ABOUT THE COMPANY :
ASK Automotive Limited is a Public Listed Indian auto ancillary major, having pioneered in providing Advanced Braking (AB) Systems and Solutions for the country’s automobile market. Founded in 1988 by the first-generation entrepreneur and visionary Mr. Kuldip Singh Rathee, ASK Automotive is today India’s Largest Manufacturer of 2W Advanced Braking Systems, commanding an ~ 50% share of the Indian two-wheeler market for Advanced Braking Systems including, brake shoes, disc brake pads and brake panel assemblies.
The Company is also among the leading manufacturers of Aluminium Lightweighting Precision Solutions (die-casting to critical machining, paint shop, and critical assemblies) for automotive and non-automotive applications and has successfully achieved a unique positioning across Automobile OEMs with powertrain agnostics products focussing on EV domain.
Having established a stronghold in the two-wheeler segment, The Company With over three decades of rich industry experience, ASK Automotive has made strong investments to grow with the new and changing Auto Industry ecosystem. The Company boasts 18 strategically located state-of-the-art manufacturing facilities in close proximity to the OEMs enabling just-in-time delivery schedules, better economies of scale for customers, and logistical advantages. The manufacturing facilities are accredited on quality and safety with world-class certifications like IATF 16949:2016, ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, and OHSAS 18001:2007.
Here’s an overview of the Management Discussion and Analysis (MD&A) section from ASK Automotive’s Annual Report 2023-24, highlighting key themes and topics.
Management
Discussion and Analysis (MD&A) Overview
1.
Industry Structure and Development
Global
Economy
- The global economy grew at 3.3% in 2023, despite geopolitical headwinds, supply chain disruptions, and inflationary pressures.
- Growth is expected to continue at 3.2% in 2024 and 3.3% in 2025, with central banks likely to ease monetary policies.
Indian
Economy
- India became the fifth-largest economy with a GDP
of $3.7 trillion (~₹307 lakh crores).
- Projected GDP growth for FY 2024-25 is 7.0%,
with inflation expected at 4.5%.
- Government spending on infrastructure and Make in
India initiatives is expected to drive economic expansion.
Global
Automotive Industry
- Passenger vehicle sales grew by 10% globally in 2023, reaching 75 million units.
- Electric vehicle (EV) sales surged by 30%, with EVs capturing 15% market share.
- China remains the largest automobile market, selling 30.09 million vehicles in 2023,
including 4.91 million exports.
- European car sales increased by 18.6%, while North America grew by 15%.
- Indian passenger vehicle sales reached a record 4.9
million units in FY24,
growing 7.4% YoY.
- The automobile sector contributes 6% to India's GDP,
with India being:
- Largest producer of three-wheelers (3W)
- Second-largest producer of two-wheelers (2W)
- Third-largest producer of passenger vehicles (PV)
- Segment-wise growth in FY24:
- Two-Wheelers:
21.43 million units (+9.8% YoY)
- Three-Wheelers:
0.99 million units (+16.1% YoY)
- Passenger Vehicles:
4.89 million units (+7.4% YoY)
- Commercial Vehicles:
1.03 million units (-0.71% YoY)
Aluminium-Based
Components Market
- Growing demand for lightweighting and thermal
management is driving higher aluminium
adoption in vehicles.
- Aluminium content in EVs is 30-50% higher than internal combustion engine (ICE) vehicles.
- ASK Automotive is leveraging Aluminium
Lightweighting Precision Solutions (ALPS) to capture opportunities in
both domestic and international markets.
2.
Opportunities and Threats
Opportunities
- Expansion in the EV sector.
- Growing exports to the EU and North America.
- Diversification into passenger vehicle and
commercial vehicle segments.
- Expansion of independent aftermarket channels.
- Investment in new product development and innovation.
Threats
- High competition
leading to margin pressures.
- Economic uncertainty
due to global geopolitical conflicts.
3.
Outlook & Growth Strategy
- ASK Automotive is a market leader in Advanced
Braking Systems (ABS) for 2Ws, holding a 50% market share in
India.
- Focus on R&D and in-house engineering
capabilities for new product development.
