JTEKT India Ltd Management Discussions.


Global economic scenario

Financial Year 2020-21 (FY21) was the year riddled with COVID-19 challenges with everyone trying to adapt to this pandemic situation. FY20 witnessed trade war between US and China and the ensuing geopolitical tensions, elections in India, and the start of the COVID-19 pandemic. The pandemic was not just a health crisis but had far-reaching implications on the global economy. The pandemic led to a sharp decline in global trade, lower commodity prices and tighter liquidity conditions. Economies across the globe saw contraction in their respective GDP primarily due to reduced economic activity and restricted mobility and people curtailing discretionary spending.

According to the International Monetary Fund (IMF), US’s GDP growth for Calendar Year (CY) 2020 de-grew by (-)3.5% as against a growth of 2.3% CY2019. Overall, the Advanced Economies too posted negative growth of (-)4.7% with the sharpest falls recorded by Spain, the United Kingdom and France with a de-growth of (-)11%, (-)9.9% and (-)8.2% respectively. Even the traditional growing Emerging Markets & Developing Economies too could not escape the clutches of the pandemic as they collectively posted a fall of (-)2.2%. China emerged as the only bright spot amongst all the economies with a growth of 2.3%, as per the IMF’s data.

Indian economic scenario

India has been the shining star of the global economy and usually lead the growth chart. However, it could not escape the wrath of the COVID-19 pandemic as it faced an uncertain FY21. The financial year began with a lockdown leading to multiple issues like the exodus of the migrant population from most metros, creating labour issues for companies, demand coming to a halt barring for few industries. No wonder, quarter one of the fiscal was washed out for the economy.

However, as the lockdown was lifted, supported with fiscal stimulus policies announced by the Government to spur the economy, industries saw demand coming and some recovery. However, in some sectors such as hospitality, real estate, travel etc., consumer sentiment continued to take a beating contributing to low demand offtake in the economy. As per the data from India’s National Statistical Office, the country’s GDP contracted by (-) 7.3% for FY21 as compared to the growth rate of 4.2% in the previous fiscal.


Global Auto Scenario

The COVID-19 pandemic did not leave any sector unscathed. As per Scotiabank Economics, global auto sales contracted sharply by (-)15% y-o-y (or 63.7 Mn units) in 2020 as countries around the world confronted the COVID-19 pandemic. Pandemic related factors were the biggest drivers of differentiation in auto sales across countries and regions last year: the prevalence of the pandemic, the stringency of containment measures, and magnitude of the policy responses.

US auto sales, accounting for around 23% of the global auto sales, saw a decline of (-)15% for CY20. Despite high COVID-19 cases along with less restrictive measures and a highly accommodative policy environment, moderated the economic impact of the pandemic in 2020.

China sat on one end of the spectrum with auto sales down by ‘only’ (-)6% y-o-y (or 20.1 Mn units) in 2020. Effectively avoiding second waves of COVID-19, China’s economic output returned to pre-crisis levels by year-end with the aid of substantial policy support by their Government.

Latin American countries fell on the other end of the spectrum with regional auto sales down by (-)27% as the first waves even persisted during the second half of the year. Further, variable policy support, as well as commodity exposure, drove some divergence within the region.

And even European economies did not fare much better with Western European auto sales down by (-)24% for CY20. Despite ample policy supports, high COVID-19 cases and repeated waves of pandemic in most countries necessitated tighter restrictions that took a serious economic toll.

Indian Scenario

In comparison to the growth rate of 5.2% in FY19, the growth rate in FY20 had dropped to (-)14.2% due to overall economic slowdown, inadequate government stimulus for the industry, liquidity crisis and poor consumer sentiments. FY21 was a year of COVID-19 and the same also impacted the automotive industry.

With the lockdown in the country, the fiscal began on a gloomy note for the industry as it saw ZERO sales in the first month of April 2020 and negligible sale in the subsequent month. A large part of the fiscal’s first five months remained sub-optimal for the companies and the automotive industry even as the economy witness steep decline across segments. While the industry saw a strong business traction in the second half of the fiscal, it could not get the industry fully out of its doldrums. As per data from Society of Indian Automobile Manufacturers (SIAM), the automobile industry remained in the negative growth zone as it posted a (-)13.6% decline over its previous year.


As per SIAM, the industry produced a total 22.65 million vehicles including Passenger Vehicle (PV), Commercial Vehicle (CV), Three wheelers (3W), Two wheelers (2W) and Quadricycles for FY21 as against 26.36 million units for FY20, registering a de-growth of (-)14.2% over the same period last year.

Domestic Growth

As per data from SIAM, the overall PV segment registered a de-growth of (-)10% for FY21 as compared to the same period last year. Sale of domestic PV segment for the financial year was at a 2.7 million units, as compared to 2.8 million units in FY19 thereby declining by (-) 2.2%. Within the PV category, the sales of passenger Cars and Vans declined by (-) 9.06% and (-) 17.62% respectively. The bright spot in the category was the utility vehicles. The demand for the utility vehicles continued as it posted a robust growth of 12.1% to close the year at 1.1 million units. Importantly the demand for this segment continued to be strong and it now accounts for 39% of the total PV market, an increase of 5% when compared to FY20.

