capex already incurred for GM.

Despite the cancelled order, going forward, expects international die casting business to do well.

Going forward, for RM, in FY 18, expects to acquire more customers in domestic hydraulics and passenger car segment and to increase supplies to existing variants of passenger car OE companies. After markets which got affected due to demonetisation, should come back well in FY 18. However uncertainty on GST continues and its still not clear as to how domestically it will pan out to its customers and to RM. Internationally aims to increase its die casting portfolio in EU.

For Rane Engine Valves (REV), net sales in FY 17 grew by around 3.4% as while passenger car and utilities continued to do well, demonetisation had affected the 2W space and the aftermarket and M&HCV segment got affected due to change in BS IV norms. Railway segment helped in achieving some growth in sales. Expects railways to continue to do well going forward as well.

The company did lot of initiatives on cost cutting and operational efficiencies which led to better margins. The turnaround activities are still underway.

Debt was being repaid in FY 17 which helped in overall reduction in costs. Expects working capital to remain around current levels going forward.

Around 25% of total sales came from Passenger car segment, 24% from railways, 22% from 2W and rest from M&HCV and other segments.

For FY 18, the cost cutting measures will continue to be taken. Further capacities will be expanded for international customers. Expects 2W space to do well in FY 18 which inturn will help the company.

In Rane Brake lining (RBL), implementation of VRS at Chennai and Hyderabad and various other cost cutting measures together with forex gain helped in better margins in FY 17. Expects to maintain the margins, but it would be difficult given forex uncertainty and rising input costs.

Aftermarkets which account for around 40% of total sales, was affected due to demonetisation but still did well on margins front.

Passenger car segment constitute around 34% and M&HCV segment constitute around 36% of total sales.

Rail segment didn't do well in FY 17 for the company and there was a lower off take from international market.

In Rane TRW Steering Systems (RTSS), robust demand for occupant safety division helped in reporting better sales. Net sales grew by around 21% in FY 17 to Rs 856.70 crore. The company was able to increase its market share in steering division, which helped in otherwise a sluggish M&CV market. Cost control measures helped in better margins.

In FY 18, expects to increase its presence for tractors and small commercial vehicle segment. Aims to introduce new solutions and products with optimized designs for M&HCV customers.

For Rane NSK Steering Systems (RNSS), customer offtake from passenger car segment helped in increased sales in FY 17. The sales increased by 30% to Rs 1000.10 crore in FY 17.

68% of total sales is from passenger car segment and 27% is from M&HCV segment. Higher volumes helped in better margins in FY 17.