JBM Auto Ltd Management Discussions

OVERVIEW OF THE ECONOMY

A. Global Economy

Despite concerns over disinflation in 2022-23 and central banks raising interest rates to tackle inflation, the global economy has shown resilience, averting the feared stagflation. Factors such as increased government spending, sustained household consumption and an unforeseen expansion in labour force participation have contributed to this steady growth.

The April 2024 World Economic Outlook publication, ‘Steady but Slow: Resilience amid Divergence, offered a baseline forecast of steady global growth of 3.2% for 2024 and 3.3% for 2025, which remains unchanged from 2023. Economic growth will likely remain modest, albeit slightly accelerated in advanced economies and modestly slowed in emerging markets. However, long-term growth projections will likely clock in at historic lows.

Inflationary pressures are easing faster than anticipated in many regions, leading to a more balanced outlook than the previous year. Global inflation will likely decrease steadily, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. Within this forecast, advanced economies will likely return to their inflation targets sooner than emerging markets. Despite this, core inflation may decrease at a slower pace.

The IMF report for April 2024 prescribed that central banks must ensure a smooth transition as inflation approaches its target level. Moreover, a renewed emphasis on fiscal consolidation is essential to create space for future investments, manage debt levels sustainably, and ensure long-term financial health.

Overall, the global economic outlook is cautiously optimistic. While immediate risks are balanced, addressing long-term challenges is crucial. These challenges include high borrowing costs, withdrawal of fiscal support, and long-term effects of the COVID-19 pandemic and geopolitical tensions. The forecast for global growth five years from now is at its lowest in decades, suggesting a slowdown in the convergence of living standards among countries. Responsible monetary and fiscal policies, growth-oriented reforms, and international collaboration are vital to navigating the current landscape and forging a more secure and sustainable future. (Source: IMF April 2024 – World Economic Outlook publication, titled ‘Steady but Slow: Resilience amid Divergence).

Indian Economy

Amidst global challenges in FY24, India achieved significant economic milestones. Despite a worldwide slowdown driven by high interest rates and geopolitical tensions, India demonstrated remarkable resilience, retaining its position as the worlds fifth-largest economy. As per the second revised estimation by MOSPI, India is poised to achieve a growth rate of 7.6% during FY24, surpassing the previous years 7%. Robust domestic consumption, increased government capital investment, a fortified financial sector and stable monetary policies fueled this growth.

Indias GDP Growth (%)

Both the manufacturing and service sectors showcased strong performances. Manufacturing saw an impressive growth rate of 8.5%, with the index of industrial production (IIP) for manufacturing registering a significant 5.6% growth compared to the previous year. Meanwhile, the service sector remained resilient, with the purchasing managers index (PMI) consistently above 50, indicating sustained expansionary activity.

Additionally, GST collections surged by 11.7%, reflecting robust domestic demand. However, global geopolitical tensions between Russia and Ukraine, led to soaring oil prices and grain scarcity, exacerbating global inflation. India was not immune to these effects and experienced higher inflation rates. To address this, the Reserve Bank of India (RBI) maintained a tight monetary policy, keeping key policy rates unchanged at 6.5%, effectively managing inflation within the tolerance band, with the average CPI inflation estimated at 5.4% during the fiscal year.

Outlook

In FY25, the World Bank forecasts a growth rate of 6.6% for India. The service sector, which will likely thrive, while the industrial sector will likely maintain its strength, notably driven by vibrant construction and real estate activities, will buoy this growth. The World Bank observed that the rapid increases in investment and government consumption, which will likely continue, were supported by the substantial expansion witnessed in Q4 of FY24. Inflationary pressures that spiked in mid-2023 will likely alleviate and hover around 4.5% throughout FY25. This metric is within the RBIs 2-6% target range. The subsiding of inflationary pressures will create more policy space to ease financial conditions. The World Bank expects Indias growth to moderate to 6.6% in FY25 before picking up in subsequent years due to the dividends of a decade of robust public investment.

Union Budget 2023-24

Despite being an interim Union Budget, the policy announcement for FY25 highlighted the governments intention to focus on infrastructure development, economic stability, sector-specific advancements, environmental sustainability and strategic global positioning. It declared that these all aligned with the vision of a ‘Viksit Bharat (Developed India) by 2047. The key highlights include:

? A record expenditure target of 11.11 Lakhs Crores, accounting for 3.4% of GDP, signifying an 11.11% increase. ? Increased allocations for the Ministry of Road Transport and Highways (MoRTH) to 2.78 Lakhs Crores and the Ministry of Railways to 2.55 Lakhs Crores.

? Three major economic railway corridor programmes under the PM Gati Shakti initiative were identified to enhance logistics efficiency and reduce costs. Establishment of a

1 Lakh Crore corpus through a fifty-years interest-free loan for financing research and innovation in emerging domains, including advanced defence technology.

? Expansion of the Production Linked Incentive (PLI) scheme with a 33.5% increase in the outlay to 6,200 Crores.

? Enhanced budget allocation for the Ministry of Rural

Development to 1.77 Lakh Crores, including a boost of 86,000 Crores for the Mahatma Gandhi National Rural

Employment Guarantee Scheme (MNREGA) to stimulate the rural economy.

? Indias fiscal deficit improved to 5.6% of the GDP in FY24, down from the earlier estimate of 5.9%, and an expected fiscal deficit of 5.1% in FY25.

Policies aimed at the automobile sector encompass:

? Expansion and enhancement of the electric vehicle (EV) ecosystem through the augmentation of manufacturing capabilities and charging infrastructure.

? Provision of support for electric buses through a price safety mechanism.

? Creation of entrepreneurship opportunities for vendors involved in the supply and installation of charging infrastructure, along with employment prospects for skilled youth in manufacturing, installation, and maintenance of electric vehicles.

? Funds have been allocated for replacing government vehicles, as part of the governments green and clean mobility strategy.

