Mahindra CIE Automotive Ltd
(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: