Igarashi Motors India Ltd Management Discussions.

Automotive Trends & Market

Global Light Vehicle Sales for the Calendar Year 2018 was slightly lower than that in 2017 at 95 Million units. While the sales in 2018 during the period January 2018 to September 2018 were higher than the previous year, from October 2018 to March 2019 period, the Global Sales declined by 7%*. At the same time, sales in China and Europe declined by 13% and 10% respectively as compared to the previous year. Analysts attribute different factors for the sudden drop in Sales during the end of the year which include the economic impact due to the restrictive trade policies in China, issues of volatile regulatory environment in Europe and shift in customer preference patterns globally.

The key players in Global Automotive industry are gearing up for future mobility and drivers for the transformation include emissions, safety, electrification, autonomous driving, ride-sharing and connectivity.

While experts estimate that substantial investments in Electric Vehicles space have been incurred, the state of progress indicates that platforms in Hybrid Electric Vehicles and Internal Combustion Engines will continue to be an important focus for the next 10 years where downsizing and performance improvement will feature significantly. Strong Hybrids based on fuel cells are also being worked upon by key players and the trajectory is expected to be known in the next years.

In the next 10 years, players look for substantial transformation in all key areas and the estimates of automotive volumes by 2030 vary from 105?115 Million units per year and experts estimate an average scenario of the penetration of Electric Vehicles is expected to be anywhere between 20-35% by 2030.

Electric Motors in Automotive

• Innovations and technological upgrades have created momentum to drive growth of electric motors in the automotive industry. With an average of 35 Electric Motors per vehicle globally today, up from 15 per vehicle 15 years ago, the market opportunity for Motors continues to be high.

• Demand for Brush DC Motors will continue to grow and Brushless DC Motors will increase its penetration in select applications like blowers, pumps, engine cooling, and power steering.

• Traction motors as main drive in the Electric Vehicles is being worked upon aggressively by key Tier-1 players and OEMs. Major players are working on multiple technologies to develop highly efficient traction motors with the help of superior materials and robust electronics. The most preferred solution today is that of a hybrid motor which embraces the technology of Switched Reluctance combined with Insert Permanent Magnet technology.

• European Union continues to lead on aggressive targets in emission control and fuel economy for an improvement by almost 50% in these aspects, USA & China are following the trend of improvement, thereby increasing the demand for electric motors and actuators that facilitate these targets.

• Usage of electric motors in Vision & Cleaning systems is also expected to increase due to adoption of wipers for rear-wind screen, headlight wipers and motors for windshield spray pump.

• Thermal management systems will also use more motors due to inclusion of Electric Oil Pump, Air Pump, Vacuum Pump and Water Pump.

• Comfort systems continue higher usage of Electric Motors for body, seats, and interiors. Key players estimate that a high-end vehicle will require over 20 motors per car for seat-specific applications. Applications include the different movements of the seat as well as lumbar supports and active bolsters.

* Source: LMC Automotive Report 2018

• Body systems and interiors continue to grow with trunk opening & closing device, door sliders, in-addition to the traditional window lift and door latch motors.

• Augmented Safety is increasing usage of electric motors for applications like Anti-lock Braking System, Electric Park Brake.

• Powertrain and chassis systems continue to account for high usage of Electric motors and these include starters, alternators, motors for under-the-hood actuators, all-wheel-drive, and power-steering.

• Niche applications like spoiler lifter, dashboard actuator, door lever retractor, sun-shade closure, exhaust flap actuator, are growing the usage of electric motors.

• Our Company has been developing Torque Actuator Motors (TAMs) & Comfort Actuator Motors (CAMs). During the year under review, we progressed considerably on technology solutions for the projects launched during the previous year which were awaiting validation approvals to take-off. Three key programs were successfully launched during the year which included motors for turbo-charger applications, new generation throttle bodies as well as motors that downsized actuators. These key launches being futuristic, it is planned that the volumes of these new programs will contribute to over a third of the total TAM volumes over the next 3 years.

• Focus continues on development of comfort motors with Europe centric customers for growing the existing business and industrializing these projects.

In addition, to the motors in our portfolio, we are working on the new blocks of applications in the below diagram for launch during the forward years.

Brushless DC (BLDC) Motors

• The technology in evolution of Electric Motors clearly indicates a strong impetus towards usage of Brushless DC Motors in many applications where Brush DC Motors, AC Induction Motors, and Universal Motors are being used currently.

