Igarashi Motors India Ltd Management Discussions

Economic Overview Global Economy

The global economy exhibited remarkable resilience in 2023. The International Monetary Fund (IMF) has revised its projection for global economic growth in 2023 from 3.0% in its October 2023 outlook to 3.1%. Ongoing geopolitical challenges, volatility in energy and food markets, aggressive monetary tightening and higher-for-longer interest rates have contributed to the moderation in global economic growth.

Global inflation continues to recede faster than expected. It declined from 8.7% in 2022 to 6.8% in 2023. While headline inflation has sustained a decline from its unprecedented peaks, core inflation has proven to be sticky. Global headline inflation is expected to decrease to 5.8% in 2024 and to 4.4% in 2025.

Economic growth in several emerging markets and developing economies (EMDEs) has exceeded expectations in 2023. The US economy has experienced the strongest recovery among major economies. Its GDP is estimated to grow from 1.9% in 2022 to 2.5% in 2023. The European

Union (EU) has demonstrated resilience in navigating through unprecedented shocks from the prolonged geographical tensions war and higher interest rates. Although its GDP growth contracted from 3.6% in 2022 to 0.6% in 2023, the EU managed to avoid the recession in 2023.

Economic growth in several emerging markets and developing economies (EMDEs) has exceeded expectations in 2023. The US economy has experienced the strongest recovery among major economies.

According to the IMF, the Indian economy is expected to advance steadily at 6.5% in 2024. Both private and government investments are expected to be the primary driver of economic growth in 2024.

The economic outlook for 2024 will be impacted by higher interest rates, carrying the risk of a resurgence in inflation due to persistent core inflation and shifts in the anticipated monetary stance. Furthermore, the ongoing geographical tensions conflict has the potential to dampen the overall economic outlook of the EU. The escalation of geopolitical conflict in the Middle East and the Red Sea route could elevate logistics costs, energy and commodity prices, raise the risks of supply disruptions and pose downside risks to the global economy. However, with faster disinflation and steady growth, the possibility of a severe economic downturn has diminished. The global economy is expected to sustain its resilience in 2024. The IMF forecasts a global growth of 3.1% in 2024, with a slight uptick to 3.2% in 2025. The Asia-Pacific (APAC) region is expected to be the fastest-growing region in the world economy in 2024, driven by robust domestic demand in East Asia and India.

(Source: IMF Economic Outlook Update January 2024, EIA, S&P Global)

Indian Economy

Amid the volatile global economic environment, India continues to shine as a beacon of hope. It is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. As per the first advance estimates released by the National Statistical Office (NSO), real GDP is expected to grow by 7.3% in FY 2023-24 as against 7.2% in FY 2022-23, driven by buoyant domestic demand, moderate inflation, a stable interest rate environment, and strong investment activity. Despite repetitive food price shocks, CPI inflation is on a downward trajectory and eased to 5.10% in January 2024 from 5.69% in December 2023. The RBI keeps the policy repo rate unchanged at 6.50% and retains the CPI inflation forecast at 5.4% in FY 2023-24. Furthermore, the Index of Industrial Production (IIP) shows that the output of Indias industry grew by 6.1% in the first three quarters of FY 2023-24 compared to 5.5% in the corresponding period of last year. The Manufacturing sectors recorded a higher growth of 5.6%.

According to the IMF, the Indian economy is expected to advance steadily at 6.5% in 2024. Both private and government investments are expected to be the primary driver of economic growth in 2024, backed by improving prospects of rural consumption with easing of inflation, increased spending in an election year and the governments proactive policy measures. The Interim Budget 2024-25 reflects the governments continued focus on infrastructure development, economic stability, sector-specific developments, environmental sustainability and strategic global positioning. It sets the foundation for the vision of a Viksit Bharat (Developed India) by 2047.

