mahindra cie automotive ltd share price Management discussions



The Board of Directors of the Company at its meeting in December 2022 approved the proposal to change the name from Mahindra CIE Automotive Limited to CIE Automotive India Limited. India is one of the major growth markets that CIE group is focusing on as part of its global strategy. The Board also took note of the proposal to find a buyer for the truck forgings business in Germany. This is to focus on the car forgings business out of Spain & Lithuania, especially managing the transition to Electric Vehicles (EVs).

Accordingly, the truck forgings business in Germany has been classified as held for sale; hence we are not presenting the details of the truck forgings business in this report. Your Company is a multi-locational and multi-technology automotive components company with manufacturing facilities and engineering capabilities of its own and its subsidiaries in India and in Germany, Spain, Lithuania, and Italy in the European continent as well as a plant in Mexico, North America. It has an established presence in each of these locations and supplies to automotive Original Equipment Manufacturers (OEMs) and their Tier 1 suppliers. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) and currently has about 379 million shares listed.

Your Company is part of the CIE Automotive Group of Spain and is the CIE Automotive Groups vehicle for its forgings business globally. The Company therefore draws from the vast and varied experience of the CIE group in partnering and co-developing products for the rapidly evolving Automotive industry.

Set out below in Exhibit 1 is a graphical representation of the Company and its subsidiaries (together referred to as the Company in this report).

Exhibit 1: Legal Structure of the Company:

The list of subsidiaries and their ownership interest is provided in Exhibit 2.

Exhibit 2: The Subsidiary Companies of the company as on 31st December, 2022

Subsidiary Companies Information
Sr. Name of the Subsidiary No. Proportion of Ownership Interest Remarks
1 CIE Galfor S.A.# 100% Collectively known as CIE Forgings
1 UAB CIE LT Forge 100%
2. CIE Legazpi S.A. 100%
3. CIE Forging Germany GmbH 100%
1 Jeco Jellinghaus GmbH* 100% Collectively known as Forgings, Germany
2. Gesenkschmiede Schneider GmbH 100%
3. Falkenroth Umformtechnik GmbH 100%
4. Schoneweiss & Co. GmbH 100%
4. Metalcastello S.p.A. 99.96% Gears, Italy
2 Aurangabad Electricals Limited 100%
3 Stokes Group Limited* 100% Stokes, UK
4 BF Precision Private Limited 100% Collectively known as Bill Forge
5 Bill Forge de Mexico S de RL de CV 99.99%
6 CIE Hosur Limited 100%

Please note: * - These are dormant companies

Note: # - CIE Galfor SA is the holding company for all businesses in Europe, except Stokes Group of companies


We are a large, diversified auto-components group with presence across many processes/ product lines, geographies and customers. It manufactures parts; not systems and aggregates, but these parts are complex, and value added thus differentiating it from other ‘tier 2 parts companies. The Company just like the CIE Automotive Group of Spain, is focused on the automotive market – cars, utility vehicles, commercial vehicles, two wheelers and tractors.

Your Company has 29 manufacturing facilities including 4 manufacturing facilities in Europe and 1 in Mexico The manufacturing locations are generally located close to major automotive manufacturing hubs to facilitate supplies to customers. In certain instances, the Company also provides services such as value analysis and value engineering to add value to the customers products. The Companys unique combination of specialization in high value-added products, which is usually delivered directly to OEMs and presence across multiple production technologies, also differentiates it from other component suppliers.

The Company largely operates in the automotive markets of Europe and India. In Europe, the Company supplies components mainly to the light vehicles and heavy truck markets with a comparatively small business in the off-road sector. In India, the Company is more diversified and supplies components to the light vehicles segment (both passenger vehicles and light commercial vehicles), two wheelers, tractors, medium and heavy commercial vehicles, in order of dependence.

A brief description of the key businesses of the Company is presented in Exhibit 3.

