About the Company
Gabriel India Limited (Gabriel India or the Company), a leading auto component
manufacturer, is widely recognised as one of Indias most trusted and respected brands.
Established in 1961, the Company has specialised in producing a diverse range of ride
control products, including shock absorbers, struts, and front forks. The Company has
expanded its product line over the years to meet the needs of top automotive Original
Equipment Manufacturers (OEMs) and diverse business segments.
Gabriel Indias extensive presence across various business segments, including Two- and
Three-Wheelers, Passenger Cars, Commercial Vehicles, Railways, and Aftermarket is a
testament to its commitment to excellence and customer satisfaction. The Company has
established long-term relationships with virtually every OEM and providing an attractive
aftermarket portfolio across various product verticals, and has been steadily growing its
export presence across six continents.
The flagship company of the ANAND Group, Gabriel Indias success can be attributed to
its unwavering focus on delivering high-quality products and its exceptional engineering
capabilities. The Companys reputation for reliability and trust has made it a household
name in the Indian market, and its commitment to innovation and customer satisfaction has
positioned it as a leader in the auto component manufacturing industry. With a growing
global presence and a diverse product line, Gabriel India is poised for continued success
in the years ahead.
Global Economic Overview
The FY 2022-23 was marked by significant global events that had far-reaching
consequences on the world economy. The escalation of the Russia-Ukraine war, Chinas
decision to enforce lockdowns and its zero- COVID policy, and the European market slowdown
due to inflation collectively resulted in a major global supply chain disruption - leading
to extreme volatility in input prices. This uncertainty made it difficult for businesses
to plan and prepare costing scenarios.
Despite these challenges, the International Monetary Fund (IMF) projects a growth
rate of 2.8% in the global economy in 2023, with an expected increase to 3% in 2024. While
inflation has been a major concern, the IMF forecast indicates a decrease from 8.7% in the
previous year to 7% in the current year. A further decline to 4% is also predicted in 2024
as major economies tighten monetary policies and prices stabilise.
According to the IMF, core inflation rates are expected to decline to 5.1% this year as
major economies experience a cooling down of inflation. While the US and Europe are
expected to face significant economic challenges, Asia is projected to drive much of the
global growth in 2023 due to ongoing reopening dynamics and relatively lower inflationary
pressures compared to other regions. Despite the challenges and volatility in the global
economy, the IMFs projections suggest a positive outlook in the coming years.
Indian Economic Overview
India has proven to be a shining example of resilience in the face of global
challenges, solidifying its position as a key driver of global economic growth In
particular, the Indian economy experienced an impressive growth rate of 6.8% in 2022,
making it the worlds fastest- growing major economy, according to the IMFs April 2023
Global Economic Outlook. This growth can be partly attributed to the efforts of the
private sector in enhancing transportation infrastructure, logistics, and the overall
business ecosystem. Indias record-breaking GST collection and import figures have also
contributed to this growth, with the Indian Rupee weakening at a slower rate than
expected, thus indicating a potential decrease in dependence on the US Dollar in the near
future.
However, inflation has been a persistent concern in India, driven by input prices,
which have caused the inflation rate to exceed the RBIs target of 6.7% in FY2022-23. To
address this issue, the RBI raised interest rates quarterly, resulting in a slowdown in
spending. In April 2023, the RBI maintained the status quo and held interest rates steady,
allowing earlier rate hikes to take full effect. India also began purchasing oil from
Russia at a lower price to manage inflation. These measures resulted in a drop in the
inflation rate to a 16-months low of 5.7%, demonstrating Indias progress in managing
inflation.
According to the IMFs April 2023 Global Economic Outlook report, the Indian economy is
projected to grow at a rate of 5.9% in 2023, with further momentum expected in 2024,
resulting in a growth rate of 6.3%. To sustain this growth, the Indian government is
focusing on taxation to bolster economic growth. Increased tax collections will be used to
finance infrastructure development programs such as Production-Linked Incentive (PLI)
schemes and the PM Gati Shakti initiative. The government is also committed to maintaining
fiscal responsibility by implementing a medium-term framework for public finances. This
balanced approach to growth-oriented policies and prudent fiscal management aims to
support Indias continued economic expansion while mitigating the risks of instability or
unsustainable debt.
Global Automotive Sector Overview
The automotive sector is rapidly transitioning towards cleaner and sustainable
transportation, with various vehicle types like electric, hybrid-electric, and natural gas
gaining prominence. Despite this, diesel and petrol vehicles will continue to play a
crucial role, driven by demand from the transportation, commercial, and tourism sectors.
