ZFCVINDIANSEAugust 18, 2022

ZF Commercial Vehicle Control Systems India Limited

8,310words
106turns
4analyst exchanges
4executives
Management on call
P Kaniappan
MANAGING DIRECTOR, ZF COMMERCIAL VEHICLE CONTROL SYSTEMS INDIA LIMITED
R. S. Rajagopal Sastry
CHIEF FINANCIAL OFFICER, ZF COMMERCIAL VEHICLE CONTROL SYSTEMS INDIA LIMITED
M Muthulakshmi
COMPANY SECRETARY, ZF COMMERCIAL VEHICLE CONTROL SYSTEMS INDIA LIMITED
Annamalai Jayaraj
BATLIVALA & KARANI
Key numbers — 18 extracted
7.2%
GDP estimates for the coming year are undergoing multiple revisions and the latest estimate is at 7.2%. This still is the best among all the major developing and developed economies of the world. As th
128%
Next slide. Going to Slide Number 3. So, here in Q1 you can see the vehicle production growth of 128%. That’s because it’s against a very low base because last year, in the same quarter, India was sev
68%
ns like the telematics, trailer segment and pricing recovery positively impacted sales to OEM. The 68% growth in the aftermarket is through various steps like expanding the network, introduction of ne
rs,
were in the pipeline, like, the levers for the air disc brake, the brake chambers to more customers, air supply units to also customers like BMW and a few other projects. We have more information on t
8.5%
the profitability is improving. We closed the first quarter of this financial year with a PAT of 8.5% and EBITDA of 15.0%, which are improvements QOQ and also sequentially. The change in profit and
15.0%
is improving. We closed the first quarter of this financial year with a PAT of 8.5% and EBITDA of 15.0%, which are improvements QOQ and also sequentially. The change in profit and profitability came f
50%
but then, there is a requirement that this needs to be localized, minimum we need to offer about 50% localization to get the benefit from the same tool. Mukesh Saraf: Right. P Kaniappan: Mukes
250 crore
estions. One is on the export. In the last four to six quarters, our exports have been around that 250 crores marks. In your opening comments, you mentioned about certain projects which are about to start o
100%
Mukesh Saraf: P Kaniappan: Okay. And the financial -- is like few OEMs, they took a stand that 100% they will go with it. Now others are really seeing the benefit and trying to go for concept and p
25%
th some of the customers are very positive. Shashank Kanodia: Sir, we could see something like 25% to 30% volume this year for the industry in the MHCV space? P Kaniappan: It is, again, we trac
30%
of the customers are very positive. Shashank Kanodia: Sir, we could see something like 25% to 30% volume this year for the industry in the MHCV space? P Kaniappan: It is, again, we track the c
120 crore
equest CFO to answer this question. Mr. Rajagopal Sastry: This year we could be in the range of 120 crores and by next year we’ll also have the new plant so, for that it will be an additional 70-80 crores
Guidance — 20 items
P Kaniappan
opening
“As a reminder, all participant lines will be in the listen only mode.”
P Kaniappan
opening
“There will be an opportunity for you to ask questions after the presentation concludes.”
P Kaniappan
opening
“The first quarter earnings results for this year will be presented by the management team of ZF Commercial Vehicle Control Systems India Ltd.”
P Kaniappan
opening
“So, I will be actually going through the presentation which we have also loaded on the website, www.ZF.com/CV and informed to the stock exchanges website.”
P Kaniappan
opening
“Internal ZF Commercial Vehicle Control Systems India Limited August 04, 2022 Accordingly, in the following slides, I would like to share with you some of the technologies which we will be introducing in India.”
P Kaniappan
opening
“That will be my focus so, I’m starting with autonomous driving.”
P Kaniappan
opening
“The first phase is going to be in April 2023 for the M3 buses which we believe will be followed to other vehicles like trucks.”
Mukesh Saraf
qa
“But then, after the decision that it will be handled through the former WABCO so, accordingly it will be – it is going to be promoted through the listed entity.”
