On performance of the Indian Automobile Sector in the FY16
After a solid performance in FY15 led by the two/three wheelers segment, FY16 saw a sober growth of 2.3% for the automobile segment. It is heartening to note that categories which are a reflection of the economic activities - the Medium and Heavy Commercial Vehicles (M& HCV) and Light Commercial Vehicles (LCV) were on a growth path. The M& HCVs production grew at a healthy clip of 27% in FY16 as against 21% for FY15. LCVs, which had de-grown last year, was on the positive side of growth in the FY16 clocking 10% against a negative 4% in FY15. An overall improvement in the economy coupled with pre-buying of the commercial vehicles due to a possible upward revision of cost as the BS-IV emission norms sets in by April 2017 led to the growth curve. Passenger vehicle production grew at 6% and reflected sustained consumer confidence in the market and the economy. New models, softening oil prices which put more disposable income in the hands of people and an accommodating interest regime supported this growth. Farm Tractors production declined 7% in FY16 marking second consecutive year of decline. Further, a lacklustre growth in the two/ three wheelers segment did impact the overall growth of the industry.
On performance of the Indian Automotive Component Sector during FY16
As we depend on the automobile segment, the growth is usually in line with the industry growth. According to estimates, the auto component sector grew in the range of 3 to 5% in FY16. However, I am confident that over the medium to long term, this sector will outgrow the automobile segment as multiple factors come into play. This would be led by more International sales from and outside of India.
On Rane’s performance in FY16
We have had a reasonably good year in 2015-16 with an aggregate Group Net Sales growth of 11.6% to ₹ 3,260 crore in FY16 from ₹ 2,921 crore in the previous year. Sustained cost savings initiatives, manufacturing process improvements and consolidation of plants helped aggregate EBITDA to grow by 9.1% to reach ₹ 329 crore in FY16 from ₹ 301 crore in FY15. The profit before tax and exceptional item increased by 15.8% to ₹ 133 crore in FY16 from ₹ 115 crores in FY15. We invested ₹ 212 crore in FY16 for various expansion and improvement activities.
On Company’s outlook for FY17
With the Indian economy firmly on a growth path, I am confident of the future of the auto component industry and that of Rane’s. India has a low penetration of passenger cars, two wheelers, commercial vehicles including public transport and this will ensure the growth of the auto industry and its ancillary segments. And we are ready to tap this increasing opportunity. At Rane, we have built capacity and capability in all aspects of the manufacturing process and can now compete with the best in the world. With these inherent advantages coupled with our proven track-record in the domestic and global markets and a well-planned future, we will continue to perform well and reward all stakeholders.