The CV segment witnessed a sharp decline of (-)20.77% as it closed sales numbers for the fiscal at 0.57 million units as compared to 0.72 million units for FY20. Within this segment, Medium & Heavy Commercial Vehicles (M&HCVs) and Light Commercial Vehicles declined by (-)28.4% and (-) 17.3% respectively for the fiscal over the same period last year.

2W and 3W, which account for over 80% of the total units sold in the country, saw de-growth of (-)13.19% and a whopping (-)66.06% respectively for the year. Within the 3W category, Passenger Carrier and Goods Carrier declined by (-) 74.79% and (-)26.38% respectively for the fiscal. Within the 2W segment, Scooters, Motorcycles and Mopeds declined by (-) 19.51%, (-)10.65% and (-)3.07% respectively in FY-2021 over FY-2020.


The pandemic saw lockdowns and low production that also hit the exports segment. According to data from SIAM, for FY21, overall automobile exports registered a de-growth of (-)13.05%. All segments including PV, CV, 3W and 2W exports declined by (-)38.92%, (-)16.64%, (-)21.67% and (-)6.87%, respectively as compared to FY20.


With the COVID-19 pandemic raging across the globe, and the emergence of the second wave in countries, the outlook remains cautious. According to IMF, global prospects remain highly uncertain. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis and the adherence to precautionary measures by people.

IMF is projecting a global growth at 6% in 2021, moderating to 4.4% in 2022. Of course, high uncertainty surrounds this outlook in relation to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.

For India, IMF has a bullish outlook. In its update in April, IMF had projected India’s GDP to grow 12.5% in FY22, the highest among emerging and advanced economies. GDP growth for FY23 is pegged at 6.9%. India is the only country expected to register a double-digit growth this fiscal. However, the rapid spread of the second wave of COVID-19 may force IMF to temper the bullish growth outlook.

The COVID-19 pandemic has grave consequences for the automobile industry and all related sectors. However, analysts are bullish and expect global auto sales will rebound by around 9% (or 69.4 mn units) for CY21 with a wide range across countries. Key drivers of country-specific auto sales outlooks include the depth of the auto sales decline in 2020, the strength of the economic hand-off from 2020, the speed of vaccine rollouts, the continuation of policy supports, and increasingly, structural characteristics prior to the pandemic.

In India, SIAM has forecasted a moderate growth for the various categories of the auto segment, but disruption in the supply chain owing to semiconductor unavailability, raw material shortages and lockdowns are the headwinds that the industry will have to face. In its outlook in April 2021, SIAM estimates passenger vehicle sales to grow between 3-5% and commercial vehicle at 10-12%. The 2W segment is expected to grow between 5-7% and 3W segment is pegged to grow between 7-9%. However, the country is witnessing lockdowns by various State Governments and hence the outlook might be subject to change.

Nevertheless, it is hoped that the various Government initiatives for the industry may help to spur the demand across the country. Some of these are…

100% foreign direct investment (FDI) under the automatic route

The voluntary vehicle scrappage policy has been announced which is likely to boost demand for new vehicles after removing old unfit vehicles currently plying on the Indian roads.

The initiative by Delhi Government to set up 100 vehicle battery charging points across the state to push adoption of electric vehicles

Approving an outlay of INR 57,042 crore (US$ 7.81 billion) for automobiles & auto components sector in production-linked incentive (PLI) scheme

Continued focus by the Government to develop India as a global manufacturing centre and a Research and Development (R&D) hub.

Shortlisting of 11 cities in the country for introduction of EVs in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme.

In February 2019, the Government of India approved FAME-II scheme with a fund requirement of INR 10,000 crore (US$ 1.39 billion) for FY20-22.


Financial Review

Company’s Abridged Profit & Loss Account (INR in Million)




2020-21 2019-20 2020-21 2019-20
Net Income from Operations 13,183 14,989 13,357 15,194
Other Operating Income 147 116 145 115
Total Revenue 13,330 15,105 13,502 15,309
Raw Material 9,170 10,149 9,663 10,748
Staff Cost 1,947 2,136 1,806 2,018
Other Expenditure 1,185 1,453 1,108 1,362
EBITDA 1,027 1,369 925 1,181
Other Income 55 88 78 110
Depreciation & Amortisation 830 928 779 865
EBIT 252 529 223 425
Finance Charges 47 99 47 99
PBT 205 430 177 326
Tax 68 78 54 51
PAT 137 351 123 275
Other Comprehensive Income (2) (23) (3) (22)
Total Comprehensive Income 135 328 120 253
Profit Attributable to Owner 135 328 120 253
Capital Expenditure 211 391 160 332
EPS 0.48 1.24 0.50 1.13
D/E Ratio 0.07 0.12 0.08 0.13

Ratio Analysis

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in the key financial ratios are as under: -

Debt Equity Ratio

The ratio has improved from a level of 0.13 to 0.08. The borrowings have significantly reduced from a level of INR 740 million at start of the financial year to end at a level of INR 446 million. Reduction in Bank Borrowings has increased the interest coverage ratio from 4.30 times to 4.79 times.