The industrys growth is also fuelled by changing consumer preferences, sustainable
policies, new technologies, and emerging markets.
Technological advancements have made the automotive industry highly competitive,
leading to reasonable prices in the market. The global automotive market is valued at USD
20,85,778.43 million in 2022 and is expected to grow to USD 2,460.23 billion by 2028,
exhibiting a CAGR of 2.8%. Additionally, the Industry 4.0 and Made in China 2025 proposals
have created a new ecological environment for the manufacturing industry, further
supporting growth in the sector.
Further, Europe and North America, with their strong economic and technological
advancements, are home to several large automotive enterprises. These companies have
considerable brand influence and market share, providing opportunities for the expansion
of the automotive market in these regions.
The automotive industry is a critical driver of economic growth, continuously striving
to meet evolving customer demands by embracing innovative technologies.
The availability of skilled labour, robust research and development centres, and
cost-effective steel production has supported the sector globally. As the industry moves
forward, it will continue to enhance its capabilities, rework its strategies, and build
connectivity to sustain growth and meet the demands of the changing market.
Indian Automotive Sector Overview
According to the Society of Indian Automotive Manufacturers, the Indian automotive
sector has emerged as the worlds third-largest market, surpassing Japan, with 4.25
million vehicles sold in 2022. The growth of this sector can be accredited to factors such
as increasing disposable incomes, availability of credit and financing options, and a
growing population.
Further, the Indian Governments industry-friendly policies and initiatives are
expected to play a significant role in further fuelling these developments. For instance,
the allocation of Rs. 3,000 Cr. to the Indian Semiconductor Mission will strengthen the
auto component ecosystem and boost the auto components sector. Businesses are also working
collaboratively with the government to develop hybrid vehicles as a transitional step
towards fully electric models. In addition, the Governments release of funds to set up
7,432 public charging stations will significantly push EV adoption, making EV charging
convenient and reducing range and charging time anxieties for EV owners. With a large
workforce and potential for job creation, manufacturing growth could strengthen Indias
position in the global automotive industry.
Indian Automotive Component Sector Overview
The Indian auto component industry is vital to the countrys economic growth and
employment. This industry comprises players of all sizes, from micro entities to large
corporations, and is distributed across various clusters. Currently, it contributes 2.3%
to Indias GDR which is expected to grow to 5-7% by 2026, providing direct employment to
1.5 million people.
The industry has shown remarkable growth, with a 34.8% increase in turnover to Rs. 2.65
Lacs Cr. (USD 33.8 billion) during April-September 2022 compared to the same period in the
previous year, driven by lower base effect due to COVID-19 lockdowns. The Automobile
Component Manufacturers Association (ACMA) predicts that auto component exports from India
will reach USD 30 billion by 2026, and the industry is likely to achieve a revenue of USD
200 billion by the same year.
In the current fiscal year, the auto component industry is expected to grow by 20-23%,
propelled by strong international demand and a resurgence in the local original
OEM aftermarket segments. As the world moves towards more efficient, safer, and
reliable electric, and hybrid cars, new opportunities are expected to emerge for auto
component manufacturers.
Moreover, India is heavily investing in electric vehicle infrastructure to prepare for
the transportation industrys future, creating newer verticals and opportunities for the
sector in the current decade. This will position India as a key player in the global
electric vehicle industry and further boost its growth prospects. Overall, the Indian auto
component industry is a crucial contributor to the countrys economy, and its future
growth potential is significant.
Business Segments
Two-and Three-Wheeler
The Company boasts extensive experience in the 2W and 3W industry also positions itself
as a leading 2W and 3W EV player as well.
With a focus on supplying top-notch front fork and rear shock absorbers to the
industrys biggest Original Equipment Manufacturers (OEMs), the Companys two-and
threewheeler segment saw impressive growth from 22% to record Rs. 1,834.4 Cr. in the
fiscal year 2022-23, a significant jump from the previous years Rs. 1,507.1 Cr.
Generating about 64% of its total revenue, the Companys top three customers are TVS
Motors, Yamaha, and Bajaj Auto.
The Companys success can be primarily credited to its continuous endeavour to increase
its market share currently 32% by attracting major customers and developing innovative
products that meet industrys ever-changing needs. Gabriel Indias products have
established a strong presence in the market thanks to its high acceptance rate and
superior quality.
