Endurance Technologies Ltd Management Discussions

Economic overview

World economic overview

Over the last four years, the world economy has been resilient despite disruptions in the macroeconomic environment. International Monetary Fund (IMF) forecast of 3.2% global growth rate in CY 2023 will remain steady at 3.2% in CY 2024 and CY 2025, primarily due to better-than-expected resilience in the United States and several large emerging market and developing economies. Increased structural reforms have also improved productivity. While disruptions in the supply chain, geopolitical uncertainty and underlying inflationary pressures may contribute to surging commodity prices, favourable supply chain dynamics will help rein in inflation significantly. According to estimates, headline inflation is expected to drop from 6.8% in CY 2023 to 5.9% globally in CY 2024 and touch 4.5% in CY 2025.¹

The eurozone is also anticipated to bounce back from its sluggish growth of 0.4% in CY 2023, with projections pointing towards 0.8% in CY 2024 and 1.5% in CY 2025. Although energy prices, including natural gas, had significantly decreased in CY 2023 compared to the previous year, the potential for future increases poses a challenge for efforts to reduce inflation. Ongoing conflicts in the Middle East have also heightened uncertainties and geopolitical risks in the region. Nonetheless, growth in the Middle East and North Africa (MENA) region is expected to accelerate from 2.7% in CY 2024 to 4.2% in CY 2025.²

Outlook³

Advanced economies are projected to experience modest growth in CY 2024 and CY 2025. This gradual improvement is expected to be driven by steady expansion in US GDP, coupled with a modest recovery in the euro region following subdued growth in CY 2023. Developing and emerging market economies are also expected to report steady growth in CY 2024 and CY 2025. The volume of global trade is expected to increase by 3% in CY 2024 from 0.3% in CY 2023. In addition, it is anticipated that during CY 2024 and CY 2025, the price of fuel and non-fuel commodities are likely to fall and interest rates are expected to drop across major economies. Furthermore, in CY 2024, the average annual price of oil is expected to fall by 2.5%, while the price of non-fuel commodities is expected to grow by 0.1%.

Growth in Europe and Central Asia (ECA) is projected to slow down to 2.8% in CY 2024, following a substantial strengthening to 3.3% in CY 2023. The regions growth is expected to remain broadly unchanged in CY 2025. Despite the slowdown, the regions economy continues to be supported by strong domestic demand and a gradual recovery in the eurozone. Furthermore, in the short term, persistently high inflation is expected to hinder the easing of monetary policy across most economies and dampen private consumption. The MENA regions upward revisions are based on the assumption that the economic performance of oil exporters will be propelled by a robust rebound in export demand.

Indian economic overview

Despite global uncertainties, the Indian economy continues to remain resilient to headwinds. Indias real GDP (Gross Domestic Product) reached 8.2% in FY 2023-24. The past decade has witnessed consistent economic growth, bolstered by heightened public sector investment, a resilient financial sector and substantial expansion in non-food credit. Over the preceding three years, the Government has escalated spending on infrastructure projects to stimulate economic growth and employment opportunities. The Interim Budget 2024-25 has also laid emphasis on the importance of infrastructure investment and capital expenditure to sustain this positive trajectory. The Budget has also outlined plans for increasing capital expenditure by 11% in comparison to the previous year for long-term projects, totalling H 11.1 trillion.⁴

Indias contribution to global growth is expected to rise from 16% to 18% by 2028, according to IMF projections. While trade and financial channels have allowed India to become more integrated into the global economy, strong domestic demand remains the main growth driver, cushioning India from external headwinds.⁵

Outlook

Driven by strong GDP growth, a burgeoning middle class that stimulates domestic consumption, and dedicated investments in infrastructure, the Indian economy continues to demonstrate promising growth prospects. Strategic trade agreements, technological progress, and digitalisation have also created multiple opportunities for improvement in Indias business environment. Looking forward, India is expected to further strengthen its position in the global arena, with projections suggesting it will cross the $5 trillion GDP mark in the coming years.⁷

Industry overview

Global market

Despite headwinds, the global automotive sector has demonstrated great resilience. Although challenges such as chip shortage and fluctuating energy costs have impacted performance, auto manufacturers exploring alternate technologies to counter its effect. Furthermore, advancements in electric vehicle components, development of lightweight materials and connected vehicle technologies are creating promising pathways for future expansion. The automotive industry is focusing on developing innovative solutions to cater to the evolving market, particularly in the emerging EV segments.

According to ACEA (European Automobile Manufacturers Association), in CY2023, registrations of new vehicles globally grew by 9.7% compared to the previous year (72.5 million vehicles in CY 2023 compared to 66.1 million in CY 2022). Registrations grew by 13.9% in the European Union (10.5 million compared to 9.3 million in CY 2022), by 14.4% in the USA (12.3 million compared to 10.8 in CY 2022), by 4.5% in China (with 22.3 million compared to 21.4 million the previous year) and 8.5% in India (with market increasing from 3.8 million vehicles to 4.2 million).⁸ The registrations recovered steadily from the impact of the global pandemic and the subsequent difficulties in the supply chain of car manufacturers.