(Source: Ministry of Statistics & program Implementation, Reserve Bank of India, Ministry of Finance, IMF Economic Outlook Update January 2024)

Industry Overview Global Automotive Industry

The global automotive industry exhibits resilience despite obstacles such as declining sales of electric vehicles (EV), widespread strikes in U.S. factories, supply chain disruptions, and escalating raw material costs in 2023. Despite challenges, there is a sense of optimism as recovery is evident in the global light vehicle market. According to S&P Global Mobility, the global sale of light vehicles reached ~90 Million units in 2023, reflecting an increase of 8.9% from 2022 levels. Global sales of new light vehicles are expected to increase by 5.6% y-o-y in 2024 and reach 95 Million units. The industry is benefiting from demand recovery and production increase due to inventory restocking efforts across many regions.

The automotive industry is anticipated to face another subdued year and a cautious recovery in 2024. The industry is weighed down by an uncertain demand environment influenced by sluggish consumer spending and macroeconomic factors, including higher inflation leading to elevated vehicle prices, extended marine transit times resulting from the adoption of slightly longer routes due to the Red Sea Crisis causing the lead time up by 15~20%, marginal increase in transit costs, and the re-emergence of supply chain disruptions due to escalating geopolitical tensions.

Indian Automotive Industry

The Indian automobile sector witnessed a reasonably satisfactory year in FY2024, with all segments demonstrating healthy growth. Passenger Vehicles (PV), Commercial Vehicles (CV), and Two-wheelers (2W) segments recorded single-digit growth, while three-wheelers (3W) exhibited a notable recovery. Implementation of various government schemes for the automobile sector is showing good results. The combined production of PV, CV, 3W, 2W and Quadricycles stood at 23.83 Million units in FY2024 (21.20 Million units in FY2023) with a 12.5% increase.

4W - Domestic Automotive Sales Trend

According to the Society of Indian Automobile Manufacturers (SIAM), the total sales of four-wheelers Passenger Cars stood at 4.21 Million units (3.89 Million units in FY2023) with 8.4% surge in domestic sales during FY2024. In the PV category, SUVs in particular saw strong demand, with extended waiting periods for key models. The strong performance of the PV segment was fuelled by positive consumer sentiments, new model launches and product upgrades from OEMs, greater availability, effective marketing, enticing vehicle offers, good monsoon outlook and recovery in the rural market. Furthermore, electric 4-wheeler sales reached 0.9 Million units in FY2024 (0.4 Million units in FY2023).

Despite concerns about high inventory levels, the PV segment is expected to witness growth in 2024, bolstered by new product launches, evolving consumer preferences and positive market sentiments.

4W - Automotive Actuators Market

Automotive actuators constitute an essential integrated component within electronic control systems for both commercial and passenger vehicles. The global automotive sector is undergoing a transformation driven by innovation and significant trends such as efficient ICE/Hybrid/ Plug-in hybrid/Mild Hybrid/Fuel cells powered vehicles, powertrain electrification, and connected vehicles, among other advancements. The modern passenger vehicle is equipped with over 100 motor units to manage varied applications including light source positioning, grill shutter, seat adjustment, HVAC systems, and fluid and refrigerant valves, among others.

The global automotive actuators market was valued at US$ 28.2 Billion in 2023 and is projected to reach US$ 44.6 Billion by 2032, growing at a CAGR of 5.1%. The markets growth is propelled by key factors such as the widespread adoption of automation and electronic systems across vehicle categories, ranging from economy to high-end vehicles, to enhance vehicle and passenger safety and in-vehicle comfort level. Passenger car is the leading segment in the automotive actuators market.

The significant expansion in the automotive industry has led to a rising demand for downsising vehicle engines to improve fuel efficiency, serving as a primary driver propelling the growth of the automotive actuators market. Furthermore, escalating environmental awareness has prompted governments of several countries to promote the integration of electric and hydraulic automotive actuators in vehicles, thereby contributing to market growth.

