Published On:May 27 2024
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Rane Group Announces ₹1,000 Crore Capex Plan Over Three Years Amid Rising Order Book

Rane Group is set to expand its business with a proposed three-year capital expenditure of ₹1,000 crore, driven by a surge in new orders and a positive growth outlook.

The Chennai-based auto parts leader closed FY24 with its highest-ever aggregate revenue of ₹7,200 crore ($870 million), an 8% increase over the previous year. The group secured over ₹1,000 crore in new orders in FY24, including ₹400 crore in the March 2024 quarter alone, with ₹250 crore coming from its joint venture Rane NSK.

In FY24, Rane Group rebalanced its product portfolio by divesting its US telematics business, RaneT4U, and its castings business. "We remain reasonably positive on the prospects given our order book position. We plan to invest about ₹1,000 crore over the next three years in capex. We continue to prioritize operational improvements and cost savings," said Harish Lakshman, Chairman of Rane Group, during the Q4 FY24 earnings call.

Of the proposed capex, about 45% will be allocated to the merged entity, Rane Madras Ltd (Rane Brake Lining Ltd and Rane Engine Valve Ltd are merging with Rane Madras), while the remaining 55% will be invested by joint venture companies.

Lakshman emphasized the group's focus on capitalizing on growth opportunities, consolidating the business, and reducing debt over the next few years. He also highlighted the China Plus One strategy as a significant opportunity for Rane Group amid the US's additional duties on Chinese steel and aluminium.

“Our RFQ (request for quote) pipeline has increased over the last 18 months. Compared to previous years, the pipeline is growing across product lines, including Rane Madras, Rane Engine Valves, and Rane Brake Lining. Due to China Plus One, we see clear benefits and have won new businesses where customers moved away from Chinese sources,” Lakshman added.

He noted that the financial burden on Rane NSK Steering Systems Pvt Ltd due to warranty provisions is nearing an end, with only about ₹28 crore remaining from the initial ₹500 crore provision. Regarding the other JV, ZF Rane Automotive India Pvt Ltd, Lakshman mentioned that the company’s occupant safety business is benefiting from evolving safety regulations in India, achieving double-digit revenue growth in FY24. The vertical integration of inflator and webbing plants, which are fully prepared and nearing production, will further enhance the company's competitiveness in the Indian market.

HBL





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