MANAGEMENT DISCUSSION & ANALYSIS REPORT Indian Two wheeler industry is the largest in the world as far as the volume of production and sales are concerned. The volume growth recorded in the 2014-15 fiscal year stood at a commendable 14.8 percent on a year-on-year basis. The 'Make in India' campaign of the Government of India is also going to attract more foreign investment into Indian Two-Wheeler Industry creating further growth opportunities in the coming years. Hero MotoCorp Limited, our major customer, continues to remain the market leader in 2014-15, with a stronghold in the motorcycles segment where it enjoys a market share of over 50%. INDUSTRY STRUCTURE AND DEVELOPMENT Two wheeler vehicles, due to their low cost and easy operatability, especially in congested traffic, have traditionally been a very popular mode of transport in China, India and many other regions in the world. The Indian two-wheelers industry is estimated to be worth around Rs. 755 billion in 2014-15, with total sales volumes of 18 million units. As of 2014-15, the motorcycles segment accounted for about 67 per cent of overall two-wheeler sales. Domestic two-wheeler sales are expected to be driven by scooter sales while motorcycle sales growth is expected to moderate due to subdued rural growth. The under - penetrated rural market will be the key growth driver for the two wheeler industry due to low penetration as compared to urban market. Scooter sales are likely to grow at a higher rate than motorcycles over the next 5 years, due to changing consumer brferences and a low base effect. Domestic motorcycle sales are expected to moderate on account of lower growth from rural areas as farm incomes are expected to grow at a slower pace. Scooter sales will drive the two wheeler domestic sales growth due to changing consumer brferences, new launches and expansion in dealership network. OPPORTUNITIES, CHALLENGES, RISK & CONCERN The two-wheeler market has emerged as the most vibrant and transforming segment of the overall Indian automobile industry, witnessing an unbrcedented growth. Rising rural demand and fuel efficiency are among the major factors boosting the growth in the market. Despite the economic slowdown, the Indian automobile industry has been performing consistently well, compared to other major markets of the world. ICRA said the motorcycle volumes faltered after a positive first half of 2014—15 and OEMs lined up new models to woo customers. OUTLOOK Two wheeler industries is expected to report a volume of 7-8% in 2015-16 as we believe the various structural positives associated with the domestic industry including favourable demographic profile, moderate penetration levels, growing urbanization, strong replacement demand and moderate share of financed purchases remain intact; as also the large opportunity is available to grow brsence in the overseas markets. Though, further growth in Indian Two-Wheeler Industry will depend heavily on people's personal disposable incomes that rely on India's economic growth in days to come. Taking into account the challenges that the industry has been facing since the past few years and the way it has responded to most of the threats that it faced, the future of auto industry remains promising. CAUTIONARY STATEMENT Certain Statements in the Management Discussion and Analysis describing the company's objectives, projections, estimates and expectations or brdictions may be 'forward looking statements' within the meaning of applicable laws and regulations. It cannot be guaranteed that these assumptions and expectations are accurate or will be realized. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statues and incidental factors. For and on behalf of the Board For and on behalf of the Board Sd/-Neeraj Munjal Managing Director DIN: 00037792 Sd/-Dr. Anil Kumar Gupta Whole Time Director DIN: 02643623 Place: New Delhi Date: August 4, 2015 |