Similarly, in the European Union, pure BEV electric vehicles reached a market share of 14.6%, plug-in hybrids (PHEV) 7.7% and HEV hybrids (including mild hybrids) 25.8%. Conversely, the market-share of traditional combustion vehicles fell to 48.9% (35.3% petrol and 13.6% diesel).⁹

[Source: European Automobile Manufacturers Association, April 2024]¹⁰ According to the findings of S&P Global Mobility released by ACEA, global car production increased by 10.2%, reaching 76 million units in CY 2023. While the European Union witnessed a growth of 11.3%, reaching 12 million vehicles, the USA increased its production by 8.5%, reaching 7.6 million vehicles. Similarly, China produced 25.3 million cars, achieving a growth rate of 9.1%, whereas India increased its growth rate to 6.8%, taking its tally to 4.7 million vehicles. Notably, Germany saw a significant increase in car production, reaching 4.0 million vehicles with an 18.7% growth compared to the previous year.¹¹

Indian automobile industry

The Indian automobile industry is expected to play an important role in improving the nations growth potential, contributing to 7.1% of Indias GDP.¹² The Production Linked Incentive (PLI) scheme for automobiles and auto components valued H 259,380 Million is also expected to improve the performance of this sector.¹³

Two-wheeler segment

India manufactures over 21 million two-wheelers annually, making it the largest producer of two-wheelers in the world. In the Indian automobile market for FY2023-24, domestic two-wheeler sales accounted for approximately 76% of the total sales by volume, increasing from 15.86 million to 17.97 million units compared to the previous year.¹⁴ Moreover, the total export of automobiles in FY 2023-24 stood at 4.5 million units, with two-wheelers constituting approximately 77% of the overall vehicle export volume.¹⁵

Three-wheeler segment

In the fiscal year 2023-24, domestic sales of three-wheelers rose from 4,88,768 to 6,91,749 units (a notable increase of 42%) compared to the preceding year. The growing need for affordable commercial vehicles for last-mile connectivity acted as a primary driver for increasing the nationwide demand for three-wheelers.

Four-wheeler segment

India achieved a significant milestone in FY 2023-2024 when its domestic sales of passenger vehicles surpassed 4 million units for the first time, driven by growing consumer demand and low interest rates on auto loans.¹⁶ In FY 2023-24, sales of domestic passenger vehicles increased by 8.4%, compared to a marginal increase of 0.6% in commercial vehicles.¹⁷ Compared to the previous year, total domestic sales of passenger vehicles increased from 3.89 to 4.22 million units. battery-electric-13-market-share/

Commercial vehicle segment

In the commercial vehicle sector, domestic sales saw an increase to reach 0.97 million units in FY 2023-24 from 0.96 million in the previous year.¹⁸ The commercial vehicle segment expects growth driven by heightened government expenditure due to elections, infrastructural projects and demand from key industries such as coal, cement and iron ore.

Category	2020-21	2021-22	2022-23	2023-24
Passenger Vehicles	27,11,457	30,69,523	38,90,114	42,18,746
Commercial Vehicles	5,68,559	7,16,566	9,62,468	9,67,878
Three Wheelers	2,19,446	2,61,385	4,88,768	6,91,749
Two Wheelers	1,51,20,783	1,35,70,008	1,58,62,087	1,79,74,365
Grand Total	1,86,20,233	1,76,17,606	2,12,04,162	2,38,53,463

[Source: Society of Indian Automobile Manufacturers]

Electric vehicles

As the adoption of electric vehicles gains momentum, India has the potential to emerge as a leading EV market globally by 2030.¹⁹ Projections suggest a compound annual growth rate (CAGR) of 49% for the EV market between 2022 and 2030, with the EV industry poised to generate 5 million direct and indirect jobs by 2030. Budgetary allocations aimed at bolstering EV manufacturing and purchase shall have an impact across different segments of the EV market.

The governments Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was designed to accelerate the adoption of electric vehicles. Under phase-II of the FAME India Scheme, subsidies totalling H 11,50,000 million have been provided to electric vehicle manufacturers and consumers for 15,42,452 electric vehicles, till March, 2024.²⁰

Anticipated growth in electric vehicle (EV) sales is set to persist in 2024, driven by heightened emphasis on electrification, enhancements in the EV ecosystem, projected decline in battery expenses and the introduction of new models across various segments.

Government policies

The Government has launched the PM-eBus Sewa Scheme to promote the adoption of electric buses in public transport. This scheme aims to provide 10,000 e-buses to 169 cities under a public-private partnership (PPP) model, with a total outlay of H 5,76,130 million, continuing until 2037.

The FAME II and National Electric Bus Programme (NEBP) programmes have been instrumental in driving the adoption of e-buses through capital subsidies and favourable contracting terms. The government has awarded tenders for the procurement of e-buses under these schemes, with a focus on reducing the total cost of ownership (TCO) and improving operational efficiency.

