About GKN Driveline India Limited Unlisted Shares

(i) GKN Plc group company of GKN Driveline India

GKN Driveline (India) limited parent group company is GKN Plc. It has registered offices in the United Kingdom. GKN Plc is the leading automotive driveline technology and systems engineer. GKN Plc is a global partner to the automotive industry. More than 50% of the 80 million new cars sold every year contain GKN Automotive technology. GKN has a global network of 54 production facilities in 23 countries that supply over 90% of the world's car manufacturers. It's 29,000 dedicated employees design, develop, manufacture, and integrate driveline technologies that add value to vehicle programs. On 19.04.2018, Melrose Industries Plc became GKN’s new owners after the acquisition of GKN Plc by Melrose Industries Plc.

(ii) About GKN Driveline India

GKN Driveline (India) Limited was incorporated as Private Limited on July 25, 1985. The company’s name changed more than once and the latest change was from GKN Driveshafts (India) Limited to GKN Driveline (India) Limited on July 3, 2003. The Company is having technical collaboration with GKN Driveline International GmbH, Germany since 2003 and under the collaboration agreement, the Company draws various state of the art technologies from GKN. The Group is primarily in the business of manufacturing and sale of driveshafts to original equipment manufacturers in the automobile industry.

Technology Support

The GKN Driveline (India) Limited maintains interaction with GKN Group internationally. The company continuously imports technology from GKN Group under the Technical Collaboration Agreement and the same is fully absorbed. The company is receiving support and guidance from GKN Group to drive functional excellence in marketing, human resource, application engineering, supply management, and information technology, among others, which helps the Company to remain competitive and further step-up its overall business performance. GKN is committed to ensuring that the support in terms of new products, innovations, technologies, and services is commensurate with the needs of the Company and enables it to continue as a market leader. (iii)

Manufacturing Plants

GKN Driveline (India) Limited has five manufacturing plants. Two plants are in Haryana, one in Maharashtra, one in Tamilnadu, and one in Gujarat.

(iv) The clientele of the Company

GKN Driveline has impressive automotive industry leaders such as Toyota, Ford, Bajaj, Fiat, Honda, and Suzuki as its clients.

(v) Financial Performance

In the Financial year ended March 31, 2020, the Company made a net turnover of INR 941 Cr and profit before tax of INR 83 Cr. In the Financial year ended March 31, 2019, the Company made a net turnover of INR 1077 Cr and profit before tax of INR 50 Cr. In the financial year ended March 31, 2018, the Company had registered a net turnover of INR 1067 Cr and profit before tax of INR 127 Cr.

Export Income:

During the Financial year ended March 31, 2019, the Company posted export earning of INR 22 Cr in comparison to export earning of INR 62 Cr in the financial year ended March 31, 2018.

Analysis of FY19-201.

1. The Company’s top-line showed a de-growth of 12.63 % when the current year is compared with the previous year mainly due to lower market demand and discontinuation of supplies for the Hyundai QXi model on account of a pricing dispute.

2. EBITDA for FY19-20 is INR 138 Crores (14.68%) as compared to INR 114 Crores (10.60 %) in the previous year. EBITDA is better than the previous year due to a reduction in Employee benefit expenses by INR 12 Crores, reduction in Business auxiliary service charges by INR 17 Crores, and reduction in slow-moving inventory by INR 2.2 Crores when compared with the previous year.

3. Net profit is better due to significant one-off provisions created during the previous year for contingencies and tax matters, INR 18 Crores which is not in the current year, and reduction in finance cost by INR 13.5 Crores.

4. The Board of Directors of the Company has proposed INR 146 as the final dividend for the year ended 31 March 2020.

FY20-21 Financial Analysis

1. The Company’s top-line showed a de-growth of 29.43 % when current year is compared with previous year mainly due to lower market demand on account of COVID 19 lockdown in 2020. However, the export sales remained largely the same with negligible decline of 2%.

2. EBITDA Margins improved from 14% in FY20 to 18% in FY21 due to write back of provision for interest and penalty on Income tax for INR 179 Mn as company has opted for Vivad se Vishwas Scheme for settlement of Income tax litigations and lower supplier provisions in current year by INR 65 Mn.

3. The Operations & the Financial Results of the Company during the/Year ended 31st March 2021 were substantially impacted due to shutdown of the company’s plants under the lockdown announced by the State/Central Government after the outbreak of COVID-19 Pandemic during April to May 2020.

4. The Board of Directors of the Company at its meeting held on 23rd June 2021, declared an interim dividend of INR 62 per equity share (620%) of face value of INR 10 each for the year 2020-21.

Auto-Industry In 20-21

As GKN Driveline provides products and services to the automobiles sector, so growth in GKN Driveline is directly proportional to performance of Automobile sector.The passenger vehicle industry showed a de-growth in financial year ending March 2021 as compared to previous year due to covid-19 pandemic spread. Before the second wave, the auto sector had been seeing a recovery in sales, despite challenges such as a shortage of semiconductors and increase in raw material costs.

GKN Driveline Unlisted Share Analysis of FY21-22.

1. Revenue of GKN Driveline is increased by 24% in the FY21-22, which is decent growth.

2. Gross Margins have decreased from 49% in FY21 to 46% in FY22 due to rise in material costs.

3. Due to high materials cost there is a pressure seen in the EBITDA Margins as well. The margins are down from 17% last year to 15.5% in FY22.

4. Profit increased from 56 Crores in FY21 to 65 Crores in FY22.

5. EPS of FY22 is Rs. 51 per share.

6. GKN Driveline is generating very good cash from operations. In the FY22, EBITDA was 134 Crores and Cash flow from operations is 131 Crores. So, almost 100% EBITDA is getting converted into cash. Anything above 80% is considered great.

7. ROE = 22% and ROCE = 53%. The profitability parameters are also very good.

8. In FY21-22, GKN Driveline has given a dividend of Rs.62 per share.

9. GKN Driveline is a debt free company.