- Expansion in Aluminium Lightweighting Precision
Solutions (ALPS) to cater to growing EV adoption.
- Strengthening the Safety Control Cables segment,
which has grown over 30% in both OEM and aftermarket
channels.
- Expansion in overseas markets, with a focus on
the US and Europe.
- Establishment of new manufacturing facilities in
Karnataka (18th plant) and Rajasthan (Karoli Mega Plant).
4.
Financial Performance (Consolidated)
Key
Highlights (in Rs. Crores)
Metric |
FY 2023-24 |
FY 2022-23 |
YoY Growth |
Total Income |
₹3,005 |
₹2,566 |
+17% |
Revenue from Operations |
₹2,995 |
₹2,555 |
+17% |
EBITDA |
₹311 |
₹248 |
+26% |
EBITDA Margin |
10.4% |
9.6% |
+80 bps |
Profit After Tax (PAT) |
₹174 |
₹123 |
+41% |
PAT Margin |
5.8% |
4.8% |
+100 bps |
Earnings Per Share (EPS) |
₹8.8 |
₹6.2 |
+42% |
Debt-to-Equity Ratio |
0.42x |
0.49x |
-14% |
5.
Segment-Wise Performance (FY24 Revenue in Rs. Crores)
Segment |
Revenue |
YoY Growth |
Advanced Braking Systems (ABS) |
₹1,137 |
+7% |
Aluminium Lightweighting (ALPS) |
₹1,279 |
+29% |
Safety Control Cables (SCC) |
₹121 |
+36% |
EV Segment |
₹120 |
+133% |
Exports |
₹147 |
+58% |
6.
Internal Controls & Risk Management
- ASK Automotive uses SAP HANA for business process
automation to ensure financial discipline.
- The company has a robust risk management framework
with an independent internal audit function.
- Risk Management Committee monitors economic, regulatory, and competitive risks.
7.
Human Resources & Workforce
- 7,000+ employees as of March 31, 2024.
- 500+ hours of training provided for skill development.
- Focus on diversity, employee well-being, and
workplace transparency.
8.
Corporate Social Responsibility (CSR) & Sustainability
- ₹2.8 Crores spent on CSR initiatives.
- AHSAAS Trust
supports education, healthcare, and rural development.
- Investment of ₹48 Crores in a 9.9 MWp solar power
plant in Sirsa, Haryana, to transition towards renewable
energy.
Conclusion
ASK Automotive delivered strong
financial growth in FY24, outperforming the Indian 2W market. The
company is focused on expanding EV components, increasing exports, and
strengthening its independent aftermarket presence. Investments in R&D,
automation, and renewable energy ensure sustainable growth in the coming
years.
Financial
Metrics Discussed in the MD&A Section of ASK Automotive's Annual Report (FY
2023-24)
The Management Discussion and Analysis (MD&A) section of the ASK Automotive Annual Report 2023-24 provides key financial metrics and highlights the trends in revenue, expenses, and profitability. Here’s a summary of the key figures and trends:
1.
Revenue Trends
Metric |
FY 2023-24 |
FY 2022-23 |
YoY Growth |
Total Income |
₹3,005 Crores |
₹2,566 Crores |
+17% |
Revenue from Operations |
₹2,995 Crores |
₹2,555 Crores |
+17% |
Key
Trends:
- Revenue grew by 17% YoY, reflecting strong demand across product segments.
- Growth driven by higher domestic demand, increasing
EV adoption, and export expansion.
- All major business segments contributed positively to
revenue growth.
2.
Expense Trends
Metric |
FY 2023-24 |
FY 2022-23 |
YoY Change |
Total Expenses |
₹2,791 Crores |
₹2,391 Crores |
+17% |
Cost of Materials Consumed |
Not disclosed separately |
Not disclosed separately |
- |
Key
Trends:
- Total expenses grew in line with revenue (+17% YoY), indicating stable cost control.
- Raw material costs, employee costs, and operational
expenses increased proportionally.
- Investment in capacity expansion (Karoli, Rajasthan & Karnataka plants) led to
higher capital expenditure.
3.