• Key drivers for this trend include reduced energy use, long life, low noise, compact size and light weight characteristics. Inhibiting factors have been identified as costs, and performance of drivers & controllers. Technology developments in the area of Electronics to address the above are becoming visible and it is anticipated that with growing volumes in the future, the cost of electronics will become competitive over the next years, enabling extensive usage of BLDC Motors for multiple segments that include appliances, office equipment, and automotive.

• With increased focus in Electric Vehicles, including for the 2-Wheel, 3-Wheel & the 4-Wheel segment, usage of BLDC Motors as the main powertrain drivers for the vehicles is expected to be a strong focus.

• In Geographies like India, regulatory guidelines to drive energy efficiency will accelerate the usage of BLDC Motors which contribute to significant savings in energy consumption of appliances, where a significant penetration is expected to occur in substitution of conventional motors.

• We have worked extensively in developing robust drivers & controllers with superior performance in the airflow segment and significant traction has been built in Brushless DC Motors for the Ceiling Fan application. Soft-launches have been made during the year with key players and responses are encouraging. Capacity for 1 Million motors has already been installed (as in the below picture) and expected to be significantly utilized from the middle of 2019. Work is progressing in other areas of BLDC Motor applications in the appliances, and automotive markets.

Experiences during the year

• The forecasts and estimates given to us by customers at the beginning of the year were robust and the plan was to achieve growth momentum during the year.

• An abrupt slowdown in Chinese automotive volumes from October 2018 triggered all global OEMs & Tier-1s to pull back estimates in China as well as other regions and prune down the pipeline for tight inventory controls during the end of the Calendar year.

• It was explained by customers that China being the most positive from Business point of view for all OEMs & Tier-1s, a slowdown in China caused them to be cautious and pull back in other geographies as well.

• Reduction in volumes due to both these phenomenon were experienced by us through the second half of the year, albeit with lesser volatility during the end of the financial year, when we saw a turnaround in the volume of the new programs that were launched during the year.

• As volumes and capacity utilization are key to our business, we rapidly responded to the unpredicted, changed market scenario and evolved necessary short-term aggressive plans to maintain business efficiency, which include:

• Creating focused teams to improve techno-managerial efficiency

• Adopting lean-ness across Value streams

• Controlling and deferring expenditures

• Consolidating infrastructure

• Regular dialogues with supply-chain partners for joint cost improvement initiatives of bought-out parts

• Key Customer focused desk to tap on additional opportunities and new programs

• Our team, together with all our global partners, have set out aggressive short and medium-term plans to transform rapidly and get back to the growth path.

• Such instances have been experienced by our Company during global downturns and then we have seen strong recoveries when the cycle turns. With new platforms and programs launched for the forward years with existing & new customers, our preparedness for volume growth in the forward years is already in place.

• With new infrastructure and additional capacity set up in the last 2 years, we have the ability to scale-up the volumes substantially in the next years with marginal investments.

Quality And Manufacturing Engineering

During the year, substantial efforts and actions were taken in the manufacturing engineering area where more than 100 projects were launched and completed during the year which contributed to quality improvements on the various production machinery and assembly lines. These projects also contributed to productivity improvement in select areas by reducing cycle times and improving human productivity.

Key focus areas were towards automating complex processes and improving quality in work-stations, by including automated vision systems and poka-yokes with the help of robotics and intelligence. Three new lines were set-up with the new concepts in manufacturing and these are expected to deliver improved quality and productivity as their capacities get utilized. Key customer audits and assessments have taken place and customers are impressed with the optimal approach of human and automation for quality and productivity for new volumes that will be launched in the coming years. They are keenly looking at launching new volumes in the near future.

One Igarashi

‘One Igarashi program was launched for global integration of all functions and locations of Igarashi group to harmonize and complement one-another for the future. Progress has been made over the last year to integrate the technology teams, customer program teams, manufacturing teams, and sourcing teams across the group which will manifest efficiency across the global Igarashi value streams.

With the footprint created in India and global trade uncertainties, Igarashi Electric Works Limited, Japan (parent) has increased focus to grow the business from India. Dialogues with Japanese Tier-1 companies have been initiated for deliveries of motor from India.

Integration of Agile Exports Division

During the year, Exports division of Agile Electric Sub Assembly Private Limited (Agile) was combined with the company, thereby adding new products and applications to the portfolio.