? Customs duty exemption was extended to the import of capital goods and machinery needed to manufacture lithium-ion cells for batteries used in electric vehicles. i. Performance of the Auto Industry in FY24

India has become the fastest-growing economy in the world in recent years. This fast growth, rising incomes, a boost in infrastructure spending and increased manufacturing incentives have accelerated the automobile industry. The two-wheeler segment dominated the automobile industry because of the Indian middle class.

Indias auto component industry is an important sector driving macroeconomic growth and employment. The industry comprises players of all sizes, from large corporations to micro entities, spread across clusters throughout the country. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to more than 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of Indias GDP. The Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2 million by 2026.

Segment-wise Automobile Performance in India in FY24 (No. of Vehicles in Lakhs)

					Domestic Sales
S. No.	Category	FY23	FY24 Production	% Change	FY23	FY24	% Change	FY23	FY24 Exports	% Change
1.	Passenger Vehicles	45.87	49.02	6.86%	38.90	42.19	8.45%	6.63	6.72	1.42%
2.	Commercial Vehicles	10.36	10.66	2.97%	9.62	9.68	0.56%	0.79	0.66	-16.31%
3.	Three-wheelers	8.56	9.93	16.04%	4.89	6.92	41.53%	3.66	3.00	-17.94%
4.	Two-wheelers	194.59	214.69	10.33%	158.63	179.74	13.31%	36.52	34.58	-5.30%
	Total	259.37	284.30	9.61%	212.04	238.53	12.49%	47.59	44.96	-5.52%

(Source: SIAM)

Production

According to the Indian Automobile industry body "Society of Indian Automobile Manufacturers" (SIAM), the industry produced a total of 284.30 Lakhs vehicles, including passenger vehicles, commercial vehicles, three wheelers and two-wheelers in FY24 as against 259.37 Lakhs in the previous year, registering a growth of 9.61%

Domestic Sales

Domestic sales grew by 12.49%, as reported in sales, i.e. 8.45% in passenger vehicles, 0.56% in commercial vehicles, and 41.53% in three-wheelers.

Export Sales

Exports sales were down by 5.52%, but passenger vehicle sales grew by 1.42%. Segments other than passenger vehicles reported a decline in sales, i.e. 16.31% in commercial vehicles, 17.94% in three-wheelers, and 5.30% in two-wheelers. ii. Investments in the Automobile Industry

The Indian automobile sector recorded an inflow of huge investments from domestic and foreign manufacturers. FDI inflow in the sector stood at $ 35.65 billion between April 2000 and December 2023, around 5.35% of the total FDI inflows in India during the same period. Some of the recent investments made/planned for the auto component sector are as follows: ? Ola Electric became the first auto company in India to launch an IPO in over two decades. It will likely be worth

8,500 Crores ($ 1.01 billion).

? Auto components maker Happy Forgings launched its IPO on 19 December 2023. It comprises a fresh equity issue of 400 Crores ($ 47.99 million) and an offer for sale

(OFS) of 71.59 Lakhs shares.

? In October 2023, Tata Motors signed a definitive agreement to acquire a 27% stake in Freight Tiger, a software-as-a-service (SaaS) company, for 150 Crores

($ 17.99 million).

? In August 2023, Bosch earmarked 480 Crores

($ 57.39 million) for R&D and an additional capex of

480 Crores ($ 57.39 million).

? In June 2023, Tata Motors invested $ 2 billion towards development of new products and platforms over the next four years.

? In May 2023, Apollo Tyres invested around 1,100 Crores

($ 133.17 million).

? In May 2023, Gabriel India inked a pact with Inalfa to invest 170 Crores ($ 20.58 million) to set up a new manufacturing facility. Inalfa Gabriel Sunroof Systems (IGSS) in Chennai which became operational in the first quarter of FY24.

? In May 2023, Tesla proposed setting up a manufacturing plant in India, and the Government of India announced plans to develop a modified production-linked incentive scheme (PLI 2.0) for electric vehicles and advanced chemistry cell batteries to attract fresh investments thereof.

? In May 2023, Bridgestone looked to expand its retail footprint in India by 20-25%.

? In May 2023, Tata Technologies announced a partnership with TiHAN – IIT Hyderabad to collaborate on software-defined vehicles (SDV) and advanced driver assistance systems (ADAS) that incorporate the latest technologies.

? In April 2023, Green Cell Mobility invested 1,500 Crores

($ 181.59 million) to double the supply of EV buses in India.

iii. Government Initiatives for the Automobile Industry

? The Government of India has reaffirmed its commitment to EVs and its mission to achieve 30% electric mobility by 2030. The budget announced customs duty exemption on importing capital goods and machinery required to manufacture lithium-ion batteries that typically power EVs.

? The Bharat New Car Assessment Programme (BNCAP) will strengthen the value chain of the auto component sector and drive the manufacturing of cutting-edge components, encourage innovation, and foster global excellence. ? The Government of India notified that the FAME scheme (FAME-II) was extended for another two years until 31^st March 2024. The Automotive Mission Plan (AMP) 2006-26 has been instrumental in ensuring growth for the sector. The Indian automobile industry will likely achieve a turnover of $ 300 billion by 2026 by expanding at a CAGR of 15% from its current revenue of $ 74 billion.

? In November 2020, the Union Cabinet approved a PLI scheme in automobile and auto components with an approved financial outlay over five years of 57,042 Crores

($ 8.1 billion). In September 2021, the government issued a notification regarding a PLI scheme for automobile and auto components worth 25,938 Crores (US$ 3.49 billion).

In February 2022, the government received an investment proposal worth 45,016 Crores (US$ 6.04 billion) from

20 automotive companies under the PLI auto scheme.

This scheme will likely create an incremental output of

2,31,500 Crores ($ 31.08 billion).

? The AMP 2016-26 will help the automotive industry growth and will benefit the Indian economy in the following ways: ? Increase the auto industrys contribution to Indias GDP to over 12%.