Drawing insights from interactions with global OEMs and customers, it is anticipated that efficient ICE and Hybrid systems will remain the primary drivers for the majority of 4W powertrains in the coming decade, even as BEVs gain traction in specific regions. Industry experts foresee consolidation among Tier-1 and Tier-2 players in the ICE segment within the global auto industry. Igarashis strategic approach is to strengthen its position as a leading global player in the TAM segment to meet the increasing demand for Actuator motors in ICE and Hybrid Systems.

Indian 4W - Actuators Market

Following the adoption of BS-VI regulations and advancements like ETC, EGR, WGA, and VGT, the Indian 4W actuators market expanded. Analysts report that the Indian automotive actuators market, including ETC, VGT, EGR, WGA, ETV, and fuel pump, reached 10.8 Million units in 2023 and is forecasted to grow to approximately 14-16 Million units by 2026, with a compound annual growth rate (CAGR) of 15% to 18% from 2022 to 2026. Major players in the Indian actuator market, specifically in engine air management, include Bosch, Denso, Mikuni, KSPG, Dellorto, PVNA, and Turbo Energy. Your Company is working closely with these industry leaders to fortify our market presence, with the goal of positively boosting market share >48% and solidifying our position as a leading player in the industry.

Electric Motor Growth Platforms Broad-banding of Actuator Motor Applications - 4W

With a robust global track record spanning two decades, your Company stands poised to strengthen its position as a leader in the global 4W Actuator market with 13% global PV market share for Engine Air Management applications. Our commitment to innovation drives us to diversify actuator applications, extending beyond air management (ETC, EGR, VGT) to include Safety applications (EPB, PLA, GBA, and EVP), as well as Vehicle Body applications (TOCD). These versatile motors are integral components in the Internal Combustion Engine (ICE), Hybrid, and Battery Electric Vehicle (BEV) car segments.

In the realm of Engine Air Management, our dedicated development team is actively engaged in over 25 programs, collaborating with 13 Tier-1 customers globally and domestically. These efforts are projected to yield approximately 20-25 Million motors over the next 4-5 years.

Similarly, in the Safety system, our development team is currently focussed on 9+ programs with key customers across the global automotive market. Anticipated volumes for these initiatives stand at around 25-30 Million units over the next 4-5 years. Since a leading global Tier 1 customer had awarded new business, we have planned to launch 4 programs during next year with an annual volume of 2.75 Million units. Our Team put an extraordinary effort to develop these programs in a recordable time of nine months (normally takes 18 to 36 months).

In the arena of Body systems, our development team is spearheading 3 new application programs with leading

Tier-1 customers for TOCD, Seat and HRA applications for the global PV market. Forecasts indicate a volume of approximately 13~17 Million motors over the next 5 years. Furthermore, our research and development team is actively engaged in the development of side door open and close system motors with a prominent global customer.

Electric Parking Brake (EPB)

The traditional mechanically-operated handbrake is undergoing a transformation towards modernisation. In contemporary vehicles, the conventional handbrake has given way to the electric parking brake, a sophisticated electronically-controlled system featuring an integrated actuator (motor) within the rear brake caliper. Activation is facilitated by a switch conveniently located within the cars interior consisting of 2 motors per EPB per car.

Our development team is actively engaged in 8 programs in partnership with 5 renowned Tier-1 customers both internationally and domestically. These initiatives are expected to yield a volume of 20 Million motors over the next 4-5 years, with commercial launch slated for FY2025 alongside three Tier-1 customers.

Furthermore, recognising the significance of the global market, your Company is strategically venturing into the East Asia market with a strong focus on the EPB sector. Your Company has initiated 2 programs targeting major OEMs in the region, aligning with our commitment to expanding our market reach and catering to evolving industry demands.

Gear Box Actuators (GBA)

The Gear Box Actuator (GBA) is a critical component in modernised manual transmission gear box that is responsible for engaging and disengaging the gear in the gear box using an electro-mechanical device through electronic control unit for the optimised mechanical transmission. Presently, our development team is working on a GBA with a global Tier-1 customer, with 3 motor per GBA, the projected volume of 5~6 Million in the next 5 years. Further, the product has successfully proven in the testing at the customers facility and full-time production is planned in late 2024.