Exhibit 3: Lines of Business

Geography Product Specialty Focus Areas Key Customers CY 2022 Revenue (Rs in Mio)
India Crankshafts - As forged and Machined, Stub Axles -As forged and Machined Passenger & Utility Vehicles and Tractors M&M, Maruti Suzuki India Limited, Tata Motors and Tata Motors (EV) 7,745
Erstwhile Bill Forge -
2 Wheelers: Steering races and engine valve retainers Pass Vehicles: constant velocity joints, tulips, steering shafts, steering yokes and wheel hubs Passenger Vehicles and Two Wheelers Hero, Bajaj, HMSI and TVS, Ford, GKN, NTN, Nexteer, Rane NSK, KIA (EV), Hyundai, PSA Stellantis (EV), Ola Electric (EV) 12,553
Spain + Lithuania Forged steel parts for Industrial Vehicles and Crankshafts, Common Rail, Stubs, Tulips for passenger cars Passenger Vehicles Renault, VW Group, Daimler, GKN, JLR, GM, Fiat, DAF, Bosch, NTN, Faurecia, Dana, ZF, BMW 24,621
Aluminum Castings
India Aluminum castings using High pressure or Gravity die casting specialized in Thin wall to thick wall parts viz- complex engine components, Brake system parts, Aesthetically sensitive parts OEM & Tier 1 supplier for 2&3 wheelers, Passenger Vehicles and Commercial Vehicles Bajaj , Nidec GPM , Ashok Leyland, Daimler, Brembo, KSPG, Bosch , Valeo, Mitsubishi, Bajaj EV, Nidec GPM (EV), Bosch (EV) 10,060
India Castings Sheet Metal Stampings, Components and Assemblies Passenger & Utility Vehicles M&M, Tata Motors, Ashok Leyland, Mahindra Electric (3W) 12,859
India Turbocharger Housings, Axle & Transmission Parts Passenger & Utility Vehicles, Construction Equipment & Earthmoving, Tractors and Tier 1 M&M, Honeywell, Cummins, Hyundai, JCB, Automotive Axle, New Holland, Dana India CV, John Deere, PSA Avtec, Linamar 6,527
Magnetic Products
India Soft and Hard Magnets Tier 1 of Passenger Denso, Sumida, Varroc, 1,613
Vehicles, Utility Intica, Mitsuba, Lucas
Vehicles, Two Wheelers TVS, Mitsubishi Electric
India Compounds, Components, and Products Electrical Switchgear, Auto Components L&T Switchgear, Phoenix Mecano, TVS, M&M , Volvo Eicher, SML Isuzu, Mahindra Electric (3W) 1,722
India Engine Gears, Timing Gears, Transmission Gears, Transmission Drive Shafts Passenger & Utility M&M, Eaton, Caterpillar, Vehicles, Construction HINO, Turk Tractor & Earthmoving (CNH), BEML, Bonfiglioli, Equipment Mahindra Electric 3,230
Italy Engine Gears, Transmission Drive shafts, Crown Wheel Pinion Tractors, Construction Caterpillar, CNH, & Earthmoving Merritor, John Equipment Deere, JCB, Allison Transmission (EV), Axle Tech (EV) 6,601

The Economic Background

IMF in its report on the global economic outlook issued in Jan23 states, "The global fight against inflation, Russias war in Ukraine, and a resurgence of COVID-19 in China weighed on global economic activity in 2022, and the first two factors will continue to do so in 2023." The latter part of last year saw some of these risks moderate and IMF has raised its growth forecasts in January of this year compared to what they had made in October last year. Global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then rise to 3.1% in 2024. The forecast for 2023 is 0.2% higher than predicted in the October 2022. Inflation, the main culprit slowing down the global economy, is also expected to moderate. Global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, still above pre-pandemic (2017–19) levels of about 3.5%.

Europe was greatly affected by the war in Ukraine. Demand dropped while sanctions on Russia led to unprecedented increase in gas & power prices, fueling inflation. Central banks raised interest rates, and this further eroded demand. Power prices have moderated more than expected as Europe moved to replace Russian gas with other sources while optimizing electricity consumption, which was helped by a warmer-than-usual winter. But inflation remains a concern. Growth in the euro area is projected by IMF to bottom out at 0.7% in 2023 before rising to 1.6% in 2024. There is an increase of 0.2% in 2023 forecast compared to October 2022.

IMF estimated that growth in India is set to decline from 6.8% in 2022 to 6.1% in 2023 before picking up to 6.8% in 2024. The Indian economy has shown resilience amidst external headwinds and a weakening global economic scenario. This years budget highlighted comfortable fiscal deficit figures and excellent tax collections. Budget forecasts for the coming financial year have been based on conservative assumptions, showing that the economy is on a strong footing. For the last few years, the government has focused on infrastructure development and its capital expenditure plan reflects this. Capex spending by the government has steadily increased in the last few years and is expected to be the highest in FY24.

The private sector has also seen a capex revival with credit growth being at a four year high, even as the balance sheets of both banks and corporates remain healthy. Some of the optimism needs to be tempered. Many commentators expect the new income tax regime to put more money in the hands of people and increase consumption, but confusion between the old and new regimes persist and the jury is still out on the new regime. Domestic consumption could also moderate in FY24 due to the combination of - slower global growth, lagged effect of interest rate hikes and dissipation of ‘revenge consumption, that followed the lifting up of restrictions during the covid pandemic. Inflation continues to be higher than comfortable and rural incomes have only recovered moderately. The prospect of a K shaped economy with consumption growth in the lower income categories lagging others, is real.

The Automotive Market

The two key geographies that we operate in are India (52% of consolidated sales) and Europe (48% of consolidated sales). Please note that we have a small plant in Mexico which is covered under India sales (INR 2.5 bn)


In India, we supply to a variety of segments with the segment wise dependence of our India sales shown in bracket – light vehicles (49%), two & three wheelers (23%), tractors (20%) and trucks (8%). Different segments of the Indian automotive market behaved differently. Light vehicles experienced pent up demand and have had one of the best years in terms of production in the last 5 years. Two wheelers remained sluggish as rural incomes are slowly recovering from the pandemic. Tractors remained flattish on a higher base. Trucks saw strong growth especially in the second half on the back of strong infrastructure spends and overall state of the economy. On the demand side the trend continues to be positive as the market opens up and is expected to grow across all segment as estimated by various agencies.

Light Vehicles

The Indian light vehicles market has grown handsomely by ~23% over CY22. The market which has seen a slew of new launches has been buoyant due to the demand for all new models being strong. Waiting periods which in some cases extended well over 12 months for a specific model. The Indian automotive manufacturers are focusing on a strong order book and are ramping up production capabilities to meet this demand. In CY 22, Q2 & Q3 were excellent quarters in terms of growth as the base from last year was subdued due to the second wave of Covid.

