Today's Top Gainer
Note:Top Gainer - Nifty 50 More
In year 2017, the total global sales of light vehicles were 95 Million units of which 4 Million units were in the Hybrid & Electric Vehicle category.
Experienced players in automotive domain estimate the total volume to grow to about 115 Million units in the next 10 years and forecast a range of 25%-35% in the Hybrid & Electric Vehicle category.
China has emerged as the largest production & consumption market, contributing to a little over 29 Million light vehicles in 2017. Strong impetus towards Electric vehicles is clearly evident in China.
Automotive Technology & Consumer Trends
Experts have analysed the key directions in technology and consumer trends in the automotive industry as Electro-mobility, Autonomous vehicles, Connectivity, Ride Sharing, while features of fuel-efficiency, emission control, safety & comfort continue to be top performance & functional priorities of Automotive manufacturers. While Battery Technology & Electric Vehicle Power Train is evolving, strong engineering challenges are driving downsizing of the Internal Combustion Engines (ICE) which are necessitating inclusion of Turbo-chargers & Emission Control units in these Engines.
The new ICE Platforms that are being developed are now being designed to ensure that all elements in the ICE Power-train are capable to withstand wider Thermal Shock, Mechanical Shock & Electromagnetic Interference bandwidths.
Vehicle makers are also taking strong cues from concepts of Ride-sharing, Car-pool, Private-Cabs and are testing vehicles for longer than earlier specified lifecycle of vehicles i.e., if the vehicle was earlier designed for life of 200,000 miles, components are now being tested for a life of twice as much.
Interestingly, the Principle of actuators being used in the ICE Power-train is also extending to the actuators that are used in Hybrid & Electric Vehicles for applications related to cooling of Power-train elements.
Actuators & Motors
Careful assessment of the Engineering trends in actuators due to the afore-mentioned technology trends indicate that the design features of actuators and motors of the past need to be substantially upgraded for vehicles of the future.
Specific characteristics of widening performance bands in thermal, mechanical and electromagnetic requirements are warranting new materials, new components and new concepts in the design of motors and actuators. Interfacing of various elements of an actuator is gaining increased engineering importance due to the new trends, thereby causing longer validation cycles and project launch timelines.
Market for motors and actuators in TAM segment is growing due to increased usage and improved functionality of turbo-chargers and EGR units with electric actuators. Customer enquiries also indicate that usage of coolant control actuators will steadily increase for various coolant circuits in Electric & Hybrid Vehicles.
Usage of Motors & Actuators for Comfort Applications in body, seat & steering continue to grow and requirements of downsizing, low noise & cost dominate the characteristics in this segment.
(Source : Internal Study)
Actuators which use Electric Motors of our range in TAM & CAM applications are identified in the table below:
Actuators & Motors TAM (Torque Actuator Motor)
|Electronic Throttle Control (ETC) Waste Gate Actuator (WGA)||It precisely controls the amount of air for air-fuel mixture entering into the combustion chamber of the engine for perfect combustion. W aste-gate is used to divert exhaust gas away from turbine wheel in a turbocharged engine system.|
|Exhaust Gas Recirculation (EGR)||It is used in internal combustion engine to reduce the pollutant emissions.|
|Variable Geometry Turbine (VGT)||It changes effective aspect ratio of the turbo with the changing conditions by controlling the guide vanes to control the flow of exhaust gases to the turbine.|
|Coolant Control Valve (CCV)||It controls the engine and other temperatures for better engine performance and comfort. Such valves are proliferating into the coolant circuit of EV / HEVs.|
|Air Intake Flap||It is a small butterfly valve responsible for supplying fuel-air mixture in gasoline engines and air in diesel engine to the combustion cylinder.|
Actuators & Motors CAM (Comfort Actuator Motor)
The table below explains the specific applications of motors in Comfort Applications:
|Body||These are the motors that are on the body of the vehicle, e.g., Window regulator, Power Tail Gate, Slide door, Trunk Opening & Closing Device, Sunroof, Door Opener|
|Seats||These are the motors for various movements in seats of the vehicle, e.g., Adjuster, Recliner, Incliner, Lumbar, Head-rest, Belt presenter, Swive|
|Steering||These are the motors associated with the steering of the vehicle, e.g., Column Adjuster, Tilt Mechanism|
The below application portfolio indicates the opportunity basket for us and our Company is working to progressively introduce more applications to our current product portfolio, selected carefully, keeping in mind Strategic and Technical considerations.