In addition, the Electric Mobility Promotion Scheme (EMPS) 2024, which came into effect on April 1, 2024, aims to support the adoption of electric two-wheelers and three-wheelers through demand incentives. The scheme has a budget of H 5,000 million and provides subsidies to EV manufacturers, which will benefit consumers by reducing the purchase price of EVs. The scheme also emphasises the development of an EV manufacturing ecosystem in India. The estimated expenditure on the PLI Scheme for Automobiles and Auto Components has been increased substantially to H 35 billion in FY 2024-25, up from a revised estimate of H 4.84 billion in the current fiscal year.

The government has set ambitious targets to expand the EV charging infrastructure. As of February 2024, India had installed 12,146 operational public EV charging stations.²¹ The government plans to significantly increase this number to meet the rising demand for EVs, with a target of 1.32 million charging stations by 2030. Furthermore, India is on track to produce 500,000 EV three-wheelers, at least 55,000 EV four-wheelers and 7,000 EV buses by 2024.

Outlook

The financial year 2023-24 has proved to be reasonably satisfactory for the domestic automobile sector, with passenger vehicles, commercial vehicles and two-wheelers registering single-digit growth, alongside a notable recovery in the three-wheeler segment. Looking forward, the implementation of various government schemes in India is expected to yield positive outcomes, aiding the domestic automotive industry to smoothly transition to adopting new powertrain technology.

Indian auto components industry

In recent years, India has emerged as the fastest-growing global economy. This rapid expansion, accompanied by rising income, increased infrastructure investment and enhanced manufacturing incentives, has propelled the automotive industry forward. Notably, the Indian auto component industry grew by 12.6% to H 29,800 million in the first half of 2023-24.²²

The growing presence of global automobile Original Equipment Manufacturers (OEMs) in India has further increased the production of auto components within the country. Additionally, the aftermarket turnover of the auto components industry in H1 FY 2023-24 reached H 4,51,580 million²³ .

The automotive industry serves as a key driver of growth for the Indian economy. The automotive parts industry allows 100% FDI under the automatic route, thereby, from April 2000 to December 2023, the Foreign Direct Investment (FDI) inflow into the Indian automotive sector amounted to $35.65 billion.

Recently, the Ministry of Heavy Industries announced an extension of the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year, with some modifications. Introduction of Aatmanirbhar Bharat 3.0, PLI schemes in the automobile and auto component sectors having a financial outlay of H 2,59,380 million are further anticipated to drive the growth of the industry. Under the revised scheme, incentives will be applicable for five consecutive years, commencing from the financial year 2023-24.²⁴

Outlook

Indias automotive component industry plays a pivotal role in driving macroeconomic growth and employment. It is anticipated that the Auto Components industry in India will expand to $200 billion by 2026, with exports expected to increase fivefold over the next decade.²⁵ The Automotive Mission Plan (AMP 2026) aims to achieve a turnover of $200 billion by 2026 for the auto component sector, supported by robust exports ranging between $70 - 80 billion.²⁶ With a significant contribution of 20.1% to the manufacturing GDP, the automotive sector stands as a key catalyst for macroeconomic growth and technological advancement in the country.²⁷

Company overview

Endurance is one of the leading automotive components manufacturers with a diverse product base comprising aluminium die-casting, suspension, braking systems and transmission products. It caters to the varied requirements of two, three and four-wheelers. With over thirty years of expertise in designing, developing and manufacturing high-pressure, low-pressure and gravity die-casting products for both Indian and international OEMs, the Company continues to expand its presence in India and other countries. Over the years, the Company has expanded its footprint into Europe through overseas subsidiaries in Italy and Germany. The Company remains focused on innovation and excellence, through an emphasis on QCDDM (Quality, Cost, Development, Delivery and Management).

The Company acts as a complete solution provider for a diverse array of technology-intensive products for OEMs in the two-wheeler, three-wheeler and four-wheeler sectors. From product conception to end-user servicing, it caters to the diverse needs of OEMs. The Company holds a prominent position as a leading Tier-I supplier for major Indian and global automotive brands.

Manufacturing and R&D

Endurance has 31 state-of-the-art manufacturing facilities, delivering superior quality products that adhere to stringent regulatory requirements. It has 19 manufacturing facilities in India spread across Maharashtra, Gujarat, Uttarakhand, Tamil Nadu and Karnataka. In Europe, it has 8 facilities in Italy and 3 in Germany. It also has 5 advanced R&D centres in Maharashtra and 2 tech centres in Italy.

The Companys state-of-the-art infrastructure for design, virtual validation and CAE (Computer-Aided Engineering) analysis and laboratory testing has enabled it to consistently improve its product range. Moreover, it holds the distinction of being the first Tier 1 supplier in India to have the capacity for direct vehicle testing. The Endurance Proving Ground (EPG), spread over 29 acres of land, facilitates testing of suspension, transmission and braking products across various surfaces, including high-speed performance tracks, ride evaluation tracks, ABS evaluation tracks, ride and handling tracks, gradient tracks, steering pads, mud and water troughs, dust tunnels and country tracks.