Light Vehicles (Production Million Units)
Period 2022 2021 Change
Full Year 5.2 4.1 22.7%
Oct-Dec 1.2 1.0 12.2%
Jul-Sep 1.3 1.0 33.1%
Apr-Jun 1.2 0.9 38.4%
Jan-Mar 1.3 1.2 4.9%

Source: IHS

Most agencies have estimated positive forecasts for the Indian passenger vehicle market with IHS in its latest update forecasting the Indian light vehicle to grow by 7.7% in CY 23. This is largely because of the slew of new launches and updates being brought to market, first time buyers push up sales as they seek to avoid public transport, loans are readily available to buy cars and the willingness to replace cars faster reducing ownership times to 4 years or less. The long-term picture for the car market remains healthy, given the current low vehicle penetration levels and as per capita income continues to grow, it will increase the Indian households ability to afford a car. IHS global, expects the Indian light vehicles (less than 6T) to grow at a CAGR of 2.5% over a period of 2022-27 which is much lower than what Crisil expects. Battery Electric Vehicles (EVs) were still less than 1% of overall market in CY 22 and are expected to increase to 4-5% by CY25.

Two Wheelers

The Two-Wheeler industry production has shown a growth of 3.4% in CY22 as compared to the previous year (source: SIAM) despite a subdued base. The quarter wise performance reveals that there was a decline in the demand for 2 Wheelers in Q1C22 due to the rising cost of acquisition on account of rising RM prices which are beginning to stabilise. Concerns on personal safety coupled with the opening up of schools and offices may boost up demand. But increasing fuel costs and increase in steel prices being passed to consumers may further increase the cost of ownership and dampen demand. CRISIL expects the two wheeler market to grow by 10-13% in FY24 which may be on the optimistic side.

Two Wheelers (Production Units)

Period 2022 2021 Change
Full Year 19,537,259 18,902,456 3.4%
Oct-Dec 4,604,786 4,549,031 0.5%
Jul-Sep 5,650,212 5,221,927 7.7%
Apr-Jun 4,820,657 3,482,294 38.2%
Jan-Mar 4,461,604 5,649,204 -21.0%
Source: SIAM

Two wheeler demand is expected to rise on the back of the economy opening up and Rural sentiments picking up due to the governments latest support measures for rural economies. Though Crisil forecasts a double digit CAGR between FY22-27, we expect long term growth to be subdued.

EV penetration has started to increase in this segment and reached about 4% in CY22. This is expected to jump to 10% by CY25 as customer acceptability of these vehicles is rapidly increasing.


Tractor production in India has shown a slight decline of ~2% in CY21 (source: Tractor Manufacturers Association/ TMA). However, CY21 was a very good year for tractors when for the first time production crossed 1mn units. This trend has continued in CY22 which has also seen production in excess of 1mn units.

Tractors (Production Units)

Period 2022 2021 Change
Full Year 1,004,976 1,028,412 -2.3%
Oct-Dec 224,671 258,121 -13.0%
Jul-Sep 304,864 309,890 -1.6%
Apr-Jun 284,320 248,601 14.4%
Jan-Mar 191,121 295,301 -35.3%
Source: TMA

Farm incomes were affected due to the uneven distribution of rainfall despite overall having a normal monsoon. The OEMs were also forced to take price increases due to the jump in input costs, which has also contributed in some fall in demand. Governments continued focus on infrastructure projects augurs well for rural demand.

A large part of the tractor demand is replacement demand which was very high in CY20 and CY21. Some decline can be expected in replacement demand, and this may negatively impact future demand. On the other hand, the level of farm mechanization in India is still sub optimal and there is large scope for growth. CRISIL expects the tractors market to grow by 5-7% in FY24. CRISIL is also forecasting a long term CAGR between FY22-FY27 to be 6-8%. Tractor forecasts are always tricky as the industry has shown great deal of cyclicality historically.

MHCV production in India which had seen a large drop in CY19 was further hit by a steep drop of in CY20. CY21 saw a sharp recovery from this low base and in CY22 this trend has continued. MHCV production in India has grown by more than 27% in CY22 vs CY 21 which was also a comparatively low base. Q3 is normally the weakest quarter in the year due to monsoon. But Q3C22 was higher than pre pandemic Q3C19 substantially (89k vs 50k). IHS has forecast that in CY23 MHCV production in India would grow by 3%.

The recently announced budget with its sharp push on infrastructure augurs well for the next few years. The dedicated freight corridor of the Indian railways may shift some demand from road transport to rail but this shift will largely affect tractor trailers which are a small segment (~1/6th) of MHCV sales. For the longer term, IHS estimates this to grow at a conservative rate of 5% CAGR over CY22-CY27.

Medium & Heavy Commercial Vehicles (MHCV) MHCV (Production Units)

Period 2022 2021 Change
Full Year 381,763 299,714 27.4%
Oct-Dec 88,398 85,012 4.0%
Jul-Sep 89,318 67,021 33.3%
Apr-Jun 94,286 47,425 98.8%
Jan-Mar 109,761 100,256 9.5%


As informed before, the company has decided that its European truck forgings business will be held for sale. We will cover the rationale in a later section on strategy. Without this business, our European operations will cater largely to the light vehicle market, with a small portion of the revenue being supplied to the off-highway, farm equipment and tractors market.