Passenger Cars
Gabriel Indias presence in the utility vehicle segment is steadily growing stronger,
with the Company now holding a 33% market share in this high growth segment, compared to
its overall market share of 23% in the passenger car market. This positions Gabriel India
favourably within the growing segment of passenger cars, which has seen a notable increase
in demand due to the introduction of new models by key customers, and a surge in the
popularity of SUVs. One such key customer of the Company is Maruti Suzuki, which launched
several successful programmes this year, contributing significantly to the volume
increase. The Company has also established a major presence in the aftermarket segment of
passenger cars, which saw a remarkable growth of 37% during the FY 2022-23, reaching a
record Rs 691 Cr., up from Rs. 503 Cr. the previous year.
The Companys top three customers are Maruti Suzuki, Volkswagen, and Mahindra &
Mahindra, which highlights the Companys strong position in the market. Additionally, the
Company has made significant progress towards future readiness by developing partnerships
with major automotive companies such as MSIL, M&M, TML, TKM Private Limited, and VW.
Commercial Vehicles and Railways
Gabriel India, a leading manufacturer of shock absorbers for commercial vehicles (CV),
holds a remarkable market share of 89%. In the Railways segment, the Company has expanded
its product line to serve all segments of Indian Railways, including the prestigious
Vande Bharat Express, for which Gabriel India is the only qualified Indian supplier.
While the Company had not previously supplied shock absorbers for electric locomotives, it
has now fulfilled the development order for both the Vande Bharat Express and the
electric locomotives, marking a significant milestone in its growth and expansion.
The Company currently holds a dominant position in the commercial vehicle segment and
has made a strategic decision to leverage this position to pursue growth overseas. This
expansion has already begun through its association with DAF, and efforts are underway to
establish relationships with other customers as well. In the financial year 2022-23, the
Company s segment grew significantly by 42% to Rs. 357 Cr. compared to the previous
years Rs. 252 Cr. The Companys plans for future development include partnerships with
Volvo, JBM, and a new electric vehicle customer, as well as two programmes for DAF. Among
the top three customers are Tata Motors, Mahindra & Mahindra, and Ashok Leyland.
Aftermarket
Over the past 60 years, Gabriel India has established a dominant market position and an
exceptional brand reputation in the aftermarket sector, catering to various types of
vehicles, including 2W and 3W, passenger vehicles, and commercial vehicles. With a market
share of more than 40%, Gabriel India has been leading the aftermarket segment to new
heights of growth, with a remarkable 18% increase in sales-the highest ever recorded. The
launch of new products has been a key driver of this impressive growth, including 203 SKUs
in FY 2022-23, and more than 1,355 SKUs in the last 5 years. Furthermore, the Company has
successfully introduced 18 new product lines in recent years, with four more in the
pipeline. Gabriel India is the only company present in all segments of the market, namely
TW, PC, CV, and Railways, and has completed 4 IT-enablement projects in FY 2022-23.
This growth is supported by an extensive distribution network spanning six
continents,11 CFAs, over 700 dealer networks, and around 20,000 retail outlets, backed by
a highly efficient sales force.
Financial Overview
(Rs in Cr.)
Particulars |
FY 2022-23 |
FY 2021-22 |
| Net sales |
2,942.14 |
2,310.46 |
| EBITDA |
213.69 |
145.93 |
| Profit before Tax (PBT) |
177.91 |
126.46 |
| Profit after Tax (PAT) |
132.35 |
89.52 |
| EBITDA/Turnover (%) |
7.2 |
6.3 |
| EBITDA/Net interest ratio |
46.61 |
34.15 |
| Debt-equity ratio (x) |
0.01 |
0.02 |
| Return on equity (%) |
16.2 |
11.5 |
| Book value per share (7) |
60.58 |
53.38 |
| Earnings per share (7) |
9.21 |
6.23 |
| Debtors Turnover (days) |
47.60 |
60.41 |
| Inventory Turnover (days) |
27.89 |
33.17 |
| Interest Coverage Ratio (x) |
46.61 |
34.15 |
| Current Ratio (x) |
1.81 |
1.66 |
| Operating Profit Margin (%) |
24.2 |
24.5 |
| Net Profit Margin (%) |
4.5 |
3.9 |
Opportunities and Threats Opportunities
Shift towards Electric Vehicles: The Indian governments concerted efforts to
promote electric vehicles are catalysing a major transformation in the countrys passenger
vehicle market. In response to this growing demand, automakers are rolling out electric
vehicles in the Indian market, while the Government is offering incentives to encourage
their widespread adoption. According to a report published by the International Energy
Agency, India is projected to emerge as the largest market for electric vehicles worldwide
by 2030, highlighting the significant momentum in the countrys electric vehicle
ecosystem.