Business overview

The Company continues to embrace new technologies to innovate new products and expand its footprint in the domestic and international arena. The Company strives to be the preferred partner for all its customers and relies on its strong brand equity, financial strength, technological leadership, along with its manufacturing and sourcing capabilities to create exceptional value for stakeholders. In FY 2023-24, the Company achieved significant milestones, winning substantial new business across two-wheeler, three-wheeler, and four-wheeler segments as well as enhancing efficiencies by strengthening its operations and sourcing capabilities.

The Company commissioned its third aluminium forging press in Waluj, Chhatrapati Sambhajinagar with a fourth expected to be operational by Q1 FY 2024-25. Our forging capabilities are expected to contribute to our goal of increasing our 4-wheeler business. Additionally, Endurance expanded its assembly capacities with a new scooter suspension line in Waluj for a Japanese OEM and increased its ABS capacity from 400,000 to 640,000 units per annum. Similarly, the capacity of alloy wheel plant in Chakan also increased from 4.5 million to 5.5 million wheels per annum, with further expansions planned across various facilities to support new projects and OEM collaborations.

Financially, the Company saw a robust performance and achieved a new milestone of crossing H 100 billion (topline) for the first time. The Company won orders worth H 11.99 billion in India (excluding orders from its largest OEM customer) and €31 million in Europe. These new orders span various segments, including significant contracts for EV components and hybrid vehicle parts, reflecting a strategic pivot towards the evolving automotive landscape. The Companys ongoing efforts in innovation and technology resulted in 43 new patent approvals and 18 new design registrations taking the patents to 75 and design registrations to 42, demonstrating its commitment to maintaining a competitive edge through continuous improvement and adaptation to changing industry dynamics.

The Company has sustained its market leadership in die-casting by strengthening its product and process capabilities, using advanced technologies and capitalizing on the capabilities of the in-house tool room. Going forward, the Company plans to increase focus on machined castings for the four-wheeler and non-automotive segments for the domestic and export markets.

In Q3 FY 2023-24, the Company secured a deal worth H 60 million in the EV casting segment at the Vallam plant. Additionally, at the Chakan plant, in Pune the Company is in the process of installing machines for structural aluminium casting, catering to components such as swing arms, subframes and structural fairings, for both EV and internal combustion engine (ICE) models. The Company secured significant orders totalling H 2.8 billion for machined castings, specifically targeting four-wheeler applications.

The Company is setting up a new plant on a 11-acre site at AURIC, Chh Sambhajinagar, scheduled to be operational in Q1 FY2025-26. With a capacity of 900 MT castings per month, the facility will cater to the four-wheeler market, including EV components, as well as non-automotive aluminium casting applications. With a projected CAPEX of H 4,009 million and an anticipated annual revenue exceeding H 5,000 million, this investment is expected to drive substantial advancements in our capabilities and future growth.

Proprietary Business

The Company is a pioneer and market leader in suspension systems. With a rich legacy spanning over two decades, the Company specialises in the design and calibration of a diverse array of front forks and shock absorbers for motorcycles, scooters, mopeds, mountain bikes, three-wheelers and quadricycles. It aims to deliver a safe, stable and comfortable riding experience on all kinds of roads. The suspension business contributes 25% to the consolidated revenue. The Company has focused on product premiumization and focusing on increasing the penetration in higher cc vehicles. It has won orders worth H 1,653 million for front fork from a reputed OEM for which start of production will be in Q3 of FY 2024-25. The Company has also won orders worth H 1,247 million from another reputed OEM, being supplied from its Halol plant, enabling the Company to fully utilise the plant capacity.

Braking systems

The Company is emerging as a market leader for braking systems. The braking systems are designed to improve stability during deceleration and prioritise rider safety. The Company holds the distinction of being the first Company in India to design and manufacture brake systems featuring split-type callipers as well as integral and fixed-type callipers. The Company is focusing on higher technology and higher value add products such as the 2-wheeler disc brake systems along with single and dual channel ABS. The Company designs and manufactures master cylinders equipped with integral and remote reservoirs. Its disc brake assembly capacity has expanded to 6.2 million units and the brake disc capacity has reached 8.1 million units. The Company has a run rate of 400,000 per annum for the single channel ABS and has added a capacity of 240,000 per annum for the dual channel ABS with start of production in Q4 FY 2024-25. The Company has focused on strategic backward integrations of wire-braided hoses and valves to drive margin expansion.

Transmission

The Company has strengthened its position as a reputed player in transmission systems, catering to the specific requirements of motorcycles and three-wheelers. Leveraging over two decades of experience in understanding Indian driving habits, the Company specialises in designing, developing and manufacturing a diverse array of clutches including higher technology assist and slip clutches. The Company also utilises Value Analysis and Value Engineering (VAVE) methodologies to develop innovative products. To ensure superior performance, the products undergo rigorous testing under simulated vehicle operating conditions as well as at its 29-acres extensive proving ground. The company has also started manufacturing drive-shafts for three-wheeler from its newly setup plant at Chhatrapati Sambhajinagar.

EV and hybrid

The Company is dedicated to increasing its market share for the electric two-wheeler, three-wheeler, and four-wheeler segments. It remains committed to providing EV products to both existing and new OEMs. The Company has won EV business of H 7,145 million in India and €91 million in Europe till date.

