Global Economy
According to the International Monetary Fund (IMF) April 2023 WEO report, the global
economy is poised to experience a minor downturn with growth projected to be 2.8% in 2023
and anticipate a positive outlook for 2024 at a rise of 3.0%. Despite facing challenges
like central bank rate hikes to combat inflation and Russias war in Ukraine.
The swift spread of the COVID-19 pandemic in China in 2022 acted as a hindrance to
growth. However, the recent reopening has resulted in a faster-than-expected recovery.
While global inflation is projected to decrease from 8.8% in 2022 to 6.6% in 2023 and 4.3%
in 2024, it remains higher than pre-COVID-19 pandemic levels. Moreover, pent-up demand in
many economies, or a more rapid decline in inflation could provide a more significant
Despite the possibility of challenges like the escalation of Russia-Ukraine war,
tightening global financing costs, or sudden market reactions to negative inflation news,
the priority in most economies is to achieve sustained disinflation amid the
cost-of-living crisis. Under such circumstances, it is crucial to employ macro-prudential
tools. This will reinforce debt restructuring frameworks. Additionally, it will also
mitigate the potential impacts of tighter monetary conditions and lower growth on
financial and debt stability. Moreover, accelerating COVID-19 pandemic vaccinations in
China could safeguard the recovery and positively impact cross-border spill overs.
Targeted fiscalsupport should be provided to those most affected by elevated food and
energy prices. And comprehensive fiscal relief measures should also be phased out. .
To conclude, multi-lateral cooperation is necessary. This is to preserve the gains from
the rules-based multi-lateral system and mitigate climate change by limiting emissions and
increasing green investment. By prioritising the above measures, we can weather potential
economic storms and come out stronger on the other side.
Outlook
While some countries, regions, and territories have experienced a robust recovery from
the COVID-19 pandemic, the global economic outlook remains uneven. Unfortunately, for many
nations, ongoing political and economic difficulties have hindered their efforts to regain
lost ground. Despite the expectation of another period of challenging conditions and
slowing activity, the projected downturn is expected to be moderate. Therefore, economies
worldwide are likely to remain stable and experience minimal disruptions.
Indian Economy
In the face of the four Cs - COVID-19, (geopolitical) conflict, climate change and
central bank action - the Indian economy has shown great resilience, mainly because there
were no direct or large fiscal stimulus to consumption. However, there are two important
features in the growth pattern. First, the economy has recovered faster in nominal terms
than in real terms (due to high inflation). Second, revisions to official data released in
February show that the economy has been more resilient than previously thought.
In a challenging global macroeconomic environment, Indian economic growth has been
revised to 7.2% in FY 2022-23 maintaining the position of fastest growing nation. It is
expected 6% growth rate in next now above pre-COVID-19 pandemic levels, the recovery from
the COVID-19 pandemic shock has been quite broad-based. This will be tested again by the
slowdown in global growth, and the tightening of financial conditions at home.
Although there has been a rapid rebound in domestic demand, particularly in
contact-based services, there are emerging challenges. The global growth rate is
decelerating, and tighter financial conditions may impede the progress of consumption
recovery. Against this backdrop, more moderate domestic inflation could be a relief.
Outlook
On one side, corporate balance sheets look healthy. A robust banking system and the
Governments capex thrust should create forward momentum and supportfixed investment.
The real GDP is anticipated to grow, but at a slower pace than in this fiscal. On the
other side, slowing global growth will reduce demand for Indias exports. This will also
affect domestic industrial activity in those sectors. The complete ramifications of the
Reserve Bank of Indias tighter monetary policy, which usually takes time to fully
manifest and is typically observed with a delay of 3-4 quarters, will become apparent in
the upcoming months. Continued geopolitical strife is expected to keep commodity prices
elevated compared to the years prior to the COVID-19 pandemic,
. With all major sectors which could create growth headwinds.
