Setco Automotive

- Management indicated they are working on ideas at the promoter level to raise money, which would also help reduce promoter share pledging. - No finalized plan or application for fundraising has been made yet. - Due to current market volatility and COVID-19 uncertainties, no fundraising is expected in the next couple of quarters. - The company prefers to wait for market stabilization before making any capital raising moves. - The focus remains on organic growth and improving operational performance before considering external funding.

- No major CAPEX planned for the next two years as the existing capacity is sufficient up to Rs. 850-900 crores turnover (Page 9). - Past investments include capacity expansion around 2018-2019 to increase capacity by about 30% (Page 9). - Investments made in Lava Cast foundry, in-house diaphragm plant, and a modern automated press facility with progressive tooling for assembly (Page 8). - Some hindsight that investments could have been deferred to reduce interest cost, but these were strategic and aimed at meeting future demand (Page 8). - Currently focusing on stabilizing operations and improving utilization rather than immediate new CAPEX (Page 11, 12). - Considering strategic moves and raising funds at promoter level to reduce pledge percentage, but no finalized plans yet (Page 10). - Expansion into tractor segment with new supplies expected by Q3 FY21; also growth in exports for Lava Cast business (Pages 6-7).

- The company expects visible growth in OE medium and heavy commercial vehicle industry within a quarter or two (Page 6). - Production is anticipated to ramp up with two shifts operational, targeting Rs. 50 crores per month turnover, which is around 70-75% capacity utilization (Page 7). - Long-term export business for Lava Cast expected conservatively between 5,000 to 8,000 metric tonnes annually, helping de-risk cyclicality (Page 6). - Tractor segment business expected to reach Rs. 50 to 75 crores in OE within three years, with additional aftermarket potential (Page 13). - From Q3 FY21, business expected to pick up significantly, with expected EBITDA positivity and breakeven in Q4 for subsidiary Lava Cast (Page 14-15). - Aftermarket share predicted to increase to approximately 70% of turnover due to its resilience compared to OEM (Page 7-9). - Capacity expansion up to Rs. 850-900 crores turnover potential without major CAPEX (Page 7, 9).

- Setco Automotive is confident the worst period is behind and is well positioned for recovery as the economy rebounds. - Q2 standalone operations expected to break even, with EBITDA turning positive at Lava Cast possibly by Q4 FY '21. - The company expects a ramp-up from Q3 FY '21, targeting Rs. 50 crores per month turnover, reflecting approx. 70-75% capacity utilization. - Earnings per share and EBITDA expected to improve significantly in the coming years as demand recovers and fixed cost savings are realized. - Interest coverage expected to nearly double at Rs. 600 crores turnover due to stable contribution levels (~27%). - Aftermarket business, currently about 70% of turnover, is more stable and supports growth with higher margins than OE. - Investments in product diversification (e.g., tractor segment, exports from Lava Cast) expected to contribute to future revenue and profit growth. - Overall outlook is positive with steady demand recovery, cost efficiency, and strategic expansion supporting profit growth.

- As of August 2020, the order position in the aftermarket segment has returned to pre-COVID levels. - Original Equipment (OE) industry started picking up in Q2 FY21, with expectations of no year-on-year drop from Q3 onwards. - Demand in Q2 expected to be around 75%-80% of pre-COVID levels, improving further in Q3 and Q4. - Company is ramping up production, moving from one shift to two shifts by August 2020, ready to meet increasing demand. - New orders in the pipeline include supply of casting to OEMs like Tata Motors and Ashok Leyland, though market slowdown delayed actual buying. - For lava cast division, an order for producing approximately 12,000+ tonnes (~50% of capacity) is expected. - Tractor segment orders expected to start around Q3 end FY21, with pricing fixed. - Overall company expects to reach about Rs. 50 crores turnover per month from Q3 FY21.