Rane Group continues its business expansion with a proposed 3-year capex of Rs.1000 crore, driven by rising new business orders and a positive growth outlook.

The Chennai-based leading auto parts house ended FY24 with its highest-ever aggregate revenue of Rs.7200 crore ($870 million), an increase of 8 per cent over 2022-23 revenue. The group secured over ₹1000 crore in new orders in FY24, with over ₹400 crore in the March 2024 quarter alone, including ₹250 crore from the JV firm Rane NSK.

In FY24, the group focused on rebalancing its product portfolio and divested the US telematics business, RaneT4U and castings business.

“We remain reasonably positive on the prospect given our order book position. We plan to invest about ₹1,000 crore over the next three years in terms of capex. We continue to prioritize operational improvements and cost savings, Harish Lakshman, Chairman of Rane Group during the Group’s Q4 FY24 earnings call.

Of the proposed capex, about 45 per cent will be spent by the merged entity – Rane Madras Ltd (Rane Brake Lining Ltd and Rane Engine Valve Ltd are in the process of getting merged with Rane Madras), while the remaining 55 per cent will made by its joint venture companies.

Lakshman stated that the Group will focus on capitalising on the growth opportunities, consolidating the business and reducing debt over the next couple of years.

Commenting on the impact of the US’ recent imposition of additional duties on Chinese steel and aluminium, Lakshman noted the China Plus One strategy as a real opportunity for Rane Group.

“Our RFQ (request for quote) pipeline has gone up in the last 18 months. When I look at the pipeline compared to previous years across product lines, not only Rane Madras, but even Rane Engine Valves and Rane Brake Lining, the RFQ pipeline is increasing. Because of China Plus One, we clearly see benefits and there are examples of one or two smaller businesses that we have won where the customers moved away from a Chinese source, he added.

Lakshman mentioned that the financial burden Rane NSK Steering Systems Pvt Ltd faced over the past 4-5 years due to warranty provisions is nearing an end, with only about ₹28 crore of warranty provision remaining. It had to make a provision of about ₹500 crore of which, ₹472 crore has already been disbursed.

Regarding the other JV, ZF Rane Automotive India Pvt Ltd, he noted that the company’s occupant safety business was benefiting from the evolving safety regulations in India, achieving double-digit revenue growth in FY24. He added that the vertical integration of inflator and webbing plants, which are fully prepared and nearing production, will enhance the company’s competitiveness in the Indian market.