- PPAP was incorporated in 1978 for the manufacture of custom made extrusion products
- PPAP is led by Mr. Ajay Kumar Jain who is the Chairman and Managing Director. He is also the President of Toyota Kirloskar Suppliers Association.
- Abhishek Jain is the Executive Committee of Honda Suppliers Association.
- PPAP commenced the automotive business in 1985 with a start of Maruti cars in the Indian market
- The company was converted into a public limited company in 1995 and was listed on the Indian Stock Exchange in 2008
- PPAP is the leading manufacturer of Automotive Sealing Systems, interior and exterior injection molded products
- PPAP working with three Japanese companies for the technology requirements and relationships Today PPAP manufacture over 500 different products for their customers and their target is to achieve Zero defect and Zero PPM in quality and delivery performance
- All the policies and decisions of PPAP are in line with what the customer desires.It is this strategy that has resulted in PPAP leadership position in the respective product segments
- The company’s core competence is in Automotive Sealing system and Injection molded products
- The company primarily services the Passenger Car segment and they have recently started supplying to the LCV segment as well
- PPAP is capable of doing in-house product designing and manufacturing of tools and validation of their products also. This integrated capability gives PPAP a very strong competitive edge over their competitors as they are able to give customers an integrated cost effective solution for theirproduct requirements
State of the Art manufacturing facilities
- Located in Noida, Greater Noida, Chennai and Pathredi in Rajasthan
- PPAP have established a Joint Venture with their technology partner Tokai-Kogyo. After the establishment of this company, as a group, PPAP can cater to theentire Automotive Sealing System requirements of the customers
- All PPAP plants are environment quality, safety and health related certified
- All Japanese OEMs operating in India are PPAP customers, a few European, local car makers like TATA and Mahindra are customers of PPAP
- PPAP have recently added Suzuki Motorcycles which is a leading two wheeler manufacturer as a newcustomer. They would be manufacturing injection molded parts for them.
- About 10% of PPAP products are CKD Exports to their customers to various countries all overthe world like Japan, Europe, Mexico, Venezuela, Argentina and othercountries
- PPAP has been awardedthe ‘Economic Times Polymers Award’ for 2017 for excellence in plastics under the automotive category
- PVs seem to be the least impacted with single digit decline Y-o-Y while two wheelers and CVs seem to be the most affected with a strong Y-o-Y double digit decline
- Passenger vehicles and Commercial Vehicles in India on a consolidated basis fell by 18.66% in December; the steepest in 16 years; hit by weak consumer sentiment and cash crunch post demonetization
- Two wheelers sales crunched by almost 20% Y-o-Y while Passenger domestic sales declined by 8%
- Players like Maruti Suzuki and Renault India have managed to report good volume numbers on the back of the strong orderbooks and new launches like Baleno, VitaraBrezza and Kwid
- Tata Motors and Toyota India have also outperformed, supported by the launch of their new products InnovaCrysta, Fortuner and Tiago and a low base of reference last year.
- Hyundai India performed in line with the industry; however Honda Cars India registered a 19% Y-o-Y decline in its monthly domestic sales during December.
- Mahindra & Mahindra also underperformed reporting an 8% fall in volumes owing to higher exposures in the rural economy.
- The management of Maruti has indicated that it is expected to grow at least 10% in the current financial year despite the impact of demonetization.
- The launch of the Ignis which was announced on 13thJanuary is expected to keep the tempo high for Maruti
- App-based cab aggregators such as Uber and Ola are also pushing overall car sales accounting for over 1 lakh cars or almost 1/3rd of total sales to fleet operators last year
- Overall in the Automobile sector, Passenger Vehicles will be the least hurt as bulk of the sales happens through financing and with the interest rates getting cut, thick and fast, this can make Passenger Vehicles sales to outperform the industry
- Amid a volatile demand scenario nearly 24% of the passenger car volume over the past year has come from the sale of new models
- The bulk of PPAP sales would primarily be to OEMs, PPAP do not cater toaftermarket
- PPAP is focusing on increasing the customer base, so in the last quarter PPAP added the SML Isuzu as into their customer base, in this quarter PPAP has already added Suzuki Motorcycle as its customer
- For Plastic Sealing System the company is catering to almost 70% of the Indian market and90% market share with each of their customers’ components.
