India Nippon Electricals

It’s a company established in 1984 and then converted to JV with with a Japanese entity. Which is group company of MHALE group Germany.
This company make electronic ignition systems for 2/3 wheelers and portable engines, integrated starter systems, sensors and ECU’s.
They have 4 plants in hosur, Pondicherry, kolhapur and Rewari.
Talking about the past, this company doesn’t have a impressive growth for last 10yrs (don’t know as if they were sleeping or what).
Sales growth for TTM/3/5/10 yrs is 3.2/8/8/10 %.
Profit growth is also dismal during these timeframes (less than 4%).
ROE is also 10% which reflect their past performance.
But other fundamentals are good like
ROCE - 30%
Quick ratio - 3.23
Current ratio - 1.7
ALTMANN z - 8.18
Promoter holding - 66.39%
Div yield - 1.5%

One important thing to notice is company has been giving more than 33% of profits as dividend for last 10yrs and more than 43% for last 3 yrs. And it’s debt free with reserves of 229 cr for a mcap of 669cr.

What caught my eye was the announcement made by the chairman in AGM on 27th August about new business from EGR controller for small diesel engine to meet BS IV norms. Recently govt has announced that BS III emission norms will be moved to BS IV in 2017.

Second announcement he made that they are developing Electronic fuel injection and integrated starter generator for 2 wheeler (big potential) and off road vehicle. They claimed these products as disruptive (need more info on this).
Since then the stock is in upward trajectory and crossed it’s life time high and then corrected a bit.
He also announced higher R&D spending for developing state of the art components.
He also mentioned that they have hired an industry expert to improve efficiency by improving shop floor quality and productivity levels which gets reflected in SEP 2016 results as the OPM improved from 10.47% to 11.89% YOY and they saw a profit growth of 25%.
He also mentioned abt wage settlement happened for 3 factories (1 left). Which is a good sign and gives certainity.

Technicals of the stocks are strong as it crossed it’s 13 yr high with higher volumes.
I am not sure of the Dec results due to Demonitization. Margin improvement can be a big trigger with revenue growth from new business. So overall it looks promising for me.

I tried to contact the CS but still no success.
Once I am able to, will update you guys soon.

P.S : -
Disclosure - invested.


I went through it last week, not so growth kept me on hold on my investment plan. Is it possible to determine its potential from new products and R&D investments?

Have you checked the summary of chairman’s speech in AGM. It’s there on bse.
They got new business of EGR controller for small diesel engine. Somewhere I read India is moving from BS III to BS IV norms I 2017.
For EFI and ISG CS said, r&d and testing keeps on going with customers. We can expect some new business coming in with EFI and ISG in near future.
I couldn’t contact with MD.
Results are on 27th Jan.

Dec 2016 qtr results looks muted.
Sales almost same on YOY basis and profit growth of 12% comes mostly from other income. May be Demonitization affect.

We need a lot more information. I was going through the last 2 Annual reports and a large part of the the Business Outlook section of MDA in 2015 is repeated verbatim in 2016

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Anybody still tracking the business.
It has been on unprecedented rally for past few sessions.

Appreciate inputs.

@vinayohara: Are you still tracking or invested in the business?


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Need some inputs on india Nippon. Kindly post about some information about the potential at cmp.

Looking forward to research more on it


MD’s speech during AGM on 27.8.2018.

Good Set of numbers this quarter
Revenue Q3 YoY : 130 Cr vs 110 Cr (18% Growth)
Profit : 14.69 Cr vs 11.67 Cr (25% Growth)

9M :
Revenue : 389 Cr vs 345 Cr (13% Growth)
PAT : 42 Cr vs 36 Cr ( 16% Growth)

TTM EPS around 25. Trading at 15 PE (Market Cap 860 Cr) ,
Company remains debt free with 240 Cr of liquid Investments.
Apart from electronic ignition systems, Company has identified electric vehicles as a focus area. As smooth charging is crucial for any battery-powered vehicle, the company is focusing on power management system besides body control module — DC/DC convertor. A DC/DC convertor converts high voltage batteries to 14v electrical device voltage. The company is also setting up a new dedicated R&D centre in Hosur to attract talent from tech start-ups to focus on two-wheeler technologies for electric vehicles and other futuristic technologies. Management is exploring inorganic growth to build a futuristic electric vehicle component ecosystem. The company may target niche acquisitions (automotive technology start-ups) to strengthen its product capabilities.
After Market Sales and exports are growing very well.

