RENOWNED AUTO PRODUCTS MANUFACTURES LIMITED
ANNUAL REPORT 2008-2009
MANAGEMENT DISCUSSION AND ANALYSIS
INDIAN MARKET CONDITIONS
Indian Automobile Industry witnessed a growth of about 3.32 percent in
April-March 2009 when compared to April - March 2008.
The cumulative growth of the Passenger Vehicles segment during April -
March 2009 was 6.75 percent over Previous Year. Passenger Cars grew by 9.62
percent, Utility Vehicles was down by 9.03 percent and Multi Purpose
Vehicles were up by 5.79 percent in FY 2008-09. For the Passenger Vehicle
segment expected Growth is 17% in 2009-10 and 94% 2014-15 with respect to
Year 2007-08 Vehicle production.
India has been identified as a Hub for Small Car Manufacturing for both
Domestic and Export Requirement. Following are the Vehicle production Plan
and Investment Plan for the Major Global Car Manufacturers in India.
Passenger Car Segment:
* Increased their capacity to 600,000 cars per annum. They introduced their
Global Launch Car 110 and 120 last year.
* Ashok Leyland and Nissan Motor Co., Ltd., signed a binding Master Co-
Operation Agreement (MCA) for the formation of three joint venture
companies supporting the Light Commercial Vehicle (LCV) business at a
investment of USD 500mn. Investment got slight delayed by one Year due to
Global Economic down trend.
* The earlier plan of setting up a New plant to manufacture Rs. 1,00,000/-
car in West Bengal with an investment of US$ 240million was suspended and
New Plant at Sanad in Gujarat State is under progress. The Production is
expected to commence from Dec 2009. Interim Plant at Pant Nagar has started
producing Nano Car at the rate of 200 Cars per Day.
* Target of 200,000 units capacity p.a. Start of Production expected by end
2010 & they are already looking at the small segment.
* Additional Capacity to manufacture 150,000 cars p.a. from their Green
Field Plant at Pune. Started producing M200 Spark car from Q3 2008 onwards
and they are planning to launch M300 Global Mini Car in Q4 2009 from their
Mahindra & Mahindra:
Constructing their new Commercial Vehicle plant in Pune with capacity of
100,000 Vehicles per year. First Vehicle to roll out in Q4, 2009.
* Due to Economic Down trend Renault postpone their 50:50 JV, to make
400,000 cars a year with an investment of over US $ 1 billion.
* Now only Nissan is investing as per their Plan to start their A segment
compact Car from May 2010. New capacity would be around 250,000 Cars per
* Investing 400 million euro in a new plant in Pune. Operations are to
start in Dec 2009 having the Plant Capacity of 100K cars per Annum.
Investing US $ 250million in a new plant in Rajasthan with capacity of
60,000 car per year First car to roll out in 2009.
* Restarted their Ranjan Gaon, Pune Plant having the Plant Capacity of 100K
cars per Annum.
* Plans to invest US$ 500 million including the expansion of Ford India's
current manufacturing facility in Chennai, India.
Commercial Vehicle Segment
The Commercial Vehicles segment has been heavily affected and there is very
serious Down Trend. In Medium & Heavy Commercial Vehicles it was (33.16)
percent and Light Commercial Vehicles it was (7.10) percent compared to
2 and 3 Wheeler Segment
Two Wheelers had a marginal Growth of 2.60 percent and Three Wheelers sales
dropped by 4.13 percent during April 08- March 09 compared to the
corresponding period previous year.
Automobile Exports registered a substantial growth of 23.61 percent during
April- March 2009 over the same period during the previous year.
TENNECO'S ALIGNMENT WITH MARKET
Nissan, has awarded Development and Supply of Strut and Rear Shocks for
their A Segment Compact Car. Tenneco met all the project Milestones on time
and expecting the start of Mass production from May 2010.
Tata Motors, have awarded our Company their New Indica Vista and Tata Nano
small Car. Tenneco successfully supported the development activity and
started Mass production from Aug 2008 for Tata New Indica Vista at Pune and
Dec 2008 for Tata Nano from their Interim Plant at PantNagar due to the
issue at Singur Plant construction.
For Toyota India Small Car, Company has been awarded to develop and start
Mass production for Strut and Rear Shocks. Start of Mass Production is
expected around Oct 2010.
Mahindra & Mahindra, have awarded Company Xylo, LTV and U 202 vehicles for
Development and is starting Mass production for Strut and Rear Shocks.
* Company has successfully supported Development and Started Mass
Production for Xylo from Dec 2008.
