Dear Shareholders,
The world is undergoing a period of significant geopolitical upheaval,
marked by shifting alliances, the ongoing war in Ukraine, and an intensifying conflict in
the Middle East. The palpable rise in geopolitical tensions is significantly impacting
global stability and multiple sectors, making the outlook for the world economy
increasingly uncertain. Factors such as significant rise in trade barriers, stringent
financial conditions, diminished confidence among businesses and consumers, and increased
policy uncertainty are impeding growth potential. Elevated trade expenses, particularly in
nations that are increasing tariffs, are contributing to inflation, though this effect is
going to be somewhat mitigated by declining commodity prices.
It has been estimated that global growth is expected to slow down from
3.3% in 2024 to a moderate 2.9% in 2025, whilst 2026 paints a challenging and uncertain
picture. Some of the direct impacts of such a slowdown will undermine economic scenarios
across nations, reduce income, create fewer employment opportunities, and lead to a
decline in trade. Though most countries have witnessed a recent decline in inflation,
service price inflation continues to be consistently high, and rising food costs are
causing a minor increase in goods price inflation. These inflationary pressures are being
exacerbated by protectionism, and inflation expectations have sharply increased in a
number of nations.
Interestingly, in a present gloomy economic environment, India has
emerged as a knight in shining armour by becoming 4th largest global economy in the year
2025. This growth has been fuelled by domestic reforms and its global positioning under
the vision of ‘Aatmanirbhar Bharat'. RBI in its latest Financial Stability
Report has stated, ‘Despite an uncertain and challenging global economic backdrop,
the Indian economy remains a key driver of global growth — underpinned by sound
macroeconomic fundamentals and prudent macroeconomic policies.'
A significant boost in economic activity in the fourth quarter of the
financial year 2024-25 has driven GDP to grow for the full year to 6.5%. However, it is
sluggish when compared to the pandemic year 2020-21 and has plummeted significantly from
9.2% recorded in financial year 2023-24. Stable economic conditions, increased spending on
infrastructure, rising urbanization, increasing middle-class population, and recent
changes in personal income tax coupled with two interest rate cuts by the RBI are expected
to increase customer spending. A normal monsoon is likely to support rural demand,
especially for Two-Wheelers and smaller cars.
With domestic sales up 7.3% and exports up 19.2% in FY 2024–2025,
the Indian auto industry demonstrated robust growth. Such growth has been propped up by
strong customer demand, government policies, rising infrastructure investments, and a
focus on sustainable mobility. Whilst, Passenger Vehicles sales reached a record 4.3
million units (2% growth), 2W sales grew by 9.1% to 19.6 million units, and 3W sales rose
by 6.7% to 7.4 lakh units. Nevertheless, despite some rebounds in recent months,
Commercial Vehicles (CVs) registered a little 1.2% dip.
One of the major highlights among all the developments has been a 16.9%
increase in EV registrations, which includes an 18.2% increase in electric passenger
vehicles and a 21.2% increase in e-two-wheelers. The adoption of electric vehicles in the
country was significantly supported by government initiatives such as EMPS, PM E-Drive,
and PM e-Sewa. New models, easier access to EV charging stations, and consumers'
growing desire for more environment friendly forms of transportation have all contributed
to the rise. Furthermore, the Indian car industry is well-positioned for consistent
development due to rising consumer confidence, continued government assistance, and
growing interest in EVs.
Throughout the years, at JTEKT India, we have consistently endeavored
to attain exceptional quality and integrate refinement at the heart of our operations. We
have not only scaled up and exceeded our capacity by improving overall operational
efficiency but also initiated and implemented several steps to rationalize our
manufacturing operations. Moreover, to keep up with the changing market dynamics, customer
behavior, and technical trends, we have focused on enhancing our designing, prototyping,
and testing capabilities by keeping creativity and invention at the forefront. And,
further aligning with the Indian automotive industry's new growth projections, the
Company has purposefully transformed its manufacturing landscape. A strong Manufacturing
Rationalization Roadmap, a long-term project aimed at creating flexible, effective, and
scalable operations in line with our customers' changing needs, is at the core of
this transformation.
With our seven factories, we have succeeded in leveraging our position
as a solution provider by putting impetus on value-addition, innovation and infusing the
essence of freshness in our new products which meet our customers' expectations. The
organization has made rationalization a top priority as a crucial facilitator for
achieving operational excellence to preserve speed, flexibility, and cost competitiveness.
