Igarashi Motors India Ltd

Rising to Capabilities With Steady Momentum

During the fiscal year, we prioritised leveraging our internal capabilities diversifying beyond Air Management to Technology-agnostic Applications viz., Safety and Body applications for use across ICE, Hybrid and BEV car segments.

I am delighted to share with you the 32nd Annual Report of Igarashi Motors India Limited for FY 2023-24. During the fiscal, we maintained a steady momentum amidst global challenges, leveraging our internal capabilities to maintain Global automotive share and also our domestic automotive and non-automotive share, foster enduring customer connections and embrace potential market opportunities.

During FY 2023-24, the global economy demonstrated moderate growth and disinflation, showcasing resilience amid challenges such as continuing geopolitical tensions, stringent monetary tightening measures, the Red Sea issue resulting in increased marine cargo transit time and higher shipping costs, container shortages and economic slowdowns in several nations. Despite sluggish global automotive demand in FY 2023-24 due to slower chip shortage recovery, ongoing supply chain constraints, and escalating raw material costs, the global automotive segment exhibited resilience. The segment witnessed a gradual recovery in the latter part of the fiscal year, driven by reduced inventory challenges and increased production in many countries, hinting at a measured rebound in 2024.

Innovation focus and path-breaking trends such as efficient Internal Combustion Engine (ICE) and Hybrid systems in vehicles, the global automotive industry are steering towards transformation and rapid expansion. Moreover, the ‘Minus China' strategy is gaining momentum, with major global Original Equipment Manufacturers (OEMs) seeking alternative sources to address geopolitical issues and supply chain bottlenecks.

Despite global headwinds, the Indian economy maintained its position as the fastest growing major economy globally, with an estimated GDP growth of 7.6% in FY 2023-24 up from 7% in FY 2022-23. This growth is largely attributed to robust domestic demand, rise in industrial activity, moderating inflation and an upstick in investments. Additionally, measures like favourable government policies such as the PLI scheme, Make in India and FAME-II are increasing India's appeal as a potential global manufacturing hub. The domestic automobile segment echoed the Indian economy's buoyancy, reporting sales growth of 12.5% in the fiscal year, according to the Society of Indian Automobile Manufacturers (SIAM).

Adopting a forward-looking lens has helped our Company proactively position ourselves to capitalise on the burgeoning opportunities within the domestic automotive and FMEG markets.

Our Company has navigated FY 2023-24 with strategic finesse amid a volatile business environment, maintaining a stable momentum while diversifying its portfolio, and technologies and strengthening internal capabilities, generating an impressive 10% topline growth and an 83% increase in net profit compared to FY 2022-23.

With a robust global track record spanning two decades, we continue to solidify our position as the leader in the global 4W Actuator market by diversifying beyond air management [ETC, EGR,WGA, VGT, CCV] to include technology-agnostic Safety applications [EPB, PLA, GBA, EVP] and Vehicle Body applications [TOCD] for use across ICE, Hybrid and BEV car segments.

We remain dedicated to our 4W DC Motor sub-assembly business, providing solutions for Window Lift, Wiper, Seat, and Fuel Pump applications, serving both export and domestic markets.

Additionally, the domestic 4W actuators market has been witnessing expansion following the implementation of BS-VI norms and technological advancements. Our focussed efforts have translated into impressive results for FY 2023-24, with us securing a commanding 42% domestic market share in engine air management applications.

We upgraded our BLDC ceiling fan technology, allowing our customers to introduce new and improved models. Notably, our non-auto BLDC ceiling fan motor segment has maintained a 22% market share, despite the slower adoption of the mandatory energy efficiency and Star Rating program implemented from January 2023.

During the fiscal year, we prioritised leveraging our internal capabilities to increase our market share within the domestic automotive sector.

We focussed on technology integration, scalable manufacturing (backwards integration), quality assurance, team skill development, operational streamlining, semi-automation in manufacturing and building finished goods inventory to ensure sustained growth and embrace upward market potential.

We had been awarded by a top-tier global client on a GBA actuator, forecasting the production of 5-6 Million units in the upcoming five years.

The product has successfully completed testing at the customer's facility, and full-scale production is scheduled to begin in late 2024.

Additionally, the team achieved an impressive milestone by developing the EPB actuator, a technology-neutral motor, within an 9-month period. This product is set for a commercial release in FY2025, in collaboration with three leading customers, and marks our strategic entry into the East Asian market. Highlighting our commitment to broadening our product applications and providing innovative solutions to our esteemed partners, our development team continues to be actively involved in strategic initiatives.

We have collaborated with 12 top-tier customers globally and domestically to develop 24 Engine Air Management programs with an approximate yield capacity of 22~25 Million motors over the next 4-5 years. Simultaneously, we are engaged in 9 plus applications programs in Safety and Body systems, expected around 25 Million motors over the same period, partnering with 10 Tier-1 customers both in India and worldwide. We are also working on 8 EPB programs with 5 leading Tier-1 customers targeting 20 Million motors over the next 4-5 years both globally and domestically, set for commercial launch in FY2025 with two Tier-1 customers.

Under ‘Minus China' strategy, a leading Global Tier-1 Customer has worked closely with our company to achieve the successful launch of the New Generation TOCD product for the European Market. This milestone was reached within an unprecedented timeframe for commercial launch in FY2025, supported by our parent company, Igarashi Electric Works Ltd, Japan.

The electronics R&D division of your company has successfully created products spanning standard, premium, and super-premium segments within the ceiling fan category. These products emphasise voice recognition, smart sensing technology, and BLDC motors designed for water pump applications.

Our development team designed competitive PCB controllers for Domestic Exhaust fans and Table/Pedestal/Wall (TPW) fans, poised for launch upon the introduction of mandatory star ratings for TPW applications by the government, expected within the next 12 months.

We remain committed to bolstering our core business by implementing robust strategies, leveraging advanced technology platforms and enhancing internal capabilities to sustain momentum and foster long-term customer relationships. Additionally, we are diversifying our portfolio to develop technology-agnostic products tailored to meet evolving demands across both global and Indian automotive and non-automotive sectors, driving volume, sustainable growth and customer reach.

As we continue sustainability efforts, we maintain our dedication to ESG principles and ESG targets. Our goal is to create a enduring value for our stakeholders over the long term.

Lastly, I express my heartfelt gratitude to our shareholders and all stakeholders for their unwavering trust and confidence in the Company's endeavours. I would also extend my thanks to the Senior Management and employees for their continuous support and steadfast commitment to helping fulfil the Company's objectives and scaling new heights.

Warm Regards,

Chairman