ABOUT THE CO.

FMGIL is the 2nd largest player in the organized market of pistons and piston rings in India with more than 30% market share.
- Its parent, Tenneco is one of the world’s largest designers, manufacturers and marketers of rise performance and clean air products and systems for automotive and commercial vehicle original equipment markets and the aftermarket.
FMGIL was established in 1954 as a joint venture with Goetze-Werke of Germany, which was owned by Federal-Mogul LLC, one of the leading manufacturers of automotive components in the world. Based in Gurugram (Haryana, India), FMGIL engages in manufacture, supply and distribution of automotive components in India and internationally. It mainly offers pistons, piston rings, piston pins, valve seats, valve guides. It is the largest manufacturer of pistons and piston rings in India.
- The company caters to automotive, heavy-duty, motorcycles, energy, industrial, power generation, railway & defence industries. FMGIL manufactures world class products at its state of the art manufacturing facilities located at Patiala (Punjab), Bangalore (Karnataka) and Bhiwadi (Rajasthan).
Patiala is our first plant established in '54 as the JV with the Company as Dr. Khalid explained and then about 20 years later we established in Bangalore plant in '77 and then Bhiwadi plant got established again nearly 20-years later in 1996 for the sinter. All these plants are certified to the latest quality standard as well as the environmental standard as well as the safety standard which are basically IATF 16949, ISO 14001 and ISO 45001.
Our business is 85% I would say oriented towards OEM and 15% little less towards aftermarket. So the point I was trying to bring home with these two was that on one side, these drivers are helping us to improve the potential on the 85% of the business, but this 85% of the business which is increasing, so that is a potential increase, 14% is a challenge. So overall, we are in a much better situation, for example, the Scrappage policy will help in getting new trucks on the road or new vehicle on the road which is welcome business for 85% of our business. But then those trucks which are out or vehicle which are out, will also get out of our replacement zone. So, that's why I'm saying, for 85% of the business this is a key driver, but on less than 15%, it is a challenge.

In terms of leadership position, I would say the OEM market position in India, we clearly have a leadership position in Piston Ring and also in Valves Seats and Guides. In Pistons-we are overall number two, in Diesel Pistons-we are number one. But overall we are number two in Pistons.
And then as I mentioned, we are supplying to almost everyone who has an engine in India and some of these customers are appearing on your slides. Just want to emphasize that, since we are well diversified across the segment and within the segment, we are well diversified within the customer portfolio. So, none of our customers is more than 10% of our business. So, our customer portfolio, I would say, we are pretty risk-free.
We have clearly a leadership position in seats and guides as well as the piston rings. So, they are good, 30%-plus market share range approaching towards 40%, that kind of a range. And in piston also we are close to kind of a 30% range, if that answers your question.
We have an edge, I would say our agreement with the customer, any inflation or deflation we have to pass on with each other, so we have already had this arrangement with our customers. There is always a lag of three to six months but we accrue the books based on information or factual available. So, I have said that we have arrangement with the customers for passing on or recovering for any inflation or the raw material prices going down.
- We are looking to bring it gradually down for this labor cost, for example, now we have achieved from 26% to 24.5%, so maybe let us say, we are targeting maybe somewhere around 21%- 22 at least in the next one or two yearsʼ time.
The first step would be to retain the level where we have left from 2018-19, we were almost having somewhere around 18%/20% of ROCE, so we will be targeting that.

So, as such, we don't view ourselves as seasonality, but normally, going by the way the market goes in the OEM, the quarter ending March is normally the best quarter, because that being the financial year end. And also, somewhere in between this quarter of festive season, we see more sales than others. So, these are the two times where a little bit of seasonality catches up.
if you see the current I would say portfolio, you will see these vehicles are bang on coming back and whether you name Toyota, Innova, you are referring to Harrier or Safariʼs or MG Hector or Thar and those kind of vehicles, which are pretty much there on the wait list and all of them are diesel. So, frankly we were expecting such a good shift, and most of these vehicles are running only on diesel and this is bringing a lot of benefit to us, when we claim that we have done better than the market.

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ABOUT THE CO.

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