The long-term outlook predicts an improvement in consumer sentiment, driven by geopolitical stability, economic prosperity extending to rural areas and a notable surge in the sale of premium bikes and EV scooters and three-wheelers. To meet the growing demand for EV scooters, the Company is scaling up production volumes to 240,000 parts per annum for eight components of EV battery pack and motor housing aluminium castings, amounting to an initial annual value of H 1,000 million.

Aftermarket

Aftermarket is a strategic priority for the Company.

Aftermarket sales witnessed a growth of 6.77%, increasing from H 4,311 million in FY 2022-23 to H 4,603 million in FY 2023-24, contributing 6% to the domestic income. The Company has set a target to increase this share to 10% by FY 2027-28, indicating a strategic focus on expanding its presence in the aftermarket domain.

During FY 2023-24, the Company expanded its penetration to 213 districts with 444 distributors in India, and its presence to 3 more countries viz Brazil, DR Congo and Cameroon, thereby extending its presence to 34 countries. The Company also aims to concentrate on outsourced value-added products.

While the aftermarket has focused primarily on the two-wheeler and three-wheeler segments, the Company also plans to enter into the four-wheeler segment for aftermarket.

Overseas Subsidiaries

Endurance Overseas Srl (EoSrl)

Endurance Overseas Srl (EoSrl) is the Companys subsidiary located in Italy. It is established for the purpose of making strategic overseas investments. The Company holds 95% of the share capital in EOSrl, while its wholly-owned German subsidiary, Endurance GmbH, holds the remaining %. EoSrl also provides management support services to other European entities within the Group to centralise certain critical functions. During FY 2023-24, EoSrl reported total income of € 8.5 million. This is a decrease compared to € 10.2 million in the previous year. Profit after tax also declined from € 16.1 million in FY 2022-23 to € 8.3 million in this fiscal year. The decline took place owing to a reduction in dividends received from the Italian subsidiaries (for the amount of € 9 million compared to € 15 million of the previous year).

Endurance SpA

Endurance SpA (ESpA) is a step-down operating subsidiary of the Company in Italy and is primarily engaged in the production of high pressure die casting and machining components for the automotive sector. These include engine, gearbox, transmission parts, along with assembled metallic components made from aluminium alloys, cast iron and steel. During FY 2023-24, ESpA reported 2.8% increase in total income. It reported an income of € 159.9 million, as compared to € 155.5 million in FY 2022-23. Profit after tax also increased 149% to € 10.1 million as compared to € 4.0 million in the previous year. Furthermore, the Company recorded a profit at 6.3% of the total income. This was significantly higher compared to the year and in line with the historical profitability before the global pandemic and energy crisis rattled the economy. In addition to this, energy prices fell significantly as compared to 2023 (-60% Electricity and -69% Gas), even though the values are still significantly above historical values. The Company also benefited from reduction in rental expenses following a demerger by the parent Company, Endurance Overseas Srl. The tax burden was lower compared to the ordinary rates as ESpA benefited of tax allowances provided due to high depreciation registered due to the technologically advanced machines bought in the previous years. The Company also benefitted from energy cost savings through its operational solar panels. During the year, the Company won new orders, worth for about € 22 million (in terms of yearly turnover at regime), from various car makers, particularly for powertrain components. Production for these orders is expected to begin in FY 2025-26.

Machined aluminium die casting – cam carrier assembly Endurance GmbH

Endurance GmbH ("EGmbH"), a wholly owned subsidiary based in Germany, carries out manufacturing operation of high pressure die casting and machining components. It caters to large automotive OEMs in the German market. During the year under review, EGmbH reported 9.8% increase in total income to € 55.3 million as compared to € 50.4 million in the previous year. Profit after tax was € 0.7 million as against the previous years profit of € 1.4 million. The lower performance stemmed from two key factors. One was the inefficiencies associated with ramping up production of new products and the second was due to reduced benefit from energy cost reduction due to fixed term agreements.

Endurance Gmbh - Massenbachhausen Endurance Engineering Srl

Endurance Engineering Srl ("EEsrl") is a step down operating subsidiary of the Company in Italy and is primarily engaged in the production of plastic components for automotive applications.

During the year under review, EEsrls total income reduced from € 14.0 million to € 12.5 million. On the other hand, profit after tax was recorded at € 0.8 million, compared to € 0.7 million of previous year.

EEsrl continues to support the Endurance Groups expansion into alternative solutions, engineering plastic components to complement the aluminium production of other group companies. Despite a drop in sales, the Company secured new orders worth € 2.4 million (in terms of yearly turnover at regime) with production starting in FY 2024-25.

Endurance Castings SpA

Endurance Castings SpA ("ECSpA") is a step down operating subsidiary of the Company in Italy and is primarily engaged in manufacturing operation of high pressure die casting and machining components.

During FY 2023-24, ECSpA reported 1.4% decrease in total income, recording € 40.9 million from both captive and non-captive customers, as compared to € 41.5 million in the previous year. Profit after tax also decreased, falling from € 2.7 million to € 0.7 million. This decline is primarily due to lower turnover and an unfavourable mix of products. Despite these challenges, ECSpA won new orders from external customers, worth € 2.3 million (in terms of yearly turnover at regime). Production is anticipated to begin in FY 2024-25.

