Introduction:

Founded in 1985, Subros Limited is a joint venture public limited company that has revolutionized the automotive industry with its cutting-edge thermal products. With a strong focus on quality, innovation, and technical collaboration, Subros has become a trusted name in the field of air conditioning and refrigeration systems.

History:

Subros Limited, a leading Indian manufacturer of thermal products for automobiles, has a rich history dating back to 1985. Here’s a glimpse of their journey:

Founding and Collaboration (1985):  The Suri brothers, Ramesh Suri and Lalit Suri, founded Subros in 1985 as a joint venture public limited company. They partnered with Denso Corporation of Japan, acquiring both technical expertise and a 13% ownership stake.  Suzuki Motor Corporation also joined the venture, holding another 13% stake.

Early Years and Growth (1986-2000): Subros began operations in 1986, initially focusing on assembling automotive air conditioning systems. They leveraged Denso’s technology and built a strong foundation for domestic production.  In 2000, they renewed their technological agreement with Denso to solidify their collaboration.

Becoming a Leading Manufacturer (2000-2010):  Subros steadily grew, transforming from an assembler to a full-fledged manufacturer. They established themselves as the only integrated facility in India capable of providing complete air conditioning and heater systems for automobiles. Their product range expanded to include compressors, evaporators, tubes, hoses, heaters, blower units, and condensers. 

Vision:

Strategy: Company aims acceleration of value creation through management strategies that reflect our corporate philosophy. Our corporate philosophy is aligned with our strategic pillars and comprehensive excellence pillars which are aligned with company vision and values. Realization of strategy is tracked by financial, customer satisfaction, employee engagement and sustainability targets.

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Industry Outlook

Historically, the Indian Automobile Industry has been a good indicator of economic performance. The automobile sector plays a key role in both macroeconomic expansion and technological advancement. The domestic automotive industry has seen a robust revival in FY 2022-23, aided by remarkable recovery in economic activities and increased mobility. The demand sentiments for the majority of the automotive segments viz. Passenger Vehicles, Commercial Vehicles and Tractors have remained robust.

The mobility landscape will fundamentally transform over the next 10 to 15 years with ACES trends, autonomous driving, connected cars, electrified vehicles and shared mobility amplifying their impact. The evolving landscape presents a perfect opportunity for Indian automakers to lead the disruptive changes occurring across segments and gain a significant competitive advantage.

Automobile Domestic Sales Trends

TRENDS:

Research and Development Electrification is clearly emerging as the biggest trend in the automobile industry. Driven by stringent emission and fuel economy (CAFE) regulations across the globe, pure ICE vehicles will no longer be a viable propulsion choice for passenger vehicles. The EV Market is expected to grow at CAGR of 49% between FY 2022-2030.

As India moves towards increasing “green” standards, roadmaps for future technologies are focused towards energy-efficient and environment friendly products. Our dedicated teams are working proactively to meet these anticipated requirements by harnessing advanced technologies.

R&D capabilities have helped us to locally design and develop HVAC, battery and traction motor cooling systems, controller systems, and its integrations for the electric bus segment.

Key Milestones:

Over the years, Subros achieved several milestones. They set up manufacturing plants in Noida, Manesar, and Pune, catering to a wider market.  They adopted eco-friendly practices, becoming the first in India to use non-CFC refrigerants in 2002.  They also actively participated in environmental initiatives and social welfare programs.

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Roadmap for Future

• The Company has partnered with technological incubators, which are approved by Central Government for future technology development.
• Rise of shared mobility is paving the way to a new customer segment. The significant rise in leasing of vehicles and the ease of commuting it offers for customers has helped this business model. This has created a new revenue pool for automobile makers and components suppliers.
• The Company anticipates a tremendous transformation stemming from consumer preferences and environmental concerns shifting towards cleaner and more economical modes of transportation. The business model, product portfolio and day-to-day operations have to be transferred from conventional energy to a greener source of energy.

Business

Business Verticals:

• Passenger Cars segment (AC & ECM)
• Commercial Vehicle – Bus AC
• Railway AC
• Transport Refrigeration System
• Residential and Commercial Cooling Products

Market Share:

Product wise break-up:

Revenue contribution from Geography presence:

Subros earns from domestic market only

Customer segment:

Presence:

At present, the Company is operating at a capacity of 2.0 million units per year and is one of the largest and only integrated  manufacturing units for auto air conditioning systems. The Company has grown by 25% in FY 22-23 with CAGR of 10% during 2015-23.

Facilities:

MANESAR PLANT

Plant in Manesar in vicinity of the MSIL factory on a land area of 38,000 sq. mtrs. The plant is equipped with the latest state of the art manufacturing and testing facilities. Manesar plant produces REC condensers, HVAC assembly, kitting parts, radiator and ECM assembly. Subros also has another plant in the vicinity of the main plant having HVAC assembly operation.

NOIDA PLANT

Compressor and Heat Exchanger Plant

The compressor plant produces compressors for various vehicle applications. The facility covers Precision Machining centres, Nocoloc Brazing Furnaces, Vacuum Brazing Furnaces and Tube Processing equipments. The production lines incorporate extensive in-line quality checking equipment to ensure that the quality is in-built in to the process. The Heat Exchanger plant produces multi flow condensers, heater cores and RS evaporators.

Pressure Die Casting Plant

The facility has unique Squeeze & Vacuum Pressure Die Casting to produce high quality intricate castings for compressor blocks.

KARSANPURA PLANT

Manufacturing facility in Karsanpura, Gujarat, is strategically located in close proximity of Suzuki Motors Gujarat Hansalpur Plant. Our plant stands encompassing a sprawling plot area of 17.0 acres. The plant is equipped with advanced manufacturing lines and productivity. Karsanpura plant produces HVAC assembly, kitting parts, injection molding parts and radiators. Plant has expansion plans to add condenser assembly and RS evaporator in next two years. We use special purpose machines for high quality and productivity. Best in class safety features are installed in the plant.

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CHENNAI PLANT

Chennai plant caters to the customers based in southern part of India. The plant produces HVAC assembly, condensers and kitting parts. The plant also manufactures AC systems for the commercial vehicle segment, bus segment, transport refrigeration segment, rail segment and AC parts for After Market requirements.

PUNE PLANT

Pune plant has been built in Chakan, Pune on a land area of over 24000 sq. mtrs. The plant’s vicinity to Tata Motors Limited helps in providing faster and efficient service to the customer. The plant also caters to the requirements of all other customers based in Western part of India.

NALAGARH PLANT

Nalagarh plant is a fully integrated State of the Art facility having manufacturing and assembly of residential and commercial cooling products (Window AC, Split AC, Commercial units). The Plant includes manufacturing of Fin – Tube Type heat exchangers, Fin Press, Expanders, Automatic Brazing Machines, Cross Flow Fan Manufacturing & Plastic Molding along with Fully Automated Paint shop & other related equipments. It is backed by strong design capability and also has Laboratory to design & test the complete product as per customer requirements.

SUBROS TECHNICAL CENTER & DENSO SUBROS ENGINEERING CENTRE, NOIDA

Driven by the need to be self-reliant, reduce product development costs and acquire a competitive edge, Subros has invested heavily to augment Research and Development. This setup comprises the entire product design, development, and validation cycle.

The facility enables virtual prototyping and simulation of various Thermal Management Systems for optimum efficiency in design, space allocation, airflow and cooling under different climatic conditions, among other things. The design and analysis facilities include Catia V5, Unigraphics, CREO, CAE (NASTRAN)/CFD (CCM) + 1D Simulation (KULI). In addition, Subros has established a comprehensive validation centre for both component and vehicle testing.

The company continuously invests in innovative technologies and has several patents. The main focus behind the design is safety and sustainability Subros also has a separate Joint Venture with DENSO called DENSO Subros Engineering Centre (DSEC), which focuses on application design for thermal products. The centre comprises an Environment Test Chamber (Wind Tunnel), equipped with test components in temperatures varying from -30°C to +60°C under varying speed and sun load conditions, a Calorimeter (Bench Test Rig) and Vibration Test Machines for component testing. The technical centre is also suitably enabled to carry out endurance and reliability tests with advanced machines like burst tests, salt spray chamber tests, and pulsation t

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SUBROS TOOL ENGINEERING CENTRE

The Subros Tool Engineering Centre (STEC) is a world-class facility equipped with state-of-the-art machineries such as CNC Machining Centre, WireEDM, CNC EDM, and CNC Lathe, along with other conventional tool room machines. This neoteric facility is also endowed with CAD-CAM facility with Unigraphics NX19 along with CAE softwares Mold flow, Hyper form, Ad Stefan, which forms the backbone of this design and development center. Our qualified and experienced team fulfils and tooling requirements such as PDC Dies, Injection Moulds, Sheet Metal Tools.

Our Quality section is equipped with Coordinate & Contour Measuring Machines to ensure a Final Quality Product. To ensure customer goals, we have a dedicated program management team with regular project tracking through Bulls Eye Software. With its competence to handle dies up to 30 tons, STEC is adept at niche tooling to meet specialty tool requirements for import substitution and exports.

Suppliers:

• Minda Corporation Ltd
• Ahluwalia Contracts (India) Ltd
• Majestic Auto Ltd

Customers of Subros

Passenger Cars segment (AC & ECM)

• TATA
• Maruti suzuki
• Suzuki
• Denso
• Nissan
• Renault
• Mahindra
• Force

Commercial vehicle segment

• TATA
• Mahindra
• VE commercial vehicle
• DAIMLER
• Denso
• Force
• SML ISUZU
• Ashok Layland

Railways

• Medha servo drives
• Rail Coach Factory (Kapurthala) 
• BHEL
• Indian Railways
• Bombardier

Residential & Commercial

• Voltas
• Whirlpool of India Ltd
• AMSTRAD
• Havells India Ltd
• Haier Electronic group co Ltd
• Others:
• Talbros Automotive Components ltd
• Tadano Escorts
• Global Autotech Ltd
• Caryaire Equipments India Pvt Ltd
• CAF- Power Automation

Financials:

Fundamental

• Market Cap ₹ 4,050 Cr.
• Current Price ₹ 621
• Stock P/E 41.5
• High / Low ₹ 734 / 320
• Book Value ₹ 138
• Dividend Yield 0.16 %
• ROCE 17.2 %
• ROE 11.2 %
• Face Value ₹ 2.00
• Promoter holding 36.8 %
• Profit after tax ₹ 97.6 Cr.
• Debt ₹ 43.1 Cr.
• EPS ₹ 15.0
• Debt to equity 0.05
• Return on assets 6.33 %
• ROCE 17.2 %
• Dividend Payout 12.0 %
• Quick ratio 0.67

Key Financial Ratios

Balance Sheet

Profit & Loss

Cash Flow

Share Holding:

Strength- Weakness- Opportunities -Threats

Strengths:

1. Integrated Manufacturing Unit: Subros is India’s largest and only integrated manufacturing unit for vehicle air conditioning systems. It produces compressors, condensers, heat exchangers, and other components needed for AC systems across various segments (passenger cars, buses, trucks, refrigeration transport, off-roaders, home air conditioners, and railways) ¹.
2. Technical Expertise: Collaborations with Denso Corporation and Suzuki Motors provide Subros with technical knowledge and expertise in developing automotive air-conditioning systems.
3. Market Presence: Subros has a strong market presence due to its long-standing experience and reputation in the industry.

Weaknesses:

1. Dependency on Collaborators: While collaborations are beneficial, Subros’s reliance on Denso and Suzuki for technical knowledge could be a potential weakness.
2. Volatile Automotive Industry: The automotive industry is subject to economic fluctuations, affecting demand for air conditioning systems.

Opportunities:

1. Growing Automotive Market: As the Indian automotive market expands, Subros can capitalize on increased demand for air conditioning systems.
2. Diversification: Exploring new segments (such as electric vehicles) and expanding product offerings can open up growth opportunities.
3. Export Potential: Subros can explore international markets for its products.

Threats:

1. Competition: The automotive air conditioning industry is competitive, with other players vying for market share.
2. Technological Disruptions: Advances in electric vehicles and alternative cooling technologies may impact traditional air conditioning systems.
3. Supply Chain Risks: Dependence on suppliers for raw materials and components poses supply chain risks.

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