S J S Enterprises Ltd

AS OF 31^ST MARCH 2024, SJS HAS BUILT A COMFORTABLE CASH AND CASH EQUIVALENT POSITION OF Rs. 520 MN, WITH NET DEBT AT Rs. 163.5 MN AND A POSITIVE CASH FLOW. OUR FREE CASH FLOW TO EBITDA RATIO STANDS AT A HEALTHY RATE OF 47.3%.

Dear Shareholders,

It is with great honour and privilege that I present to you our Annual Report for FY 2023-24.

The Indian economy remains resilient amidst global headwinds, demonstrating strength and a vision for sustained growth. As the fifth-largest economy globally, the nation continues to maintain its position as the world's fastest-growing major economy. India's Gross Domestic Product (GDP) grew by 8.2% in FY 2023-24 as against 7.2% in FY 2022-23, driven by both private and government investments, improved rural consumption, controlled inflation, stable interest rates, and proactive policy measures.

The Indian automotive industry demonstrated remarkable resilience in FY 2023-24, driven by a combination of factors including enhanced consumer confidence, new model launches, product upgrades from Original Equipment Manufacturers (OEMs), and a shift towards premiumisation. The passenger vehicle segment's domestic sales grew 8.4% to 4.22 Mn units compared to 3.89 Mn units in the previous year. The two-wheeler segment also experienced strong growth of 13.3% YoY, reaching total domestic sales of 17.97 Mn units compared to 15.86 Mn units in the previous year. Positive market indicators, including improved vehicle availability, increased electric vehicle adoption, and government support for sustainable mobility, indicate a promising growth trajectory.

Furthermore, the industry is experiencing a gradual transition towards technologically advanced products, marked by the integration of innovative features like 3D appliques, cover glass / optical plastics for digital dials, touch-based navigation systems in various applications, lens mask assembly and premium IMD and IML parts.

This shift is a significant driver for product differentiation among OEMs and consumer appliance companies. By embracing cutting-edge features and functionalities, manufacturers are enhancing the appeal and functionality of their products to meet evolving consumer preferences.

You would be delighted to know that in FY 2023-24, once again, we surpassed the automotive industry's performance. This achievement is attributed to the inclusion of WPI and the significant contributions from the consumer segment and exports. The successful acquisition of WPI has opened numerous avenues for SJS. It has broadened our footprint in the passenger vehicles and consumer appliances & electricals segments, reducing our reliance on two-wheelers. It has enhanced our product range with new technology categories such as IML, IMD, and IMF, enabling us to offer innovative solutions for vehicle interior lighting and IME solutions for the next generation of vehicles. Both Exotech and WPI acquisitions complement our existing portfolio, paving the way for cross-selling opportunities and strengthening our order book.

As of 31^st March 2024, SJS has built a comfortable cash and cash equivalent position of Rs. 520 Mn, with net debt at Rs. 163.5 Mn and a positive cash flow. Our free cash flow to EBITDA ratio stands at a healthy rate of 47.3%. Additionally, our return on capital employed (ROCE) and return on equity (ROE) as of 31^st March 2024, are robust at 20.4% and 15.2%,

Additionally, our return on capital employed (ROCE) and return on equity (ROE) as of 31^st March 2024, are robust at 20.4% and 15.2%, respectively.

respectively. In a significant development, our Board of Directors has recommended a final dividend of 20% on the face value for the first time since our Initial Public Offering (IPO), as a reward to our long-term shareholders.

I am thrilled to share that Joe, our Managing Director, has received a prestigious lifetime achievement award from the Screen Printing Association of India and the Federation of European Screen Printers Associations. This award recognises Joe's exceptional contributions to the industry, marked by his visionary leadership and remarkable achievements. Congratulations to Joe, on this well-deserved honour.

Going forward, we intend to introduce premium products and technologies, aiming to establish ourselves as a comprehensive solution provider for aesthetic products. Our efforts are evident in the acquisition of significant orders across various product categories from both existing and new clients throughout the year.

We are particularly excited about the potential of optical plastics and cover glass, which will gain significant traction in the medium term. Further, we are collaborating with OEMs to introduce innovative premium products such as IML wheel caps and intricate IML and IMD parts for consumer companies.

I would like to express my sincere gratitude to our esteemed stakeholders for their unwavering trust and encouragement.

Managing Director's Message

IN FY 2023-24, EXOTECH'S EBITDA MARGINS INCREASED TO 16.6%. FOLLOWING THIS SEAMLESS INTEGRATION, SJS ACQUIRED A 90.1% STAKE IN WALTER PACK INDIA (WPI) IN APRIL 2023 AND THE TRANSACTION WAS COMPLETED IN JULY 2023. A SUBSIDIARY OF WALTER PACK SPAIN, WPI SPECIALISES IN DESIGNING AND DEVELOPING HIGH VALUE, FUNCTIONAL DECORATIVE PARTS FOR PASSENGER VEHICLES AND CONSUMER ELECTRICALS IN INDIA.