Endurance Adler SpA

Endurance Adler SpA ("EASpA") is a step down operating subsidiary of the Company in Italy and is primarily engaged in manufacturing operation of clutches and brakes systems and other metal rubber components for the two-wheeler market.

During FY 2023-24, EASpA reported a total income of € 9.9 million as compared to total income of € 10.8 million for the previous year and a profit after tax of € 0.4 million compared to € 0.2 million of the previous year.

Veicoli Srl

Veicoli Srl ("Veicoli") is a step-down operating subsidiary of the Company in Italy and provides fleet management services through its application platform. During FY 2023-24, Veicoli reported a total income of € 1.3 million and a profit after tax of € 0.2 million. Throughout the year, the Company prioritised acquiring new customers acquisitions and expanding its portfolio of offered solutions.

Frenotecnica Srl

Frenotecnica Srl ("Freno") is the new step-down operating subsidiary in Italy acquired in June 2022. Freno is primarily engaged in the manufacturing of brake pads for two-wheeler vehicles in the after-market and replacement business. During FY 2023-24, Freno reported a total income of € 4.4 million and a profit after tax of € 0.4 million. In the previous year, since its acquisition, the Company has contributed € 2.9 million in total income and € 0.1 million in profit after tax.

New Fren Srl

New Fren Srl ("New Fren") is an operating subsidiary in Italy, acquired in November 2022. New Fren is primarily engaged in manufacturing brake discs, centrifugal clutches, clutch discs, pads and brake shoes for two-wheeler vehicles in the after-market and replacement business. During FY 2023-24, New Fren reported a total income of € 6.4 million and a profit after tax of € 0.1 million. In the previous year, following its acquisition, the Company contributed with a total income of € 2.3 million and a loss after tax of € 0.2 million.

Quality and productivity focus

The Company places paramount importance on quality as a fundamental driver of its growth strategy. Adhering rigorously to stringent QCDDM parameters has been instrumental in establishing and maintaining sustained market leadership. All outsourcing partners and vendors are required to adhere to the QCDDM parameters. To drive value creation for all stakeholders, the Company places strong emphasis on robust production capabilities, internal process control and corporate governance.

Environment, health and safety

The Company is building an EHS and sustainability-first culture, consistently prioritising human lives, environment, health, safety, and sustainability in its decisions. The management of change initiative ensures all material changes, layout changes, expansions, and greenfield/brownfield projects require certification from the EHS team. The Company focuses on developing contractors on hazard identification and management, risk assessment, competency mapping, training for their employees, and emergency preparedness and response as part of its contractor safety management initiatives.

Daily safety champions are rotated every day across all plants to drive a safety-first culture. At Endurance, the zero tolerance for unsafe acts and non-compliance is facilitated by its consequence management policy. The Company has developed a mechanism to benchmark and share learnings and best practices across locations for continuous improvement.

Endurance has been driving sustainability and has achieved a carbon neutrality of 35% in FY 2023-24. The Company has developed its 2030 goals to achieve 50% carbon neutrality, 50% renewable energy mix and Zero waste to landfill across all its operations in India. Endurance is also engaged with its vendor partners to drive sustainability across the value chain.

For the detailed report refer to the page number 44.

Human resource

The Company places great emphasis on fostering a workplace culture that promotes learning and individual growth. It has created targeted programmes for its diverse workforce, helping employees unlock their true potential and accelerate their journey in the professional arena.

Diversity

Endurance considers diversity a strategic priority, believing it develops sustainable competitive advantage through a diverse workplace. By driving a diverse and collaborative culture, the Company continuously challenges itself and fosters innovation, one of its core values.

Leadership development and capacity building

Building the next line of leaders from within is a strategic priority for Endurance. The Company believes in identifying the true potential of employees and enabling them to achieve it by capitalising on their strengths and challenging them to overcome weaknesses through focused initiatives. High-potential talent pools at junior, middle management, and senior levels have been identified as part of Endurances succession planning initiative. This initiative aims to help high-potential individuals redefine their limits and potential while enabling them to develop managerial and leadership skills for larger roles.

Developing a high-performance culture and driving employee engagement

Endurance is building and sustaining a high-performance culture that offers it a sustainable competitive advantage. The

Companys culture shapes the experience of each employee and emerges from its CITTI values (Customer Centricity, Integrity, Transparency, Teamwork, and Innovation). These five pillars help foster this culture as they guide decisions and actions. Endurance believes demonstrating these values consistently in its actions has made it a globally trusted brand.

The Company has developed a result oriented work culture. Initiatives including driving internal customer centricity, proactive risk assessment and mitigation, ensuring effective and robust review mechanisms, and driving end-to-end accountability have helped shape the Companys culture. Sustainable actions based on the voice of employees from the annual engagement survey are implemented each year, driving employee engagement and loyalty.

