Sona Comstar - Annual Report Summary
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THE BEGINNING
Sona Comstar is an Indian company that designs and manufactures automotive components, primarily for the electric vehicle industry. It had a successful initial public offering (IPO) in June 2021, which raised over INR 5,500 crore ($750 million) for the company. This IPO made Sona Comstar the first auto component maker to be listed on the Indian bourses in nearly a decade.
Prior to the IPO, Sona Comstar's financial statements indicated strong revenue growth, with total revenue of INR 2,455 crore ($340 million) in the fiscal year 2019-2020, up from INR 2,177 crore ($300 million) the previous year. The company also reported a net profit of INR 68 crore ($9.3 million) in 2019-2020, up from INR 52 crore ($7.1 million) in 2018-2019.
THE BUSINESS
Sona is focused on the development and production of automotive components for electric and hybrid vehicles, as well as traditional internal combustion engine vehicles. The company's products include gears, shafts, and transmission systems, among other components.
The Company has nine manufacturing and assembly facilities located across India, USA, Mexico and China, of which six are located in India. The facilities in India (Chennai), China, Mexico and the USA manufacture conventional and micro/plug-in hybrid starter motors and BLDC/PMSM traction motors. The plants in Gurugram, Manesar and Pune (India) manufacture differential gears, differential assemblies and other gears. While the facilities in India are manufacturing plants, the facilities in the US, Mexico and China operate as satellite final assembly plants.
The company is a global supplier and around 76% of its revenues are from international sales. It is also one of the leading suppliers to battery electric vehicles, with 25% of its revenues being derived from the BEV market.
Achieving significant global share from existing systems and components: Sona Comstar has increased its global market share of differential gears and starter motors to 6.3% and 4.6%, respectively, in CY 2021, and from 5.0% and 3.0%, respectively, in CY 2020.
Looking ahead, Sona Comstar is well-positioned to benefit from the growing demand for electric and hybrid vehicles in India and around the world. The company has established partnerships with major automakers and suppliers and is investing in research and development to drive innovation in its product offerings.
The acquisition of Comstar Automotive by Sona BLW in 2019, marked the creation of a new identity. The company started in the year 1995, Incorporated as Sona Okegawa Precision Forgings Ltd., a JV with Mitsubishi Materials Corporation.
During the year, they were able to acquire two of the top 10 global passenger vehicle manufacturers as their customers and that as of today, serve seven of the top 10 global carmakers.
The global market share of differential gears and starter motors increased to 6.3% and 4.6%, respectively. In comparison, they continue to dominate the Indian market for differential gears with a 50-90% market share across vehicle categories. The pursuit for global significance is also reflected in the addition of new programmes and new customers in the net order book. At the end of FY 2021-22, the net order book stood at INR 186 billion, of which 62% is contributed by EV.
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THE PRODUCTS
INCREASED EV ADOPTION:
Globally, EV adoption is in full swing and has surpassed initial estimates by a long shot. From only 1 million EVs being active in 2016, the number of total plug-in vehicles on roads is expected to cross ~20 million in 2022. According to the 2016 edition of BP’s Energy Outlook, a fleet of 71 million plug-in vehicles is estimated to be on the move by 2035.
However, the analysis of recent trends and sales data by BloombergNEF indicates that this can be accomplished by 2025 — 10 years ahead of the initial projections. Favourable government policies, coupled with increasing consumer awareness of climate change, are expected to drive EV sales in the foreseeable future.
Electrification, Global market significance, Diversification and Technology are the four specific strategic priorities of the company.
At Sona Comstar, their foresight to anticipate climate change resulted in proactive investments in R&D, ensuring a diversified product portfolio covering all types of electrified powertrains to cater to the growing needs of EV OEMs.
NEW PRODUCTS
They placed a great focus on R&D, have spent around INR 1,761 million on R&D initiatives over the last three years, and introduced three new products in FY 2021-22.
In FY 2021-22, the company introduced two new products for the EV drivetrains: spool gear and epicyclic gear set. The introduction of these two products has extended the reach of the EV drivetrains' varying architectures.
In FY 2021-22, they introduced Integrated Motor Controller Module (IMCM) for a predictive active suspension system that offers comfort and convenience to the occupants of a car. This futuristic suspension system with our IMCM senses every bump and speed breaker and independently responds to all external disturbances..
GLOBAL AUTO INDUSTRY
Global light vehicle sales were around 81 million units in 2021. Although the automotive industry sales recovered from the lows of Covid-affected quarters, it was still far behind the peak of ~94 million units in 2018.
The automotive industry faced multiple supply-side disruptions that depressed global vehicle production, particularly in the second half of the year. The emergence of new Covid-19 variants and the geopolitical conflict in Europe compounded the supply-side challenges caused by the global semiconductor shortage.
Wide-scale vaccination across the globe has helped the resumption of economic activities from the pandemic-induced restrictions, thus supporting the demand for new vehicles across the markets. The automotive industry is in the midst of a transformational phase. Global megatrends such as evolving competitive landscape, electrification of powertrains, growing digitalisation and supply chain recalibration, are transforming the mobility industry at an unprecedented pace.
THE FINANCIALS
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