Profitability Trends
Metric |
FY 2023-24 |
FY 2022-23 |
YoY Growth |
EBITDA |
₹311 Crores |
₹248 Crores |
+26% |
EBITDA Margin |
10.4% |
9.6% |
+80 bps |
Profit Before Tax (PBT) |
₹213 Crores |
₹176 Crores |
+21% |
Profit After Tax (PAT) |
₹174 Crores |
₹123 Crores |
+41% |
PAT Margin |
5.8% |
4.8% |
+100 bps |
Earnings Per Share (EPS) |
₹8.8 |
₹6.2 |
+42% |
Key
Trends:
- EBITDA grew by 26% YoY, supported by operational efficiency and cost
optimization.
- EBITDA margin improved by 80 bps, reflecting better product mix and pricing strategy.
- PAT increased by 41%,
driven by strong revenue growth and improved margins.
- EPS rose by 42% YoY,
enhancing shareholder value.
4.
Financial Ratios & Key Performance Indicators
Ratio |
FY 2023-24 |
FY 2022-23 |
Change |
Debt-to-Equity Ratio |
0.42x |
0.49x |
-14% |
Return on Net Worth (RoNW) |
21.2% |
19.1% |
+208 bps |
Return on Capital Employed (RoCE) |
23.6% |
22.1% |
+150 bps |
Interest Coverage Ratio |
8.47x |
16.7x |
-49% |
Key
Trends:
- Debt-to-equity ratio improved to 0.42x (vs. 0.49x in
FY23) due to efficient debt
management.
- Higher RoCE (23.6%) and RoNW (21.2%) indicate improved
capital efficiency.
- Interest coverage ratio declined from 16.7x to 8.47x due to increased interest expenses.
Summary
of Financial Performance Trends
- Strong revenue growth (+17% YoY), driven by increased demand across Advanced Braking
Systems (ABS), Aluminium Lightweighting Precision Solutions (ALPS), and
Safety Control Cables (SCC).
- Stable expense growth (+17% YoY), with cost control measures ensuring profitability
improvements.
- Profitability metrics improved significantly:
- EBITDA margin expanded to 10.4% (+80 bps YoY).
- PAT margin improved to 5.8% (+100 bps YoY).
- EPS grew by 42% YoY,
reflecting enhanced shareholder returns.
- Improved financial health, with lower debt-to-equity ratio (0.42x) and higher
returns on capital (RoCE: 23.6%).
ASK Automotive is well-positioned
for future growth, leveraging its strong market leadership in 2W braking
systems, growing presence in EV components, and increasing global exports.
Risks
and Uncertainties Highlighted in ASK Automotive’s MD&A Section
The Management Discussion and
Analysis (MD&A) section of ASK Automotive’s Annual Report 2023-24
outlines several risks and uncertainties that could impact the company’s
performance and strategic goals. These risks are categorized into business,
financial, operational, and regulatory risks, along with management’s
approach to mitigating them.
1.
Key Risks Identified
1.1.
Competitive Risk
- The automotive component industry is highly competitive,
with numerous domestic and international players.
- Margin pressures
could arise due to pricing competition and customer bargaining
power.
Impact on Strategic Goals:
- Could reduce market share if ASK Automotive
fails to maintain cost competitiveness.
- To mitigate, the company is investing in R&D and
product innovation to differentiate its offerings.
1.2.
Economic and Geopolitical Risks
- Global supply chain disruptions, geopolitical conflicts
(e.g., Russia-Ukraine war, Middle East tensions), and inflationary pressures can impact input costs and demand.
- Fluctuations in the Indian economy, interest rates,
and currency exchange rates could affect operations.
Impact on Strategic Goals:
- May increase raw material costs, affecting profitability.
- Could slow down revenue growth if demand weakens
due to economic downturns.
- To mitigate, the company is diversifying its export
markets and securing long-term supplier contracts.
1.3.
Raw Material Cost Fluctuation Risk
- ASK Automotive relies on key raw materials like
aluminium and other metals, whose prices are volatile.
- Inflation in raw material prices could reduce margins if costs cannot be passed
on to customers.
Impact on Strategic Goals:
- Can negatively affect EBITDA margins and cash
flow management.
