Rane Group, a leading auto parts manufacturer, has announced a significant capital expenditure plan of ₹1000 crore over the next three years. This move is driven by a surge in new business orders and a positive growth outlook.
The Chennai-based company concluded FY24 with its highest-ever aggregate revenue of ₹7200 crore (approximately $870 million), marking an 8% increase over the previous fiscal year. The group secured over ₹1000 crore in new orders during FY24, including ₹400 crore in the March 2024 quarter alone. Notably, ₹250 crore of these orders came from the joint venture firm Rane NSK.
“We remain reasonably positive on the prospect given our order book position. We plan to invest about ₹1000 crore over the next three years in terms of capex. We continue to prioritize operational improvements and cost savings,” said Harish Lakshman, Chairman of Rane Group, during the company’s Q4 FY24 earnings call.
Of the proposed capex, approximately 45% will be allocated to the merged entity, Rane Madras Ltd. Rane Brake Lining Ltd and Rane Engine Valve Ltd are currently in the process of merging with Rane Madras. The remaining 55% of the capex will be invested by the group’s joint venture companies.
Lakshman emphasized that the group will focus on capitalizing on growth opportunities, consolidating its business, and reducing debt over the next few years.
Addressing the impact of the US’s recent imposition of additional duties on Chinese steel and aluminium, Lakshman pointed out the China Plus One strategy as a significant opportunity for Rane Group. “Our RFQ (request for quote) pipeline has gone up in the last 18 months. Compared to previous years across product lines, the pipeline is increasing not only for Rane Madras but also for Rane Engine Valves and Rane Brake Lining. We clearly see benefits from the China Plus One strategy, with customers moving away from Chinese sources,” he added.
Lakshman also noted that the financial burden faced by Rane NSK Steering Systems Pvt Ltd due to warranty provisions over the past 4-5 years is nearing an end, with only about ₹28 crore of the ₹500 crore provision remaining. The company has already disbursed ₹472 crore.
Regarding the other joint venture, ZF Rane Automotive India Pvt Ltd, Lakshman highlighted that the company’s occupant safety business is benefiting from evolving safety regulations in India, achieving double-digit revenue growth in FY24. He mentioned that the vertical integration of inflator and webbing plants, which are fully prepared and nearing production, will enhance the company’s competitiveness in the Indian market.
Rane Group’s strategic investment and focus on operational excellence position it well to leverage the burgeoning opportunities in the auto parts industry, further solidifying its market presence and driving sustained growth.