Light Vehicles

The year started on a hopeful note as the lingering impact of Covid and the semiconductor crisis was easing. The forecasts were positive and expected to reach pre pandemic levels. The Ukraine war which started in February started to change the scenario rapidly in Europe and the market sentiment collapsed. Inflation shot up as electricity prices increased manifold due to the disruption of Russian gas to Europe, which used to be the main source of power generation in many parts of Europe especially Germany. The overall demand in 2022 ended marginally lower than 2021 which itself was a subdued year. This is a third year running when the market has contracted.

Light Vehicles (Production Million Units)

Period 2022 2021 Change
Full Year 15.2 15.6 -1.9%
Oct-Dec 4.0 3.9 3.1%
Jul-Sep 3.5 2.9 19.6%
Apr-Jun 3.9 4.1 -4.9%
Jan-Mar 3.8 4.7 -18.4%

For Light vehicles (<3.5T incl. cars, Utility Vehicles & Light Commercial Vehicles), the data from IHS shows that the production in Europe has fallen by ~2% in CY22 as compared to CY21 to 15.2 mn units. In the second half of CY22, the demand for light vehicles came back after some of the uncertainty due to the Ukraine war was reduced. As inflation eases, light vehicles segment is estimated by IHS to grow by ~5% in CY23. Also, as per IHS data the passenger vehicle market in Europe is forecasted to grow at a steady CAGR of 2.6% over the period of 2022-27. However the pre pandemic market of 19-22mn units will not be reached even by 2027 when IHS forecasts production to be in the range of 17-17.5mn units.

The electrification of vehicle powertrain is the key risk to be considered in the market. We will cover the mitigation strategy in a later section on EVs. The exhibit below shows the rapid penetration of battery electric vehicles in the European car market. (Source : ACEA)


Demand in the Indian automotive market in CY22 continued the growth trajectory from the previous year. The light vehicles segment recorded highest production levels since 2018 with many successful new model launches. The two wheelers and tractors segments were sluggish as rural incomes are slowly recovering post pandemic. On the raw material side, prices remained elevated during the year. Electric Vehicles (EVs) became more mainstream, especially in the three & two-wheeler segments.

The order book situation was such that all the business verticals in India required capital expenditure for increasing capacity. A new unit is being added at the gears plant in Pune to cater to EV parts while the Rajkot gears plant was also expanded during the year. A new forging & machining line was installed by Bill Forge at Bengaluru to cater to EV transmission parts. CIE Hosur commissioned a new fuel rail line, the first time this technology has been introduced in India. The crankshaft machining capacity at the forgings plant in Chakan, Pune was augmented and an additional 4000T press is being put up to enhance forgings capacity. Two compression moulding presses were added to the Composites unit in Pune to increase capacity to make components from the compounds produced. The new plant being built by the Aluminum vertical at Aurangabad was completed last year, it will cater to 4W EV parts, among others. The stampings plant at Kanhe continued adding more robotic welding capabilities to increase value add. There were also incremental growth capex at the magnetics, foundry & Mexico plants.

The key focus remains on how to balance order book requirements and investments in capacity such that both growth and profitability objectives are met. Process reengineering, automation and digitization with a view to improve operations and match CIEs global standards of manufacturing excellence, went on as planned. Developing parts with greater value addition remains an important part of operational strategy. As an example, the Stampings Division has developed welded and assembled parts and installed robotic welding processes, to improve value addition.

On account of the above initiatives, our Indian operations were able to grow faster than the market (CY 22 growth of 29%) and despite raw material prices remaining elevated, they reached EBITDA levels at higher than 15% during the year.


Our car forgings business out of Spain & Lithuania, is facing the challenge of a rapid transition to electric mobility. We have decided to put up our German truck forgings vertical for sale to facilitate greater attention to managing this transition. The CY22 results for our European business do not include the performance of the German operations, which are reported separately. Light vehicles production in Europe fell for the third straight year as the semiconductor shortage extended into CY22 and the market was negatively affected by the war in Ukraine. Battery electric vehicles (BEVs) remained buoyant, and their market penetration crossed 10%. Electricity prices in Europe rose to unprecedented levels largely due to the war situation in Ukraine, putting lot of strain on profitability.

Our European operations concentrated on improving productivity, pruning other costs and in some cases passing on part of the energy price rise to customers, so that the impact of market factors on profitability was minimized. At the same time, the focus was on generating more EV related orders and on developing aluminum forgings to be used in EVs. Our European operations (excluding the German forgings operations) showed healthy growth of 27% over the previous year. We were able to minimize the impact on profitability, achieving an EBITDA margin of 14.5% in CY 22 (excluding the German forgings operations – comparable EBITDA% for CY21 was 17.2%).


In 2022, CIE Indias consolidated sales (excluding the German forgings operations) were INR 82,283 mn, 28% higher than 2021 and our EBITDA margin was 15.4% vs 15.2% previous year. This performance is also significantly better than pre-pandemic CY19 or CY 18 levels – CY22 sales higher by 9% vs CY19 and by 7.5% vs CY18; EBITDA% . better by +2.2% vs CY19 and by +1.2% vs CY18.