Disc: Tracking

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Excellent analysis of company by Dr. Vijay Malik

Disc: Invested


annual report 202021

Revenue – Rs 497.42 crs vs Rs 503.94 crs / PBT Rs 51.67 crs vs Rs 72.08 / PAT Rs 40.69 crs vs Rs 55.20 crs
Exports during the year ended 31st March, 2021 amounted to 2,302.98 Lacs as against 1,451.00 Lacs of the previous year.

R&D Expenses - Capital Exp 10.88 crs + Recurring Rs 9.04 crs = Total Exp 19.92 crs or 4.17% of the revenue
INEL is zero debt Company with cash and liquid investments of around ` 328 Lacs as on 31st March, 2021.

Investment Total Rs 272.67 crs
Non current Investment Rs 140.20 crs vs Rs 130.80 crs – Lucas TVS Ltd – Rs 96.11 crs vs Rs 91.81 crs / Investment in Debentures Rs 26.73 crs vs Rs 21.54 crs / Investment in VC fund Rs 4.85 crs vs Rs 5.07 crs /
Current Investment – Rs 132.47 crs vs Rs 143.08 crs
Return on Networth declined to 9.04% in FY 2020-21 from 13.17% in FY 2019-20.

PT Automotive Systems Indonesia – Investment of Rs 12.07 crs - the Company is evaluating different options of exiting the country. During the year, the Subsidiary had taken steps to realise the investment in assets it holds and to facilitate the exit of the Company from the Country, all of which are expected to bear fruit in financial year 2021-22.

Company’s exposure to Copper was material for the year. Total copper purchased or consumed during the year were of Rs 54.05 crs for 9.96 lakh kg or 996 ton.

For the year 2020-21, the total remuneration paid to Mr Arvind Balaji, Managing Director is Rs 224.93 Lacs comprising of 113 Lacs in commission and 111.93 Lacs by way of salary.

Company is a joint venture between Lucas Indian Service Limited (LISL), a wholly-owned subsidiary of Lucas TVS Limited, MAHLE Electric Drives Japan Corporation (MEDJ) and Mahle
Holding (India) Private Limited (MHIL).

manufacturers of electronic ignition systems for the automotive industry, with special focus on two-wheelers, three-wheelers and portable generator sets. We also manufacture sensors, controllers and convertors.

Today, in addition to our core offerings for internal combustion engines, we are bringing products for electric vehicles to the market, demonstrating our firm intent to play an important role in this future technology.

In India, we supply to many leading two-wheeler automotive companies and other internal combustion (IC) engine manufacturers. We are also steadily growing our aftermarket and export business.

we are investing in our capabilities, strengthening our product portfolio and increasing our customer base. Opportunities to grow our aftermarket and export business are also being scouted with intense focus.

Today, while we extract more value for our core business of ignition system solutions for internal combustion engines, we are simultaneously preparing ourselves to capitalise on the opportunities presented by tomorrow’s technology of electric mobility. Additionally, we are leveraging our technological know-how to tap opportunities in areas beyond the automotive segment.

Our core products include flywheel magneto, digital ignitors, sensors, integrated starter generator (ISG), controllers and DC-DC convertors, which are aligned with present and future market needs. Our sensors are used across engine and exhaust applications, transmission applications and automotive safety applications. We also offer transistor controlled ignition (TCI), ignition coil and regulator rectifier products, among others, to support customer needs.

Keeping pace with technological disruptions in the automotive sector, we are actively working on increasing our offerings for the electric mobility and non-automotive segment.