? Create an additional ~65 million direct and indirect jobs.

? Implement an end-of-life policy for automotive vehicles and components to ensure safety and environmental preservation.

(Source: IBEF)

B. Indian Auto Components Industry

India has become the fastest-growing economy in the world in recent years. This fast growth, rising incomes, a boost in infrastructure spending, and increased manufacturing incentives have accelerated the automobile industry. After a robust 14% growth in FY24, the auto parts/components industry will likely see a modest 5-7% increase in revenues for FY25, per the latest ICRA Limited (formerly Investment

Information and Credit Rating Agency of India Limited) report. This projection comes as the sector navigates through a shifting landscape of domestic demand and global economic uncertainties. ICRA forecasts that companies in the industry will likely see a slight improvement in their profit margins next year. This uptick is attributable to increased production efficiency and more automobile components. However, the industry is not resting on its laurels, with plans to invest between 20,000 Crores and 25,000 Crores in the coming fiscal year to expand capacity and develop new technologies. Indias auto component industry is an important sector driving macroeconomic growth and employment. The industry comprises players of all sizes, from large corporations to micro entities, spread across clusters throughout the country. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to over 1.5 million people.

C. Electric Vehicle Industry

Global Outlook of the Electric Bus Segment

The Multiple Benefits of City Bus Electrification Boost Adoption in Advanced and Emerging Economies

Sales of electric buses, comprising all medium- and large-sized buses, are far ahead of those of other heavy-duty vehicle (HDV) segments (including medium- and heavy-duty trucks). Several European countries (such as Belgium, Norway and Switzerland) and China achieved sales shares above 50% in 2023, and more than one-fifth of bus sales were electric in Canada, Chile, Finland, the Netherlands, Poland, Portugal and Sweden. Almost 50,000 electric buses were sold globally in 2023, equating to 3% of total bus sales and bringing the global stock to approximately 635,000. This relatively low share is primarily due to the limited sales shares in most emerging markets and developing economies (EMDEs) and the low market penetration of electric buses in some larger markets such as the United States and Korea.

Early policy support for electrifying public transport and the availability of domestically produced electric buses, coupled with incentives, meant that China took an early and significant lead in electric bus sales. In 2020, China was responsible for about 90% of electric bus sales worldwide. In 2023, this fell to around 60%, largely due to a decrease in domestic demand for electric and ICE buses and, to a lesser extent, increasing sales in other regions. The fall in Chinese demand could be a consequence of the early success seen for electric buses – around 65% of Chinas electric bus stock was deployed before 2019. It may also be linked to the ending of purchase subsidies for BEV and PHEV buses at the end of 2022. Despite Chinas lead in global sales having shrunk, Chinese manufacturers continue to export large volumes of electric buses, accounting for over 85% of electric city bus deployments in Latin America. They have also increased their market share in the European Union from 10% of bus sales in 2017 to 30% in 2023, driven by companies such as Yutong and BYD.

City buses, in particular, have strong potential for electrification thanks to their relatively fixed driving patterns and lower daily travel distances, which have spearheaded growth in electric bus sales. In the European Union, BEVs reached a 43% sales share among city buses in 2023, demonstrating clear progress towards the proposed target of 100% of city bus sales being zero-emission vehicles (ZEVs) by 2035. Over the same period, just 1% of European Union coach sales were battery-electric, though uptake is increasing worldwide.

Electric bus sales and sales share by region, 2015-2023

There has also been encouraging progress in EMDEs, where a focus on the co-benefits of electric buses – such as reduced air pollution and greater access to public transport – has boosted take-up. The wide availability of electric buses in already competitive markets has supported this growth. Cities across Latin America, such as Bogota and Santiago, have recently deployed nearly 6,500 electric buses. BasiGo, Africas largest electric bus company, has an order book of 350 buses, representing almost 2% of electric bus sales outside of China in 2023, and aims to sell a further 1,000 electric buses in Kenya and 200 in Rwanda in the coming years. Along with the high potential for electrification of city buses, infrastructure developments can also support the transition. The Bus Rapid Transit (BRT) system, based on the use of dedicated bus lanes with priority access at intersections and off-board fare collection, can support the establishment of high-capacity, efficient services for cities. The new all-electric BRT system in Dakar – the first on the African continent – is a strong example. This network, announced at the end of FY23, would have served 320,000 passengers daily. Elsewhere, the European bus rapid transit of 2030 (eBRT2030) scheme aims to improve the urban transport environment by developing innovative solutions for electric BRTs, with demonstrations in Amsterdam, Athens, Barcelona and Prague, among other cities.

Global Electric Bus Demand

Electric Buses are Projected to Represent 30% of Buses Sold Globally by 2035 Based on Existing Policies Several governments have recently announced new funding for electric and zero-emission buses. For example, the United Kingdom has launched a second iteration of its zero-emission bus programme, providing ? 129 million (almost

$ 166.8 million) to support deployment over the next few years. As announced in late 2023, India is targeting 50,000 electric buses on its roads by 2027. There are also longer-standing programmes, such as the zero-emission bus rapid-deployment accelerator partnership launched in 2019 to accelerate the deployment of zero-emission buses in major Latin American cities.

Funding programmes of this kind and heavy-duty vehicles regulations, including the European Unions revised carbon dioxide emission standards for HDVs and Californias Advanced Clean Fleets, are expected to increase the sales share of electric buses. In STEPS, electric bus sales increase fourteenfold from 2023 levels, to about half a million in 2035, representing 30% of bus sales. The stock reaches 4.5 million in 2035 in STEPS, or 20% of the total.

As announced at Conference of the Parties (COP) 28, India aims to reach 50,000 electric buses by 2027, backed by a $ 390 million fund supported by the Indian and US governments to provide loans to expand electric bus manufacturing. In the Stated Policies Scenario (STEPS) and the Announced Pledges Scenario (APS), electric bus sales shares will increase to about 35% in 2030 and 60% in 2035. Electric truck sales remain low in both scenarios to 2035, at under 10%.