- The company is mitigating this risk through long-term
supplier partnerships and cost optimization strategies.
1.4.
EV Transition Risk
- The shift from internal combustion engine (ICE)
vehicles to electric vehicles (EVs) presents both opportunities and
threats.
- Some of ASK’s existing products (e.g., braking
systems for ICE vehicles) may see reduced demand in the long term.
Impact on Strategic Goals:
- If ASK does not expand its EV component portfolio,
it risks losing market relevance.
1.5.
Regulatory & Compliance Risks
- Changes in environmental, safety, and emission
regulations (e.g., Bharat Stage (BS) norms, Corporate Average Fuel
Economy (CAFE) standards) could require product redesigns.
- Stricter corporate governance and disclosure norms
increase compliance costs.
Impact on Strategic Goals:
- Could lead to higher R&D expenses to comply
with regulations.
- Non-compliance could result in penalties or
reputational damage.
- ASK is ensuring compliance through internal legal
teams and industry partnerships to stay updated on regulatory changes.
1.6.
Supply Chain Disruptions Risk
- Delays in raw material supply due to geopolitical
issues, pandemics, or logistics bottlenecks could impact production.
- Dependence on specific suppliers poses a risk if they fail to deliver.
Impact on Strategic Goals:
- Could lead to production slowdowns and increased
costs.
1.7.
Foreign Exchange Fluctuation Risk
- ASK Automotive exports to over 12 countries and imports
raw materials, making it vulnerable to forex fluctuations.
- A depreciating rupee could increase import
costs, while a strengthening rupee could reduce export
competitiveness.
Impact on Strategic Goals:
- Could affect revenue and cost structure, impacting
profitability.
- ASK mitigates this risk through hedging strategies
and cost pass-through mechanisms with customers.
1.8.
Technology Disruption Risk
- Rapid technological advancements in mobility
(e.g., AI, autonomous driving, connected vehicles) may require continuous
innovation.
- Failure to adopt new technologies could lead to loss of market share.
Impact on Strategic Goals:
- Could slow market expansion if ASK lags in
innovation.
- The company is investing in R&D, digital
transformation, and smart manufacturing technologies to stay ahead.
Strategic Goal | Risk Impact | Mitigation Strategy |
Market Leadership in 2W Braking Systems | High competition and pricing pressures | Investment in product innovation and differentiation |
Expansion in EV Components | Transition risk from ICE to EVs | Focus on Aluminium Lightweighting (ALPS) and EV braking solutions |
Export Market Growth | Forex volatility and geopolitical risks | Hedging strategies and market diversification |
Operational Efficiency & Cost Control | Rising raw material costs and supply chain issues | Long-term supplier contracts and cost optimization |
Regulatory Compliance | Stricter emission & safety norms | Proactive R&D investments and industry collaborations |
3.
Risk Management Framework
- ASK Automotive has a dedicated Risk Management
Committee to identify, assess, and mitigate key risks.
- Uses SAP HANA-based digital risk monitoring systems.
- Conducts regular risk assessments and internal
audits.
Conclusion
ASK Automotive is actively
addressing risks through innovation, market diversification, operational
efficiency, and regulatory compliance. By staying agile in product
development and risk management, the company aims to achieve sustainable
growth in the evolving automotive industry.
Future
Plans and Strategic Goals Outlined in ASK Automotive’s MD&A Section
ASK Automotive has outlined several future
plans and strategic goals in the Management Discussion and Analysis
(MD&A) section of its Annual Report 2023-24. These strategies
focus on business expansion, technology advancement, market diversification,
and sustainability initiatives.
1.
Key Strategic Goals & Future Plans
1.1.
Expansion in the Electric Vehicle (EV) Market
Strategic Goal: Strengthen ASK Automotive’s position in the growing EV sector in India.
Initiatives:
- Increase production of Aluminium Lightweighting
Precision Solutions (ALPS), which are critical for EVs.
- Expand product offerings in thermal management
solutions, which are in high demand for battery packs and electric
motor housing.
- Develop next-generation braking systems optimized
for EVs.
- Aim to grow revenue from EV-related products,
which already saw 133% YoY growth in FY24 (₹120 Crores revenue).
