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5. Rane Group Business Report FY ended Mar. 2017

Rane Group Business Report FY ended Mar. 2017

Financial Overview

FY ended March 31, 2017
-In the fiscal year ended March 31, 2017, the Group's net revenue from operations increased by 25% over the previous year to INR 30,293.4 million.

FY ended March 31, 2016
-In the fiscal year ended March 31, 2016, the Group's net revenue from operations increased by 10% over the previous year to INR 24,313.0 million.

FY ended March 31, 2015
-In the fiscal year ended March 31, 2015, the Group's net revenue from operations increased by 14.7% over the previous year to INR 22,108.8 million.

FY ended March 31, 2014
-In the fiscal year ended March 31, 2014, the Group's net revenue from operations totaled INR 19,275.3 million, a decrease of 0.5% from the previous year. The growth in exports was offset by decreases in sales for OEMs and the aftermarket.

Restructuring

wholly owned subsidiary in Germany

-In March 2017, Rane Holdings Limited i Board of Directors has approved the setting up of a wholly owned subsidiary in Germany under the name of Rane Holdings Europe GmbH through acquisition of 100 % equity shares of a newly incorporated company for this purpose.

Investment in Precision Die Casting plant in Russellville, Kentucky

-In July, 2017, The company announced to invest USD 5.8 million in its Precision Die Casting plant in Russellville, Kentucky for new equipment, tooling and upgrades.

Kar Mobiles merged into Rane Engine Valve
-In May 2014, the Company announced that its subsidiary, Kar Mobiles Limited, would merge with another of its subsidiaries, Rane Engine Valve Limited, effective April 1, 2014.

Conversion of Rane TRW Steering and Rane NSK Steering
-During the fiscal year ended March 31, 2015, both Rane TRW Steering Systems and Rane NSK Steering Systems were converted from public limited companies to private limited companies

Rane Diecast was merged into Rane (Madras)
-The Company announced that it has merged Rane Diecast Ltd. with Rane (Madras) Ltd., effective April 1, 2013. Rane Diecast Ltd. manufactured precision high pressure aluminum diecast products mainly for overseas market.

Developments in India and overseas

Rane NSK Steering Systems Limited
-Rane NSK Steering Systems developed and launched eight new products during the fiscal year ended March 31, 2015. These new launches generated INR 28 million in revenue during the fiscal year with the potential for additional revenue in the following years.

Rane TRW Steering Systems Limited

-In August 2015, Rane TRW Steering Systems Private limited inaugurated its new airbag manufacturing plant located adjacent to its seatbelt plant in Singaperumal Koil, Chennai, India. It has an installed capacity to produce around 500,000 airbags.
-In the fiscal year ended March 2014, a new plant in Chennai has commenced its operation with a capacity of 268,000 units per annum for manufacturing air bags.

-Rane TRW Steering Systems Limited began exporting seat belts and buckles to Brazil in the fiscal year ended March 31, 2013.

Rane (Madras) Limited

-During the fiscal year ended March 31, 2017, Rane Madras Limited (RML) set up a rack & pinion manufacturing facility at its Varanavasi plant to supply to both domestic and export customers.

-During the fiscal year ended March 31, 2017, India-based Rane (Madras) Ltd. announced plans to invest USD 5.8 million in its Precision Die Casting plant in Russellville, Kentucky for new equipment, tooling and upgrades

-During the fiscal year ended March 31, 2013, Rane (Madras) Limited started production of hydro-static steering gears and cylinders for commercial vehicles and farm tractors.

-In the fiscal year ended March 31, 2013, Rane (Madras) Limited began to export its products to Brazil with a focus of penetrating South American markets.

Rane Brake Lining Limited
-During the fiscal year ended March 31, 2013, Rane Brake Lining Limited launched multiple new products including:

• Brake linings and disc pads for passenger car, MUV, and M&HCV applications
• Asbestos-free brake lining for low floor buses
• Asbestos-free disc pads for passenger cars and small commercial vehicles

Major Awards

Contracts

Rane NSK Steering Systems Pvt. Ltd.

-In the fiscal year ended March 31, 2016, Rane NSK Steering Systems Pvt. Ltd has started SOP for new product development in steering column for TATA LCV, Daimler HDT & ISUZU.

Rane TRW Steering Systems Pvt. Ltd.

-In the fiscal year ended March 31, 2016, Rane TRW Steering Systems Pvt. Ltd has successfully commenced supply of Seatbelts for an export customer and also won orders for Airbags from the same customer.