Customer Preferences Shift Towards Premium Products: As income levels continue to
rise and the number of affluent consumers in India also increases, the demand for premium
passenger vehicles has significantly risen. These consumers are willing to pay more for
vehicles advanced safety features, superior comfort, luxury interiors, and advanced
infotainment systems. In response to this trend, automakers are introducing premium models
and variants of their popular passenger vehicle models, effectively catering to Indias
growing demand for premium passenger vehicles .
Infrastructure Development: Infrastructure development is a key focus for
governments worldwide, with substantial investments being made towards constructing
essential components such as roads, bridges, and highways. As a result, there has been a
significant increase in demand for commercial vehicles, which play a vital role in
transportation and logistics.
Government Policies: The commercial vehicle industry is likely to experience a
substantial boost by implementing government policies, including incentives tailored to
encourage the adoption of electric vehicles, scrappage programmes aimed at phasing out
older vehicles, and regulations regarding loadcarrying capacity. These policies can
directly help the growth and progress of the commercial vehicle industry. The government
can create a more sustainable and efficient transportation system by providing incentives
that stimulate the adoption of electric vehicles and the elimination of older vehicles.
Additionally, regulations concerning loadcarrying capacity can help improve road safety
and reduce wear and tear on infrastructure. Implementing these policies can contribute to
a more prosperous and sustainable commercial vehicle industry.
Threats
Rising Geopolitical Tensions: Over the past few years, geopolitical tensions have
been on the rise, resulting in a range of issues impacting the global supply chain. For
example, the Russia-Ukraine conflict has had a significant effect on the industry, as have
high levels of inflation around the world, and banking crises in the USA. Such factors can
cause input prices to increase, which directly impact the margins of companies and could
also result in production delays. This highlights the importance of having a robust risk
management plan to mitigate such events impact on businesses.
Global Shortage of Semiconductors: Semiconductors play a vital role in microchips
and are essential components used in the automotive industry, particularly in control
units that regulate vehicle performance, airbags, and driving assistance systems. Despite
the automotive industrys hopes of resolving the semiconductor shortage by 2022, leading
manufacturers are still facing longer lead times.
Experts predict that the shortage may persist well into 2024, posing significant
challenges to the industry. The extended shortfall in semiconductor supply may lead to a
delay in production schedules, an increase in input costs, and lower profit margins for
the automakers.
: Change in Consumer Behaviour: Consumer buying patterns have changed due to the
unstable global economy, price inflation, and the state of financials and public health.
In 2021, buying a car from dealerships became difficult due to year-long wait periods, but
automakers transitioned their inventories to an order- based model and made car purchases
experience digital. However, geopolitical tensions have reversed progress automakers had
made. Car firms need to secure reliable raw materials, parts, and components, establish
centralised production models, and collaborate with governments and financial institutions
to introduce new incentives to address the challenges in the automobile sector.
Risks and Concerns
Having a robust risk-management framework is a crucial aspect of Gabriel Indias
business strategy. As is the case with many automotive companies, the Company is exposed
to various operating business risks. However, the Company proactively monitors these risks
and takes corrective actions to mitigate them. To prevent risks from arising in the first
place, the Company has an independent and dedicated Enterprise Risk Management (ERM)
system in place that identifies, manages, and mitigates business risks. Gabriel India
takes an integrated approach to minimise risk and conducts proper assessments to maximise
growth. The Companys success relies on its ability to identify and capitalise on
opportunities generated by its business and the markets that it operates within. By
managing the associated risks, the Company strives to strike a balance between its growth
and return goals and the related risks.
Human Resources
At Gabriel India, the Company attributes its success to its dedicated and resilient
employees, who have been instrumental in propelling the Company to new heights. As a
testament to the Companys commitment towards its workforce, Gabriel India has
continuously enhanced its HR-related processes, practices, and systems to further align
with its organisational objectives. Through on-the-job training, workshops, and external
training programmes, the Company ensures that its employees receive adequate training and
development opportunities to help them grow professionally. The Companys ability to
attract and retain top-notch talent has been instrumental in furthering its business. The
Company maintains cordial industrial relations, and its employees enjoy the strong support
of the ANAND Group management in ensuring their safety and well-being.