Our operations are supported by three world-class manufacturing facilities - Hosur (Tamil Nadu), Puducherry and Rewari (Haryana). Our strategic presence enables us to reach out better to our customers, offer just-in-time supplies and improve speed-to-market for the introduction of new products

A team of dedicated and qualified engineers, who have been trained in-house as well as at the collaborator’s company, are engaged in designing and developing innovative electronic ignition products. We are also working on developing new technology solutions and softwares to serve the e-mobility segment and non-automotive sectors. Our continued quest for introducing future-ready solutions is reflected in the sustained investments we are making in our R&D capabilities, with a new Technology Centre being established in Hosur, Tamil Nadu.

Our revenues were maintained at levels similar to the previous year despite the loss of business volumes in the first quarter and even while the two-wheeler industry in India registered degrowth. Improvement in our market share and more business from existing customers contributed towards sustaining our revenues. Aftermarket sales grew by 48% as we strengthened our distribution network and our product portfolio, while exports grew by 59% led by new customer acquisition. We are glad to share that not a single employee was laid-off during the pandemic

Future-ready with new Technology Centre
Underpinning our future readiness is our upcoming state-of-the-art Technology Centre. In its final stages of completion, the new Technology Centre will power our ability in developing futuristic product lines. While our traditional business is, and will remain for the next several years, electronic ignition products for IC engine vehicles, the new Technology Centre demonstrates our firm intent to be prepared for electric mobility. We have already successfully introduced several products for electric scooters, reaffirming our commitment to being a future-ready partner to our customers. The Technology Centre will also play a central role in augmenting our innovation thrust for non-automotive businesses and powering our growth strategy.

Our increased investments in developing advanced technologies and strengthening our team will also help us to win in emerging areas and support business diversification. INEL has identified that electronic products hold much promise in an era of technological disruption in the automotive sector and is working to enhance its capabilities and capacities in the electric mobility and non-automotive segment. The Company is actively expanding its product portfolio that will allow INEL to grow in Electric Vehicle (EV) domain.

The Technology centre is on the verge of completion and will be commencing its operations during the first half of FY 2021-22. The Technology centre will host many state-of-the-art facilities for performance and emission testing for two wheelers, three wheelers and general purpose engines and will also spearhead the Company’s thrust into futuristic product lines. The Company is actively progressing in development of new products in the area of displays and clusters, Sensors, DCDC converters, Controller for EV, ISG and other automotive and non-automotive applications.

R&D Expenses - Capital Exp 10.88 crs + Recurring Rs 9.04 crs = Total Exp 19.92 crs or 4.17% of the revenue

In the exports segment, the Company is planning to strengthen its position in ASEAN and Latin America. The Company is also planning to expand its new line of business such as sensors in the international market.


AGM 2020 – Sep 2020

Your Company was largely able to contain the impact of deceleration in the Industry, due to a combination of higher value of BS VI products, efforts taken to increase presence in new segments/ products like Sensors, robust growth in after-market sales and increase in share of business from customers and product lines.

Increased competition and obsolescence of some of the products, as well as the volatile nature of demand post COVID will put pressure on profits. However, your company has a robust cost reduction system in place as well as new product pipeline to help mitigate its effects. Earlier diversification measures have started to yield results as the company was able to bag order from new customers in domestic and overseas markets. Overall, your Company has been able to improve its position in the Industry.

Though the first Quarter FY2021 fiscal was subdued, there were some very encouraging developments during the current Quarter in terms of order wins that augurs well for the Company in the long term. The Company had won a significant order from a customer in the US which holds the promise of improved performance in the years to come and more such business down the line.

Your Company is strengthening its position in Electronics segment by developing new products like Sensors, Controllers etc. Also, priority is being given for development of the new products and applications for regulatory and technology requirements. Focus is also being given to identify the new segments, EV products.
Establishment of R & D center in Hosur, which is expected to be operational by end of FY 2020-21, is a step in the direction of establishing your Company as a key Technology player which can help in unlocking the potential further and act as springboard to grow faster.