In India, the transition to electric mobility will be gradual with the first segments to make the transition being 2&3 Wheelers and buses. In 2022, e3Ws formed 40% of the 3W market and e2Ws constituted roughly 4-5% of two wheelers sold. Though the penetration of electric cars is roughly 1% only, many new model launches were . announced in the e4W space. It is expected that the penetration of EVs will continue to grow significantly in three wheelers (50% in 2025, 65% in 2030) and in two wheelers (10% in 2025, 35% in 2030) but will improve gradually in cars (4-5% in 2025, 10% in 2030). We should keep in mind the usual disclaimer that forecasting the trajectory of new technologies is not an exact science. We track the market closely to be able to make the required course corrections if the situation changes. Your company is in dialogue with key electric OEMs (vehicle makers), existing as well as new, in all segments and the order book developed so far is encouraging. In CY22, almost 35% of the order book generated was in the EV space. Our EV order book in India covers Aluminum & steel forgings, gears, stampings & composites parts for e2W, e3W and e4W. Your company has been investing in additional capacities to cater to the EV order book - a new unit is being added at the gears plant in Pune, a new forging & machining line was installed by Bill Forge at Bengaluru to cater to EV transmission parts, the new aluminum plant at Aurangabad and the investments in robotic welding at stampings vertical will also cater to EV requirements.


Electrification of powertrains has seen rapid adoption in Europe. As per ACEA, battery EVs (BEVs) accounted for 12.1% of the European light vehicle sales in 2022 (vs 9% in 2021) and plug in hybrid vehicles (PHEVs) 9.4% (vs 9% in 2021). Internal combustion engine-based powertrains lost ground – petrol vehicles made up 36.4% of sales (vs 39.9% in 2021), and diesel 16.4% (vs 19.6%), though hybrid vehicles marginally increased their penetration (22.6% vs 19.8%). Among various powertrains, BEVs are growing the fastest – they grew by 31.6% in 2022 compared to 1.2% for PHEVs and 8.6% for hybrids. A point to be noted here is that a shift to hybrids & PHEVs as compared to pureplay BEVs, will be beneficial to your company as number of parts available for supply increases. The share of BEVs in the overall light vehicles market is projected to grow to 15% by 2025 and to 60% by 2030 though we recognize that making forecasts about an emerging technology rapidly penetrating the market, is fraught with risks.

In our European operations, a significant part of sales in the forgings vertical comes from manufacturing crankshafts for cars. Crankshafts are at risk due to the transition to EVs. We do not expect that there will be a large negative effect in the short term but in the midterm (from 2026 onwards), we expect crankshaft sales to decline progressively. Our mitigation plan is to start producing aluminum forged parts and steel suspension products for cars. Almost 40% of the new orders that the car forgings vertical acquired in CY22 were in the BEV space. Forged aluminum parts are expected to constitute a significant part of car forgings sale by 2027. Our other European vertical which makes gears for off road and farm vehicles (Metalcastello), will not be much affected by electrification. But here too, we have acquired significant business for BEV transmission parts. As stated earlier, we have decided to classify our German truck forgings vertical as held for sale and are therefore not discussing the impact of electrification on this business.


EVs will mean a greater emphasis on stamped, plastic and aluminum parts compared to forged, cast or machined parts. We are well placed to tackle this change as we have presence in multiple processes, especially in India. As the supplier ecosystem for EVs is at a nascent stage, EV OEMs are looking to partner with suppliers who have quality and pedigree. Therefore, the transition to EVs may be more of an opportunity rather than risk. We are also able to learn from the experiences of our principal promoter, CIE Automotive which is working closely with many global EV OEMs.


Our strategy is based on the global strategy of CIE Automotive which has a track record of success in four continents – Europe, N & S America and Asia. In accordance, your company consistently pursues the following principles that we believe sets us apart from the competition: make operations world class; diversify customer base, plant locations & technologies; invest in a disciplined manner; focus on continuous improvement in profitability and decentralize plant management. Our strategy can be summarized as follows - the better we become in our operations, the better we serve our customers and the better growth opportunities our customers present us with. Your company pursues a judicious mix of organic and inorganic growth. Mergers & acquisitions are targeted to fill strategic gaps in our products, customers, or skills portfolio.

The success of this strategy can be gauged by the giant strides we have made since CY16 which was the first full year of results. Our consolidated EBITDA margin has improved from 11.1% in CY16 to 15.4% in CY 22 while the Return on Net Assets (RONA) has increased to over 17%. Please note that CY22 financials do not include the German truck forgings business while the CY16 financials did. A part of the increase in EBITDA% in CY22 is attributed to classifying the German operations as held for sale. But even if we compare absolute EBITDA between the two years, the bottom line has grown manifold. Absolute EBITDA has improved from INR5500mn in CY16 to INR12682mn in CY22, a growth of +130%. We aim to further improve these metrics as our plants strive to match the global standards of CIE.

Looking ahead, the demand situation in the Indian automotive market continues to be optimistic. The Indian economy is expected to be a $5 trillion economy (from the current $3.3 trill.) by 2026-27. Car ownership in India is about 28 per thousand which is about 20 times lower than in Europe & US and much lower than even in China. The expansion of the economy will see improvement in this ratio. Two wheelers are more of a necessity and almost half of all households in India own one. There is enough scope to increase penetration especially in rural areas, which are the focus of most 2W OEMs. The pace of infrastructure building which accelerated as the government primed the economy during the covid pandemic, is expected to help both the tractors and truck segments. Your company is well prepared to capitalize on these prospects. We aim to balance order book requirements and investments in capacity such that both growth and profitability objectives are met. The European light vehicles production was in the range of 19-22mn units every year between 2010 & 2019. It has seen three successive years of large drops with production level plummeting to 15.2mn units in 2022. IHS expects the recovery to be gradual with demand five years ahead forecasted to be in the range of 17-17.5mn units. The stagnation in demand is accompanied by a rapid penetration of BEVs as outlined in the preceding section. Also, inflation in electricity prices and other costs, caused primarily by the war in Ukraine is expected to linger for the next few quarters. In Europe the company will aim to reengineer products and processes to meet the twin challenges of rising costs in a stagnating market as well as a rapid transition to BEVs.