Electric Bus Demand in India

In India, cities contribute to 82% of GDP and are responsible for 78% of greenhouse gas emission and air pollution. The transport sector in India alone accounts for approximately 13.2% of the total carbon dioxide emissions, and road transport has been known to contribute up to 90% of total greenhouse gases emission from the transportation sector in India. As the country continues to urbanise rapidly, policymakers are continually working on plans that abide by the required emissions reduction.

One such action is to incorporate the electrification of Public Transport Authorities (PTAs) buses for intra-city and intercity operations. Public transport is considered sustainable for various reasons, including its ability to move more people and simultaneously reduce congestion and pollution on the roads.

A strong pull from customers, including public transit operators and city governments, is one of the significant reasons for the strong performance of e-buses globally. Regulatory and political influences and government subsidies are also paving the way for the adoption of electric buses in India. In August 2023, the Government of India launched a PM e-Bus Sewa scheme to augment bus operations by deploying 10,000 electric buses in PPP mode. The scheme has two segments: ? Segment A: Augmenting the city bus services in 169 cities will enable associated infrastructure support for the development/upgradation of depot infrastructure and creating behind-the-meter power infrastructure like substations for e-buses.

? Segment B: Green urban mobility initiatives in 181 cities envisage green initiatives like bus priority, infrastructure, multimodalinterchangefacilities,NCMC-basedautomated fare collection systems, and charging infrastructure. Under the scheme, states/cities shall run the bus services and pay the bus operators. The government will support these bus operations by providing subsidies to the extent specified in the proposed scheme. Under this scheme - Maharashtra will receive 1,453 buses, followed by Gujarat at 425 and Bihar at 400. Besides, Odisha will get 350 buses, Punjab will get 347 units, Jammu and Kashmir and Haryana will receive 200 each, followed by Chandigarh at 100, Puducherry at 75, and Meghalaya at 50.

The PM-eBus Sewa scheme will lead to a greater rollout of electric buses in Maharashtra, Gujarat, Bihar, Odisha, Chhattisgarh, Punjab, Jammu and Kashmir, Puducherry, Chandigarh, and Meghalaya. 3,600 buses will be awarded under this scheme to serve distinct cities in the above states and union territories.

In 2023, the top five states driving the demand for electric goods wheelers in India are Maharashtra, Karnataka, Jammu and Kashmir, Telangana, and Gujarat. Together, these states accounted for nearly 41% of Indias new electric bus fleet additions.

India will replace 800,000 diesel buses with electric buses over seven years. Replacing diesel buses will address environmental concerns and contribute to building Indias EV sector, aligning with the broader Faster Adoption and Manufacturing Electric Vehicles (FAME) incentive programme. The FAME India scheme was initiated in 2015 by the Ministry of Heavy Industries. Presently, ~4,000 electric buses are operational in India, and many OEMs have already laid out their expansion plans for e-buses in the coming years.

Procurement of Electric Buses in India

Reaching this target is proving challenging as bus fleet operators in the country typically dont have access to upfront capital to purchase the buses and usually operate on shaky financial footing, often constrained by regulators to keep fare prices as low as possible. Manufacturers also face limited capital availability as banks are reluctant to fund ebuses because of higher perceived risk-return profiles, higher costs, and the low perceived resale value of the buses as collateral.

The government has rolled out two main mechanisms to addressthesetwochallenges.Thefirstisthebulkprocurement model, implemented by state-owned Convergence Energy Services Limited (CESL). This model aggregates purchases of e-bus procurement contracts to secure better pricing in exchange for large quantities. This model aims to replicate some of the positive outcomes of similar bulk procurement mechanisms successfully piloted in the country, for instance, in the efficient lighting and clean cooling sectors by CESLs parent company, Energy Efficiency Services Limited. But even with savings from bulk procurement, the cost of ebuses would still be too high for local transportation systems with little access to financing and an uneven track record of on-time payments. The government, therefore, designed a ‘Pay As You Go leasing model called Gross Cost Contracting, where the ebus manufacturer leases the ebus to the public transport corporation in exchange for a fee per kilometre, thus reducing the cash constraint on the bus operator entity. These two mechanisms have succeeded, and about 20,000 tenders for e-buses have been received. However, a few issues, notably broader participation from bus manufacturers, prevent wider adoption of the scheme. Key trends highlight the electric bus categorys higher EV integration than other vehicle segments in primary EV sales states. Notably, Uttar Pradesh records a 15% penetration rate, Karnataka stands at 12%, and Maharashtra at 8%. The upward trajectory is sustained by growing consumer demand, standardised products, technological advancements, and improved charging infrastructure.

Global Battery Demand

Battery Demand for Electric Vehicles Jumps Tenfold in Ten Years in a Net Zero Pathway As EV sales continue to increase in todays major markets in China, Europe, and the United States and expand across more countries, demand for EV batteries will likely multiply. In the Stated Policies Scenario (STEPS), EV battery demand will grow four-and-a-half times by 2030 and almost seven times by 2035 compared to 2023. Demand is significantly higher in the announced pledges scenario (APS) and the net zero emissions by 2050 (NZE) scenario, multiplied by five and seven times in 2030 and nine and twelve times in 2035, respectively. In the APS in 2035, there could be as much EV battery demand per week as there was in the entire year of 2019. Cars remain the primary driver of EV battery demand, accounting for about 75% in the announced pledges scenario (APS) in 2035, albeit down from 90% in 2023, as battery demand from other EVs proliferates. In the STEPS, battery demand for EVs other than cars jump eightfold by 2030 and fifteenfold by 2035. In the APS, these numbers reach tenfold by 2030 and more than twenty-fold by 2035. Battery requirements differ across modes, with a two- or three-wheeler requiring a battery about 20 times smaller than a battery electric vehicle (BEV), while buses and trucks require batteries that are two to five times bigger than those of a BEV. This factor also affects trends in different regions, given that two or three-wheelers are significantly more critical in emerging economies than developed ones.