Mukesh Saraf
qa
“I mean, yes, I did get a sense that all of these will be listed entities, but you are saying that ADAS products were largely the ones that probably WABCO didn’t have and ZF was probably more of the contributor to that.”
P Kaniappan
qa
“And we are going one step further wherever it’s possible to localize our approaches to cover maximum localization not only to meet the requirement of the government but yes, to meet the cost target.”
Risks & concerns — 1 flagged
The strong difficult periods faced so far by the economy and the country at large did impact the profitability of the company, even though the various measures and controls did help in mitigating the impact.
— P Kaniappan
Q&A — 4 exchanges
Q
The first question is from the line of Mukesh Saraf from Spark Capital, please go ahead. Good afternoon and thank you for the opportunity. Thank you for a lot of these details that you have provided on the new products. So, my first question is, could you broadly give a sense of which of these new products are actually coming from ZF Global table and which of them, probably WABCO as a company already had? And if you could give a sense of how ZF is helping the Indian entity getting the products? Yes, thank you Mr. Mukesh. Yes, all these products that I presented, are part of the listed entities
P Kaniappan
Yes. That is correct. Okay. ZF has a size and scale, many of these electronic products are in-house manufactured and they are actually pioneering those technologies. Now it’s combined and designed part of the braking system. Right, right. And secondly, any of these products that you can highlight where the localization levels are already at high levels or should we assume that right now the import, I mean, they are largely being imported in some front? Yes, mainly the braking products, whether it’s hill start aid or the traction control. Those things are already localized, and these are being
Q
Yes, thank you for the opportunity. So, two questions. One is on the export. In the last four to six quarters, our exports have been around that 250 crores marks. In your opening comments, you mentioned about certain projects which are about to start off and hence should we expect – and also you mentioned even supply chain issues. So, should we expect the export to move up or is it still awaiting the project expansion which you were conducting?
P Kaniappan
I’m not sure whether I got the question fully. Sir, if I may just repeat it, the export revenues in the last four to six quarters have been around the 250-crore mark. You were expanding and you were setting up a new facility for the same to expand further, but in your opening comments you also mentioned there are certain new projects which you are working on and which had already started. So, do you expect to pick up in the exports business more from a 12 to 18 months perspective? Yes, thank you. So, there are two aspects. As such we have been continuously working on new project pipeline and t
Q
Yes, good afternoon sir. Sir, ADAS is a technology new to India, right? So, we have just a plentiful of passenger vehicle models that produced that technology. So, just wanted to get a sense how has been the OEM response to your offering of ADAS solutions? And how do you see the penetration levels going forward?
P Kaniappan
Can you say it again? I couldn’t get the question. Yes. Sir, I’m saying that ADAS as a technology is new to India, right? so, we have just a plentiful of passenger vehicle models who are putting this technology. You being in this solution for the commercial vehicle space, how has been the OEM response and how do you see its potential and penetration going forward? Yes, thank you. So, we have been working with some of the Indian OEMs, at least four-five years we have been working on it. And so, little good level of maturity right now and going forward we will be expect some of them to launch th
Q
Thank you. Thank you very much. I don’t have anything more to say. Thank you very much. Thank you for joining.
P Kaniappan
Thank you all. Thank you Jayaraj sir. Thank you for hosting. Thanks sir. Thank you.
Speaking time
P Kaniappan
50
Mukesh Saraf
21
Shashank Kanodia
9
Gokul Maheshwari
6
Operator
5
Mr. Rajagopal Sastry
5
Chintan Sheth
3
Nishant
3
MODERATOR
1
Sanjay Joshi
1
Opening remarks
P Kaniappan
Ladies and gentlemen, good day and welcome to the ZF Commercial Vehicle Control Systems India Ltd. Q1 FY’23 earnings conference call hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance in the conference call, please signal an operator by pressing "*" then "0" on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Pvt. Ltd. Thank you and over to you sir. Thank you. Good afternoon. Thank you for joining us today and welcome to ZF Commercial Vehicle Control Systems India Limited quarterly earnings call. The first quarter earnings results for this year will be presented by the management team of ZF Commercial Vehicle Control Systems India Ltd. Your host today from ZF Commercial Vehicle
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