Your company has finetuned its capital allocation strategy by putting up the German forgings operations for sale. The German vertical was lagging our other verticals in performance and this decision will lead to an improvement in the companys return ratios. The financial details of the above decision will be presented in a subsequent section.


As an organization, your Company is evolving with its HR practices and policies to improve on employee engagement and experience. We strive to provide a good working environment to our employees such they have ample opportunities to further their skills. A key focus is to maintain harmonious relations with employees at all plants in all geographies. The organization has put in place a Diversity, Equity and Inclusion conceptual model and has adopted appropriate targets in line with the practices of CIE Automotive globally. Our Employee Value Proposition (EVP) is centred on four pillars of Care

& Wellness, Advancement opportunities for Career Growth, Respect & Dignity and Structured Reward and Recognition.


A portion of our permanent labor workforce in certain locations is part of labor unions. We have signed collective bargaining and other agreements with labor unions at several plants where we have agreed to certain guaranteed bonuses, guaranteed wage increases, and wages linked to productivity.

In accordance with our EVP, we have rolled out career development programs for employees through Individual Development Action Plans (IDAPs). The focus is to upskill the workforce and create internal opportunities in terms of career progression for our employees. Coaching has been introduced in the organization; senior managers have been trained as coaches who in turn coach the employees on their IDAPs. We are continually focusing on building a strong young talent pipeline of engineers and have specially crafted yearly learning plans for young engineers hired as freshers from campuses. The process for succession planning has been strengthened across the organization with an eye that the identified successors of key managerial positions are equipped for the next role. To institutionalize the culture of recognition, we have introduced the Panchratna award scheme under which the ‘Gaurav awards for excellence and the ‘Samman awards for innovation are given.


As on 31st December 2022, there were 784 employees on the rolls of our Spanish & Lithuanian plants (comprising CIE Galfor S.A, CIE Legazpi S.A. and CIE LT Forge) and 221 at our Italian plant.


In the last few years, the key focus in India has been to bring all businesses including those that were acquired, under the same IT platform. Under the "One India One IT program, the entire Indian operations use common infrastructure and applications, including SAP. Business processes across divisions/plant locations are aligned and controls applied centrally, helping to bring better controls and save cost. Your Company has undertaken cyber security audit and the Vulnerability Assessment and Penetration Testing (VAPT) to identify areas vulnerable to cyber threat. A common IT policy has been adopted to safeguard vulnerabilities and the latest applications on cyber security and firewalls have been deployed.

Your Company has migrated to "Cloud Infrastructure" and is in the process of adopting "Hyperconverged Technology". The use of virtual data base through these applications ensures that data is protected at multiple virtual locations while having real time access.

Automation and digitization are a big focus area for your Company. Many activities have been digitized especially in processes like sales, purchases, production, inventory/stores, assets, payroll etc. We intend to digitize logistics, HR and and EHS (environment, health & safety) processes and related records fully, requiring no manual intervention. As part of the green initiative, your Company has started on the journey to go paperless in some offices.

Robotic Process Automation (RPA) has accelerated with more monotonous processes being automated and utilisation of BOTs is becoming more sophisticated. New processes like treasury, exchange rate updation has been added during the year as part of RPA. More areas are being explored for RPA.

As part of implementing industry 4.0 ideas on the shopfloor your Company as a first step has installed internet-of-things (IOT) applications at the gears division in India. The foundry division is also deploying a few of these tools. This is helping with efficiency measurement on real time basis.

The digitization and automation effort is a continuous process and a strong and dedicated team has been created for the purpose.


ESG has become an imperative aspect of business and investors are paying attention to this along with financial performance of the Company. Your Company understands that a wholistic approach to ESG is important to have harmonious relations with all stakeholders in our business – shareholders, employees, customers, suppliers, community, which is key to long term stability of our business model.

As a subsidiary of CIE Automotive, we follow the 5 years Strategic ESG plan to comply with 79 KPIs designed under 4 pillars namely, culture, ethical commitment, Eco efficiency and active listening; which are aligned with the UN- 17 Sustainable Development Goals. These KPIs are part of business process /Balanced Score Cards of all divisions which in turn are linked to performance appraisals.

Under continual improvement initiatives, the plants have been asked to identify sustainability projects under 9 categories (Energy intensity, green energy percentage use, waste intensity, transport efficiency, reduction in fuel efficiency etc) and these are monitored regularly. For example, your Company has been steadily increasing the usage of energy produced from green sources at its Indian plants every year. The green energy used at Indian plants was 132.56 million units in CY22 vs 63.09 million units the year before. Further details are provided in Annexure VI of the Directors Report.

Employees are our assets and training/ constant communication on ESG aspects to them is of prime importance, hence the team members are trained on the significance of ESG in their day-to-day activities. Our value chain partners are also given regular training on the requirements of ESG and enhancing their capabilities to ensure they are our extended partners in ensuring sustainable growth of their organisations too. The best suppliers selected based on our ESG compliance criteria are rewarded at the Vendor meet event annually. We will continue to enhance our value chain partners ESG performance by identifying areas of opportunities through regular assessments/visits. As part of our digitisation drive, the Company is enhancing and upgrading its sustainability portal to ensure that, real time sustainability data under BRSR is captured and trends are plotted for necessary corrective actions.