Overall, the directors are confident that your Company is ready to meet the challenges posed due to COVID-19 as well as the evolving changes in the industry. Your Company is confident that it will not only grow its market share further but will also diversify into new products and markets. Your Company is committed to capitalize on the drive for localization and the need for a resilient and geographically diversified supply chain and is fully geared for that purpose.

the most important question which is basically what if hundred percent of two wheeler production in India moves electric and the answer is equally straightforward.

Right now we’re a completely IC Engine company. So effectively, if hundred percent goes to EV mode, our sale will be zero. I know, I’m exaggerating, of course, because we have after-market, exports and all that, but effectively we are a hundred percent IC Engine company. Now, what are strategies to counter that? And I’ve talked about that over the last two years and I’m happy to share that again. So, right now, we’re doing few things that will help us in mitigating this risk to an extent.

Of course, we don’t expect EV to take over overnight, so we continue to grow our IC Engine business, which is a source of profits and continues to give good results to the shareholders, both in India and outside India. Happy to report that we are gaining market share. There are many segments, like stationary engines, all-terrain vehicles etc which are going to remain with IC engines for quite some time and we will continue to grow in those segments in India and outside. So, that is going to be a continued sustained growth that’s going to come.
We’re working with some customers on ‘in between technologies between’ i.e. between IC engine and EV like hybrid technologies where we are having close discussions with customers, having developed the technology.

We are then working with non two wheeler customers like commercial vehicle customers. I’m happy to report that we have already won some business in the area of sensors. So, like that we are gradually increasing our product portfolio to diversify away from pure IC Engine to other related fields till the electric vehicles becomes a reality.

We are working on one product category, which I mentioned a couple of times in the past, and we’re close to signing an agreement. When we do that, I will publicly disclose it, but we’re making progress on developing those technologies to actually expand our products outside IC Engine business.
During this time, we plan to invest in developing new technology and that is the reason we are setting up the R&D Center, that will give us a strong position for the future.

Actually, since we are a mechatronic company, So today, our top 3 products are IC based but we are going strong in those segments, not only in the domestic market, but from the export side also.

So we are going strong in that area. Our top customers are TVS, Hero, Greaves, Suzuki and recently we are able to make in roads into another big customer. We have already started the development of products for that customer and we expect it to show results in the current financial year. This new customer also has the potential to reach the top three customer. We’re making good progress in that area.

We have developed new products like sensors, DC-DC converters, controllers, etc. We are also working on some EV products right now. We are getting queries from EV customers and we started working on those lines also, but it is too early to say, but definitely we’re moving towards those areas

As MD mentioned after-market is definitely the focus area and you might seen that recently (in the last year) we have seen around 8 percent growth in that area, in spite of the market going down.

Export side, we have already had a few prestigious customers and during last year we already had some good orders and now the development work is in progress. It is just a recent activity, which has been done.

when will the Kolhapur unit be restarted? Why it is closed? We have closed this Kolhapur Unit for the cost optimization benefit and if the business goes up and if there is a need, we will consider this but as of now, it is closed.

the land about Rs.5.30 Cr and why it is shown as meant for re-sale. Reclassification is done in the balance sheet on the basis of IND AS applicability and as per IND AS, if the land is kept unused for a long time it should be reclassified as meant for sale. That is why we classified it as such. It is the land held by the Company in Haridwar.

India Nippon is not the name of any company named Nippon. It means Japan. So, when we conceived this company, there were two partners from India and one from Japan, it’s called by the name India Nippon. It is not the property of anybody. So, the company has that name independent of the partners.
As far as our technologies, they are wholly developed by us in our own R&D Center and the new R&D center will enhance our capabilities both in the current range of products as well as the new range of products in the coming years.