* Development for LTV is under progress and Start of mass production is
expected around Oct 2009 from their newly built Pune Plant.
* Development started from July 2009 for recently awarded U202 Business.
Ford India, has awarded our Company their 8517 project for the development
and Supply of mass production.
Successful launch of Indica Vista and Nano. Tata team interested to send
RFQ for commercial Vehicles and Crossover Vehicle too.
They are interested to work with Company for Heavy Duty Trucks and
Trailers. We are in the preliminary stage to receive their RFQ.
They have sent the RFQ for their upcoming Heavy duty Commercial Vehicles
and we have submitted the Quotation too.
Atter successful support for 8517 project, we started getting all the new
RFQ's from Ford India and currently we are working for 2 RFQs.
In the last four years the Company's product mix has changed gradually from
2- wheel Shocks to 4-wheel Shocks and Struts. In 4-wheeler applications for
the last four years we have been awarded the deveiopment and supply of Rear
Shocks and Front Struts for the above mentioned platforms from various
Apart form the above the company is working on various new platforms with
various Global Customers like Renault-Nissan JV, Maruti Suzuki, Nissan,
Ford and Reva Electric Car in passenger car segment. Also we are working
for the Heavy Duty application shocks for the customer like, Taco
Hendrickson, Mahindra Internationals, Ashok Leyland -Nissan JV, Volvo and
For the two wheeler market as we do not have the technology for Front Fork
we had constraint to approach. Tenneco acquired M/s Marzocchi an Italian
Two wheeler Front fork and Rear shocks manufacturing company. With this
Tenneco now has very good business opportunity with Two wheeler
Manufacturing Original Equipment Manufacturers (OEMs) like TVS Motors,
Royal Enfield Motors for Two wheeler Market also. Tenneco expects
substantial business from the above-mentioned customers.
The company has successfully obtained very prestigious business from new
OEMs and we booked business that Triple our revenue in next 2 to 3 Years.
This is very significant measure of our success in this Industry. With this
we upgraded our Hosur Plant Line A and Line B inline with European standard
of manufacturing capabilities. There will be a Line C which we plan to
install in Year 2009 inline with Customer Launch Plan.
The company is receiving a huge number of Requests for Quotation (RFQ) from
OEMs both in India and overseas. This positive indication provides
confidence and opportunity to grow business. Converting the above RFQs to
orders would ensure revenue growth in the medium to long term.
The Company has plans to improve business in 2 Wheeler with the help of
Tenneco Europe and with the Technical know-how from Marzocchi - Italy the
company expects to improve its business in this segments. Quotation
submitted for Suzuki Motors Spain and Yamaha Motors for Front Fork and Rear
As done in 2008-09 the Company would work closely with Tenneco Europe and
North America to enhance exports. Exports shall continue to be a major
thrust area and the quantum of orders received is increasing both in Export
Aftermarket and in OE Business.
The company has given a big thrust to the after-market. We serve more than
500 Distributors and Retailers including NAPA, TEMOT Autoteile, ADI,
Advance Auto Parts O'reilly Automotive, Kwik-fit Europe, Uni-Select and Pep
Boys and major new product and new brand launches are planned in current
and future years to enhance market share and volumes.
We are developing advanced technologies and targeting growth markets
including expanding our presence in the Heavy duty Commercial and
Speciality Vehicle Market for both Shock Absorbers and Elastomer products.
In 2006-07 the Government of India had taken a number of initiatives like
Automotive Mission Plan (AMP) launched by Prime Minister Dr. Manmohan Singh
for Heavy Industry and Public Enterprises for the benefit of Indian auto
industry and also announced India as a major small car hub and as result of
this both Indian and Global OEM's expanding their existing facilities and
Installing new plants for the manufacture of Passenger vehicles and
Commercial vehicles and Two & Three wheelers. Major Expansions happening in
Hyundai, Maruti Suzuki, FIAT, TKML, TATA Motors, Honda Motors for passenger
vehicles and new entry has been made by OEM's NISSAN, VOLKSWAGEN, Mahindra
International etc. The Company is planning to become a major base of shock
and struts manufacturer for the small cars, Heavy-duty application and two
SCHEME OF ARRANGEMENT
As the Shareholders are aware the Company for sometime had under
consideration a Scheme of Arrangement for reduction of Share Capital of the
Company. In this regard the Company had approached you for the sanction of
the Scheme in December 2008. Consequent to your approval the Company has
filed a Petition in the Hon'ble High Court of Judicature, Madras and the
matter is pending before the High Court. Based on the order further action
would be taken.