Park Lock Actuators (PLA)

The application of PLAs is technology-agnostic, representing a crucial component in both ICE vehicles with automatic transmission and Electric Vehicles (EV). PLAs play a vital role in preventing vehicle rollaway during parking, as well as facilitating features like the Hill Assist mode, and enhancing theft protection.

Presently, our development team is actively involved in 3 programs alongside esteemed global Tier-1 customers, with a projected volume potential of 4 Million motors over the next 4 years. We are pleased to announce that the product has successfully undergone testing and validation at the customers facility, marking a significant milestone in our journey towards delivering innovative solutions to meet market demands.

Trunk Opening and Closing Device (TOCD)

Trunk Open-Close Devices (TOCDs) are installed in both ICE-powered vehicles and EVs in a technology-agnostic manner. This device utilises an actuator (motor) to automatically unlatch the trunk upon switch activation. Typically integrated into high-end vehicles, this feature enhances the premium feel of the vehicle, particularly in developed countries. It is positioned for widespread adoption across all vehicle categories in the near future.

In alignment with the Minus China strategy and support of Igarashi, Japan, a Global Tier-1 Customer has closely collaborated with your Company to achieve the successful launch of the New Generation TOCD product within an unprecedented timeframe for commercial launch in FY2025. The RFQ volume is anticipated to reach 10 Million units over the next 4-5 years.

Motor Assembly for Seat Adjustment

As a part of aesthetics in automotive technology, Seat adjustment actuators are growing the market for the drivers ergonomics while driving. Our development team is working with global and domestic tier-1 customers for seat movement motors, with a projected volume of 3~5 Million in the next 5 years.

Sub-Assemblies for DC Brushed & Brushless DC Motors

Your Company stands as a leading supplier of sub-assemblies tailored for DC Brush/Brushless Motors utilised in Seat applications, which include motor, armature, and brush holder assembly, as well as stator and armature assemblies for Window Lift applications, and armature and carrier assembly for Fuel pump applications. Our comprehensive range of sub-assemblies caters to a diverse clientele, serving both global and domestic customers with top-notch quality and reliability.

Moreover, we are actively pursuing numerous new RFQ enquiries for these applications, demonstrating our unwavering dedication to business growth and innovation.

Armature Assemblies for Window Lift Motors

The automatic window lift has emerged as a standard feature within the 4W passenger vehicle segment, reflecting the growing demand for convenience and innovation. The Indian Window Lift Mechanism (WLM) market has witnessed substantial growth, reaching 15.3 Million units in FY2024, and is poised to expand further to 22.2 Million units by FY2027, demonstrating a robust CAGR of 13%.

Your Company has maintained a strong presence as a reliable supplier of WLM armature assemblies to key market players for over two decades, boasting a production record of 120 Million parts since 2010 for both global and domestic clientele. In FY2024, your Company held a significant one-third share of the domestic market, and we aspire to increase this share by an additional 10% over the next couple of years.

Currently, our development team is actively spearheading nine new programs in collaboration with major market players, with an estimated volume potential of 16 Million units in the forthcoming years. These initiatives are slated for launch in FY2025, underscoring our continuous commitment to innovation and market leadership.

Fuel Pump

The Domestic Indian fuel pump market reached 4.5 Million units in FY2024 and is projected to expanded to 5.3 Million units by FY2027, exhibiting a compound annual growth rate (CAGR) of 5.4%. With a proven history of supplying fuel pump carrier assemblies to major market players, your Company has delivered over 50 Million parts since 2010, serving both global and domestic markets. We are presently collaborating with key automotive market players, whose active participation will be instrumental in doubling our market share in the near future.

