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India focuses on profitable growth; EU focuses on profitability/EV transition Mahindra CIE (MACA) in its CY22 annual report highlighted a) its focus on profitable growth in India, b) re-engineering in EU for driving profitability and EV transition, c) limiting its focus on PVs in EU by divesting the CV forging business, and d) its strategy for the EV transition in India and EU. Its recent investments in capacity addition in India would support growth over the next two years. We present below the key insights from MACA’s annual report

India outlook: Focus on balancing growth and profitability

* MACA expects to sustain the growth momentum in India for the next few quarters and its order book in India is reflecting this growth momentum, necessitating capacity expansion in almost all of its verticals.

* It is focusing on balancing the order book and investments in capacity such that both growth and profitability objectives are met.

* Developing parts with greater value addition is an important part of operational strategy – e.g., to improve value addition, its stampings business has developed welded and assembled parts and installed robotic welding processes.

EU outlook: Focus on reengineering for profitability and EV transition

* Production of light vehicles in Europe fell for the third straight year in CY22 due to the semiconductor shortage and the Russia-Ukraine conflict. Battery electric vehicles (EVs) remained buoyant, and their market penetration crossed 10%.

* The company aims to re-engineer products and processes to offset rising costs in a stagnating market and to support a rapid transition to EVs.

* MACA’s EU operations focus on improving productivity, pruning other costs and, in some cases, passing on high energy prices to customers.

* It also focuses on generating more EV-related orders and developing aluminum forgings for EVs.

* Its decision to divest the CV forging business in Germany was a result of the transition of the PV business to EVs.

EV transition – MACA’s approach

* EVs will have a greater emphasis on stamped, plastic and aluminum parts, compared to forged, cast or machined parts. With presence in multiple processes, especially in India, MACA is well placed for the EV transition.

* As the supplier ecosystem for EVs is at a nascent stage, EV OEMs are looking to partner with suppliers that have quality and pedigree. Therefore, the transition to EVs may be more of an opportunity than a risk for MACA. It will also be able to learn from the experiences of its parent, which is working closely with many global EV OEMs.

* MACA has a good order book for EV parts and is working with major European and Indian OEMs across segments. Its EV order book covers aluminum and steel forgings, gears, stampings and composites parts for e2W, e3W and e4W.

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