Additionally, JTEKT India has declared the opening of a brand-new,
cutting-edge manufacturing plant in Gujarat. By localizing production and moving a few
product lines from northern India; this plant will help improve customer accessibility and
responsiveness while lowering transportation costs and lead times.
Over the years, we have created regionally tailored solutions for our
customers with the sole aim to deliver quality and comfort to the end users. Our emphasis
on innovation, introducing cutting-edge technological knowhow, resonates well with our
group's vision of becoming "A solution provider creating the future of mobility
society through Monozukuri and Monozukuri equipment."
Along with focus on self-reliance, excellence, innovation, growth,
development, cost competitiveness, exceeding customer expectations, we at JTEKT India have
put an impetus on upskilling and upscaling our human resources through training,
development and skill enhancement. As we support our employees throughout their journey
with JTEKT, we are dedicated to fostering a workforce that is inclusive, healthy, and
prepared for the future. During FY 2024-25, we completed 90+ training sessions, covered
92% workforce across technical, functional, and behavioral areas, ran hands-on DOJO
programs for shop floor readiness and introduced E-Learning platform with 45+ modules and
7,600+ sessions for self-paced learning. We offered robust development pathways,
particularly for trainees and off-roll colleagues. In FY 2025, 159 internal posts were
filled by elevating from the trainee and offroll categories.
We focus on creating value in our purchasing process, considering
quality, delivery, services, and long-term relationships with suppliers. We are committed
to sustainable and ethical sourcing practices, considering the environmental and social
impact of purchasing decisions. In the competitive Indian Automotive market, the Company
has continuously improved its supply chain by implementing front-loading activities, part
development lead-time reduction, and a Supplier Parts Tracking Team (SPTT) system. The
Company also values long-term partnerships with supply partners, regularly meeting with
them to discuss new projects and challenges. The Company organizes Annual Partners'
Meet to share growth plans, new businesses, and initiatives to improve supply chain, cost,
delivery, and quality.
The Company prioritizes sustainability through environmental
stewardship, focusing on improving CO_ emissions and water consumption. Initiatives
include energy efficiency projects, green energy transition, water resource management,
waste minimization, and ISO 14001:2015 compliance. These efforts aim to reduce freshwater
dependency, increase recycling rates, and promote sustainable disposal practices. The
Company continues to prioritize the integration of safety, security, and sustainability
throughout its operations to develop a robust, accountable, and future-oriented
organization.
During the Financial Year 2024-25, JTEKT achieved sales growth of 7%
compared to Passenger Vehicle Market growth of 3.7% during this period. However, EBIDTA
Margins were down from 9.5% achieved last FY 2023-24 to 7.6% in the current FY 2024-25 due
to several internal and external factors as we reported at Stock Exchange and discussed in
details during our Quarterly Investor call.
The financial year focused on digital transformation in manufacturing
and support functions, enhancing cyber security readiness, and improving operational
efficiency through automation and in-house software development. Key initiatives included
implementation of the Online Kiken Yochi (KY) Exercise System, supplier capacity mapping
software, automation of supplier performance scorecards, customer sample part tracking
system, E-Kanban system for direct material management, 4M Change Management System, and
product traceability system at various locations.
Over the years, we have succeeded in establishing ourselves as one of
the foremost automotive leaders, thanks to the trust and confidence you, our stakeholders,
have placed in us. Without your support, JTEKT would not have been able to climb the
success and growth ladder and set up new benchmarks.
I would like to extend my gratitude to our customers, which include,
Maruti Suzuki, Suzuki Motor Gujarat, Mahindra & Mahindra, Tata Motors, Honda Cars
India, Stellantis, Toyota Kirloskar, Club Car, E-z-go, Renault-Nissan, Isuzu, SML-Isuzu,
and Force Motors, for putting their faith in us. I would like to take this opportunity to
thank our bankers: the State Bank of India, Standard Chartered Bank, Sumitomo Mitsui
Banking Corporation, MUFG Bank Limited, and Mizuho Bank Limited.
My deepest thanks go out to each and every one of our employees for
remaining steadfast and cooperating as a JTEKT family, fostering trust and providing the
best products, services, and experiences to our customers, and community.
Lastly, I would like to extend my deepest appreciation to my
shareholders and patrons for their unwavering trust over the years and for being a
stronghold in troubled times. Throughout our journey, you have truly kept us motivated and
hopeful to achieve new benchmarks and greater things. Your trust and support have not only
made us resilient, efficient and future-ready but also helped us deepen our roots!
Yours sincerely,
Minoru Sugisawa
Chairman and Managing Director