Jay Bharat Maruti Ltd

Dear Shareholders,

It is a momentous occasion as I express my thoughts on the 35th anniversary of Jay Bharat Maruti Limited by way of this Annual Report of the Company for FY2021-22. As I put my message forward at the 35th Annual General Meeting of your Company, a famous saying resonates within me, "Opportunities don't happen. You create them." At JBML, way back in the 1980s, we created this opportunity to step into the automotive component sector and have since then curated our journey of excellence in strong association with our esteemed partner Maruti Suzuki India Limited (MSIL). Our focus, then, was on simpler auto parts and components which gradually transitioned to complex auto systems and assemblies. The journey through these 35 years has been passionate, productive, and progressive wherein Jay Bharat Maruti has advanced from only manufacturing and delivering products to offering experiences and solutions.

Indian Economy

Despite two waves of COVID-19 in FY2021-22 - the second and third waves - the economy demonstrated a V-shaped recovery during the year, bouncing back to grow at a robust rate of 8.7 percent. After contracting by 6.6% during the previous year, due to the first-round economic impact of the Coronavirus pandemic, the real GDP grew to an estimated Rs 147.36 lakh crores, which is marginally higher than Rs 145.7 lakh crores posted two years ago, in FY2019-20, before the pandemic impacted the economy. The recovery was strongest at the beginning of the year and the economic growth has gradually spiraled downward with each quarter of FY2021-22. In the first quarter of 2021-22, the economic growth was 20.1%, largely due to the low base effect. By the second quarter, it declined to 8.4% and further to 5.4% and 4.1% in third and fourth quarters.

Automotive Sectoral Outlook

India, which is the fourth largest automotive market in the world, witnessed a steady revival in 2022 on a strong underlying demand reflecting the general economic recovery and consumers' preference for personal vehicles over public transportation. While the industry is gradually overcoming the challenge of chip shortage, it is also gaining momentum with favorable government policies such as the recently announced Rs. 76,000 crores for semiconductor manufacturing scheme, the extension of the FAME II scheme till 2024, the Production-Linked Incentive (PLI) scheme for the auto and auto component sector for Rs. 26,000 crores, PLI for advanced chemistry cell for Rs. 18,000 crores, and the vehicle scrappage policy which will provide enormous support to the sector.

According to the Indian automobile industry body Society of Indian Automobile Manufacturers (SIAM), the industry produced a total of 22.93 million vehicles, including Passenger Vehicles (PVs), Commercial Vehicles (CVs), three-wheelers, two-wheelers, and quadricycles in FY 2021-22 as against 22.65 million in the previous year, registering a marginal growth of 1.24 percent.

Auto Component Sectoral Outlook

The Indian auto components industry clocked its highest-ever turnover of Rs 4.2 trillion in 2021-22, registering a growth of 23% on the back of strong performance in exports and aftermarket. While auto parts imports rose 33% in 2021-22, exports grew 43% in the same period. The auto component industry in India exported components worth Rs 1.41 trillion in 2021-22, while auto parts worth Rs 1.36 trillion were imported in 2021-22. The shortage of chips, high raw material and logistics cost, availability of containers for transport of auto components, increasing inflation, rising fuel prices, high insurance cost, less than expected growth in the two-wheeler segment, and high GST rates on auto components are some of the headwinds tne auto component industry is facing in the country. The sector is also getting the benefit of multiple tailwinds such as high estimated GDP growth in 2022-23, strong demand in the domestic vehicle market, surge in exports, focus on clean and new technology, states' electric vehicles policies, and the government's Production-Linked Incentive (PLI) scheme. The auto component sales to the electric vehicles sector stood at Rs 3,520 crores in 2021-22 — 1% of the total component sales in the financial year.

Financial Performance

Your Company achieved an increase in EBITDA by 7.06% in FY 22 due to an increase in MSIL's volumes and various cost-reduction efforts. Revenues of the Company were better as compared to the previous year, which was majorly due to increase in the price of raw material. The net profit of the Company increased from Rs. 26.06 crores to Rs. 27.47 crores, despite the impact of COVID-19, chip shortage, and other challenges; your Company was able to resurge its revenue and profitability at the same level as the previous year.

Digital Transformation

JBML has embarked on its journey toward 'transforming manufacturing' with an aim to reshape the automobile industry. The Artificial Intelligence- and Machine Learning-based Industry 4.0 implementation, deployed in our facilities last year, has helped us provide a safe and compliant manufacturing ecosystem within our plants as well as achieve optimum process efficiencies through the creation of an agile manufacturing setup for improved product quality levels, thus enabling higher productivity per unit and lower rejection ratios. In the longer run, this will enable us to get deeper insights into our operations, thereby helping eliminate inefficiencies and channelizing our synergies and investments in a more optimal manner. This smart ability will also help us further contribute, positively, to our ongoing green initiatives as well as achieve a reduced carbon footprint for the Company.

Environment

As part of our sustainability initiatives toward the conservation of the environment, your Company has implemented Zero Liquid Discharge technology in its plant in Gujarat, which is a strategic wastewater management system to ensure zero discharge of industrial wastewater into the environment.

People

Our commitment to our team members' families, as well as to the community and the nation at large, is a crucial component of your Company's operational plan. Itorings me great pleasure to let you know that Sankalp Siddhi, a ground-breaking program, has been introduced to enhance the skillsets and awaken the hidden talents of our employees and their families. JBML believes in the philosophy that improving society, as a whole, must be our priority. In this direction, we are working for improving as many people's lives as we can. The health and safety of our people continue to assume the highest priority, with all our employees being fully vaccinated.

Integrity, Safety, and Quality have been the three non-negotiable values of the organization with respect to its work culture, which are driven as ISQ momentum to make it a part of our DNA.

As a responsible corporate citizen, your Company believes in engaging with people and related environmental factors for creating a sustainable business model, to achieve inclusive growth of the disadvantaged sections of society through our CSR initiatives.

Business Outlook

With the proposed setting up of the new manufacturing unit of MSIL at Kharkhoda, Haryana, your Company will endeavor to get a major share of business and will be expanding its capacity. Your Company has already secured the significant business of new electric cars of MSIL to be launched in 2024 by Suzuki Motor Gujarat Pvt Ltd.

Environmental, Social, and Governance (ESG) aspects have been globally recognized as important parameters for the Company's long-term sustainability and growth. Your Company has made ESG a focused area in all aspects of the business.

Your Company is making concerted efforts including investments to holistically implement ESG across all the units of the Company - a guiding principle for its long-term sustainability plans toward propagating a vision and culture of ESG within the organization across all levels and businesses.

I place on record my sincere thanks to our joint venture partner Maruti Suzuki India Ltd. and Suzuki Motor Gujarat Pvt Ltd. and my special thanks and congratulations to the entire management of Maruti Suzuki India Ltd. on the completion of 40 years of glorious journey in India.

Even as the pandemic tested our collective spirit, we have many takeaways both for business and life that will stay with us. I would like to take this opportunity to thank my fellow board members, our supplier partners, shareholders, and all other stakeholders who have stood in solidarity with us as we navigated the COVID crisis.

I extend my sincere appreciation to the management and the staff of the company for their valued contribution toward driving excellence as a practice, and we continue to prevail with positivity and grit as a team for us to be building a better tomorrow for us all.