Carrier Assembly for Fuel Pump

With two decades of experience in manufacturing fuel pump sub-assemblies for Brushed DC motors, your Company has established itself as a trusted supplier to global Tier-1 customers. Currently, our development team is engaged in six new programs with key market players, projecting a potential volume of 23 Million units in the upcoming years. These new initiatives are scheduled for launch in FY2025.

Armature Assembly for Fuel Pump

Your Company is currently underway with the moulded Armature Assembly project for a prominent domestic Tier-1 auto client. Our development team is also focussed on a new program with another domestic Tier-1 Customer, with the challenging design using carbon commutator rather than Brass commutator. We forecasting a potential volume of 4.5 Million units in the forthcoming years. These fresh initiatives are anticipated to be rolled out in FY2025.

Motor Sub Assembly for Seat - Automatic Height Control

Your Company has been providing motor sub-assemblies and brush holder assemblies for seat actuators to respected global Tier-1 customers. With a track record spanning a decade in supplying motor sub-assemblies, we have consistently served as a dependable supplier to major market players, delivering over 25 Million parts for the global market since 2014.

Currently, our development team is deeply involved in five new programs with a key market player, projecting a potential volume of 38 Million units in the forthcoming years. These new initiatives are slated for launch in the near future.

Head Rest Actuators

The Head Rest Actuator in a car is a mechanism that allows for the adjustment of the head rest position (Height and Angle) to enhance passenger comfort and safety. Our development team is working with one domestic tier 1 customer with estimated volume of 3 Million in the next 4 years.

BLDC Water Pump Sub-Assemblies for Coolant Control Hub

The Coolant Control Hub (CCH) system plays a crucial role in thermal management within BEV and Hybrid powertrain systems. Serving as a centralised unit, it regulates the temperature of both the battery and traction motor, optimising their performance and extending their operational lifespan. Utilising BLDC technology for enhanced efficiency and durability, the water pump ensures effective cooling.

During the year, your Company was nominated by a leading global Tier-1 player for the development of B-samples for a CCH pump program. These B-samples underwent successful validation and testing at our customers facility.

With an RFQ volume of approximately 7 Million units for the European market over a 5-year period, the Igarashi Europe team is actively engaged in advanced discussion towards the commercial launch of this program. Furthermore, coolant control valve BLDC Stator and Rotor program was awarded by the same customer and application has secured business worth 3.2 Million units, with product launch slotted during the year 2025.

Indian Fast Moving Electrical Goods (FMEG) Market BLDC Ceiling Fan Motor Market - Industry Overview

The Indian ceiling fan market (CFM), including Induction and BLDC motors, reached 61 Million units in FY2024. Within this market, the Brushless Direct Current (BLDC) fan segment accounted for 8.4 Million units, affirming substantial growth potential. According to Industry experts, the Indian ceiling BLDC fan market is expected to grow at a CAGR of 27% during 2024-29 and reach 28 Million units.

The industry is undergoing a seismic shift, led by new entrants and the mandatory Bureau of Energy Efficiency (BEE) star labelling for ceiling fans starting January 1, 2023. This regulatory change, coupled with heightened energy conservation awareness, sparks a surge in demand for highly energy-efficient fans, particularly those with a BEE 5-star rating. This demand is met by fans equipped with energy-efficient BLDC motor technology, consuming 30-35W. Representing the new product generation, BLDC fans offer higher speed, less electricity consumption, and lower heat emission, meeting market airflow needs. The anticipated expansion of the Indian CFM market to 67 Million units by FY2026, with BLDC fans reaching 15~17 Million units, underscores growth potential. Additionally, premium ceiling fans gain traction, featuring BLDC motors and advanced technology like IoT capabilities, app operation, and decorative features. These innovations drive demand for energy-efficient ceiling fans with BLDC motors, an area your Company aims to capitalise on through emphasis on premium, standard, and economy series.

Your Company has populated more than 3.2 Million BLDC solutions to Indian CFM since the launch of this product in the year 2020. Your Company maintained 22% market share in BLDC Fan segment by working with six key market players who collectively hold more than 60% of market share in the organised BLDC fan market.