Going forward, we expect Government Capex support to moderate as there is increased
pressure to achieve fiscal consolidation. Meanwhile, private Capex is expected to start
seeing an uptick (more on this in the investment segment). Private consumption, which has
been slow to recover compared to exports and fixed investment, has more recently been
driven by a pick-up in contact-based services, some improvement in rural incomes, and
resilience in urban demand (more on this in the consumption segment).
Industry overview
Global Automotive Industry
The automotive industry is a significant sector to the global economy. It accounts for
3% of the worlds GDP output, and even higher in emerging markets, such as China and
India. As of 2022, the worldwide automotive manufacturing market was valued at USD 2
trillion, and is currently experiencing a CAGR of 3.1% annually. This growth comes after a
period of decline between 2017 and 2022, during which the market contracted by 0.6%.
(Source: https://www.azom.com/article. aspx?ArticleID=22236)
The global automotive industry experienced significant sales and was hit hard by the
COVID-19 pandemic. As the market confidence waned, the easing of COVID-19 pandemic-related
restrictions in 2022 resulted in an economic upturn. Notably, the demand for Electric
Vehicles (EVs) and hybrid model cars in the automotive industry experienced a significant
spike during this period. Electric Vehicle
(EV) sales are projected to surpass the overall market growth by approximately 48% in
2022, with an estimated global sales volume of 9.4 million units. Furthermore, the
upcoming 12-month period is expected to witness a return to pre-pandemic levels with a
growth rate of around 9%. In 2023, EVs and hybrids are anticipated to continue their
upward trajectory with a year-on-year growth rate of 29%, reaching a global sales volume
of 12.1 million units. It is anticipated that automotive corporations will concentrate
more on sustainable practices in the coming years. These practices will include
environment-friendly disposal of vehicles, particularly electric vehicle (EV) batteries,
responsible sourcing of components, and greater utilisation of recyclable materials in
their manufacturing.
(Source: https://www.automotiveworld.com/articles/
what-can-we-expect-from-the-auto-industry-in-2023/)
Indian Automotive Industry
The Indian automotive industry is one of the main pillars of the economy. With strong
backward and forward linkages, it is a key driver of growth. India is one of the worlds
largest tractors & two-wheeler manufacturers. And the country aims to double its auto
industry size to 15 Lakhs Crores by 2024. The contribution of this sector to the National
GDP has risen from 2.77% in 1992-93 to about 7.1% now. It provides direct and indirect
employment to over 19 million people. Currently valued at USD 222 billion, the automobile
industry is projected to reach USD 300 billion by 2026. To boost domestic manufacturing of
advanced automotive technology products, the
PLI scheme, with an outlay of USD 3.5 billion, offers up to 18% financial incentives in
the automotive sector. This scheme also aims to attract investments in the automotive
manufacturing value chain. Incentives are applicable for determined sales of products
manufactured in India from 1st April, 2022 for five consecutive years. The
scheme closed on 9th January, 2022, with a total of 95 approved applicants: 20
under Champion OEM and 75 under Component Champion.
Over the past ten years, India has emerged as one of the most preferred locations in
the world for manufacturing high-quality automotive components and vehicles of all kinds.
In the process, India has narrowed its gap over several established locations.
Automobile Production Trends
The domestic industry produced a total of 2,59,31,867 vehicles including Passenger
Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers, and Quadricycles in April
2022 to March 2023, as against 2,30,40,066 units in April 2021 to March 2022.
