gna axles ltd share price Management discussions


The global economy made a robust recovery in 2022 after the Covid-19 pandemic, growing 3.6% according to IMF estimates. This rebound was fuelled by pent-up demand and easing Covid-19 pandemic restrictions. However, growth was impacted by the Russia-Ukraine war, rising inflation, supply shocks, and tightening monetary policy. While it was slower than 2021s exceptional 6.1% growth, the expansion showcased the world economys resilience amid multiplicate headwinds.

Looking forward, the IMF anticipates a consistent worldwide growth rate of 3.2% in 2023 and 3.0% in 2024. The pressure from inflation is predicted to decrease gradually as commodity prices normalise. Job markets are robust in numerous countries, bolstering consumer demand. As supply chains stabilise, businesses are expected to ramp up capital investment. While the growth rate might be lower than the rebound experienced in 2021, the global economy is on track for sustained growth. With coordinated policy support and strengthening economic fundamentals worldwide, the expansion is forecast to continue despite slower momentum. The global economy has proven its capacity to manage myriad shocks and is positioned for continued growth ahead.


The Indian economy has firmly established itself as one of the fastest-growing economies worldwide, achieving a robust 7.2% GDP growth in 2022-23, despite global headwinds. This advancement was propelled by a robust internal demand, as both private consumption and investments experienced a surge. Exports also performed well, benefitting from the global rebound. The drivers of this impressive growth include increased infrastructure spending, urban demand, digital adoption and supportive Government reforms. India aims to sustain high growth by boosting manufacturing competitiveness, job creation, and human capital development.

As per the IMF predictions, India is expected to achieve a growth rate of 6.1% in 2023-24. This growth is anticipated to be primarily propelled by augmented investments in infrastructure, a surge in urban consumption, expanded digital integration, and reforms in policies. Nonetheless, there are still vulnerabilities stemming from external market fluctuations, fluctuations in commodity costs, and inflationary pressures. Through judicious fiscal and monetary measures, India is well-equipped to harness its demographic advantage, domestic demand foundation, and skilled labour pool, solidifying its position as one of the worlds fastest-growing major economies. Its growth trajectory highlights the countrys resilience and reform orientation in the face of global headwinds.


In the dynamic landscape of the tractor and commercial vehicle industry, GNA Axles continues to position itself as a pivotal player, manufacturing and marketing rear axle shafts, spindles, and drive shafts for both tractors and commercial vehicles. The Companys success is intrinsically intertwined with the prospects of these industries, not only in its home market of India but also on a global scale. As we delve into the industry overview, it becomes evident that GNA Axles has strategically positioned itself to harness opportunities, while mitigating potential challenges.

The tractor and commercial vehicle industry showed strong growth in 2022-23, aided by robust rural demand, higher infrastructure spending, and improved economic activity. In India, tractor sales grew 10% to 10.69 Lacs in 2023 compared to 9.71 Lacs in 2022, as per data from the Tractor Manufacturers Association. This growth was driven by healthy crop prices, good monsoon rains, and higher rural incomes, which stimulated tractor demand. Commercial vehicle sales also witnessed robust growth of 28% to 7,93,211 units in 2022, up from 6,17,944 units in 2021, as per the Society of Indian Automobile Manufacturers.

Globally, the tractor and commercial vehicle market displayed a mixed growth trend. The US and Germany saw 10% and 11% growth, respectively, in 2022, while markets like the UK and Japan declined 6% and 4%, respectively (Source: International Organisation of Motor Vehicle Manufacturers (OICA)). India was the fastest-growing market globally for tractors and commercial vehicles.

Going forward, the outlook remains positive for tractors in India, though threats of weather disruptions like El Nino pose risks. Commercial vehicle sales are projected to register a CAGR of 8.7% globally by 2029, reaching USD 1.7 trillion, buoyed by increasing regulations on emissions and vehicle safety (Source: Allied Market Research).


A brief summary of the operational and financial performance of the Company is given below:

Product-Wise Volume Distribution

(No. of Pieces in Lacs)

Product Types 2022-23 2021-22
domestic Exports domestic Exports
Rear Axle Shafts 20.03 17.71 16.4 17.75
Spindles 3.32 4.83 2.09 4.61
Drive Shafts 1.94 1.67 2.07 1.68
total 25.29 24.21 20.56 24.04

Segment-Wise Distribution

(No. of Pieces in Lacs)

Segments 2022-23 2021-22
domestic Exports domestic Exports
Off-Highway 19.57 2.61 17.28 3.50
CV 5.72 21.60 3.28 20.54
total 25.29 24.21 20.56 24.04
Geography-wise revenue from operations 2022-23 2021-22
Exports 838.91 760.52
Domestic 720.66 482.27
total 1,559.57 1,242.79
(? in Cr)
Financial Highlights 2022-23 2021-22
Total Operating Revenue 1,582.93 1,270.47
Profit Before Depreciation, Interest and Tax 234.12 181.53
Financial Costs 10.96 11.23
Depreciation 48.51 49.71
Profit Before Tax 174.64 120.59
Tax Expense 44.41 31.8
Profit After tax 130.20 88.79
Earnings Per
- Basic 60.67 41.36
- Diluted 60.67 41.36