Team building, Endurance Overseas, Italy

Work-life balance

Endurance aims to develop a culture that embraces balance and prioritises the well-being of all Endureans. The Company recognises that periodic leave is essential for individuals to promote good mental and physical health. In October 2021, Endurance initiated a work-life balance programme to encourage all Endureans to take time for themselves and spend time with their families.

Corporate social responsibility (CSR)

Endurance is a socially responsible corporate, committed to improving the lives of communities around It. To fulfil this objective, the Company engages in need-based social interventions through its CSR activities.

Education and skill development

The Company has undertaken several initiatives to promote education and skill development in rural areas around

Chhatrapati Sambhajinagar (formerly Aurangabad). The Company is developing school infrastructure by renovating the school buildings, constructing new toilet units for boys and girls, building libraries with books with furniture, and installing solar power units to make them environmentally friendly. Endurance also runs, ‘World on Wheels, a mobile bus equipped with 21 computers that visit different villages, allowing children to enrol in courses and earn certifications.

In addition to this, the Company also offers digital literacy programmes for students, farmers, women and youth. Moreover, Endurance operates vocational training centres that provide courses in retail marketing, electrical machine maintenance, computer skills, tailoring- fashion design and die-casting, with placement opportunities for candidates after successful completion of courses enrolled in.

Health and sanitation

Endurance has focused on improving health and sanitation in rural communities. It has conducted general health checkups, eye checkups with cataract surgeries and treatment for conditions such as prostate issues and kidney stones. Endurance has provided toilets for every household in several villages and trained rural women in first-aid nursing.

Environment

The Company has extended its support towards environmental sustainability in villages of Chhatrapati Sambhajinagar. In FY 2023-24, Endurance deepened 8 km of natural canals and further created a water capacity of 2.8 Cr. litres. In addition to this, the Company de-silted 3 ponds in 3 villages, thereby creating a water capacity of 1.8 Cr. litres. Also, the Company constructed household soak pits to help in harvesting domestic water. In the reported year, 2 dense forests were developed by the Company on 13 acres. In addition to this, the Company also promoted its plantation activities in the year under review.

Livelihoods

The Endurance Centre of Vocational Empowerment (ECOVE) has provided training to more than 1,350 candidates by providing them with skills and placement. In addition to this, Endurance also supported the welfare of the farmers and provided training to more than 300 farmers for diversified topics. The Company also provided training and Vermi beds to 230 farmers for Vermi Compost.

Opportunities and threats

Opportunities

Growing population

As the global population increases, the automotive industry anticipates a surge in demand. This expanding populace presents an opportunity for the industry to grow its customer base and consequently improve automobile demand and industry revenue.

Electric Vehicle (EV) market growth

As the automotive industry shifts towards electric vehicles, a growing demand for specialised components such as lightweight suspension parts, transmission components and braking systems can be witnessed. Endurance can leverage its expertise in manufacturing specialised auto components to tap into the expanding EV market.

Use of lightweight components

With increasing emphasis on fuel efficiency and emissions reduction, a growing demand for lightweight auto components has been noticed. Endurance, specialising in aluminium die casting, is well-positioned to capitalise on this trend by providing lightweight solutions for various automotive applications, including suspension, transmission and braking systems.

Technological integration and premiumisation

The integration of advanced technologies such as sensors, actuators and electronic control units into automotive components presents opportunities for the Company to enhance its product offerings. By incorporating smart features into suspension, transmission and braking systems, the Company can meet the evolving needs of the automotive industry and deliver differentiated products to the market. Premium features of electronic components are increasingly sought after, even in lower cc two-wheeler vehicles.

Aftermarket expansion

The Company is exploring opportunities to expand its presence in the aftermarket segment by offering high-quality replacement parts and accessories for suspension, transmission and braking systems. Leveraging its manufacturing capabilities and its focus on quality, the Company can capture a larger share of the aftermarket business and earn the trust of customers.

Capitalising on the growing Four-wheeler market

While Endurance is deeply penetrated into the two-wheeler and three-wheeler component market, the four-wheeler component market presents an opportunity for growth in the machined aluminium die casting space and in aluminium forged parts. It also provides an opportunity for us to enter into four-wheeler proprietary parts through mergers and acquisitions, technology tie-ups and internally developed parts. Larger presence in four wheeler parts, across EV, hybrid and ICE, would help the Company not only in business expansion, but also in de-risking the business from changes in consumer preference. Additionally, using its deep expertise in aluminium die casting and machining, Endurance would be able to tap this market in non-auto applications.

Threats

Economic uncertainty

Fluctuations in global economic conditions, currency exchange rates, trade policies and EV incentivisation pose threats to the Companys revenue and profitability.

Shift in consumer preference

The shift towards alternative transportation modes, such as ridesharing, electric vehicles and mobility-as-a-service, could impact the demand for traditional automotive components. The Company must remain responsive to evolving consumer preferences and improve its product portfolio to remain relevant in the market.

Regulatory changes and compliance

The Company operates in a highly regulated industry, with stringent standards for safety, emissions and quality. Changes in regulations or the introduction of new regulatory requirements could increase compliance costs and operational challenges for the Company.