|
|
|
|
|
|
(Rs in numbers) |
| Category |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Passenger vehicles |
4,020,267 |
4,028,471 |
3,424,564 |
30,62,280 |
36,50,698 |
45,78,639 |
| Commercial vehicles |
895,448 |
1,112,405 |
756,725 |
6,24,939 |
8,05,527 |
10,35,626 |
| Three wheelers |
1022,181 |
1,268,833 |
1,132,982 |
6,14,613 |
7,58,669 |
8,55,696 |
| Two wheelers |
23,154,838 |
24,499,777 |
21,032,927 |
18,349,941 |
1,78,21,111 |
1,94,59,009 |
| Total |
2,90,92,734 |
3,09,09,486 |
2,63,47,198 |
2,26,51,773 |
2,30,36,005 |
2,59,28,970 |
Source: SIAM
Automobile Domestic Sales Trends
Domestic total Passenger Vehicle Sales rose from 30,69,523 to 38,90,114 units. Sales of
Passenger Cars also increased from 14,67,039 to 17,47,376, Utility Vehicles from 14,89,219
to 20,03,718 and Vans 1,13,265 to 1,39,020 units, in FY 2022-23 as compared to the
previous year. The overall Commercial Vehicles sales increased from 7,16,566 to 9,62,468
units. Sales of
Medium and Heavy Commercial Vehicles increased from 2,40,577 to 3,59,003 units and
Light Commercial Vehicles increased from 4,75,989 to 6,03,465 units, in FY 2022-23,
compared to the previous year. Sales of Three Wheelers increased from 2,61,385 to 4,88,768
units, in FY 2022-23, compared to the previous year. Two Wheelers sales increased from
1,35,70,008 to 1,58,62,087 units, in FY 2022-23, compared to the previous year.
|
|
|
|
|
|
(Rs in numbers) |
| Category |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Passenger vehicles |
32,88,581 |
33,77,389 |
27,73,519 |
27,11,457 |
30,69,523 |
38,90,114 |
| Commercial vehicles |
8,56,916 |
10,07,311 |
7,17,593 |
5,68,559 |
7,16,566 |
9,62,468 |
| Three wheelers |
6,35,698 |
7,01,005 |
6,37,065 |
2,19,446 |
2,61,385 |
4,88,768 |
| Two wheelers |
2,02,00,117 |
2,11,79,847 |
1,74,16,432 |
1,51,20,783 |
1,35,70,008 |
1,58,62,087 |
| Total |
2,49,81,312 |
2,62,65,552 |
2,15,44,609 |
1,86,20,245 |
1,76,17,482 |
2,12,03,437 |
Source: SIAM
Automobile Export Trends
Passenger Vehicle Exports increased from 5,77,875 to 6,62,891 units while Commercial
Vehicle Exports decreased from 92,297 to 78,645 in April 2022 to March 2023. Three-Wheeler
Exports decreased from 4,99,730 to 3,65,549 and Two Wheelers Exports decreased from
44,43,131 to 36,52,122 units during the same period last year.
|
|
|
|
|
|
(Rs in numbers) |
| Category |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Passenger vehicles |
7,48,366 |
6,76,192 |
6,62,118 |
4,04,397 |
5,77,875 |
6,62,891 |
| Commercial vehicles |
96,865 |
99,933 |
60,379 |
50,334 |
92,297 |
78,645 |
| Three wheelers |
3,81,002 |
5,67,683 |
5,01,651 |
3,93,001 |
4,99,730 |
3,65,549 |
| Two wheelers |
28,15,003 |
32,80,841 |
35,19,405 |
32,82,786 |
44,43,131 |
36,52,122 |
| Total |
40,41,236 |
46,24,649 |
47,43,553 |
41,30,518 |
56,13,033 |
47,59,207 |
Source: SIAM
Growth Drivers
Growing income
3X increase in average household income from USD 6,393 in 2010 to USD 18,448 in 2020
‘youngest-nation by 2025
India to become the youngest nation by 2025 with an average age of 25 years
Vehicle Penetration
Expected to reach 72 vehicles per 1000 people by 2025 expanding Research &
Development Hub India accounts for 40% of the total USD 31 billion global engineering and
research & development spend and 8% of the countrys research & development
expenditure is in the automotive sector ‘atmanirbhar Bharat abhiyaan - self-Reliant
india Special economic and comprehensive package of 20 Lakhs Crores towards promoting
manufacturing in India
Outlook
The automotive industry is poised to undergo major changes on a global scale over the
next ten years. These changes include a shift in demand for automobiles from developed
countries to developing nations, particularly those in the
BRICS group. Additionally, there will be a significant increase in the incorporation of
electronics in automobiles. This will effectively turn them into ‘computers on
wheels connected to the internet. Alongside this, there will be a persistent focus on
achieving cost efficiencies through economies of scale and scope in the design and
engineering of vehicles and their components. Furthermore, manufacturers will actively
search for cost-effective manufacturing locations.
Auto Component
Industry
Global
The global auto components industry comprises auto component manufacturers, aftermarket
parts manufacturers, suppliers, dealers and retailers in all its diversity. China
dominates the global manufacturing of auto components but is now gradually moving to other
Asian nations, including India. This is due to higher market potential and the
availability of low-cost manufacturing options. The global exports of auto components have
grown over the past decade in most sub-categories. The swiftly globalising world is
opening up newer avenues for this industry, given the ongoing trend towards electric and
hybrid cars. This trend will lead to a shift in business models with newer verticals and
opportunities for auto-component manufacturers. In the short-term, it would also catalyse
higher volumes of international trade, especially given that new technologies would take
time to establish a manufacturing base in low-cost countries.
Indian
The Indian auto component industry is critical to the automobile OEM value chain. The
organised segment of this industry mainly includes OEMs engaged in manufacturing
high-value precision instruments. And, the unorganised segment mainly comprises low-valued
products catering to aftermarket services. The industry is highly fragmented, with most
Indian-originated firms and a number of foreign firms and JVs operating in the segment.
The various sub-sectors of the auto components industry in India are engine parts,
electrical parts, drive transmission and steering parts, suspension and braking parts, and
equipment, among others. A stable Government framework, increased purchasing power, a
large domestic market, and a focus on infrastructure growth have made India a favourable
destination for investment. Despite the supply-side issues, the auto component industry
performed well in FY 2021-22. OEMs, aftermarkets, and exports have contributed to the
remarkable growth of the auto components sector in FY 2021-22 on account of increased
value addition to meet regulatory compliance, recovery in external markets and traction in
the domestic market. The industry also witnessed strong growth on the back of a surge in
international demand, growth in OEM sales, and a low-base effect during FY 2021-22.
However, the automobile domestic sales and exports gradually gained traction in H1 FY
2023. The passenger vehicles, commercial vehicles and tractor segments have reached the
pre-COVID-19 pandemic levels. However, the two-wheelers segment is lagging behind and is
yet to reach the pre-COVID-19 pandemic levels. It has been impacted due to an increase in
the cost of insurance and high inflation. Despite some moderation in the supply-side
issues related to the availability of semi-conductors and input raw material costs in
recent months, the automotive industry might get impacted due to the ongoing geopolitical
situation, which remains an issue of concern to the industry.
(Source: Care Edge report: Auto Components October 2022)
Camshaft Industry
A vehicles camshaft is one of the integral parts of the engine. Its primary purpose is
to open or close the valves that allow fuel to enter and gas to exit efficiently.
Camshafts play an important role in improving the basic functions of an engine. They are
used extensively in modern overhead camshaft engines (OCH) as well as in older engines.
The automotive sector has been evolving at a rapid pace due to technological
advancements, innovations and changing requirements and standards in the industry. The
global automotive camshaft market is expected to reach USD 2,644.1 million in 2022, and
further projected to reach USD 3,157.2 million in 2029 at a CAGR of 3.0% during the
forecast period. As the automotive sector continues to focus on introducing lighter
vehicles, improving fuel economy, and reducing carbon emissions, camshaft manufacturers
are increasingly developing new products to meet these demands.
(Source: Vehicle Camshaft Market Demand By Manufacturers, Countries, (openpr.com))
Opportunities
Supporting Infrastructure and Expanding Research & Development Hub
India has emerged as a major destination for automotive research & development
(R&D) in recent years, with several global players establishing their research &
development centres in the country. The availability of a large and skilled workforce at a
relatively low cost, government incentives, and cost advantages in setting up
manufacturing facilities have all contributed to this trend.