Dear Shareholders,

It has been another year of exceptional performance at SJS. In FY 2023-24, our automotive segment (two-wheelers and passenger vehicles) achieved an impressive 38.3% YoY growth, exceeding the industry's combined production volume growth of 9.7% YoY. Our revenue from the two-wheeler segment increased by 21.1% YoY, surpassing industry production volume growth of 10.3% YoY. The industry passenger vehicle production volumes grew by 6.9% YoY, with our revenue up 62.0% YoY. Additionally, our consumer business showcased a stellar growth of 89.9% YoY. Our exports grew by 51.1% YoY, led by a 49.3% and 47.2% increase in the automotive segment and consumer segment respectively.

I'm pleased to announce that we've achieved our FY 2023-24 guidance of 45% revenue growth and over 30% PAT growth, excluding amortisation expenses. Our total revenue grew by 45.0% YoY to Rs. 6,278.0 Mn, driven by both organic and inorganic initiatives including new customer acquisitions, product development, increased market share, and a focus on quality and delivery excellence. EBITDA stood at Rs. 1,599.0

Mn, reflecting growth of 36.9% YoY, with margins of 25.2%, driven by higher sales and operational efficiencies. Profit after Tax (PAT) excluding amortisation grew by 37.1% to

Rs. 921.7 Mn, with a margin of 14.7%. Reported PAT including amortisation stood at Rs. 853.7 Mn. Consistent delivery of robust margins has resulted in strong cash flow generation, with cash and cash equivalents reaching Rs. 520.0 Mn. As of 31^st March 2024, our ROCE and ROE stood at a healthy rate of 20.4% and 15.2%, respectively.

For the first time since our IPO, the Board of Directors has recommended a final dividend of 20% on the face value for FY 2023-24.

Our automotive segment has secured prominent clients viz. Autoliv, Toyota Tsusho, Minda VAST, Lear Corporation, while in telecommunications, we have added Neolync, GDN Enterprises, and Foxconn Technologies. Furthermore, we have also received new orders from esteemed entities like Tata Motors, TVS Motors, Bajaj Auto, Honda Motorcycle and Scooters India, Royal Enfield, Mahindra & Mahindra, Maruti Suzuki, Whirlpool, Skoda, Continental, Hyundai, Visteon, Geberit, Stellantis, and Ola, among others, strengthening our business across various segments.

Inorganic growth is pivotal to our strategy. The successful integration of the Exotech business has significantly enhanced SJS' overall performance, 2.3x growth in revenues and improving EBITDA margins by about 440+ basis points from FY 2020-21 to FY 2023-24. In FY 2023-24, Exotech's EBITDA margins increased to 16.6%. Following this seamless integration, SJS acquired a 90.1% stake in WPI in July 2023. A subsidiary of Walter Pack Spain, WPI specialises in designing and developing high-value, functional decorative parts for passenger vehicles and consumer electricals in India.

The shift from conventional injection moulding to IML/ IMD signifies a notable trend in the aesthetics market, with IML/IMD parts emerging as one of the fastest-growing segments. Automakers are increasingly adopting IML/IMD dashboards to impart a luxurious look to their vehicles. This trend is particularly gaining momentum in higher-end models across passenger and consumer segments. The WPI acquisition strengthens our IML and IMD capabilities and 2k injection moulding capability, enabling us to develop innovative vehicle interior lighting IME solutions for future vehicles.

Going forward, we plan to enhance kit value across our segments by adding premium products and technologies. WPI's IMD/IML technologies, combined with SJS' optical plastics/cover glass, are key to this strategy.

We prioritise sustainability alongside our growth, evident in our steady transition to green energy, with renewables like solar and wind powering nearly all our Bengaluru operations. Beyond our environmental efforts, we strive to build stronger communities through initiatives focussed on education, skill development, healthcare, sanitation, and rural development. We support ‘Let's Feed the Needy', an NGO in Chennai feeding the underprivileged daily. Additionally, our garbage clean-up initiative has improved lives in ~14 villages in FY 2023-24.

Consistent delivery of robust margins has resulted in strong cash flow generation, with cash and cash equivalents reaching Rs. 520.0 Mn. As of 31^st March 2024, our ROCE and ROE stood at a healthy rate of 20.4% and 15.2%, respectively. For the first time since our IPO, the Board of Directors has recommended a final dividend of 20% on the face value for FY 2023-24.

We are committed to advancing employee growth with regular training in soft and technical skills, nurturing a culture of continuous improvement and teamwork. Our performance-based incentives, like the ‘Pay for Quality' scheme, help retain talent and recognise excellent performance. During the year, we conducted various health and safety training sessions, encompassing hazard identification to risk management, all aimed at mitigating occupational accidents. SJS has been honoured with the ‘Great Workplace' certificate for the fourth consecutive year, underscoring our success in building an inclusive work environment.

As we leverage the synergies and cross-selling opportunities from our strategic acquisitions and product innovation, I remain enthused about SJS' exponential growth in the future.