Learnings during the year
The Company encountered a few head-winds during the year which have been significant learning experiences to factor in our future business directions.
The technical challenges posed in the new applications and new program launches delayed the launch of new program volumes by 6~9 months and we expect these new launches to take off in the forward periods.
Downsizing, withstanding wider Thermal Shock Bandwidth, withstanding wider Mechanical Shock bandwidth, Superior class of Electromagnetic Noise suppression, Longer life, Lower Mechanical Noise, lower energy consumption are specific requirements where substantial Engineering time has been spent in the last year.
The validation requirements and the timelines have also become more stringent with longer duration. Close collaboration with OEMs and Tier -1 customers over the past periods are certainly helping us to gain a knowledge edge for the new requirements, albeit, the launches are taking more time than planned.
A shift in the product mix in American markets and some corrections in the inventory pipeline reduced the offtake in the US market in the second half of the year.
The appreciation of the rupee compared to the previous year also contributed to reduction in the revenue, coupled with the aforementioned two matters.
We expect the above challenges to turn favourable during the comiing years, thereby allowing us to post good growth in volumes.
The experiences of the recent years have driven the Company to include strategic alliances, lateral inclusion of businesses and pursuits in new technology products like BLDC for future business growth.
Brushless DC Motors BLDC:
In the last year, our technology group has explored key relevant opportunities in the Brushless DC Motor space. The main drivers for these technology endeavours are to fall in line with future trends requiring down-sizing, low energy consumption, long life and low noise in the applications in both automotive and other than automotive sectors.
Extensive usage of BLDC motors are seen in the appliance segment, office equipment, computers, telecommunication and automotive segments.
Our initial development focus is in carefully chosen applications where the integration of the electromagnetic design of the motor with the electronic driver and controller module can be understood and built for validating in applications with large volumes. In addition, the engineering focus is to realize the future trends mentioned above, with a commercial advantage.
Specific knowledge in Design & reliability of electronics in drivers & controllers is a continuous process and our technology team has taken significant strides in developing know-how in-house as well with international partners.
Products for select applications will be launched in the coming year.
While cost of Electronics has been a barrier for industry to adopt BLDC, with our large volumes of motors and Technology partnerships, we are on the way to build cost effective engineering solutions.
Directionally, an aim has been set to reach a business enquiry level of 25%-30% comprising of BLDC motors in our product mix over the next 3 years.
The Nil Spill quality initiative launched 2 years ago has progressed significantly with considerable improvements seen both internally & externally.
Company-wide teams have been formed to include the design/development and program management functions along with core manufacturing to institutionalize Nil Spill across various functions in the organization.
Specific indices to measure the improvements at each stage of each function have evolved and we plan to address the continuing quality improvement requirements of customers effectively through the company-wide Nil
Spill initiatives to address both occurrence and detection of Spills across all operational areas.
As technology and employee skill levels have been increasing, the trend in our manufacturing is shifting from manual to semi-automatic lines progressively.
There has been a continuous upgrade in manufacturing technology, as there is a need to move towards higher levels of automation for both quality & productivity reasons, in addition to the specific requirements of customers to build products with lower manual intervention.
Following this, Our Company has started the Process Engineering Inflexion for Smart Manufacturing (PRISM) program for continuously improving manufacturing technology.
Our Manufacturing team has identified specific areas across manufacturing lines in the company and launched initiatives for Stage automation, Cluster Automation & Production Line Automation.
A systematic and well planned implementation program has been put in place and positive results in quality, productivity and capacity enhancement are expected in the coming years.
Your Company has used the plots taken on lease inside MEPZ-SEZ during last financial year and the current financial year for installing new manufacturing lines and logistic warehouses including canteen area with total new plot area of 1,46,497 sq ft.