Risk management

The Board of the Company maintains the overarching responsibility of overseeing risk management and internal controls. This involves a specific emphasis on establishing the Companys risk tolerance, consistently evaluating and tracking key risks and scrutinising reports generated by internal auditors regarding internal controls and risk assessments.

Tiding over challenges prudently

Risks	Risk impact	Mitigation plans
Macro- economic risk	Economic downturns, inflation, and high interest rates may lead to reduced consumer spending on automobiles, affecting demand for auto components.	Endurance has expanded its geographic footprint and diversified its product range within the auto component segment. Its products are supplied to numerous OEMs and the Aftermarket.
		The Companys competitive edge stems from its strong brand reputation, enduring customer relationships, positive trade ties with vendors and stringent quality control measures— thereby positioning it at the forefront of the industry.
Regulatory risk	Frequent changes in subsidies and incentives, emission standards, safety regulations, or trade policies can significantly impact manufacturing processes and costs.	Endurance is leveraging its diverse end-user vehicles, presence across geographies, product categories and OEMs, ensuring its future-ready products meet evolving customer needs while maintaining robust compliance across all markets..
Customer concentration risk	Dependence on a few automotive manufacturers may lead to revenue volatility if these customers face financial difficulties or shift suppliers.	Endurance maintains a diverse clientele. Its ongoing efforts are concentrated on expanding its geographical presence and clientele—minimising risks associated with customer concentration.
Information technology risk	Vulnerabilities in the IT infrastructure can compromise sensitive data, disrupt operations and lead to financial losses.	The Company follows a strong methodology and has implemented appropriate softwares and tools to safeguard information assets of the organization from cyber vulnerabilities and data theft. Company has also obtained ISO27001 certification and established robust ISMS (Information Security Management System). The Company consistently reviews and enhances its IT security protocols.
Supply chain risk	Delays in receiving raw materials or components can disrupt production schedules and impact the Companys ability to meet customer demands.	Enduranceensuresuninterruptedsupplythroughtimelypayments, a business-friendly approach and enduring vendor relationships. Providing advances when necessary further strengthens these ties. The Companys strategies include indigenous sourcing, careful material planning, and long-term fixed price contracts.
Reputational risk	Non-compliance can lead to legal issues, fines and reputational damage. Ensuring a safe working environment is essential for employee well-being and operational continuity.	The Company is dedicating resources to sustainable production technologies, enhancing safety standards, promoting ethical labour practices and ensuring strict regulatory compliance. To stay abreast of the evolving needs and expectations of its stakeholders, it frequently collaborates with its key stakeholders.
Social risk	Poor employee/worker relations or negative community perceptions can lead to disruptions and strikes as well as damage the Companys reputation.	Effective HR policies are in place to ensure that the personal development of team members aligns with the organisations growth. Emphasising training, job satisfaction, promoting a conducive work culture and providing timely rewards and recognition help maintain high retention rates.

Consolidated financial results

Particulars	FY 2023-24	FY 2022-23
Revenue from operations	102,408.71	67,675.07
Other income	856.15	282.00
Total income	60,505.73	45,326.04
EBITDA	8,798.97	3,241.77
Profit before tax	426.58	42.70
Profit after tax	4,739.93	2,407.08
Cash flow from operations	19,824.17	11,314.92

The key financial ratios (standalone)

Particulars	FY 2023-24	FY 2022-23
Trade receivables turnover	8.1	8.1
Inventory Turnover (No. of Days)	11.3	11.4
ROE (%)	16.5	12.9
Current Ratio	2.6	2.3
Net Debt Equity Ratio	-0.1	-0.1
Net Profit (%)	7.4	6.0
ROCE (%)	22.1	17.4

Management outlook

The Company is poised for significant growth and expansion in the coming years, driven by strategic investments and capacity enhancements. The Company has commissioned its third aluminium forging press in Waluj, Chhatrapati Sambhajinagar and plans to commission a fourth in Q1 FY25. Additionally, a new assembly line for scooter suspensions has been established in Waluj for a Japanese OEM. The ABS capacity in Waluj has increased from 400,000 to 640,000 units per annum, and the alloy wheel capacity in Chakan also increased from 4.5 million to 5.5 million wheels per annum. These expansions are complemented by new machining and assembly lines in Chivasso, Italy, to produce transmission housings for a European OEM; production commenced in Q4 FY 2023-24 and is expected to peak in FY 2025-26.

The Company is also making significant strides in the electric vehicle (EV) market, with cumulative EV orders in India amounting to H 7,145 million (excluding orders won by Maxwell). In Europe, Endurance has secured key orders for EV motor covers and hybrid vehicle clutch housings. The share of EV and hybrid applications in Endurances European business is increasing, with 36% of cumulative orders in the last five years being for EV applications and 48% for hybrid applications. The Company is also expanding its capacity for EV scooter and three-wheeler castings, positioning itself as a key player in the rapidly evolving automotive landscape.

Cautionary statement

This document contains some statements about expected future events, financial and operating results of Endurance Technologies Limited, which are forward-looking. By nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements may not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements.