MGB110 – STRATEGIC MANAGEMENT

Group 11: Assignment – 2

Group 11 Members:
Hasthavaram Harshini (20BBA0156)
Mohammed Fawaaz A (20BBA0095)
Purnima K (20BBA0045)
Pooja Shree (20BBA0219)

Submitted to:
Dr. Sivakumar A,
VIT Business School

Submitted on:
08.09.2021
 PESTEL ANALYSIS:

POLITICAL FACTORS:

According to sources, the government is anticipated to cut the expenditure for the automobile
parts sector under the production-linked incentive (PLI) program to around Rs 26,000 crore,
and the proposal would be approved by the Union Cabinet soon. G N A axles which makes
axle shafts will also come under this program. Along with this, the government also launched
a PLI plan for the car and auto component industries last year, with a five-year budget of Rs
57,043 crore. G N A Axles is applicable for this as well. Travel restrictions also means there's
a cause for delay in the delivery of the products to the respective clients of the company in
India and abroad.

ECONOMIC FACTORS:
GNA AXLES is a very strong performer in the stock market. Its performance in the last
quarter has dramatically surged along with other automobile component manufacturers.
(overall sales revenues for the June-21 quarter increased fourfold to Rs328.96 crore.
Revenues increased 6.08 percent sequentially from Rs310.12 crore in the Mar-21 quarter,
with COVID having very little impact on sales.) G N A Axles has grown its dividend by an
average of 7.7% each year over the last three years. Supply chain restrictions have resulted in
a significant increase in raw material costs, which are up almost 31% year over year despite
similar sales. Net margins were unchanged at 8.96 percent. The auto components business is
anticipated to expand by 20-23% in revenue this fiscal year, owing to a rebound in the
local car sector and strong exports and GNA Axles is clearly amongst the companies
which have benefitted from this. Most experts anticipate further sharp growth in this
company due to this. It should be borne in mind that G N A Axles is already a company
that is known for its strong financial position and its consistent performance.

SOCIAL FACTORS:

One of the company's clients, John Deere India Private Limited, has awarded it the Partner
Level Performance Award in attaining excellence for the year 2020. Automotive Axles
Limited also awarded GNA Axles the Platinum Award for Best Quality Forgings. These
awards have helped GNA Axles further solidify their brand image and reputation amongst
car manufacturers as one of the leading automobile transmission companies in the world.
The company's top line has seen significant growth, and its profile has improved
significantly as well.

TECHNOLOGICAL FACTORS:

There is currently a semi-conductor shortage. This supply bottleneck poses a major challenge
to the industry though underlying demand remains strong. G N A Axles is also one of the
companies that is majorly affected by this.

Even as demand recovers following the second wave of the epidemic, a global scarcity of
semiconductor chips is affecting automotive manufacturing and may have an impact on
wholesales in August and September. GNA’s ability to scale up its
operations, increase its customer base in international markets, coupled with efforts to adhere
stringent delivery schedules, enhancing both product quality and its manufacturing process
has helped the company grab a significant share in the exports market.

LEGAL FACTORS:
The truck market is seeing a trend reversal due to the easing of axle load requirements.
Rather of the typical pattern of tonnage (carrying capacity) increase outpacing vehicle sales
volume growth, tonnage growth is currently trailing volume growth. Trucks' rated load
capacity increased as a result of the revised axle load regulations, allowing transporters to
carry more weight, along with a loosening of restrictions on overloading in some
jurisdictions, that has resulted in a decrease in the proportion of higher-tonnage cars to
overall sales. G N A Axles is likely to be majorly impacted by this shift, as the previously
decreed rules are not as strictly implemented and this loosening of restrictions in going to
cause a change in production, procedures, demand, etc. The increase in axle load, announced
in July, applies to heavy vehicles, which G N A axles does makes axles for.

Another significant change that G N A Axles is embracing is that the GVW of a two-axle
vehicle (two wheels in the front axle and four wheels in the back) has been increased to 18.5
tons from 16.2 tons under the new standards. From 25 tons to 28.5 tons for a three-axle truck,
and from 37 tons to 43.5 tons for a five-axle truck. This would lead to a surge in CV sales in
the year of implementation of the norm. With a large number of trucks being replaced,
transporters will fetch lower resale value for the trucks that they would be selling, hampering
their income.

6 FORCE ANALYSIS:
COMPETION:
ConMet, Morgan, Fleetguard Filters and Keihin Corporation are G N A Axles’ major
competitors.
ConMet is a global leader in the production of commercial vehicle components. For the
heavy truck sector. they develop, create, and produce unique wheel ends, aluminium castings,
and plastic components. Morgan is a truck and van body manufacturer that was formed in
1952. FFPL (Fleetguard Filters) is a filtration product manufacturer and provider. Keihin
Corporation () is a Japanese auto and motorcycle components manufacturer. Amptek Auto,
Enkai Wheels are other competitors to GNA.

Competition between companies in the industry is very fierce due to deregulation of the
industry by the government

More and more foreign companies (Ford, Volkswagen, etc.) are increasing their presence

Import of components Cheaper activities from China are increasing

The threat level is moderate due to the concentration of industry groups in

• Foreign companies are increasing their presence in India.

substitute products

Bargaining power of the suppliers

Bargaining power of the customers

• The threat of substitute products remains low as public transport is still

underdeveloped even in most cities.

• The rapid development of the Indian economy has changed the structure of tourism.

• Vendor trading power is moderate as there are a large number of producers of

• Some of them have their own subdivisions that provide them with a link.

• High demand from automakers makes them less negotiable

• Low product differentiation Competition :

1. Talbros
2. Datson engineering works pvt.ltd
3. Fitwel gasket company private limited