Mahindra CIE has come out with its annual report!

We will discuss –

  • Insights by the company on the auto sector
  • Management Discussion
  • The direction of the company

Main products for the company

  • Forgings Gears
  • castings
  • Aluminium products

Main operations

  • Europe
  • India

Europe business


  • Production for MHCVs in Europe has cumulatively fallen by ~17%
  • The forecast for MHCV growth in CY21 is 11.4%
  • However, CY18 numbers will once again be achieved only in CY24.

Light Vehicles

  • For Light vehicles, the data shows that the production fell by 22% in CY20
  • The PV market in Europe is forecasted to grow at a CAGR of 4.6%
  • A stable pattern of annual growth that is normally observed with this market will return from C22 onwards

India Business

Passenger Vehicles (PV)

  • Data from the SIAM shows that PV production declined in CY20 by 23.4%
  • Though the long-term picture for the PV remains healthy
  • IHS Global expects the Indian light vehicles ( to grow at a CAGR of 10.2% over a period of 2020-25

2 Wheelers

  • The Two-Wheeler industry production has shown the second year of decline of about 23% in CY20
  • As demand comes back CRISIL expects the domestic two-wheeler market to grow by 5-7% CAGR between FY20-FY25.


  • The Tractor industry in India has shown a healthy increase by about 11% in CY20
  • CRISIL forecasts are also positive with CAGR between FY20-FY25 expected to be 4-6%
  • The level of farm mechanization in India is still sub-optimal and this will drive demand


  • MHCV production in India which had dropped of 33% in CY19 was further hit by a steep drop of ~54% in CY20
  • While long-term forecasts for the next 5 years made by different agencies are quite divergent, they all forecast a sharp recovery from the low of CY20.

Mahindra CIEs performance in Europe

Operations in Germany and Italy were severely hit. MCIE embarked on restructuring to save cash. Demand is slowly coming back.

Mahindra CIEs performance in India

  • Efforts were accelerated to reduce the Break-Even level of the plants to make them more efficient
  • Focus on generating new orders increased and was aided by some customers choosing to shift sourcing from China to India.

Future strategy


  • CV forgings business in Europe has seen some business downsizing and layoffs to improve profitability
  • The strategy of reducing unprofitable business to improve profitability will continue in Germany
  • The car forgings business based out of Spain and Lithuania have normalized and margins in Q4CY20 are also back to pre-CoVID levels.The aim is to sustain these margins

India Business outlook

  • In India, all the market segments are expected to experience good growth in the short and medium-term
  • The order book situation is such that many verticals are going in for capacity expansion viz. foundry, magnets, gears, Bill Forge, etc.
  • The adverse supply-demand situation in the steel sector in India may result in steel price increases that could increase the price of vehicles and depress demand.

EV opportunity

  • A long-term change that the industry has to take into account is the change from Internal Combustion Engine vehicles to Electric vehicles (EV)
  • Shift to plug-in hybrid EVs as compared to pureplay Battery EVs (BEVs), will actually be beneficial.
  • EVs will mean a greater emphasis on stamped, plastic, and aluminum parts compared to forged, cast, or machined parts. Being a player with a presence across different processes especially in India is also well placed to tackle this change.

Key financial ratios remain stable

None of the top management takes a salary hike. Company to conserve cash does not pay dividend.

Balance sheet remains stable with the company focusing on conserving cash


  • MCIE is a class company
  • Management has smartly navigated through the crisis by conserving cash and restructuring to rationalize costs
  • Slowly but steadily as the auto sector comes back MCIE will be a big beneficiary of the upturn

More Annual report takeaways here. Our complete media coverage here.


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