The global automotive industry landscape continues to transform, and along with it the auto components industry. With India already cementing its place as a global component sourcing hub, we are well positioned to navigate through the emerging challenges and capitalise on the upcoming opportunities. Our tradition of pursuing excellence and keeping ‘customer at the core’ remained intact this year as well, backed by determination, prudent foresight and strong business fundamentals.
The synchronised upswing in the global economy that began around mid-2016 suddenly changed course in the second half of 2018 as the continued momentum in manufacturing and trade dissipated. Sentiments were further dampened by the hardening of US interest rates, volatile crude prices, along with uncertainty over Brexit and heightened rhetoric around protectionism.
The Indian GDP growth dipped below 7% for full-year 2018-19, after growing at 7.5% in the first half, due to weak industrial output, and overall subdued demand. However, with the election overhang now behind us, the economy should grow at over 7% going forward, driven by the government’s resolve towards achieving fiscal consolidation and continued push for structural reforms.
The Indian automobile industry too had started FY 2018-19 on a positive note, supported by normal monsoon, rising rural demand, the government’s infrastructure push and rise in industrial activity. However, most vehicle segments witnessed a considerable slowdown in the second half due to higher fuel prices, lower financing availability, steep price increase on account of insurance regulation changes in September 2018.
Driven by determination
It was quite a challenging year for our Company with varied demand and inflationary pressure on raw material cost. This is more pronounced as we were undergoing a turnaround phase. We countered the challenge by increasing capacity through debottlenecking, improving efficiency and reducing operational costs.
I’m happy to report double digit revenue growth, which has been highest in past five years.
We have significant positives, which helped us in progressing well on the turnaround plan. Our strong connect and quality performance with customers have helped to win customer confidence and support during this phase. We have handled volume ramp up and strengthened customer engagements. We are also proactively tapping into new non-automotive market segments such as Industrial and Marine engines.
Our management worked with determination on meticulously crafted set of turnaround initiatives.
Old machines and equipment were refurbished to improve process capability and availability. Initiatives were taken to enhance skills of operators and key resources in the shop floor. We also augmented corporate and plant management teams to improve the operational performance. There has been good improvement in capacity utilisation in our Company
We are gaining further market prominence with innovative products and customer delights. We will continue to aggressively defend and improve our market share with Indian customers and explore opportunities globally. We are ‘Driven by Determination’ and remain confident about our strategy of delivering profitable growth.
Progressing with optimism
The first half of FY 20 appears challenging with slowing demand in most of the vehicle segments.
The anticipated pre-buy on account of transition to BS VI, normal monsoon, the government’s continued reforms and infrastructure push are likely to propel growth. We remain optimistic about the evolving opportunities in the auto component industry and the structural trends remain positive in the long term.
We will continue to invest in R&D and drive innovations to build value-add products. We will introduce new technologies in India and tap into opportunities to supply in export markets.
We are working on various measures to manage cost during this uncertain demand environment in the short term. The demand indications from global customers are encouraging to offset any vagaries in demand from Indian customers. The operational performance improvement continues to remain a priority and various strategic initiatives are being planned to reduce cost.
We are progressing with optimism on long term market opportunities and determined to drive efficiencies to create value for all our stakeholders. On behalf of the Board of Rane Engine Valve Limited, I would like to thank all our stakeholders - Customers, Employees, Partners, Vendors, Bankers, Government, Communities and most importantly you - our shareholders, who have been part of this exciting journey.
Chairman and Managing Director