Setco Automotive, the largest manufacturer of clutches for Medium and Heavy Commercial Vehicles (M&HCVs) in India has reported strong sales of Rs 466 crore (+33.6%) for the third quarter (Q3 FY19) ended December 31, 2018 and nine months (9M FY19) ended December 31, 2018. This is despite a slowdown in the M&HCV segment in Q3. On the back of robust growth and improved operating efficiencies, EBITDA in 9MFY19 stood at Rs 67.71 crore, up by 82.3 percent YoY. Profit after tax is Rs 24.20 crore in 9MFY19, up by 84.1 percent YoY.
The company reported sales of Rs 160.42 crore in Q3 FY19, up by 10.1 percent YoY and EBITDA of Rs 23.27 crore in the quarter, up by 6.9 percent YoY. The company posted Profit after Tax of Rs 7.21 crore in Q3FY19, down by 35 percent YoY due to the normal tax rate of 34 percent applicable in FY19 as compared to ~21 percent in FY18 (actual rate was ~8% in Q3FY18).
According to the company, despite unanticipated liquidity crisis affecting M&HCV industry sales and production, Setco’s sales from the OEM segment grew by 9.9 percent and sales from the aftermarket segment grew by 32.2 percent in this quarter. LavaCast, a subsidiary of Setco, has ramped up its capacity utilisation to ~70% in Q3 FY19 vs ~60% in Q2 FY19 and is expected to move up to around 80 percent during Q4 FY19. Additionally, with the recent inroads into the farm-equipment segment and the introduction of new-generation clutches (ASD clutch) in the US aftermarket, the company is poised to grow significantly going forward.
Commenting on the results, Harish Sheth, chairman and managing director at Setco Automotive, said, “This quarter, the NBFC liquidity crisis has temporarily affected the growth rate of M&HCV sector. This is more of a short-term correction; the long-term fundamentals remain robust. With the liquidity crisis abating and impending switchover to BS-VI norms, we expect the demand to pick up significantly from the first quarter of the new fiscal. The growth-friendly measures announced in the Budget, coupled with the reduction in interest rates announced recently would give a further flip to the underlying growth drivers of infrastructure and GDP growth.”
Setco is the largest manufacturer of premium quality Lipe brand clutches for commercial vehicles in India. Incorporated in May 1982, currently the company employs more than 2,000 people globally. It is a Tier 1 supplier of clutches to all the prominent Indian commercial vehicle manufacturers such as Tata Motors, BharatBenz, Ashok Leyland and others.
Setco has a strategic global footprint with 4 manufacturing facilities, 2 in India, and 1 each in the UK and USA, with R&D centres in India and UK. Setco Automotive is the flagship company of The Setco Group which also includes Lava Cast, and its CSR wing, the Setco Foundation.