Our development team is working on six customers for ceiling fan motor and sub assemblies covering 15 programs with 5 Million motors and controllers of 20 programs with volume of 6.6 Million in next 3~4 years.

Electronic System Design & Manufacturing (ESDM)

Over the years, your Company has substantially strengthened its expertise in electronics design, evidenced by the introduction of new products and enhancements in quality. Our printed circuit boards (PCBs) now feature RF remote and IoT capabilities, reflecting our commitment to innovation. Additionally, the introduction of the Wall Regulator PCB, compatible with standard induction fan regulators, has opened up opportunities in government tenders and institutional contracts.

To address increasing demand, we have invested in high-speed dual-lane EMS machines. Furthermore, we have developed a round-type PCB controller, complete with under-light functionality, tailored for industry leaders. Mass production of this controller for premium fans commence in 2023.

Our dedication to quality is evident through the implementation of stringent testing procedures. We have incorporated Electrical and Thermal Stress test machines, Load testing machines, and a dedicated Noise-Free Room for motor checks. These facilities underscore our steadfast commitment to maintaining superior quality standards throughout our product lifecycle, from manufacturing to market delivery.

The manufacturing quality of products is key to achieving customer satisfaction and enhancements have been made to improve quality from the part level to the final products. Receipt parts undergo testing with temperature and load stress to ensure compliance with requirements and long-lasting quality. The produced products are subjected to 12 electrical and functional parameter tests, along with BIS validation requirements to ensure the best quality for the customer.

R&D Development Projects EV Motor Development

With the rapid growth of the EV market, particularly in the Indian E2W and E3W sectors, your Company is actively engaged in developing a 3.3 kW traction motor for E2W vehicles. Concept samples have been produced and tested to assess preliminary performance. Collaborating with a European customer, we aim to secure a significant share of the Indian E2W market. The development and validation of the customised 3.3 kW motor concluded successfully by the end of 2023. Additionally, we are closely working with a domestic OEM to develop a 7.5 kW traction motor for E3W vehicles, providing concept samples for vehicle-level fitment and performance verification.

BLDC Fuel Pump

Leveraging two decades of proficiency in fuel pump technology, your Company is dedicated to producing sub-assemblies for the brush motor, particularly tailored for esteemed global Tier-1 customers. There is a growing inclination among global customers towards BLDC ? sub-assemblies (Stator & Rotor) for fuel pumps, mirroring the trend of OEMs transitioning from conventional PMDC motors to BLDC technology. This transition is motivated by the quest for heightened efficiency and improved system reliability in 4-W applications.

We are closely working with a domestic OEM to develop a 75 kW traction motor for E3W vehicles, providing concept samples for vehicle-level fitment and performance verification.

The total domestic fuel pump market is projected to expand to 5.3 Million units by FY2027, demonstrating a compound annual growth rate (CAGR) of 5.4%. Your Company is deeply engaged in designing and developing Stator and Rotor sub-assemblies for fuel pumps with BLDC technology, serving both domestic and global markets, with an estimated potential volume of around 10 Million units.

Electronics - R&D

Your Companys electronics R&D has developed products across standard, premium, and super-premium segments in the ceiling fan category as well as in non-ceiling fan variants such as table fans, wall mount fans, pedestal fans, exhaust fans, and controllers designed for air coolers.

• Standard ceiling fan features speed controls, timers and remote-controlled operations with RF remote

• Premium ceiling fan is equipped with IoT connectivity, enabling seamless integration with Alexa and Google controls using voice commands

• Super premium ceiling fan features IoT, multi-tone under-light and surround lights, breeze and sleep functions

• Igarashi developed IoT solution with various service providers like Tuya, Espressif and IOTify to cater to multiple customer needs

• Offline voice recognition system is a new milestone achieved to control a BLDC fan with voice without internet connectivity

• Smartsense is a technology added to a premium range of products in which the Fan detects the temperature of the room and adjusts the speed on its own, representing a new innovation and the first-of-its-kind in the industry

