Setco Automotive Ltd., the largest manufacturer of clutches for medium and heavy commercial vehicles (M&HCV) in India, has reported bumper performance in H1FY19, scaling new heights on the back of strong production and market demand. EBITDA has jumped ~3x and operating PBT up 326% as compared to H1FY18 on the back of improved operating efficiencies despite the expiry of the Uttarakhand exemptions benefit.
PBT and PAT stood at Rs. 27.13 crores and Rs. 16.98 crores respectively compared to Rs. 2.17 crores and Rs. 1.87 crores in the corresponding period last year.
Setco’s OEM business grew by ~65% compared to MHCV industry production growth of 57%. Post GST, a significant shift to the organized sector is accelerating with each passing quarter, and has delivered 48% growth in the company’s Aftermarket Segment compared to the corresponding quarter. The growth improvement in international subsidiaries is noticed in the last four quarters. This is expected to continue in the foreseeable future with sustained improvement in EBITDA margins.
Lava Cast, the state-of-the-art casting business of Setco, saw a continuous ramp-up in capacity utilization with ~60% utilization in Q2FY19 vs ~47% in Q1FY19. It is expected to hit capacity utilization of around 85% in H2FY19. It has already commenced supplies to external customers such as Tata Motors, Ashok Leyland and others. It has also received approval from Daimler for supply of castings.
Mr. Harish Sheth, Chairman & Managing Director, Setco Automotive, said: “Strong economic fundamentals continue to drive the growth of the M&HCV segment. This growth trend is seen for the last 5 quarters in a row and the growth cycle is expected to continue for the next 3-4 years, driven by Government thrust on the rural sector and investment in infrastructure. All planned initiatives are on target to build on this strong start and deliver a superior top-line and bottom-line performance by strong cost management and better efficiencies.”