High-end facilities of tool design & manufacturing, manufacturing engineering & line building, high precision polymer components, precision metal parts and stamped parts were added due to the integration.

The above combination integrated key capabilities and facilities under our company and will contribute to tap new opportunities and improving competitiveness in the forward years.


Key Ratios FY 2018-19 FY 2017-18
Debtors turnover 4.28 4.44
Inventory turnover 9.82 12.44
Interest coverage ratio 6.82 53.01
Current ratio 1.30 2.49
Debt equity ratio 0.28 0.06
Operating profit margin (%) 19.1% 22.3%
Net profit margin (%) 9.5% 14.5%
Return on Net Worth (%) 13.4% 16.1%

FY 2018-19 figures include Agile Exports Division for the full year.

The EBITDA, Return on Invested Capital and Debt Equity Ratio fell short due to Demand slowdown in the 2nd half and integration of Agile Exports Division respectively.


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. Risk management committee met on May 22, 2018. The Risk Management Committee consists of Mr. KK Nohria (Chairman), Mr.S.Radhakrishnan, Mr.Keiichi Igarashi and Mr. P.Mukund. The key risks that the business faces are enumerated as follows:

Nature of Risk Mitigation
Macro Global Risks
• Global Trade Relationships & Realignment – Diversification of products and markets
• Slowdown in Global Markets due to Economic / Political factors – Strengthening customer relationship to align all resources in-line with markets for mutual benefit
– Exploring possibilities for non-organic growth and strategic alliances
Technology Risks
• Electrification & Autonomous Cars – Expanding band-width of products for Electric Vehicles and improving performance of existing products for Autonomous Cars
• Changes in Consumer preferences like Ride sharing – Constantly upgrading technology of existing products for enhanced application requirements
• Changes in Product Technologies – Aggressive introduction of BLDC Motors
Market Risks
• New entrants and aggression from existing players Improve co-operation with customers by offering multiple value propositions on products and services
• Geographical Localization of facilities – Real-time monitoring of logistics pipeline and global ware-houses to ensure Just-In-Time availability to customers at all locations
• Pricing Pressures from Customers – Continuous cost-competitive actions across value- stream and offer higher performance products to remain preferred supplier to customers
• Tier-2 players migrating to Tier-1 in Automotive space – New customers and new geographies to be pursued in the business mix regularly
• Customer/ Geography concentration – Robust FMEA processes in Design/ Development and Process/ Manufacturing Lines to address superior demands in performance and quality of products
Operational Risks
• Stringent Quality Requirements with new performance specifications. – Strengthen relationships with key supply-chain partners and focus strongly on in-house manufacturing where capacities and capabilities are available
• Supply Chain Security
• Manufacturing Automation
• Capital Expenditure and Capacity – Increase low-cost automation and robotics on manufacturing lines with minimal investment
• Skilled Human Resources – Flexible higher capacities to use same line for multiple products and multiskilling of human resources.
• Financial Stability – Maintain low levels of leverage and continuous dialogues with financial institutions
• Liquidity and Capital Access
– Entering into Forward Contracts in-line with the hedging policy
• Foreign Exchange fluctuation – Arrangement of pass-through mechanisms for commodity price movements
• Commodity Price movements; – Optimal coverage of liability insurance in-line with industry practices and customer requirements
• Product Liability and Warranty
Cyber Security Risks
• Threat of cyber attacks – Internal Control Measures taken to protect networks, computers, programs, and data;
• Protection of IT systems and data
– Cyber Security Threat Audits by external Experts at regular intervals;
Health Environment and Safety Risks – Complying with regulatory and customer requirements on Environment requirements & Global sustainability policies
– Planned wellness programs for all employees
– Ensuring work safety practices with periodic audits

Best efforts have been put for the above mitigation plans with a caveat that, they may not be realized completely for reasons beyond control.


Your Company is engaged in the business of auto components for automobiles. This is only one segment, hence there is no segment wise reporting.


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.


Your Company recognizes importance of leadership, technical and behavioural development for employees across the Company. Your Company continues to provide training programs for employees to hone their skills of technical as well as soft skills. Your Company has total employee strength of 790 out of which majority are women employees.


This report contains forward-looking statements. All such statements are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied depending on the circumstances.

Place: Chennai P Mukund
Date: May 16, 2019 Managing Director
DIN No. 00007788