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Published: April 30, 2024
Updated: April 30, 2024

CIE Automotive India

India verticals to grow in 2024

Calendar year 2023 turned out highly disappointing for CIE Automotive India, with sales growth registering only a 4 per cent rise, substantially less than management expectations and amid growth in the Europe region turning totally flat. What is more, profit margins in both geographies were weak. However, calendar 2024 will be the year of consolidation. Though Europe is expected to show stagnant growth for the next few years, prospects for India are encouraging, supported by new product ramp-ups.

Net profit attributable to owners of the company decreased 9.13% to Rs 177.05 crore. Equity capital increased from Rs 379.32 crore as of 31 December 2022 to Rs 379.36 crore as of 31 December 2023. Per share face value remained the same at Rs 10. The promoters’ stake was 65.70% as of 31 December 2023, compared to 74.96% as of 31 December 2022.

2-WHEELER SALES

According to Mr. Alvarez, in India, tractors sales during Q4CY23 decreased by 13%, two-wheeler sales increased 19%, MHCV sales decreased 1.5% and 6T vehicles (include passenger vehicles, utility vehicles, vans and light commercial vehicles) went up by 4.7% compared to Q4 CY22.

Tractor sales in India during CY23 decreased by 2.2%, two-wheeler sales increased 3.7%, MHCV sales increased 0.1% and 6T vehicles went up by 6.4% compared to CY22. The company expects the India verticals to grow in 2024 supported by a new projects rampup. In terms of product mix, composites contributes 4% to India sales, gears/machining 6%, castings 11%, aluminum 18%, stampings 20%, forgings 38% and magnetics 3%. In terms of the end-use segment, cars/UVs and LCVs contributes 52% to India sales, 2Ws 21%, tractors 18% and MHCV 9%. In Europe, 6T vehicles sales during Q4CY23 increased by 7.3% compared to Q4CY22. In CY23, 6T vehicles sales increased by 12.6% compared to CY22.

Europe delivered a flat performance due to a Q4 market slowdown and, specifically, the US off-highway market drop. In terms of product mix, gears/machining contributed 19% to Europe sales and forgings 81%. In terms of the end-use segment, cars contributed 60% to Europe sales, 2Ws 1%, off-highway 19% and MHCV 20%.

Pointing out that the “Europe margin was positively affected in CY23 mainly by energy price reduction after huge increases in the last quarters of 2022,” Mr Alvarez added that “going forward, the management expects stagnant business in Europe.” A majority of new orders in Europe relate to EV components. Metalcastello is currently at the bottom of the cycle and expects to suffer a drop for the next couple of quarters.

CAPEX TARGET

According to K. Kashyap Pratap, CFO, the company expects capex to be in the range of 5% of total sales for CY24. The company’s capex is concentrated mainly in India and Mexico. The management intends to improve margins driven by a focus on internal efficiencies.

According to him, the board approved a dividend of Rs 5 per ordinary equity share of a face value of Rs 10 each for the financial year ended 31st December 2023. The record date for the purpose is 13th June 2024. The board also approved a proposal for an increase in the capital of Bill Forge De Mexico, SA DE CV (BF Mexico) and to waive the right of first refusal to subscribe to the said capital increase. CIE Galfor SAU (Galfor), the other wholly-owned subsidiary of the company in Spain, will subscribe to the said capital increase. The company completed closure of operations by BFPPL and has further considered and approved the proposal to launch a process of voluntary liquidation of BFPPL. The process is expected to complete within a period of 12 months.