As far as aftermarket is concerned, it’s about eight to ten percent of our sales and I think we can go up to perhaps 12-13 percent of our sales

Right now there is lots of competition both local and global like Varroc, Denso, Mitsuba this is the nature of auto industry.

just wanted to say that Mahle has an ambition to be in India along and has the plans to be with the TVS very much happy with them and with this INEL is going to grow much faster than the market because of its niche position which TVS team brings on the board


Analyst Meet – March 2021

I cannot disclose their names yet but INEL has won a couple of businesses in the new areas because of the desire of customers to localise. It is in the area of sensors. If we have the competency to develop quality, cost and delivery to the customers they are having more open mind to localise.

we are not hearing any new models coming out with ISG- integrated starter generator. What are your views on that, Sir? The reason why I am asking is, leaving aside the first quarter and if you can see the next two quarters, just on a gross profit level there is an acceleration, per se, in terms of the year-on-year growth. So, I am just trying to understand that are there any reasons other than the underlying market picking up in terms of production.

Regarding ISG, our general principle is never to question our customer or customer behaviour. If they want to introduce ISG, we are with them. If they do not want to do it, it is ok with us.
If they do not want it and stick to the traditional magneto, we have got good share, we have got good technology, we can do that also. So, I am not budgeting profits based on whether customers will take or not. We will follow what our customer wants. Because the choice of increased cost and benefit in terms of viability is the decision of the end consumer finally. They decide what works and what does not work.

This year we did lose some of the controller business from Greaves Cotton as well but despite this, you have done better than expectation.

We have a fairly visibility about what is coming and what is going. We have tried over the course of time to also optimise our products makes work and new products. I have in the past talked about after-market also. After-market business is also continuing to grow. We want to build a basket that gives us a robustness going forward and that is our goal.

As spoken by you in the prior AGMs on bringing in new products in terms of Tyre pressure monitoring sensor and also other controllers per se within the portfolio therein- How is that business scaling up, away from the existing product portfolio?

I will not say expanding away from the existing products – we are adding products in addition to the current product portfolio.

As mentioned earlier, we have 2-3 business that are in new areas. That are not in current ignition systems that are allowing us to expand or margins expand or grow and expand our customers base. We are making progress on that. Our R&D Centre investment was meant to actually generate the IT necessary for all the new areas in electronics and we are making a good progress.

I do not think I can see us being uncompetitive compared to any other country in the world.

just to remind you our base, we are a two-wheeler dominant company and No.1 in market for two wheelers in India.

Remember, one interesting situation is, in a mature industry, like two-wheeler industry when technology is shifting, there are existing suppliers making products comfortably. So, putting new capital going after an asset that if shifting to EV there are so many dynamics playing we must study it properly before taking a decision. If in next 20 years, they are going to bring in IC engines then there is a different discussion to have. But given the trend, there are so many open questions like when it is going to come. So, we will have to be very careful in putting our money down and going after.

We have actively worked in a product portfolio that will allow INEL to grow also in the EV domain. In fact, we have won one business, actually, in EV product. So, we are actually working very actively to develop EV Agnostic product portfolio that means the EV comes also, we will be able to have it.

But, one thing I can say is that, we are actively working on a product portfolio that can provide product and solutions to EV players. We are in active discussion with many EV players. We have won some business also in the area.

Depending on the outlook, I think in a year or two, we will have a better visibility about the direction of IC engine and EV. Then there may be chance for us to revaluate some of these things.

You steadily see in INEL capex go up over the last few years. I do not see the trend changing. We have invested in our Tech Centre to develop Technology. I look at the capex as a sign of investment in our own business to grow the business. So, we invested in the Tech Centre and I think, we will continue making investments to expand our Plants, invest in new Lines, expanding our Engineering Centre, of course, we will do that.

Sir, we have lots of cash and investment in the book and Very conservative way of handling the balance sheet. Given roughly Rs.250-300 Cr we have, the scale of opportunities would you consider good distribution or buy back?

Our focus is always to try to invest in assessed growth of business and grow the business as much as we can. I think we believe in our business. We want to invest in our busines to grow as well.


Any latest inputs/observations any one can share

f1fce781-4e98-431e-8209-6ce1284e06f6.pdf (

Indian promoter buying out the stake of japanese promoters…

Market sees this as positive development. Stock up 20% now.

Discl: Invested (3% of PF)

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a5a4ebbe-98b9-4a60-869c-322b73b3bff1.pdf (5.4 MB)