As EVs increasingly reach new markets, battery demand outside of todays major markets is set to increase. In the STEPS, China, Europe and the United States account for just under 85% of the market in 2030 and just over 80% in 2035, down from 90% today. In the APS, nearly 25% of battery demand will be outside todays major markets in 2030, mainly due to greater demand in India, Southeast Asia, South America, Mexico, and Japan. In the APS in 2035, this share increases to 30%.

Stationary storage will also increase battery demand, accounting for about 400 GWh in STEPS and 500 GWh in APS in 2030, accounting for about 12% of EV battery demand in the same year in both the STEPS and the APS.

Global Battery Production

Global investment in EV batteries has surged eightfold since 2018 and fivefold for battery storage, rising to $ 150 billion in 2023. About USD 115 billion – the lions share – was for EV batteries, with China, Europe and the United States accounting for over 90% of the total.

Battery production has been ramping up quickly in the past few years to keep pace with increasing demand. In 2023, battery manufacturing reached 2.5 TWh, adding 780 GWh capacity relative to 2022. The capacity added in 2023 was over 25% higher than in 2022.

Looking forward, investors and vehicle makers have been fleshing out ambitious plans for manufacturing expansion, confident that demand for EV and stationary batteries will continue to grow due to increasing electrification and power grid decarbonisation. Global battery manufacturing capacity by 2030, if announcements are completed in full and on time, could exceed 9 TWh by 2030, of which about 70% is already operational or otherwise committed. Assuming a maximum utilisation rate of 85% translates to the potential for almost 8 TWh of batteries to be produced in 2030, of which over 5.5 TWh is from plants already operational today and those with committed announcements. This production level would meet global deployment needs in the APS, and over 90% of the deployment needs in the net zero emissions by 2050 (NZE) scenario by 2030.

The cumulative demand for energy storage in India will likely reach 903 GWh by 2030. Various technologies, including lithium-ion, redox flow, and solid-state batteries, will likely meet this demand. The lithium-ion battery market in India will likely grow at a CAGR of 50% from 20 GWh in 2022 to 220 GWh by 2030. The current focus of Indian enterprises is on battery cell manufacture. However, as more cell manufacturing units are commissioned in India, the upstream process will likely be the next priority area. These industries include graphite anode and cathode active material manufacture and electrolyte, separator, and current collector manufacturing. These batteries are used in mobile phones, laptop computers, and other similar devices, and their shape and size vary depending on the application.

Growth Drivers of Lithium-ion Battery Demand

EV sales in India increased 42% year over year (YoY) in FY24, with 1.67 million units registered. The e-car segment registered maximum YoY growth of 90%. Riding on the booming logistics and e-commerce sector, as well as favourable cost economics, the e-three-wheeler cargo segment saw an 82% rise in sales.

E-bus sales increased substantially by 79% in FY24, reaching 3,607 units. Public sector entities, including state transport undertakings (STU), drive this segment. Volumes will likely grow exponentially in the coming years, given that multiple allocations are under various tenders. JBM Auto Limited (JBMA) saw tremendous growth in FY24. The Company won tenders of 7,500 Crores for 1,390 electric buses floated by

CESL and signed definitive agreements with STUs, leading to phenomenal growth during the year. Convergence Energy Services Limited (CESL) awarded this tender as part of the PM-eBus Sewa Scheme.

The sector is growing at a rate of 90% in FY24 because of the Government of Indias commitment through the PM e-bus Sewa and FAME programmes. This growth augurs well for the demand for lithium-ion batteries in the future.

India can minimise its import dependency and assist in increasing resilience in global supply chains by localising essential minerals mining and refining value chains. India has joined the US-led Mineral Security Partnership (MSP) to help strengthen crucial mineral supply chains. The collaboration intends to speed up the establishment of varied and sustainable essential mineral supply chains. In addition, government-to-government (G2G) discussions for cooperative exploration and mining are progressing with friendly nations. The Indian government established KABIL to secure a steady supply of crucial and strategic minerals through G2G negotiation and acquiring mining assets abroad.

Graph Heading

Indigenous manufacturing supported by a PLI subsidy will help reduce the cost of electric vehicles in India and help EVs attain parity with conventional ICE vehicles. The low cost of electric vehicles, coupled with an upfront subsidy on purchase, will make EVs an attractive buying decision for the consumers.

Battery Technology

Electric vehicles have emerged as a promising technology to attain global decarbonisation goals. Instead of fossil fuel, these vehicles run on charged batteries. Their large-scale adoption has also infused growth in the battery industry in the last decade.

The growth in adoption of electric vehicles will likely continue in the current decade as well. Passenger EV sales will reach 14 million by 2025. With the positive outlook, EVs will largely influence battery demand by 2030. CES (Customised Energy Solutions) estimates that the global battery market will exceed 2,500 GWh per annum by 2030.

Battery Chemistry

Lithium-ion batteries stand out for their high energy density, efficiency, and cycle life. Today, the primary battery chemistries are high nickel – mostly nickel-manganese-cobalt (NMC) – and lithium-iron-phosphate (LFP). Together, they will likely dominate the EV market until the end of this decade. LFP and NMC battery chemistries meet EV requirements for competitive pricing, long-range, fast charging and safety. Their technological maturity and established supply chain mean lithium-ion batteries account for around 95% of annual EV battery volumes by 2030. Moreover, rapid battery demand growth will hinder new technologies from gaining significant market share quickly, at least in the short-term. Both NMC and LFP battery chemistries are continually improved, as evidenced, for example, by efforts to increase their manganese content. This could reduce the cost of NMC batteries while preserving their high energy density, and it could maintain the low price of LFP batteries while enhancing their energy density. The evolution of the established battery chemistries poses a significant challenge for alternatives seeking to compete.