Increasing use of thermoplastics:
- The plastic product is more premium because it gives a better appearance than rubber product since it gives higher compression set ratio it provides better insulation from air, water,noise and dust from getting in the vehicle
- The primary sealing is going to continue in the rubber space for PPAP, basically due to an important property called compression set, which is much higher in rubber compared to a plastic or a thermoplastic compound, so due to this property the primary sealing system is going to continue in the rubber space only, secondary sealing system like outer, inner can be shifted from rubber to thermoplastics, so for the Indian market all the Japanese OEMs already using plastic or thermoplastic as the secondary sealing system has been supplied by PPAP
- TATA has already converted from rubber to thermoplastics and PPAP is supplying these parts. The plastic for secondary sealing system is used by Mahindra & Mahindra left and European OEMs
- PPAP recorded a total income of INR 84.23 crores as compared to INR 71.78 crores in the corresponding quarter of last year
- The parts business contributed INR 74.14 crores and tools contributed INR 9.89 crores
- Around INR 21 lakhs coming from the subsidy from Rajasthan government
- Part sales have grown by 7% Y-o-Y. EBITDA grew by 32.7% in the current quarter under review and stood at INR 15.99 crores as compared toINR 12.05 croresin the previous quarter last year
- The EBITDA was up by 6.03% as compared to INR 15.08 crores in Q2 FY17
- The company’s EBITDA margin stood at a robust 18.98% in Q3 FY17 as compared to 16.79% last year and 18.4% in the previous quarter
- Profit after tax stood at INR 6.33 crores in this quarter compared to INR 3.51 crores last year and INR 5.27 crores in the previous quarter
- The company recorded a PAT margin of 7.52% in the quarter under review as compared to 4.89% last year same quarter and6.43% in the previous quarter of this financial year
- Total income stood at INR 247.19 crores as compared to INR 225.69 crores in the same period last year
- EBITDA for nine months was at INR 43.98 crores as compared to INR 39.01 crores last year
- The company recorded an EBITDA margin of 17.79%; the net profit was at INR 15.17 crores which is up by 37.41% compared to INR 11.04 crores in ninemonths last year
- PPAP is supplying almost INR 1200-1300/- per car for Marutiand from Suzuki Motors Gujarat it is in the range of about INR 1500-2000/-
- December 2016 was expected to be a litmus test for the Auto Industry with the impact of demonetization getting starker in the presence of inventory pile up at the dealers’ ends post the festival season of Diwali
- The debt equity ratio of the company as on 31st Dec’16 stands at 0.28
- Total revenue from the tools for the nine months is close to INR 22 crores
- ROCE for the quarter, it is over 15% and the current gross block is around INR 300+ crore in Q3 FY17
- The other income is around INR 80 lakhs income which is expected by consistent subsidy and rents, interests and gain on foreign currency fluctuations etc.
- CAPEX commitments are being met by their internal accruals
- Money spent for CAPEX or OPEX or maintenance CAPEX. The company is very closely reviewing the timing, the efficiency and the best possible way either a make scenario or a buy scenario
- ROCE is positively going to be a good result with improved operation efficiency
- SMG (Suzuki Motors Gujarat) business, is going to make two models; one is the Baleno which is going to getshifted to Gujarat and the new Swift is going to come. So, for the Baleno model, PPAP is going to support Maruti from PPAP existing locations namely Manesar and in Gujarat
- Around Rs.50 crores of CAPEX towards Chennaiinvestment and Gujarat investment and maintenance expenditure is expected. Hence PPAP is expected to spend between INR 10 – 15 crores on an annual basis
- PPAP is also exploring new opportunities especially in the region of injection molded parts with SMG.
- The strategy of PPAP is going tobe concentrating SMG regarding injection molding parts due to the demand and PPAP have already bought land last year and building plan isready, PPAP is just waiting for the confirmation from Marutito start building up small facility at Gujarat
- PPAP is focusing on improving their operational efficiency by an internal benchmarking and by valuing each and every paisa that is being spent on the company operations
- PPAP is focusing on Korean customers like Hyundai and working on two fronts on developing the Hyundai business, one islocalization of the existing parts under mass production.Hyundai is presently importing secondary sealing from Korea and planning to localize their requirements, PPAP is approaching Hyundai directly through tier-1 for this product
- PPAP has already supplied parts to Hyundai for evaluations and the parts have been on trial on the vehicle as early as last week and the results are positive.
- For Maruti, PPAP the next three years business strategy is 90% is on total volume and next 3 models like Ignis and other new launches, it is going to be 100%
- The company is focusing fundamentally on making the operations of the company strong.
- Injection side, the market share is still and small because only Honda is their major customer and some insignificant share from Maruti
- PPAP is basically focusing on rubber sealing systems, and for plastic sealing systems PPAP is discussing on future prospectus, they are not that focused on injection products
- The PPAP is striving for 17-18% sustainable operating margins for the coming years
- The company have 2 basic processes and one is the extrusion process and the second is injection process,where numerous products can be made onthese processes, hence the company wants to explore white good industry options in future
- From the new business from Suzuki Motorcycles, the revenue is not as expected as they get from Maruti or Honda but this will improve customer-base and de-risking for PPAP in future
- The capacity utilization may increase in future from the current 65-70% capacity utilization with the new plants at Gujarat and Patherdi, Rajasthan becomes operational