With construction during the year on these newly acquired sites, the new plots built up area is at 1,52,783 sq ft. With the above, the Companys overall plot area has increased to 3,70,133 sq ft, enabling our Company to continuously add capacity every year for the customer program launches in the future periods.
RISKS & CONCERNS
Your Company has formulated a Risk Management Policy which will guide the Risk Management Committee and the Internal Risk Management team to effectively manage the risks that the business faces. The key risks that the business faces are enumerated as follows:
Raw Material Prices & Foreign Exchange Rates: Any significant increase in steel/copper scrap prices/ appreciation of the Indian rupee could be detrimental especially due to long term contracts signed in exports which makes it difficult to obtain price increases from customers to compensate raw material price increases / foreign exchange movements.
Quality Risk: Spiking demand in quality requirements across APQP pipeline and series from the customer end have led to risk of quality spills. The quality standards have ascended in units from a few PPM to a few PPB.
Insurance Risk: The product liability insurances taken against warranty claims provide only limited coverage of the actual exposure and hence some part of the exposures liability continues to remain with the manufacturer and this could impact the business as the quality standards are becoming further stringent in the automotive industry.
Geo-Political risks/ Economic Slowdowns: 9/11 tragedy and the 2008-09 economic slowdown led to significant postponement of planned roll-outs by automobile manufacturers which in turn had a cascading effect on component makers who had already made significant capital investments for the projected business. Thus, any future event of this scale can adversely impact the industry and other fundamentals.
Probable Substitutes in the Future: Brushless DC Motors and Nano-technology are possible substitutes for the Brushed DC Motor. The brushless motors is presently costing 3~5 times the traditional motors with brushes. A brushless motor is being used when high reliability, long life and high speeds are required. Hence it is used only in those applications where sophisticated control of the motors operation is required. Nanotech is still in the nascent stage of the technology adoption cycle & is not strong enough for major tasks such as powering windows and seats. Trend in Technology movement of Motors is also being studied carefully and a visible trend of growth in Brushless DC Motors is observed. We are launching Pilot programs in this space to be prepared for the future.
Pricing Pressures: Your Company is being exposed to downward price pressures from Global Tier-1 customers due to typical characteristic of Global Automotive Industry. Your Company has taken various steps including technology intervention in both production and process development, reducing operating costs, sourcing improvements, customer negotiations and other actions to offset customer price reduction
Logistic Risk: Your company being exporter of motors to locations all over the World, it is continuously exposed to Supply Chain risks such as shipment delivery due to usage of sea freight for most of the deliveries.
Cyber Security Risk: Your company is exposed to security risk includes both cyber security and physical security. Your Company has established adequate measures for protecting networks, computers, programs and data from attack, damage or un-authorised access. Also carrying out Cyber Security Threat audits by external Experts at regular intervals. In respect of physical security, we have established surveillance cameras and access control systems.
SEGMENT WISE/ PRODUCT WISE PERFORMANCE
Your Company is engaged in the business of auto components for automobiles. This is only one segment, hence there is no segment wise reporting.
INTERNAL CONTROL SYSTEMS & ADEQUACY
Your Company has an adequate system of internal controls to ensure that transactions are properly authorised, recorded and reported, apart from safeguarding its assets. The internal control system is supplemented by well documented policies and procedures and reviews carried out by the Companys Internal Auditor which submits reports periodically to the Management and the Audit Committee of the Board.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES
Your Company recognizes importance of leadership, technical and behavioural development for employees across the Company. Your Company has launched continuous improvement & training programs aimed for increasing knowledge level of employees and offer rewards to those employees who performed well in such programs. Apart from this, your Company has devised training plans and executed for each employee based on their skills, roles and aspirations.
Your Company has total employee strength of 604 out of which majority are women employees.
This report contains forward-looking statements. All such statements are subject to risks and un-certainties. Actual results could differ materially from those expressed or implied depending on the circumstances.
|For IGARASHI MOTORS INDIA LIMITED|
|Place: Chennai||P. Mukund|
|Date: May 22, 2018||Managing Director|