Innovation in battery manufacturing is equally important. Scale-up and automation have been the key drivers of battery price declines over the last decade.

Manufacturing batteries at scale requires high yields and precision, typically requiring years of sustained investment. Current promising energy density innovations include new battery pack concepts, such as cell-to-pack and cell-to-chassis, though the latter could make battery recycling more difficult. Optimising manufacturing parameters, such as through multi-layer electrodes, improves battery performance and enables ultra-fast charging.

Lithium-ion batteries dominate both EV and storage applications, and chemistries can be adapted to mineral availability and price. This is, demonstrated by the market share for lithium iron phosphate (LFP) batteries rising to 40% of EV sales and 80% of new battery storage in 2023.

Lithium-ion chemistries represent nearly all batteries in EVs and new storage applications today. For new EV sales, over half of batteries use chemistries with relatively high nickel content, which gives them higher energy densities. LFP batteries account for the remaining EV market share and are a lower-cost, less-dense lithium-ion chemistry that does not contain nickel or cobalt. They have even lower flammability and a longer lifetime. While energy density is of utmost importance for EV batteries, it is less critical for battery storage, leading to a significant shift towards LFP batteries.

Global Annual Battery Demand (GWh) Application-Wise (Annual demand – GWh)

Outlook

The EV industry will likely multiply and continue to see an upward trend in customer demand for EVs. In FY25, a substantial number of new EV launches will likely drive growth for the industry.

The Indian EV bus sector has proliferated. Rapid urbanisation in India is boosting public transit demand. Due to environmental concerns and the need to reduce vehicular emissions, electric buses are becoming more popular. The Indian government is promoting electric buses in many ways. The Indian government plans to introduce electric buses on long-distance routes to accelerate the countrys green mobility shift. The plan focuses on interstate passenger transport, with an estimated 1.25-1.45 million buses operating on intercity or interstate routes. The change to electric buses will reduce emissions and improve the viability of buses over long routes. Incentives are being planned to catalyse the shift towards electric buses.

BM Electric Vehicles, one of Indias leading electric bus manufacturers and EV ecosystem providers, certainly has a huge opportunity to grow in the coming years.

According to an IBEF report, India is emerging as a global hub for auto component sourcing, with the industry exporting over 25% of its production annually. Additionally, it is a significant contributor to the GDP and directly employs over 1.5 million people. Manufacturers of auto components can leverage this favourable perception of the Indian automotive industry to grow their domestic and global market share. JBMA is one of Indias largest automotive components manufacturers and will continue to go from strength to strength soon.

D. Huge Opportunity for JBMA Electric Vehicles

The electric bus market will substantially grow especially in the transit segment. As the population increases and the adoption of public transportation will be the top priority both by the government and by the public. The electric bus market is expected to shift its fuel consumption from diesel to natural gas and electricity, which will reduce the pollution in the environment. Initiatives have been taken due to increased pollution in the past few years, and this will drive the market to grow.

JBMA, a leading player in the Indian automotive industry, the JBM electric bus showcases cutting-edge technology and innovation. With zero tailpipe emissions, this electric bus is not only environmentally friendly but also helps reduce air pollution, making it a vital step towards a cleaner and healthier future and realising JBMAs vision for sustainable public transportation.

Undeniably, JBMA holds the distinction of being the nations leading electric bus manufacturer. The Company has garnered an impressive market share of over 30%, bolstered by a robust manufacturing capacity of 20,000 electric buses annually in its subsidiary JBM Electric Vehicle Pvt. Ltd.

The momentum propelling JBMAs aspirations extends far beyond the domestic arena. The Companys endeavours have garnered attention from diverse regions, spanning North America, South America, Europe, the Middle East, Africa, ASEAN, SAARC nations, and Asia Pacific. The Company has received inquiries from around the globe, indicating widespread interest in its electric mobility solutions.

JBMAs proactive stance in embracing the PM-eBus Sewa scheme underscores its dedication to pioneering sustainable mobility solutions. With a steadfast commitment to innovation, technology, and collaboration, the Company stands ready to shape a greener, more connected future for public transportation.

1. According to the Companys exchange filings, in FY24, JBMA and its subsidiaries secured orders for nearly 6,390 electric buses from various state road transport undertakings and private companies. The Companys subsidiary, JBM Electric Vehicles Pvt. Ltd., has signed an agreement with MUON India, a Macquarie Group company. Under this agreement, JBM intends to deploy over 2,000 electric buses with MUON India over the next few years.

2. JBM Electric Vehicles Private Limited, a subsidiary of the Company, is looking to deliver about 2,500 electric buses this year.

JBMA, a complete end-to-end well-to-wheel solution-based enterprise in the mobility space, has a strong presence across auto components, tooling, and the complete ecosystem for buses. The Companys expertise is in managing modular platforms to meet ever-evolving customer requirements and offering reduced time to market. While striving to grow its business across various verticals, the Company remains committed to sustainability and green manufacturing. JBMA uses solar power extensively in many plants to meet captive energy requirements. The Company strives for sustainability in energy conservation, skill enhancement, societal development, and other forms of sustainability, leading to scalability for JBMA.

E. JBM E-MOBILITY PLATFORM

In India, cities have mostly used net cost contract (NCC) and gross cost contract (GCC) contract models besides the owner-operator model. The GCC model requires the operator to procure the e-buses and implement the charging infrastructure, which saves cash state transport undertakings (STUs) from making the initial capital investment. The operator is paid based on the number of kilometres the buses operate.

JBMA and its subsidiaries have won orders for ~6,390 electric buses to supply various STUs in the states of Gujarat, Haryana, Delhi, Telangana, Odisha, and Assam, among others, multiple Fortune 500 companies, and leading corporates of the country. Under these orders, the Company will deliver different applications such as city buses, staff buses, and tarmac coaches in nine and twelve-metre categories.

