Jay Ushin Management Discussions




The global macroeconomic outlook for FY23, had been extremely challenging and full of uncertainties, amid financial sector turmoil, high rate of inflation coupled with ongoing effects of Russias invasion of Ukraine followed by looming clouds of recession in US and Europe as well as continued pandemic three years of COVID. According to the IMF World Economic Outlook, the baseline global forecast for global growth is projected to fall from 3.4 per cent in 2022 to 2.9 per cent in 2023, before settling at 3.1 per cent in 2024. Advanced economies are expected to see especially pronounced growth slowdown, from 2.7 per cent in 2022 to 1.3 per cent in 2023. Emerging market and developing economies are expected to grow at 3.9 per cent in both 2022 and 2023, with China and India accounting for 50 per cent of global growth. Asia could offer green shoots for growth, particularly in India, and emerging market economies could further benefit, as the Fed finds its peak rate and the dollar eases.

Global headline inflation is set to fall from 8.7 per cent in 2022 to 7.0 per cent in 2023 on the back of lower commodity prices, but underlying (core) inflation is likely to decline more slowly. Overall Inflations return to target is unlikely before 2025 in most cases.

According to the Economic Survey 2022-23, Indias economy is expected to grow at 7 per cent (in real terms) for the year ending March 2023, following an 8.7 per cent growth in the previous financial year. The survey projects a baseline GDP growth of 6.5 per cent in real terms in FY24, depending on the trajectory of global economic and political developments.. The growth drivers of the Indian economy include robust domestic demand; buoyant private consumption; higher capital expenditure by the central government; credit growth to the MSME sector; near-universal vaccination coverage; return of migrant workers to construction activities along with surge in exports.


The automotive industry performance in FY23 was mixed, with some segments showing strong growth and others facing challenges. According to the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales grew 26.7 per cent in the fiscal year 2022-23, as chip shortages eased and demand for sport utility vehicles (SUVs) surged. Passenger vehicle volumes for the year rose to 3.9 million units from 3.1 million units a year ago. Maruti Suzuki, Hyundai and Tata Motors, reported their highest-ever dispatches to dealers last fiscal.

The commercial vehicle segment also performed well, producing one million vehicles, encompassing small 4-wheel carriers, large tractor-trailers, and specialty vehicles. The two-wheeler segment, however, faced some headwinds due to rising fuel prices, inflation, and low rural demand. Parallelly the segment saw a promising progress in electrification, especially increased adoption of electric two-wheelers and three-wheelers.

The sales growth in passenger vehicle in India in FY23 has been due to improved chip supply, strong preference for sport utility vehicles (SUVs) and higher disposable income with the people with economic recovery.


The outlook for passenger vehicle sales in India in FY24 is projected as positive, but may face some moderation and uncertainty due to various factors. In FY24, the growth rate of passenger vehicle sales would depend on the impact of new set of regulations such as BS VI phase II and new safety regulations kicking in next year, which could increase the prices of vehicles and affect consumer sentiment. Other factors that could influence the demand include the pace of economic recovery, inflation, fuel prices, interest rates, and consumer preferences.

Passenger vehicle sales are expected to grow by 7-9 percent in FY24, supported by favourable demand sentiments and various government initiatives for rural and urban development. Electric vehicles are expected to gain further traction in the market, especially in the two-wheeler and three-wheeler segments, due to technological innovations, government policy support, and environmental awareness. SUV segment to continue its dominance in the market, accounting for nearly 40 per cent of the total passenger vehicle sales.


The automotive segment in India in FY24, will throw varied opportunities with a high single-digit growth across segments, driven by a recovery in economic activities, increased mobility, rural demand, and government support. The electric vehicle segment is also expected to see a significant upturn in prospects, spurred by subsidies under the FAME-II policy, enhanced awareness, and increasing product launches. This shift in technology will provide ample opportunities for the companies to enter in the new technology parts required for an electric vehicle. The auto component industry is projected to grow at 10-15%, supported by both domestic and export market demand.


Some of the challenges that the automotive segment in India may face in FY24 are:

Supply chain disruptions due to overhang effect of the COVID-19 pandemic and war in Ukraine , which may affect the availability and cost of raw materials, components, and finished vehicles.

Rising fuel prices and inflation, which may dampen consumer demand and affordability, especially for the two-wheeler and entry-level

car segments.

Regulatory changes such as introduction of newer advanced safety regulations and features and vehicle scrappage policy, which may result in increased the compliance costs and complexity for OEMs and suppliers.

Competition from electric vehicles, which may erode the market share of conventional vehicles, especially in the two-wheeler and three-wheeler segments, where EV penetration is rapidly increasing.

Export headwinds due to the recession in major markets such as the US and Europe, may affect the demand and profitability of

Indian auto players.

With adoption of agile and resilient strategies; commensurate investment in innovation and digitalization; thrust in optimized costs and operations along with great push towards continuously exploring new markets and segments, the company is well poised to face the upcoming challenges.


The net revenue from operations for the financial year ended March 31, 2023 is Rs. 73,447.09 Lakhs as against Rs. 65,667.16 Lakhs in the previous financial year. Net Profit before tax is Rs. 1,816.48 Lakhs as compared to Rs. 1,618.70 Lakhs in the previous financial year with an increase of 12.22% over the previous year. Going forward, the management is focused on further improvements in operations performance and cost control.

Imports would continue to be a challenge for the Company in view of volatility in foreign exchanges and also fluctuations in geo-political environment. On the other side, this would be an opportunity for us to push localisation in India and become self- sufficient to meet our demand. The Company has continued its efforts to improve the level of localisation of imported parts. Various activities were initiated along with active participation of suppliers to improve efficiency of operations. This has contributed greatly in reduction of material cost while encountering exposure to foreign exchange fluctuation.


The Company maintains an adequate and effective Internal Control System, equivalent with its size and complexity. It believes that these systems provide, among other things, a reasonable assurance that transactions are executed with management authorization.

It also ensures that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss. This is supplemented through an internal audit programme and periodic review by the management and the Audit Committee. In terms of corporate governance, there are various Board and Committees in place, comprising majority of Independent Directors, for monitoring and governance over efficiency and effective internal controls. Details of these Committees are given in the Corporate Governance Report, which forms part of this Annual Report.


Some of the risks and concerns that the automotive segment in India may face in FY24 are:

Higher input costs due to the rising prices of commodities, such as steel, aluminum, copper, and rubber, which may squeeze the

margins of OEMs and suppliers.

Technology disruptions such as the adoption of electric vehicles, connected vehicles, shared mobility, and autonomous vehicles,

which may require significant investments and capabilities from the industry players

Policy changes such as the introduction of a new vehicle scrappage policy, which may have a mixed impact on the demand and supply of vehicles.

Uncertainty due to the continued effect of COVID-19 pandemic, which may affect the consumer sentiment, demand recovery, and

supply chain stability.

The company is continuously monitoring the market dynamics closely, manage the costs and cash flows effectively and innovate and differentiate their products and services to reduce its risks.


Human resource management is the key strategic approach to achieve an optimal, productive and efficient output from people employed in a company or organization such that they help their business gain a competitive advantage. In this era of online platforms and social media, it is easier to attract and engage potential candidates. The company has been able to retain the talent due to its progressive policies for retention and engagement of employees while getting regular feedback which resulted in commensurate recognition and competitive compensation. The company is able to develop future leaders within the company through identification of high-potential candidates, mentoring & training and creating career paths for key positions. Focus is also given to strict compliances to legal and regulatory requirements.

Cautionary Statement Certain statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities, laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the markets, exchange rate variations, global economic, social & demographic factors, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.