• Our R&D team developed a high-voltage solution for BLDC ceiling fans and 0.75 HP water pump motors

BLDC TPW and Exhaust Fan Application

Aligned with the ongoing emphasis of the Indian government on the Make in India initiative, your Company is actively involved in the creation of competitive PCB controllers for Domestic Exhaust fans and Table/Pedestal/Wall (TPW) fans. Currently, these BLDC fans are primarily sourced from China due to perceived technical limitations and cost advantages. However, we anticipate significant progress in the development of these fans upon sample submission, negotiations, and the initiation of production (SOP).

Additionally, your Company focusses on developing PCB controllers for Water Pumps and Desert Coolers, catering to distinct niche markets. The uptake of these endeavours relies on regulatory impetus.

Manufacturing Strategy

Your Company has consistently achieved notable progress in strengthening its in-house machine building capabilities to enhance cluster automation, improve quality, optimise processes, and reduce machine maintenance costs.

In line with the goal of boosting productivity per person per day, your Company has strategically identified key assembly lines and implemented partial cluster automation, resulting in maximum productivity gains with prudent investments. In the fiscal year 2024, the Company successfully completed four retrofitting projects for cluster automation.

Due to the diligent efforts to bolster manufacturing capabilities over the past year, your Company has successfully drawn in new customers and broadened its product portfolio with the introduction of three additional ranges. These expansions are poised to make a substantial contribution to overall revenue growth.

In preparation for the launch of these new products, your Company has devised a dual-pronged strategy for industrialisation. Expert teams in product development and process engineering are working collaboratively to assess the feasibility of integrating new products into existing assembly lines, thereby improving capacity utilisation and minimising capital expenditure. In instances where a completely new assembly line is necessary, the objective is to substantially enhance automation levels.

Your Company has made notable progress on both fronts. For instance, the in-house machine building team successfully constructed a brand-new assembly line for a BLDC range product, achieving over 90% automation. Concurrently, the modification of existing assembly lines to accommodate the requirements of new products with minimal capital investment represents a challenge that our machine building and manufacturing teams have embraced. One such instance is the successful retrofitting and modification of a product line with new technology automated stations for one of the new products, specifically the motor for EPB application.

Key Financial Ratios Standalone Operation as per SEBI Listing Obligations and Disclosure Requirements (Amendment) Regulations, 2018

Key Ratios	FY 2023-24	FY 2022-23
Debtors Turnover	3.79	4.23
Inventory Turnover	4.37	4.68
Interest Coverage Ratio	2.09	1.75
Current Ratio	1.37	1.41
Debt Equity Ratio	0.25	0.21
Operating Profit Margin (%)	10.2	3.24
Net Profit Margin (%)	1.00	1.00
Return on Net Worth (%)	2.00	1.00

Risk and Concerns

Your Company has a strong risk management and ESG policy, providing guidance to both the Risk and ESG Management Committee and the internal risk management team for efficiently managing business risks. The Risk Management Committee comprises Mr. Hemant M Nerurkar (Chairman), Mr. L Ramkumar, Mrs. SM Vinodhini and Mr. R Chandrasekaran.

Your Companys key risks and their corresponding mitigation measures are depicted below:

Risk	Mitigation Strategy
Macro risk
• Global trade disruption due to political/trade tensions and realignment	• Diversifying products and markets to create a de-risked and resilient business portfolio
• Major economies slowdown	• Strengthening customer relationships to align resources with market dynamics for mutual benefits, and exploring opportunities for non-organic growth and strategic alliances
• The escalating tensions and security challenges in the Red Sea region

 

Technology risk
• Shift towards electrification and semi-autonomous vehicles	• Expanding the product portfolio for electric vehicles and optimising the performance of existing products for autonomous vehicles
• Evolving consumer preferences in Passenger Car and Electrical Consumer Durable Industry	• Consistently upgrading the technology of existing products to enable broader and varied applications (e.g. Safety systems & Body Systems, apart from Air Management), including expanding the energy-efficient BLDC motors portfolio for consumer electrical applications
• Advancements in product technologies