The financial performance of the entity for the year ended 31st December, 2022 and 31st December, 2021 is presented below:

The Companys abridged P&L Statement for the Financial Year 2022

( Rs in Millions)

Sr. No. Particulars Standalone Consolidated
Year Ended Year Ended
December ‘22 December ‘21 December ‘22 December ‘21
Audited Audited Audited Audited
1 Income from operation Revenue from operation 43,978 32,906 87,530 67,651
Other Income 1,206 176 583 468
Total Income 45,184 33,082 88,113 68,119
2 Expenses
(a) Cost of material consumed 24,711 17,412 48,607 35,194
(b) Change of inventories of finished goods and work-in progress (258) (780) (847) (1,847)
(c) Employee benefit expenses 3,966 4,435 9,022 9,263
(d) Finance costs 135 123 227 348
(e) Depreciation and amortization expenses 1,332 1,193 2,962 2,733
(f) Other Expenses 9,344 7,553 19,028 15,625
Total expenses 39,229 29,935 79,000 61,315
5,955 3,147 9,113 6,804
3 Profit/(loss) from operation share of profits of associates, exceptional items and taxes (1 - 2)
4 Share of Profit/ (loss) of associates - - 22 12
5 Profit/(Loss) from ordinary activities before 5,955 3,147 9,135 6,816
exceptional items (3-4)
6 Exceptional items 379 (128) 379 (128)
7 Profit/(Loss) from ordinary activities before tax (5+/-6) 6,334 3,019 9,514 6,688
8 Current Tax 1,291 668 2,190 1,434
Deferred Tax (Credit) / Charge (78) 1,247 211 1,295
9 Net Profit/(Loss) for the period from continuing operations 5,121 1,103 7,113 3,958
10 Discontinued operations Profit/ (loss) before exceptional items from discontinued operations - - 831 (39)
Loss on fair valuation of assets and liabilities from discontinued operations - - (9,234) -
Profit/ (loss) before tax from discontinued operations - - (8,403) (39)
Current tax - - 92 3
Deferred tax - - (20) 6
Tax expense on discontinued operations - - 72 9
11 Profit/ (loss) from discontinued operations - - (8,475) (29)
12 Net Profit/(Loss) after taxes, (9+11) 5,121 1,103 (1,362) 3,929
13 Paid - Up equity share capital (Face value of Rs. 10 per equity share) 3,793 3,791 3,793 3,791
14 Earnings per share (after extraordinary items) (of Rs. 10/- each)
15 (a) Basic 13.50 2.91 (3.59) 10.36
16 (b) Diluted 13.50 2.91 (3.59) 10.36

Information for our Indian and Overseas operations are summarized in the table below: Segment wise results for 2022

( Rs in Millions)

Year ended
Particulars 31st December, 2022 31st December, 2021
Audited Audited
Segment Revenue
a) India 56,326 43,945
b) Europe 51,343 40,590
Total 107,669 84,535
1Less: Inter Segment Revenue (448) (668)
Net Sales / Income from Operations 107,221 83,867
Less:- from discontinued operations (19,690) (16,215)
Net Sales / Income from Continuing Operations 87,530 65,652
Segment Profit/(Loss) before tax and interest from
a) India 6,349 3,917
b) Europe 4,450 3,265
2 Total 10,799 7,182
Less:- from discontinued operations (1,058) (146)
Profit/ (loss) before tax and interest from Continuing Operations 9,741 7,036
(i) Un-allocable expenditure 227 347
(ii) Un-allocable income 12
Total Profit Before Tax 9,514 6,690
Capital Employed
(Segment Assets- Segment Liabilities)
3 a) India 59,478 54,786
b) Europe 39,805 44,718
Total 99,283 99,504
4 a) India 21,895 20,933
b) Europe 26,402 26,606
Total 48,297 47,539

Market and operational issues impacting the financial performance have been dealt with in detail in the preceding paras. The key financial ratios are given below explaining the significant variations.

Standalone Consolidation
Ratio CY-22 CY-21* CY-22 CY-21*
(i) Debtors Turnover (Days) 49 52 37 31
(ii) Inventory Turnover (Days) 49 56 58 67
(iii) Interest Coverage Ratio (times) 48 26 41 14
(iv) Current Ratio (times) 1.7 1.5 1.0 0.9
(v) Debt Equity Ratio (times) 0.03 0.05 0.18 0.25
(vi)_Operating Profit Margin (%) 19.2% 14.2% 15.4% 13.4%
(vii) Net Profit Margin (%) 12.6% 3.6% 8.6% 4.9%
(viii) Return on net worth (%) 11.5% 2.7% -2.7% 7.6%

* includes discontinued operations

Significant Changes Standalone:

With significant increase in turnover, working capital ratios have improved. Operational improvement, dividend from subsidiary and one time exceptional income from land sale has improved profit and return ratios. In 2021 exceptional tax expenses also impacted return ratios.


Debtors days increased due to significant growth in India. Inventory turns improved with growth in sales without similar increase in inventory levels. Coverage and return ratios have improved significantly due to good growth in profits, except RONW which was impacted due to one time loss on fair valuation of German assets as they were moved to ‘held for sale operations. RONW without one time impact of fair valuation is 15.3%.