-In the fiscal year ended March 31, 2015, Rane TRW Steering Systems' Inflatable Restraint Systems were nominated for use in multiple Renault platforms.

Rane Engine Valve Limited
-In the fiscal year ended March 31, 2014, Rane Engine Valve Limited acquired business order from Renault for its A-level small car to debut in 2015.

-In the fiscal year ended March 31, 2017, the Company's R&D expenditures were 1.7% of the Company's total sales revenue. The Company plans to increase the percentage of R&D expenditures to 2.0% of total revenue by 2020.

-As of March 2014, the Group has been increasing its R&D expenditure from 0.5% to 1.5% of its yearly sales.

R&D Facilities

Rane (Madras) Limited
-During the fiscal year ended March 31, 2015, Rane (Madras) Limited established a new R&D facility in Pondicherry dedicated towards steering systems.

R&D Activities

Rane (Madras) Limited

Specific R&D activities that Rane (Madras) limited focused on in the fiscal year ended March 31, 2017:
-Design and Development of Low friction steering cylinder for Farm tractors / Commercial vehicles
-Value engineering carried out in RCB steering gears
-Concept design for Friction reduction in Rack & Pinion steering gears
-Development of new concept to eliminate undesirable rotation of steering linkage in field at crimped end
-Development of Spherical Bearing Ball joint for All Terrain Vehicles
-CAE virtual simulation of peening process of Ball joints and assessment of pull out strength
-CAE analysis of composite reinforcement linkages for light weighting v Virtual simulation / Analysis capability augmentation
-Innovative hypothesis in Ball joint internals
-Multi Body Dynamics (MBD) simulation to verify kinetics & kinematics

Rane Engine Valve Limited
Specific R&D activities that Rane Engine Valve Limited focused on in the fiscal year ended March 31, 2017:
-New Materials /process technology for valves to meet emerging Industry trends – high power and low emissions
-Focus on light weighting, friction and wear reduction
-New materials and coating process
-New advanced valve technology tomanage high engine temperature conditions.
-Simulation of engine conditions in customized rigs for design validation

Rane Brake Lining Limited

Specific R&D activities that Rane Brake Lining Limited focused on in the fiscal year ended March 31, 2017:
-New manufacturing technologies for disc pads and brake linings
-New CV dyno installed with higher technology and capacity
-New high capacity air-brakes for CV

Technological Alliance

Rane Brake Lining Limited
-As of March 2014, the Company receives technical service and knowledge relating to design and manufacture of disc pads and brake linings from Nisshinbo Brake Inc.

Capital Expenditure

-The Company's capital expenditure for the fiscal year ended March 31, 2016 totaled INR 2.9 billion. The Company plans to invest INR 2 billion in capital expenditures for the fiscal year ending March 31, 2018.

-The Company's capital expenditure for the fiscal year ended March 31, 2015 totaled INR 1,520 million. The Company plans to invest INR 2,070 million in capital expenditures for the fiscal year ending March 31, 2016.

-In June 2013, the Company announced that it will make a capital investment of INR 5.88 billion (approximately USD 97 million) over the next three years ending 2016. Most of the investment will be used to expand its production capacity of automotive products, including steering gears, electric power steerings (EPSs), and friction material products such as brake linings and disc pads. The group plans to allocate the funds to its seven subsidiaries:

• Rane Madras and Rane NSK Steering Systems will receive INR 1.6 billion and INR 1.5 billion, respectively, to boost their production capacities.
• Rane Brake Linings will receive about INR 1.1 billion to improve its R&D capability and expanding its export business.
• Rane Engine Valve, Rane TRW Steering Systems, Rane Diecast, and Kar Mobiles will account for the remaining amount.

Investment in India

Rane (Madras) Limited

-In the fiscal year ended March 2017, Rane (Madras) Limited commenced production of Rack & Pinion gear manufacturing in the Varanavasi plant. RML’s newly commissioned Die casting plant in Hyderabad has ramped up production volumes and has ensued continuous traction in the Die casting business.

-In the fiscal year ended March 2016, Rane (Madras) Limited successfully commissioned its second die casting plant in Hyderabad. Products earmarked for customers in the US and European region have started.

-In the fiscal year ended March 2015, Rane (Madras) Limited constructed a new die casting plant in Telangana and a new hydraulic steering system facility in Mysore. Rane (Madras) Limited also acquired a plot that will be used for a second die casting plant at Sadashivpet.