With a healthy order book, JBMA will consolidate its position as an end-to-end electric-mobility solution provider with indigenously developed vehicle technology, battery technology and charging solutions. The Company is ready to serve the emerging market requirements in the electric-mobility domain, thereby gaining new market access and expanding its market share.

Auto Components and Systems The Companys primary business comprises the manufacture of various auto components and assemblies for use inside automobiles. It manufactures a comprehensive range of auto components, including BIW, chassis and suspension systems, pedal boxes, tubular products, safety-critical components and various auto assemblies.

In FY23, it supplied auto systems and assemblies to 1.5 million passenger cars and global OEMs like VW, Skoda, MG, and Stellantis.

JBMA is an end-to-end solutions provider for all business segments including two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and farm and construction equipment.

Tooling Room Business Under this division, the Company manufactures tools, dies and moulds for the automotive industry. Various OEMs then use these tools and dies to shape and form components that form part of the overall vehicle. The tooling business is custom-based and highly cyclical in nature. Some of the dies manufactured by JBM are used in-house for manufacturing various auto components. In that sense, JBM started to create its own tools and dies, which should lead to better operational efficiencies over the long-term.

Technology and Strategy

Current Technologies

? Integrated BCS + HVAC in nine-metre HF and coach buses ? 360 kW/600 A charging in twelve-metre HF and coach variants ? Alternate auxiliary system development for nine- and twelve-metre platforms ? Optimisation of gearbox to increase efficiency for the twelve-metre platform ? Improved energy-efficient air compressor by reducing noise level by 90 decibels

New Technologies and Innovations

The research and development division of JBM Electric Vehicles is working to embrace new technologies and innovations to meet the requirements of upcoming projects. ? Integrated TCS +BCS in a twelve-metre HF platform ? Fuel cell-operated bus ? Gen-II battery

? Hub motor drive axle (WVTA) ? ADAS level-II

? AEBS

? SiC inverter technology

? Five-in-one integrated drive system ? Skateboard chassis

F. The Companys Performance

During FY24, your Company has posted robust growth despite macro challenges and an inflationary environment. Highlights of the consolidated financial results: ? Net revenues from operations in FY24 increased by

29.86% to 5,009.35 Crores compared to 3,857.38

Crores in FY23.

? The component divisions revenues stood at 2,978.65 Crores in FY24 compared to 3,049.69 Crores in FY23.

? The tool room divisions revenues in FY24 increased 8.10% to 289.73 Crores compared to 268.02 Crores in FY23. ? The OEM divisions revenues increased to 1,741.21 Crores against 549.74 Crores in FY23, with a growth of

216.73%.

? The Companys EBITDA increased by 42.08% to 604.23 Crores against 425.26 Crores in FY23.

? The Companys net worth as of March 31, 2024 increased by 13.39% to 1,167.67 Crores against 1,029.76 Crores on March 31, 2023.

? The book value per share increased by 13.39% to 98.75 per share against 87.09 per share.

? The earnings per share stood at 15.12 in FY24 against 10.52 per share in FY23.

G. Segment-wise Performance

Component Division

? Revenues stood at 2,978.65 Crores compared to 3,049.69 Crores in FY23.

? EBIT stood at 193.50 Crores compared to 196.38 Crores in FY23.

? EBIT margin was 6.50% in FY24 compared to 6.44% in FY23.

Tool Room Division

? Revenues increased by 8.10% to 289.73 Crores compared to 268.02 Crores in FY23.

? EBIT stood at 62.41 Crores compared to 60.67 Crores in FY23.

? EBIT margin was 21.54% in FY24 compared to 22.64% in FY23.

OEM Division

? Revenues increased to 1,741.21 Crores against 549.74 Crores in FY23.

? EBIT stood at 163.28 Crores compared to 28.81 Crores in FY23.

? EBIT margin was 9.38% in FY24 compared to 5.24% in FY23.

Other Key Financial Ratios

For Key Financial Ratios please refer Note 55 of Standalone Financial Statements and Note 58 of Consolidated Financial Statements.

H. Research and Development

1. OEM Division

During FY24, the Company scaled the scope of its product development from the domestic to the international market. The Company developed various variants of twelve-metre and nine-metre electric buses, including those for Europe, Australia, and the GCC. JBMA also developed buses for mobile medical units and tarmac.

With a new manufacturing plant at Project Topaz, a dedicated prototype manufacturing shop is fully functional and has the facility to build prototypes for world-class products.

New Developments i. Global

? Twelve-metre city and intercity coach electric bus ? Designed to meet ECE regulations ? Stainless steel body structure for 20 years ? Best-in-class aggregates to meet European demand ii. Australia

? Nine-metre standard floor

? Storage space inside the bus saloon for heavy baggage ? Daily operational range of 200 kilometres ? Offers a stress-free and noiseless commute ? Loaded with technologies like an advanced emergency braking system iii. Mobile Medical Buses

? Twelve-metre low-floor AC bus

? On-board charger and carry-on portable genset for semi-urban and Village camping ? Medical inspection beds and diagnostic equipment for treating patients iv. Intercity Buses

? First made in India intercity coach ? Twelve-metre EV

? Three variants with 2X2 as well as 3X2 seat layouts ? Chassis-based construction for durable and intercity application ? Large space for luggage storage ? Aerodynamic shape of front for lowering air drag v. Premium Tarmac Buses

? Twelve-metre low-floor AC buses

? Luxurious and spacious seating for passengers ? Best-in-class ergonomics and comfort vi. Low-floor City Buses

? Nine-metre low-floor AC buses

? With automatic ramp for wheelchair movement ? Best-in-class TCO and lightweight body

PLM Introduction

The Companys R&D team has improved the efficiency of product lifecycle management (PLM) software. The new, improved digital platform ensures concurrent, coherent and seamless release of engineering and manufacturing bills of material and aids in the first-time-right new product development (NPD).

The PLM has helped the Companys R&D team and other user divisions in data automation, data protection, data security, component rationalisation and scalability of products they develop. It has also helped enable speedy data access and design modifications.