The Company identified the following ratios as key financial ratios:

Sr. No Particulars 2022-23 2021-22 Explanation for Significant Change
1 Debtors Turnover Ratio (Times) 3.01 2.72 N.A.
2 Inventory Turnover Ratio (Times) 8.29 6.69 N.A.
3 Interest Coverage Ratio (Times) 15.93 10.74 The increase in the ratio is on account of increase in Profitability
4 Current Ratio (Times) 1.93 1.78 N.A.
5 Debt Equity Ratio (Times) 0.28 0.35 N.A.
6 Operating Profit Margin (%) 14.70 14.24 N.A.
7 Net Profit Margin (%) 8.35 7.15 N.A.
8 Return on Net Worth (%) 18.22 14.93 The increase in the ratio is on account of increase in Profit Margins


The outlook for the tractor industry remains good in 2023-24, thanks to Government endeavours aimed at enhancing agricultural productivity and profitability. Advancements in tractor technologies, such as GPS and telematics, are expected to further accelerate demand. The commercial vehicle segment is set to experience robust expansion, primarily fuelled by the flourishing e-commerce and logistics industries. The increasing need for effective goods transportation, coupled with ongoing Government infrastructure development projects, is expected to drive a surge in sales of commercial vehicles.

Overall, both tractors and commercial vehicles are likely to witness single digit growth in 2023-24. Favourable Government policies aimed at agriculture and infrastructure enhancement, combined with the adoption of cutting-edge technologies, will serve as significant drivers. Although the risks associated with unfavourable weather conditions remain, the encouraging momentum established in recent years is projected to endure. Tractor and commercial vehicle manufacturers are well-positioned to capitalise on these industry tailwinds.


GNA Axles has significant opportunities for growth and expansion, given the expected increase in demand for tractors and commercial vehicles in India and globally. Rising farm mechanisation, infrastructure development, and growth of transportation services provide promising prospects to increase GNA Axles customer base and market share. However, the Company faces stiff competition from established players and new entrants in the automobile components industry. Fluctuations in commodity prices, foreign exchange rates, and changes in Government policies and regulations could adversely impact raw material costs and affect GNA Axles profitability.

human resource

GNA Axles believes its employees are the foundation for creating endless possibilities for the business. The employees are the Companys most valued assets and are vital to its success. It nurtures its workforce by investing in employee empowerment through learning, development, wellness and safety initiatives, as well as providing contemporary workplace facilities. The Company is committed to fostering a professional culture that enables employees to grow in their careers alongside the organisation. It continues to accelerate its value-based growth strategy and the overall development of its personnel. It engages employees through various development and learning opportunities, reward and recognition programmes, and career growth initiatives. As of the end of 2022-23, the Company employed 1,421 workers. The Company aims to be an employer of choice by building an inclusive, engaging and positive work culture that helps employees thrive. The Company will continue investing in its people, empowering them to reach their full potential for the mutual benefit of the employees and the Company.

quality, efficiency & delivery

Quality, efficiency and on-time delivery remained key priorities this past year. We brought more manufacturing in-house to control quality and costs, while meeting delivery schedules. Numerous employees were trained and certified as Six Sigma Black Belts to drive continuous improvement across operations. Forging efficiency enhancements helped increase capacity utilisation. Through regular vendor audits and centralised sourcing, we optimised procurement costs, especially for steel. Packaging initiatives focussed on meeting customer needs based on transportation mode and destination. Overall, our multifaceted approach to elevating quality, optimising costs, and enabling responsiveness continues to strengthen our value proposition.

technology and automation

The Company acknowledges that technology plays a pivotal role in determining a competitive edge within the market. And so, the Company has allocated resources for technological enhancements and processes to align with technology platforms. This enables the Company to meet a variety of customer specifications. The Companys forging facilities are supported by robots, and it plans to invest in automating most production processes. This automation will optimise resource use, reduce industrial risks to human workers, provide economies of scale, and significantly improve overall manufacturing and product design accuracy.


The Company has designed and implemented internal control systems tailored to its size and operations. These controls are integrated with financial and operational systems to enable effective management. The Companys internal audit team regularly reviews adherence to established internal controls, identifying potential shortcomings or concerns, and monitoring the implementation of corrective measures where needed. The Company provides summaries of internal audit findings and the status of risk mitigation action plans to the Audit Committee quarterly for their oversight. Any residual risk concerns are also presented to the Board by the Company.


The Companys discussion of its objectives, projections, estimates and expectations in this Management Discussion and Analysis may contain forward-looking statements. Actual results could differ from those statements due to various factors like the global economy, political stability, stock market performance, Government regulations and taxes, economic developments and other unpredictable events. The Company is not obligated to update any forward- looking statements unless required by law. Investors should exercise caution when interpreting these statements.