Mahin­dra CIE Au­to­mo­tive Ltd

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(BSE Code: 532756) (CMP: Rs.252.90) (FV: Rs.10) By Laxmikant Bhole Com­pany Over­view:

Mahin­dra CIE Au­to­mo­tive Ltd (MCIE) is a multi-lo­ca­tional, multi-tech­nol­ogy busi­ness with en­gi­neer­ing ca­pa­bil­i­ties and man­u­fac­tur­ing fa­cil­i­ties of its own and of its sub­sidiaries in In­dia, Ger­many, Spain, Lithua­nia, Italy and the United King­dom. It sup­plies au­to­mo­tive com­po­nents to its cus­tomers based in these coun­tries and ex­ports its prod­ucts to other coun­tries as well.

MCIE is a part of the CIE Au­to­mo­tive group of Spain and its plat­form to op­er­ate its au­to­mo­tive com­po­nents busi­ness in South East Asia across all pro­duc­tion tech­nolo­gies and its forg­ings busi­ness glob­ally. It has about 15 sub­sidiaries op­er­at­ing in var­i­ous parts of Europe and In­dia mainly grouped into 3 sub­sidiaries: Mahin­dra Forg­ings (Europe), Bill Forge (In­dia) and CIE Forg­ings. MCIE today is a large di­ver­si­fied auto-com­po­nents com­pany with pres­ence across many pro­cesses/ prod­uct lines, ge­ogra­phies and cus­tomer s. Its value-added prod­ucts are com­plex, which dif­fer­en­ti­ates it from other ‘tier-2 part’ com­pa­nies. It should also be noted that MCIE is fo­cused on the au­to­mo­tive mar­ket – cars, util­ity ve­hi­cles, com­mer­cial ve­hi­cles, two wheel­ers and trac­tors. It has 29 man­u­fac­tur­ing fa­cil­i­ties in­clud­ing 8 in Europe and 1 in Mex­ico. Its man­u­fac­tur­ing sites are gen­er­ally lo­cated close to ma­jor au­to­mo­tive man­u­fac­tur­ing hubs in or­der to fa­cil­i­tate sup­plies to cus­tomers gen­er­at­ing ad­van­tage of lo­gis­tics and costs as well. It op­er­ates in all seg­ments viz. Forg­ings, Stamp­ings, Cast­ings, Mag­netic Prod­ucts, Com­pos­ites and Gears. Some of the ma­jor auto com­po­nents that it of­fers are crankshafts and stub axles for pas­sen­ger and util­ity ve­hi­cles, flash­less neat forg­ings for pas­sen­ger ve­hi­cles, steer­ing races and en­gine valve re­tain­ers for 2wheeler OEMs, con­stant ve­loc­ity joints, tulips, steer­ing shafts, steer­ing yokes and wheel hubs for pas­sen­ger ve­hi­cles, en­gine gears, tim­ing gears, trans­mis­sion drive shafts, con­struc­tion and earth­mov­ing equip­ment, soft and hard mag­nets, mag­netic in­duc­tion light­ing for pas­sen­ger and util­ity ve­hi­cles, tur­bocharger hous­ings, axle and trans­mis­sion parts, etc. Its mar­quee clients in­clude Mahin­dra & Mahin­dra, Maruti Suzuki, Tata Mo­tors, Ba­jaj Auto, TVS Mo­tors, Volvo, Eicher, John Deere, Cater­pil­lar, Denso, etc.

The In­dian au­to­mo­tive in­dus­try is one of the largest in the world. While the In­dian econ­omy has con­sis­tently grown over 7% for 10 years over the last 12 years, the In­dian au­to­mo­tive sec­tor has grown over 8-10% on an av­er­age. Today, the au­to­mo­tive sec­tor con­trib­utes 7.1% to In­dia's GDP by vol­ume and con­trib­utes 45% of the man­u­fac­tur­ing GDP. It em­ploy­ees ~19 mil­lion peo­ple di­rectly and in­di­rectly.

As per the “Make in In­dia” cam­paign data, In­dia is the sixth largest au­to­mo­bile pro­ducer in the world with an av­er­age an­nual pro­duc­tion of 24 mil­lion ve­hi­cles in 2016. Two-wheel­ers are by far the most pop­u­lar form of ve­hi­cle in In­dia with 80% mar­ket share in 2015-16. In­dia be­came the largest two-wheeler mar­ket in the world af­ter sell­ing 17.7 mil­lion twowheel­ers in 2016. Au­to­mo­bile ex­ports from In­dia grew 15.81% YoY dur­ing April-Fe­bru­ary 2017-18 while two and three-wheel­ers ex­ports grew 20.3% and 37.02% re­spec­tively. Ac­cord­ing to the Au­to­mo­tive Com­po­nent Man­u­fac­tur­ers As­so­ci­a­tion of In­dia (ACMA), the In­dian auto-com­po­nents in­dus­try is ex­pected to reg­is­ter a turnover of $100 bil­lion by 2020 backed by strong ex­ports rang­ing be­tween $80-100 bil­lion by 2026, from $11.2 bil­lion cur­rently. The rapidly glob­al­iz­ing world is throw­ing open newer av­enues for the trans­porta­tion in­dus­try as there is a shift to­wards elec­tric, elec­tronic and hy­brid cars, which are deemed more ef­fi­cient, safe and re­li­able modes of trans­porta­tion. Over the next decade, this will lead to new ver­ti­cals and op­por­tu­ni­ties for auto-com­po­nent man­u­fac­tur­ers who would need to adapt to the change via sys­tem­atic re­search and de­vel­op­ment (R&D).

The In­dian auto-com­po­nents in­dus­try is set to be­come the third largest in the world by 2025. In­dian auto-com­po­nent mak­ers are well po­si­tioned to ben­e­fit by the glob­al­iza­tion of the sec­tor as ex­ports could zoom four times by 2020.

On a stand­alone ba­sis, MCIE reg­is­tered 32% higher sales in Q1FY19 (Q2CY18-Apr-Jun18) at Rs.802.4 crore and 20% higher sales in Q2FY19 (Q3CY18–Jul-Sep18) at Rs.815.3 crore. It reg­is­tered 26% EBITDA

In­dus­try Over­view: Op­er­a­tional Per­for­mance:

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