Chennai-based auto component house Rane Group has reported a double-digit decline in total revenue and a net loss for 2019-20 after sustaining a positive growth curve in the previous five years.
The drop in topline for the fiscal ended March 31, 2020 comes on the back of specific challenges faced by the group companies when the auto component industry is estimated to have declined by about 12 per cent on account of sluggish demand.
Rane Group’s aggregate total net revenue stood at ₹4,436.85 crore, a decline of 17.4 per cent, causing an EBITDA drop of 40 per cent. The group reported a loss of ₹28 crore as against a profit of ₹179 crore in 2018-19. In the past six years, the highest PAT of ₹230 crore was generated during FY18.
“The Indian automobile industry faced major headwinds caused by global factors and rapid policy changes which made the transition very difficult. An example was the limited time given for transitioning to BS-VI. During FY20, the demand environment remained severely impacted by the slowdown in the economy,” L Ganesh, Chairman of the Rane Group, said in the annual report of Rane Holdings, a holding company.
The performance of Rane (Madras) Ltd’s US subsidiary, Rane Light Metal Castings America, continued to face challenges, despite several measures taken to revive the business and operations.
“RML board will review the performance of the business closely in the next 12 months and take an appropriate decision, keeping in view the long-term interest of shareholders,” he said.
Rane Engine Valve’splan has been severely affected due to market slowdown and the Covid-19 pandemic. However, its order book remains healthy and the company is examining options to expedite the operational improvements.
Rane NSK Steering Systems Pvt Ltd Ltd had an exceptional expense towards estimated warranty provision of about ₹105 crore. This was due to a product performance issue from the previous year. Counter-measures have been implemented and the management does not expect any major future provisions on the warranty issue.
Rane TRW Steering Systems Private Ltd had a significant drop in commercial vehicle volumes. However, the Occupant Safety business had a satisfactory year due to exports.
Ganesh said Covid-19 disruptions will have a significant impact on the performance of the group in FY21 and various measures are being implemented for improving productivity and optimising cost. Meanwhile, the management and staff took salary reductions in the range of 10-35 per cent.