At Gabriel India, the Company goes beyond the traditional boundaries of HR management,
which involves compensation, performance reviews, and development. The Company also looks
at the entire work-life cycle of its employees and strives to provide timely interventions
that enable them to build a fruitful and long-lasting career. Gabriel Indias employees
are seasoned resources with in-depth knowledge of the sector, and the Company takes pride
in their contributions to its success.
Environment, Health and Safety
At Gabriel India, sustainability is not just an afterthought but a core value of the
organisation. The Company firmly believes that conducting responsible business is
essential to achieving comprehensive economic growth and sustained social development.
This is why Gabriel India prioritises promoting sustainability through leading initiatives
in Environmental, Social, and Governance (ESG) areas. These efforts reflect the Companys
unwavering commitment to sustainability and responsible business practices.
Gabriel India Limited has ensured that all of its plants are ISO 45001 certified for
Health and Safety, with dedicated EHS officers in each plant to ensure compliance.
Employees are continuously trained for EHS in accordance with ISO14001/ISO45001
certifications. The Company also monitors training hours during business review meetings
and conducts regular EHS training at the shop floor. Induction training for new employees
is also routine.
Sustainable Business Practices
Gabriel India is a company that prioritises the environmental and social impact of its
operations. The Companys goal is to become a top producer of ecologically friendly
automotive components in India. In order to achieve this, the Company has implemented a
number of greener practices at its facilities by adopting technical and functional
controls. An example of this is the Companys Zero Liquid Discharge effluent treatment
facilities at its Hosur, Chakan and Nashik plants. The Company strongly emphasises
efficiency, resource conservation, and the use of renewable energy to minimise its carbon
footprint. The Companys Sanand facility has received the Indian Green Building Councils
(IGBC) Green Factory Building Certification-Silver, which is evidence of its steadfast
commitment to sustainability.
Approach towards Materiality
Gabriel India conducted a comprehensive materiality assessment during the reporting
year to enhance its relationships with stakeholders and gain insights into their
expectations. The study was conducted following extensive meetings with the senior
leadership team and involved gathering feedback from employees, vendors, investors,
customers, and community representatives via a materiality survey. This exercise helped
the organisation identify and prioritise environmental, social, and governance issues
essential to the Companys long-term sustainability and resilience. The Companys ESG
strategy and corresponding initiatives tackle these priority challenges through
improvement plans, indicators, short-term and long-term goals, targets, and enabling
policies. The Company intends to evaluate and update its materiality regularly.
Internal Control Systems and their Adequacy
The Company proactively manages its operating business risks through regular monitoring
and corrective actions.
The Company has established proper and adequate internal control systems that align
with the size and nature of its operations. These systems ensure that all assets are
safeguarded and transactions are appropriately authorised, recorded, and reported.
The internal control systems are designed to ensure that the financial and other
records are reliable and accurately reflect the Companys business operations. The Audit
Committee convenes every quarter to review and discuss the various Internal Audit reports,
closure of agreed actions, and compliance with the audit plan. This ensures that the
Company always complies with regulatory requirements and that all operations are executed
with transparency and accountability.
Outlook
Gabriel India, a leading manufacturer of shock absorbers, has been a global player in
its industry. The Company has set its sights on achieving a place in the top 5 shock
absorber manufacturers globally, and is working tirelessly towards realizing this vision.
In addition to its core business of shock absorber manufacturing, the Company is also
considering diversification as a means of expanding its business. This strategic move will
enable the Company to tap into new markets and explore new opportunities for growth. With
a clear focus on innovation and customer satisfaction, the Company is well-positioned to
achieve its ambitious goals and maintain itself as a dominant player in the global market
for shock absorbers. The Companys commitment to excellence, coupled with its strong
leadership team and talented workforce, makes it a force to be reckoned with in the
automotive industry and beyond.
Cautionary Statement
Statements made in the Management Discussion & Analysis describing the Companys
objectives, projections, estimates, and expectations may be forward-looking statements
within the meaning of applicable securities Laws & Regulations. Actual results could
differ from those expressed or implied. Important factors that could make a difference to
the Companys operations include economic conditions affecting demand, supply and price
conditions in the domestic and overseas markets in which the Company operates, changes in
the Government regulations, tax laws, and other statutes, and other incidental factors.
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