-In the fiscal year ended March 2014, Rane (Madras) Limited implemented the following investment activities:

• Rane (Madras) expanded manufacturing capacity for recirculating ball joint steering gears, along with productivity improvement projects. Such initiatives undertaken during the fiscal year has resulted in enhancement of capacity by nearly 10% with no additional machine procurement.
• In die-casting division, a fully automated 850 tonne high pressure die casting machine was installed to improve the volume and productivity.

-During the fiscal year ended March 31, 2013, Rane (Madras) Limited invested INR 120 million towards improving the production capacity of hydrostatic steering gears and cylinders.

Rane TRW Steering Systems Limited

-In the fiscal year ended March 2017, Rane TRW Steering Systems Limited enhanced CV Gear capacity from 18k to 21k gears per month. It also expanded capacity for new technology Seatbelts.

-In the fiscal year ended March 31, 2016, Rane TRW Steering Systems inaugurated Airbag Plant in August 2015, upgraded Airbags test lab and commissioned new line for seat belt.

-In the fiscal year ended March 31, 2015, Rane TRW Steering Systems installed new production lines for driver air bags and passenger air bags for an application with Ford.

-In April 2014, TRW Automotive Holdings Corp. announced that its joint venture 'Rane TRW Steering Systems Limited' (RTSSL) with the Company in India has expanded its production capabilities to manufacture airbags and the latest generation of seat belt systems. RTSSL is applying TRW's global manufacturing standards to produce driver and passenger airbags and seat belts at the facility and will make approximately 320,000 units per annum initially. An increase in manufacturing capacity to approximately 810,000 units is expected to occur between 2017 and 2019. (From a press release on April 28, 2014)

-In the fiscal year ended March 2014, the Company announced that Rane TRW Steering Systems will invest INR 350 million for manufacturing seatbelt and airbags during the period between 2013 and 2018.

-During the fiscal year ended March 31, 2013, Rane TRW Steering Systems Limited installed a new production line for inflatable restraint systems. This increased the annual production capacity of airbags for passenger vehicles to 320,000 units.

-In the fiscal year ended March 31, 2013, Rane TRW Steering Systems Limited increased its production capacity for seat belts by 35% from 704,000 units to 950,000 units.

Rane Brake Lining Limited
-During the fiscal year ended March 31, 2015, Rane Brake Lining Limited increased the production capacity of disc pads at its production facility in Puducherry.

-From the fiscal year ended March 2014, Rane Brake Lining plans to increase production capacity of disc pads for passenger cars, heavy commercial vehicles and two-wheeler segments over the next three years.

Rane NSK Steering Systems Limited

-In the fiscal year ended March 2017, Rane NSK Steering Systems Limited started Invested INR 750 million to augment capacity and debottlenecking to meet the increased demand for EPS. It Invested INR 25 million to initiate capacity enhancement program in Pantnagar to make models of Maruti, Ashok Leyland, Volvo and Eicher,

-In the fiscal year ended March 2016, Rane NSK Steering Systems Limited started successfully developed several new technology features through co-development with customers for application in future businesses. Successfully put into operations additional processes and increased localisation in the EPS business

-During the fiscal year ended March 31, 2015, Rane NSK Steering Systems expanded the production area within its existing facility in Bawal to support additional in-sourcing and localization projects.

-In the fiscal year ending in March 31, 2016, Rane NSK Steering Systems expects to have capital expenditures of INR 558 million primarily for machinery involved in new product launches.

-In the fiscal year ended March 31, 2013, Rane NSK Steering Systems Limited achieved an increase of 24% in annual production capacity of electric power steering worm lines by improving cycle time.

Rane Engine Valve Limited

-In the fiscal year ended March 2017, Rane Engine Valve Limited invested in upgrading the R&D setup to enhance product development capability in meeting customer requirements. It launched four new technology initiatives that support customers transition to superior emission norms and better fuel efficiency

-In the fiscal year ended March 2016, Rane Engine Valve Limited consolidated the Peenya plant (Bengaluru) with the Hirehalli plant (Tumakuru). REVL ramped up supplies of engine valves to major European OEM during the year.

-In the fiscal year ended March 31, 2015 Rane Engine Valve Limited established a new manufacturing facility at Tumkur to expand its large engine valve portfolio.

-During the fiscal year ended March 31, 2015, Rane Engine Valve Limited expanded its plant in Ponneri to increase the facility's production capacity by 36,000 engine valves per day.

-Rane Engine Valve Limited expanded its production capacity at its plant in Trichy by 10% by commissioning a new line in March 2013.

-The former entity Kar Mobiles Limited commissioned two new production lines at its facility in Tumkur during the fiscal year ended March 31, 2013, leading to an increase in valve production to 1.8 million units per year.