1.2.
Expansion of Manufacturing Capacity
Strategic Goal: Increase production capacity to meet rising demand from OEMs and export markets.
Initiatives:
- New Manufacturing Facility in Karnataka (18th plant):
- Investment of ₹200 Crores.
- Will cater to southern India’s automotive demand.
- Focus on Advanced Braking Systems (ABS) and
Aluminium Lightweighting (ALPS).
- Expansion of Mega Manufacturing Plant in Karoli, Rajasthan:
- Investment of ₹380 Crores to scale production.
- Will support exports and new product lines.
1.3.
Growth in Export Markets
Strategic Goal: Leverage export opportunities in Europe, North America, and emerging markets.
Initiatives:
- Expand into 12+ international markets where ASK
is already present.
- Develop localized products for international OEMs.
- Increase export revenue, which saw 58% YoY
growth in FY24 (₹147 Crores revenue).
- Set up a dedicated export desk to drive overseas
business.
1.4.
Diversification of Product Portfolio
Strategic Goal: Broaden product offerings across Passenger Vehicles (PV), Commercial Vehicles (CV), and Aftermarket segments.
Initiatives:
- Enter High-Pressure Die Cast (HPDC) Alloy Wheel
Manufacturing:
- Technical partnership with LIOHO Machine Works Ltd.
(Taiwan).
- Leverage HPDC technology, which offers lighter,
stronger wheels.
- Strengthen braking systems for 4W and CVs,
expanding beyond 2Ws.
- Invest in R&D to develop new braking
technologies.
1.5.
Strengthening the Independent Aftermarket (IAM) Network
Strategic Goal: Expand ASK’s aftermarket sales and distribution network to drive non-OEM revenues.
Initiatives:
- Joint Venture with AISIN Group (Japan):
- AISIN is a top 10 global Tier-1 automotive supplier.
- ASK will market and sell AISIN’s auto components in
India’s Independent Aftermarket (IAM).
- The JV will benefit from ASK’s 400+ dealer network
in India.
- Increase direct aftermarket sales, reducing
dependence on OEMs.
1.6.
Investments in Technology & R&D
Strategic Goal: Strengthen ASK’s in-house design, R&D, and engineering capabilities to stay ahead of competitors.
Initiatives:
- Expand in-house Design Centre & Tool Room to
accelerate product development.
- Enhance virtual simulations and CAD capabilities
for better prototyping.
- Invest in smart manufacturing technologies (IoT,
automation).
- Develop proprietary materials and formulations
to improve braking efficiency and durability.
1.7.
Sustainability and Renewable Energy Investments
Strategic Goal: Reduce carbon footprint and transition to green energy.
Initiatives:
- Investment of ₹48 Crores in a 9.9 MWp Solar Power
Plant in Sirsa, Haryana for captive consumption.
- Shift melting furnaces and paint ovens to Piped
Natural Gas (PNG) to reduce carbon emissions.
- Increase recycling and hazardous waste reduction
efforts (currently at zero landfill for hazardous waste).
- Develop green mobility solutions to align with India’s
EV and carbon-neutrality targets.
2.
Expected Business Impact of These Strategies
Strategic Focus Area |
Projected Impact |
EV Market Expansion |
Higher ALPS and braking system sales, increased EV
market penetration. |
Manufacturing Expansion |
Increased production capacity, ability to meet
rising domestic and export demand. |
Export Market Growth |
Greater international presence, revenue
diversification. |
Product Diversification |
Entry into new markets (PV, CV, alloy wheels, thermal
management). |
Aftermarket Strengthening |
Higher non-OEM revenues, reduced dependence on
cyclical OEM demand. |
Technology & R&D Investments |
Enhanced product differentiation, innovation leadership. |
Sustainability Initiatives |
Lower carbon emissions, cost savings from renewable
energy. |
Conclusion
ASK Automotive has aggressive
expansion and diversification plans aimed at strengthening its market
position, entering new segments, and improving operational efficiency.
These strategies will help the company capture growth opportunities in the
EV space, expand exports, and strengthen aftermarket sales, ensuring
long-term profitability and sustainability.