Regulatory and Safety Technologies

The Companys R&D team constantly endeavours to promote environmental sustainability and minimise climate impact. By developing energy-efficient products and using the latest technologies, the Company strives to contribute to reducing carbon footprints. Reduction, reuse, and recycling have been the constant approaches in product development. By developing various technologies like lightweight, acceleration control strategies, brake regeneration, power train matching and usage of energy-efficient drives, JBMAs R&D team has developed energy-efficient products that are best-in-class, sustainable and cost-competitive.

JBMAs R&D team has embarked on the development of newer technologies, such as an electronic braking system (EBS), electronic stability control (ESC), advanced driver assist system (ADAS), automatic emergency braking system (AEBS), tyre pressure monitoring system (TPMS), automotive cybersecurity, and remote diagnostics which are necessary for our products to have a global reach.

From an export homologation point of view, JBMA is preparing for the forthcoming regulations. JBMAs R&D team is also gearing up to export the ECE, GSO and ADR homologation. The Company is looking forward to exports to Belgium, Singapore, the UAE, South Africa, Australia, Mauritius, and the SAARC countries. JBMAs R&D team has now geared up to the next level of NPD to fulfil the Companys global vision with an international mindset.

Together with its customers, supply chain partners, governments, societies, and other stakeholders, JBMAs R&D is rapidly developing and introducing bus transport to reach its sustainability targets.

I. Energy and Environment

JBMA is a proponent and a strong advocate of sustainability. Read more about the Companys efforts to reduce its carbon footprint on page 56.

Driving Business and Operational Excellence

JBMA established a business excellence (BE) function in 2020, which evolved from the erstwhile manufacturing excellence function established over two decades ago. Over the last three years, the Company has gained significant maturity in driving BE initiatives, which is underlined through the JBM House of Business Excellence. These initiatives are spearheaded by the group business excellence function at the corporate level, which acts as a think tank to enable long-term strategies and their deployment at the plant level through BU-BE, plant BE SPOC and other functions.

The BE methodology is driven through the House of Business Excellence, which acts as a guiding light and provides direction for enabling continuous business improvement under 12 pillars.

As JBMA has gained significant maturity in the first phase, it plans to shift gears to move into the second phase, enabling the Company to benchmark with and compete at a global level.

As underlined below, BE is driven through verticals, with a defined purpose and strategy to achieve the overall BE vision. Each vertical gauges the effectiveness of their respective initiatives/enablers through scorecards, which are evaluated based on the process adopted and results achieved.

Phase	Function	Purpose/Objective	Strategy/Enablers
Phase-1	H & S – Health & Safety	? To build Health & Safety Culture in the Organisation ? To achieve Zero Incident and create a Safe Workplace for all	? Robust safety assurance system. ? Machine Control Safety & Behaviour Based Safety approach ? Safety culture development through 20-pointer safety score assessment & improvement
	E & E – Energy & Environment	? To develop Energy & Environment Culture. ? To achieve Net Zero	? Integrated Maintenance Approach (IMA) & PanchTattva approach ? By improving Energy Efficiency, Reduction in GHG, Waste Management, Water Conservation through 16 pointer E&E score
	BG – Business Governance	? To streamline business processes ? To enable best-in-class quality products	? Process governance thru B6S Audit & 12 P Assessment approach ? Integrated Quality Approach (IQA) & improve 12 pointer Quality score
	CI – Continual Improvement	? To develop Continual Improvement culture to achieve best in class performance in SQCPEI	? Employee Engagement (Kaizen), Process Optimisation & Cost Reduction Project (LEAP), Best Practices Adoption ? Performance, performance & product Benchmarking
	ESG – Sustainability	? To develop Sustainability Culture in the organisation	? Deployment * of ERM and ESG ? Transparent BRSR Reporting
	BD – Basic Digitisation	? To develop robust digital back bone of the organisation ? To make the plants Industry 4.0 ready	? Enhanced SAP adoption Score and Utilisation of Digital & SaaS Tools across all business processes
Phase-2	BT – Business Transformation	? Creating World Class Plants ? Turnaround of Focus Plants	? International awards like Deming/JIPM etc. ? Performance Improvement in SQCPEI
	DT – Digital Transformation	? To increase efficiencies of business processes? ? Create smart factories	Digitisation & Digitalisation/14.0 ? Through end to end connected & visualised processes

As JBMA moves into the second phase, it will adopt a focused approach to achieve the managements objectives of creating world-class plants/smart factories of the future and turn around focused plants.

I. Human Resources and Industrial Relations

The Companys workforce is its inherent strength. JBMA takes various initiatives throughout the year to develop its people holistically. Read more about these initiatives on page 62.

J. Internal Control Systems and Their Adequacy

The Company has established a robust and comprehensive internal control system, carefully designed to match the size and complexity of its business operations. This system ensures the safeguarding of assets, accurate financial reporting, and effective operational processes, providing a firm foundation for governance and transparency. The management has implemented robust policies, procedures, and enterprise resource planning (ERP) systems to guide operations, maximise automated control transactions and minimise risk. The unit heads are responsible for ensuring compliance with these policies and procedures, while the internal audit function conducts regular verifications to ensure the effectiveness of controls. Additionally, the Audit Committee approves the annual internal audit plan by focusing on critical business risks, new initiatives, and critical process risks to ensure the internal control system remains adequate, effective, and aligned with the Companys evolving business needs.

K. Skill Development

During the year, JBMA trained >3,500 candidates through apprenticeship training, taking the number to 15,500. Read more about the Companys skill development initiatives on page 67.

CAUTIONARY STATEMENT

The report may contain certain statements that the Company believes are, or may be considered to be "forward looking statements" that describe its objectives, plans or goals. All these forward-looking statements are subject to certain risks and uncertainties, including but not limited to Government action, economic developments, risks inherent to the Companys growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward looking statements.