The business has a specific set of risk characteristics whicharemanagedthroughaninternalrisk management practice. The first line of defence in the risk practice are the operational management who are tasked with identifying risks and reporting breaches that can put the company to risk. The second line are processes and policies that are assessed periodically by the board and its audit & risk management committees. Key processes and policies include internal controls, data security & privacy, statutory compliances and ethical framework (code of conduct & whistleblower policies). Internal audit is the third line of defence that continuously reviews the efficacy of the first two lines. The senior management periodically reviews the risk management process and the actual management of risks identified. They report their findings every quarter to the risk management and audit committees of the board. The risk management committee reviews identification, assessment, management and monitoring of risks. The audit committee closely looks at the processes associated with risk management. Both these committees report to the board which provides directions to strengthen the overall risk management practice.

The process to identify risks is also defined. Senior executives participate in the annual risk assessment survey carried out by CIE Automotive to identify key risks associated with the business in each of the key geographies that CIE operates in. This is supplemented by periodic internal assessment to identify risks under different categories – strategic & reputational, commercial, technological, operational, financial, people related, regulatory/compliance and ESG (Environmental, Social & Governance) etc. Risks under these categories are classified as short term and long term and monitored periodically.

Risks are prioritized based on the following criteria:

Probability of occurrence based on past experience and analysis of the future

Impact along three dimensions - economic, organisational and/or reputational

From the standpoint of residual risk: considering the controls already in place in order to mitigate the potential impact of their materialisation The top five risks identified by CIE Automotive globally for 2023 are as follows:

Market trend change: Your Company is highly dependent on the performance of the automotive industry in India and Europe. Any adverse changes in the conditions affecting these markets may negatively affect business, results of operations, financial condition and prospects.

Geopolitical situation: The war situation in Ukraine and the global inflation that has ensued has led to an increase in raw material, energy and other input costs adversely affecting corporate profitability. A global semi-conductor shortage caused supply disruption at some of our OEM customers for the better part of the last two years and the problems are not completely behind us yet. Due to the disruption in supply chains in the last couple of years , OEMs are increasingly adopting a multilocal vs global approach i.e. a European OEM prefers to source from Companies in its vicinity – from European companies or from companies in Turkey, Russia or North Africa vs companies in India or China. This approach could reduce the expected growth in export revenues.

Cybersecurity & data privacy: As digitization & automation increase in the business, there is a growing concern around data being breached by inimical third parties.

Green supply chain: ESG has become an imperative aspect of business and investors are paying attention to this along with financial performance of the company. We will continue to enhance our value chain partners ESG performance by identifying areas of opportunities through regular assessments/visits.

Human capital for Companys growth: As the automotive industry goes through the throes of change, volatility & uncertainty; the challenges thrown up can only be met by a team that is both skilledandmotivated.Themanagementschallenge is to upskill their team and fill any skill gaps and ensure that they are primed to face the vicissitudes in the business environment. Succession planning and talent management are key initiatives that are being implemented.

Along with the above, your company has identified the following other risks that can affect its growth & profitability:

The loss of certain principal customers or a significant reduction in purchase orders from certain customers could adversely affect business, results of operations, financial condition and prospects.

The dependence on a few key customers in some business verticals is high and leaves these verticals reliant on the performance of these OEMs – the stampings business in India and Gears business in Italy are particularly vulnerable. Overall, both the Indian and European operations of the company are now well diversified and customer concentration risk is pertinent to a few verticals as stated above.

Potential inability to pass-through to its customers increase in costs like labor, energy, etc. could reduce future profitability.

As part of its growth strategy, your Company aims to develop many new parts for both existing and new customers. Managing the new product development process in an efficient manner is a key challenge.

Your Company will need to be ready for changes in its product portfolio to counter the impact of transition in automotive technology to hybrids and electrical engines. Electrification will mean a greater emphasis on stamped, plastic and aluminum parts compared to forged, cast or machined parts. As the supplier ecosystem for EVs is at a nascent stage, EV OEMs are looking to partner with suppliers who have quality and pedigree. Therefore, the transition to EVs may be more of an opportunity rather than risk.

Digitisation & Automation is a key focus area to improve operations. Not being able to implement these programs in a time bound manner can affect operations.

Implementation of the new labour code in India

– may require changes in systems as with any increase in minimum wages for workmen, there will be increase in costs.

There is also a strategic risk that your Company has to contend with in CY23. As reported earlier, German truck forgings vertical is held for sale. The inability to find a buyer and complete the deal can be a major risk.


In the opinion of the Management, your Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded and reported correctly. The internal control systems comprise extensive internal and statutory audits. The Corporate Governance practices instituted by the Company are discussed in detail in the chapter on Corporate Governance of this Annual Report. Report on statutory compliances has also been provided.


Your Company has made giant strides since CY16 which was the first full year of our operations. All key metrics - topline, bottomline, profitability and cash flows – have grown manifold. We remain committed to generating better returns for our shareholders. The prospects of the automotive industry, especially in India are optimistic. Your Company is in an excellent position to take advantage of the coming opportunities while being ready to face up to the challenges thrown up by the volatile, uncertain, complex & ambiguous (VUCA) business environment we operate in.


Certain statements in the Management Discussion

& Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those express or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.