In addition to these factors, India also offers a large domestic market for automotive
products as well as access to neighbouring markets in Asia and the Middle East. This has
led to increased investments in the Indian automotive sector by both domestic and
international companies.
Moreover, the Indian Government has launched several initiatives to support the growth
of the automotive industry, including the Automotive Mission Plan (AMP) 2026 and the
National Electric Mobility Mission Plan (NEMMP) 2020, which aim to promote sustainable and
environmentally friendly automotive technologies.
Demand of Electric Vehicles
Electric vehicles are serving as a major catalyst for innovation in the auto component
industry. The growing adoption of electric vehicles is driving the transformation of
automotive electrical distribution systems. The industry is moving towards vehicles with
an increasing number of electrical components that are becoming more complex,
necessitating electrification systems that can handle higher voltages. Over the past few
years, electric vehicles have received increasing attention due to falling ownership costs
and stricter government emissions regulations. The rising share of EV sales has the
potential to present new opportunities for the auto components industry in India.
Favourable Government Policies
The Indian Government is focussing on promoting clean mobility and has implemented
various measures to encourage the manufacturing and adoption of electric vehicles. One
such initiative is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles
in India (FAME II) scheme. Additionally, multiple production-linked incentive schemes are
being introduced to establish a domestic manufacturing ecosystem. The aim is to encourage
new investments in developing local supply chains for essential technologies, products and
auto components. These efforts are expected to contribute to the growth of the electric
vehicle industry in India.
Bridging the Local Manufacturing Void
There has been an increasing interest by the leading global manufacturers to start
manufacturing auto components in India. The recently approved PLI scheme worth 18,100
Crores for battery manufacturing by the GOI, is expected to increase manufacturing
capacities and reduce reliance on imports. This will significantly reduce battery costs,
which forms a significant portion of EV cost. The Government of India has also proposed to
provide incentives of 76,000 Crores for the development of semi-conductors to provide
globally competitive incentive package to the companies for setting up plants in India.
Challenges
Semi-Conductor Shortage
The auto component industry faces multiple headwinds in the form of a semi-conductor
shortage due to the current geopolitical tensions. These factors are impacting the
operating margins of the OEMs. The industry has been impacted due to the shortage of
semi-conductor chips for a long time now. The semi-conductors for automotive segments
account for 11% of the overall semi-conductor demand. The use of electronics in vehicles
has been continuously increasing. Currently, it accounts for 40% of average automobile
usage, thus increasing higher dependence on semi-conductors. The semi-conductors used
across various segments in vehicles include: -
Interior and Exterior Lightening
Safety Control-Related System and Chassis (ABS, Airbag, among others) Telematics
Communication Systems Audio and Video-Based Infotainment System Interior Body Control
System (Climate Control, Power System, Electric Power Steering, among others) Autonomous
Driving System & Driver-Assistance Battery-Centred Driving System The global impacts
of the COVID-19 pandemic and geopolitical tensions have disrupted the OEMs supply chain.
Moreover, the extended timeline of approximately 6 months from chip production to vehicle
production has been further affected by the ongoing semi-conductor chip shortage, which is
currently the industrys most significant global challenge. The timeline for a return to a
more stable production rate remains uncertain and requires continued monitoring.
Steep rise in Commodity Prices
Automobile Original Equipment Manufacturers (OEMs) are grappling with the challenge of
high raw material prices as a result of the current geopolitical tensions. Specifically,
the cost of aluminum and steel has spiked significantly during H1 FY 2022, prompting OEMs
to raise vehicle prices in response. Unfortunately, these steep increases in vehicle
prices are likely to put a damper on consumer demand, potentially casting a pall over the
industrys outlook.