Some significant changes and evolving perspectives at ASK Automotive based on their latest Annual Report (FY 2023-24) versus previous years:
1. Stronger Focus on Electric
Vehicles (EVs)
- Current Year (FY 2023-24):
- Major push into the EV sector, with a 133% YoY
revenue growth from EV-related products (₹120 Crores).
- Emphasis on Aluminium Lightweighting Precision
Solutions (ALPS) for EVs, targeting thermal management and lightweighting.
- New initiatives in EV braking systems and
EV-specific components.
- Previous Years:
- EVs were mentioned more cautiously, with a focus on
traditional automotive components.
- Less explicit strategic initiatives targeting EV
market growth.
**Significant Change: ASK is
now aggressively pursuing the EV market, reflecting broader industry trends and
regulatory pushes for electric mobility.
2. Manufacturing Capacity Expansion
- Current Year (FY 2023-24):
- New plant in Karnataka (18th plant) with a ₹200 Crore
investment.
- Expansion of mega facility in Karoli, Rajasthan with a
₹380 Crore investment.
- Previous Years:
- Emphasis was on optimizing existing capacity and
gradual expansion.
- Investments in new facilities were smaller or more
focused on specific product lines.
Significant Change: There’s a clear shift toward scaling up operations
significantly, likely driven by rising demand, both domestically and
internationally, and a need to capture market share.
3. Export Market Growth & Global
Expansion
- Current Year (FY 2023-24):
- Focus on increasing exports, which grew by 58% YoY to
₹147 Crores.
- Specific targeting of Europe and North America with
localized products.
- Dedicated export desk and strategy for international
growth.
- Previous Years:
- Exports were a part of the strategy but not as
strongly emphasized.
- Focus was more on domestic market dominance and OEM
partnerships.
Significant Change: ASK is increasingly looking beyond Indian borders, aiming
to diversify revenue streams and leverage international market opportunities.
4. Product Portfolio Diversification
- Current Year (FY 2023-24):
- New venture into High-Pressure Die Cast (HPDC) Alloy
Wheels, leveraging a technical partnership with LIOHO, Taiwan.
- Expansion of product offerings into Passenger Vehicles
(PV) and Commercial Vehicles (CV) segments.
- Previous Years:
- Strong focus on 2W Advanced Braking Systems and
traditional braking components.
- Less diversification into new vehicle segments or
innovative materials like HPDC alloy wheels.
Significant Change: There’s a strategic pivot towards diversifying product
lines, likely to reduce dependence on the 2W market and tap into broader automotive
opportunities.
5. Sustainability and Renewable
Energy Investments
- Current Year (FY 2023-24):
- Big move with a ₹48 Crore investment in a 9.9 MWp
solar power plant in Haryana.
- Transition of melting furnaces and paint ovens to
Piped Natural Gas (PNG).
- Achieving zero landfill for hazardous waste and
significant green initiatives.
- Previous Years:
- Sustainability was noted, but investments were smaller
and more incremental.
- Focus was more on efficiency improvements rather than
large-scale green energy projects.
Significant Change: ASK is taking bolder steps in sustainability, aligning with
global trends towards ESG (Environmental, Social, Governance) priorities and
potentially improving their appeal to socially-conscious investors.
6. Strategic Partnerships & JVs
- Current Year (FY 2023-24):
- New Joint Venture with AISIN Group (Japan) to expand
aftermarket sales for Passenger Car products.
- Strengthening technical partnerships for advanced
materials and EV components.
- Previous Years:
- JVs and partnerships were more focused on technical
collaborations for existing product lines (like braking systems).
- Less emphasis on leveraging global partners for market
expansion.
Significant Change: ASK is now leveraging partnerships not just for technical
support but for market expansion and diversification, signaling a more
aggressive global growth strategy.
In Summary:
ASK Automotive’s management is showing a bolder, more aggressive strategy than
in past years, with a keen focus on capturing growth from the EV revolution, expanding
global footprints, diversifying product offerings, and boosting sustainability
efforts. They’re clearly aiming to transform ASK into a more resilient,
future-ready company, ready to tackle the evolving auto industry landscape.
Disclaimer:
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