 

Market risk
• Existing and new players pose competition in the market, along with pricing pressure from customers and shifts in energy ratings for BLDC fans	• Establishing a strong customer base through multiple value propositions on products and services.
• Concerns arise regarding geographical localisation of facilities and customer concentration	• Real-time monitoring of logistics pipeline and global warehouses
	• Consistently implementing cost-competitive strategies, focussing on star-rated BLDC fan motors, and diversifying into new geographies and customer segments to maintain competitiveness and expand the business mix

 

Risk	Mitigation Strategy
Operational risk
• Adhering to strict quality standards with new performance specs	• Upgrading design, validation, FMEA, and testing capabilities to meet new standards, including collaboration for system-level validation
• Tackling supply chain obstacles	• Strengthening relationships with key supply chain partners and establishing alternative sources
• Automating manufacturing, managing capital, and securing skilled labour	• Implementing cluster automation and robotics in manufacturing, integrating flexible higher capacities, and conducting regular training programmes to enhance employee skills and well-being

 

Financial risk
• Maintaining financial stability to navigate economic fluctuations	• Maintaining leverage at low levels and regular dialogues with financial institutions
• Ensuring liquidity and access to capital for operational needs and growth initiatives	• Engaging in forward contracts aligning with the hedging policy, regularly monitored by the Audit Committee to mitigate forex risk
• Managing risks related to foreign exchange volatility, commodity price movements, and product liability to safeguard financial health and reputation	• Implementing mechanisms for passing through commodity price changes with a time lag to expedite responses to commodity movements
	• Maintaining liability insurance coverage at optimal levels in line with industry standards and customer requirements

 

Cyber security risk
• Cyber security breaches-	• Enforcing internal control measures to safeguard networks, computers, programs, and data, including ESG
• Protection of IT systems and data	• Engaging external experts for regular cyber security threat audits and continuously reinforcing stringent security policies, employee training and procedures, including implementing advanced firewalls and anti-virus software

 

Health, Environment and Safety risk
• Increasing environmental concerns and regulatory compliance	• Striving to achieve the greenest and safest operations, including adherence to environmental regulations and meeting customer requirements in alignment with global sustainability policies
• Health and safety of the workforce	• Conducting periodic audits to ensure the implementation of best safety measures across various stages of operations, along with planned wellness programs for all employees

 

Natural calamities risk
Disruption of business operations due to natural calamities, epidemics or pandemics	• Adopting procedures to manage situations during natural calamities and establishing a robust business continuity plan
	• Establishment of a management task force for addressing potential eventualities

Human Resources

Your Company considers its employees as the most valuable asset, recognising the crucial role they play in its day-today operations. Your Company consistently organises leadership, technical, and behavioural training to enhance the skills and capabilities of its employees. The robust HR policy fosters equality and transparency across the organisation, creating a safe, synergetic and conducive work environment for employees to deliver optimal results, ensuring that employees goals align with the organisations growth vision. Your Company actively engages and inspires its workforce, supporting them in achieving personal goals while fostering overall company growth. As on March 31, 2024, your Companys total employee base stood at 675.

Internal Control Systems and Their Adequacy

Your Company has established a strong internal control system. The adequacy of the system is validated by its role in ensuring proper authorisation, recording and reporting of transactions, along with safeguarding company assets. Moreover, your Company has well-documented policies and procedures, reinforced by extensive reviews conducted by internal auditors. These review reports are periodically evaluated by the management and the Audit Committee of the Board, contributing to a business environment with minimised risks.

Cautionary Statement

The Management Discussion and Analysis contains forward-looking statements describing the Companys objectives, projections, estimates, and expectations. All such statements are subject to risks and uncertainties. Actual results might differ substantially or materially from those either expressed or implied in the Statement depending on the factors that could affect the Companys operations.