Technical Changes
The automotive industry has faced various technological disruptions, such as emission
regulations, safety standards, and the rise of electric and electronic mobility. The
migration to BS-VI norms was particularly challenging for Indian auto component
manufacturers due to the technology-intensive nature of the management modules. Since most
of the technology is imported, local players do not have a level playing field. Joint
ventures with lead firms can help bridge this technology gap, giving
Indian firms the access to new technologies, customer base. Indian and foreign firms
have already made efforts towards technology upgradation. It includes the use of modular
platforms and new materials, and platform sharing in India.
High and Non-Uniform Tax Rates
The auto components industry in India face challenges due to high and non-uniform tax
rates, with some components taxed at 18% and 28% GST rates, along with compensation cess
in the range of 1-22%. The lack of a uniform GST rate creates disincentives for enhancing
domestic production in some sub-segments. Additionally, auto components for EVs also
attract high GST rates, resulting in limited domestic production. Streamlining taxes and
duties on auto components is necessary to promote indigenisation and attract investments
in key areas, such as batteries and power electronics. company overview
Precision Camshaft Limited (‘PCL or ‘The Company) has established itself as
a world-renowned manufacturer of camshafts, producing all types of camshafts under one
roof. Since its establishment in 1992, the Company has emerged as a market leader in the
manufacturing of camshafts. Its success can be attributed to its unwavering commitment to
a robust quality management system, adherence to world-class production practices, and
continuous improvement initiatives.
With an unwavering focus on engineering, and research & development, Precision
Camshaft Limited has expanded its capabilities to become a self-sufficient provider of
automotive solutions. The PCL group of companies includes Memco Engineering Private
Limited, MFT Motoren und Fahrzeugtechnik GmbH and Emoss Mobile Systems B.V. This has
enabled the Company to offer critical automotive and non-automotive parts as well as
electric mobility solutions to top-tier automotive original equipment manufacturers
(OEMs). The Company prides itself on meeting customer needs promptly. It values its
employees and prioritises sustainability through its corporate social responsibility
initiatives.
Performance Overview
Financial Overview
Standalone and Consolidated
|
Standalone |
Consolidated |
| Particulars |
For the year ended 31st March, 2023 |
For the year ended 31st March, 2022 |
For the year ended 31st March, 2023 |
For the year ended 31st March, 2022 |
| Total Revenue |
65,432.41 |
52,648.68 |
1,10,979.40 |
91,142.34 |
| Total Expenses |
53,635.16 |
41,858.58 |
96,953.17 |
78,109.24 |
| Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) |
11,797.25 |
10,790.10 |
14,026.23 |
13,033.10 |
| Profit Before Tax & Exceptional Items |
8,341.06 |
7,336.97 |
6,027.80 |
3,353.05 |
| Exceptional Items |
0.00 |
1,277.50 |
0.00 |
2,741.39 |
| Profit Before Tax |
8,341.06 |
8,614.47 |
6,027.80 |
6.094.44 |
| Total Tax Expenses |
2,246.24 |
2,006.78 |
1,399.21 |
1,492.15 |
| Profit / (Loss) for The Year |
6,094.82 |
6,607.69 |
4,628.59 |
4,602.29 |
| EPS (Basic) |
6.42 |
6.96 |
4.87 |
4.85 |
| EPS (Diluted) |
6.42 |
6.96 |
4.87 |
4.85 |
Standalone
During the Financial Year under review, on a standalone basis your Company registered a
total revenue of 65,432.41 Lakhs as against 52,648.68 Lakhs in the previous year. The
profit after tax for the year stood at 6,094.82 Lakhs as against 6,607.69 Lakhs in the
previous year.
Consolidated
On a consolidated basis, the total revenue was 110,979.40 Lakhs as against 91,142.34
Lakhs in the previous year. The profit after tax for the year stood at 4,628.59 Lakhs as
against profit of 4,602.29 Lakhs in the previous year.
Disclosure of Accounting Treatment
During the preparation of the financial statements, the Company followed the treatment
as prescribed in the applicable
Accounting Standard, and therefore, no additional disclosure or explanation from
management is required in the financial statements.
+91-9892691696
