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