The global automotive industry landscape continues to transform and along with it theauto components industry. With India already cementing its place as a global componentsourcing hub we are well positioned to navigate through the emerging challenges andcapitalise on the upcoming opportunities. Our tradition of pursuing excellence and keepingcustomer at the core' remained intact this year as well backed by determinationprudent foresight and strong business fundamentals.
We are "Driven by Determination" and remain confident of our strategy andapproach to deliver profitable growth.
The synchronised upswing in the global economy that began around mid-2016 suddenlychanged course in the second half of 2018 as the continued momentum in manufacturing andtrade dissipated. Sentiments were further dampened by the hardening of US interest ratesvolatile crude prices along with uncertainty over Brexit and heightened rhetoric aroundprotectionism.
The Indian GDP growth dipped below 7% for full financial year 2018-19 after growing at7.5% in the first half due to weak industrial output and overall subdued demand.However with the election overhang now behind us the economy should grow at over 7%going forward driven by the Government's resolve towards achieving fiscal consolidationand continued push for structural reforms.
The Indian automobile industry too had started FY 2018-19 on a positive note supportedby normal monsoon rising rural demand the Government's infrastructure push and rise inindustrial activity. However most vehicle segments witnessed a considerable slowdown inthe second half due to higher fuel prices lower financing availability steep priceincrease on account of insurance regulation changes in September 2018.
Driven by determination
Our growth was supported by performance of steering and linkage division. Our plantsresponded well to the market fluctuations and maintained optimal capacity utilisation.Hydraulic products experienced a strong traction with customers. We engaged various leanmeasures to improve operational performance which helped to partially mitigate theinflationary pressures on material costs. We upgraded our R&D facilities in bothPuducherry and Chennai.
The operational performance of die casting business in India continued to improve andfurther cost reduction initiatives are planned in the upcoming year as well. The orderbook of die casting business in India is still not healthy and capacity utilisation isunder stress.
The performance of our overseas subsidiary Rane Precision Die Casting Inc. (RPDC)continues to remain a concern for us. We envisaged losses for three years when we acquiredthis business in 2016. There were few setbacks as the subsidiary could not secure adequatenew business and achieve planned operational improvements. RPDC secured new businesseswhich will help in sales growth. We still see a lot of scope for operational improvementsand are undertaking several initiatives including deputing some senior managers from ourGroup.
We are Driven by Determination' and remain confident of our strategy and approachto deliver profitable growth.
Progressing with optimism
The first half of FY 2019-20 appears challenging with slowing demand in most of thevehicle segments. The anticipated pre-buy on account of transition to BS VI normalmonsoon the Government's continued reforms and infrastructure push are likely to propelgrowth. We remain optimistic about the evolving opportunities in the auto componentindustry and the structural trends remain positive in the long term.
We will continue to invest in R&D and drive innovations to build value-addproducts. We will introduce new technologies in India and tap into opportunities to supplyin export markets.
Our steering and linkage division is expected to continue its growth at a stable paceaided by market growth and new business launches. We succeeded in securing orders from newcustomers for the Indian die casting division which will likely get reflected in fiscal2020-21. RPDC's pursuit to become profitable looks possible over the next two years and isdependent on securing profitable new orders and achieving sustainable improvements inoperation over the next 3-4 quarters.
We are progressing with optimism on long term market opportunities and determined todrive efficiencies to create value for all our stakeholders.
On behalf of the Board of Rane (Madras) Limited I would like to thank all ourstakeholders customers employees partners vendors bankers governmentcommunities and most importantly you our shareholders who have been part of thisexciting journey.