Net Profit Margin

Net Profit margin declined from 1.7% to 0.9% mainly due to decline in sale volumes. Further Return on Capital Employed declined from 4.9% to 2.2%.

Current Ratio

The current ratio has improved from 1.57 times to 1.67 times due to reduction in current maturity of Long-Term Loans. Further Quick Ratio improved from 1.11 times to 1.22 times.

There has been no significant change in other financial ratios including debtor turnover, inventory turnover, and fixed assets turnover ratios.


JTEKT Fuji Kiko Automotive India Limited (JFIN) (Formerly known as Sona Fuji Kiko Automotive Limited)

During the year under review, the subsidiary’s revenue decreased by 16% to reach INR 836 million. Despite severe stress in Auto sector, JFIN continued to work with better capacity utilization to reduce negative impact on profitability. It also achieved 100% OTIF (On Time In Full) delivery track record.

(INR mn.)

JFIN 2020-21 2019-20
Revenue 836 1000
EBITDA 106 194
EBITDA Margin 12.7% 19.4%
PAT 40 99
PAT Margin 4.8% 9.9%


Safety : Achieved 573 accident-free days.
Training : Imparted training to employees in Production, Product Design, HR&GA, and Manufacturing Engineering to enhance knowledge and skill.
Environment : Power consumption reduced with new kaizens such as installation of VFD, replacement with LED lights, automated timers etc.


During the fiscal, the Company received acclamation from Toyota Kirloskar Motor Pvt. Ltd. in achieving ‘Zero PPM’, ‘Best Safety Leader’,‘Quality’and‘Delivery’. ‘Certificate of Gratitude’ from Mahindra & Mahindra Also,itreceived for unmatched commitment and contribution for the all-new ‘Thar’. It also received accolades from Isuzu Motors India in ‘Best Delivery Performance’. These recognitions are testimony to its commitment to excellence in delivery of products and customer satisfaction.


In the journey to attain Self-reliance in the area of Product Designing and Testing, we have further enhanced the testing facilities by incorporating testing facilities for NVH (Noise and Vibration Hazards), enabling us to take one more step further towards self-reliance for testing related to Noise and Vibration for our core products.

Despite several limitations caused by the Covid-19 Pandemic, JIN continues towards completion of Phase 2 of Technical center to avoid dependency on making available the mass production line by stopping regular production for the purpose of developing proto samples for our core products i.e. Manual Steering Gear, Column and Intermediate Shafts.

The technical center in India is now also adding value to the Company by reducing turn-around time for new product development, providing cost effective solutions and developing products specific to the Indian market as well as provide support to other Global Technical Centers. Recently our Indian Technical Center has taken up design responsibility for many projects, which in the earlier scenario would have required support from Japanese Technical Center.

On the front of Driveline business, we successfully completed vehicle trials and data collection of City, Semi Highway, Highway and hilly Indian roads to identify local requirements of CV Joints. In this process, we have convinced major customers and moved further closer to entering new business segment of CVJ in Driveline Business.


People including employees, customers, partners, investors, etc. form the bedrock for the success of the Company. Employees are one of the key strengths of the Company and HR plays an important role in managing, guiding and motivating the Company’s workforce. Moreover, HR at JTEKT is viewed as a strategic business partner aligned with the business requirements.

The Company believes that human capital is one of the most valuable resource and thus deeply nurture its 3200+ family members. Capability building, engagement and learning and development are the focus area to ensure growth opportunities and a healthy work-life balance for its workforce.

Induction & Training

Every new employee has to undergo an induction process which lasts up to 7 days. The Company has a policy of giving training of minimum 2 hours per month / employee. During FY21, it provided training for 95,481 hours spread across 1,424 training sessions. Total participants covered under trainings were 15,325. The Company also provides DOJO training to our shop floor employees.

The Company has set up system and process for external trainings. It has a tie-up with Maruti Centre of Excellence for leadership development in India and Japan Globus University for international training.

The Company and its parent, JTEKT Corporation, Japan, believes in global rotation of employees. The fiscal saw multiple employee exchange programs whereby the employees are exposed to global standards.

The Company follows Hoshin Kanri strategic planning system for setting up goals and targets for mid-to-long term which is generally 3 to 5 years.

Support during COVID

As the pandemic hit the country, the Company was quick to respond and ensured the safety and security of its employees. It formulated policies around work from home (WFM) for its employees and implemented a provision of 17-day leaves to all employees who test COVID-19 positive and were asked to isolate and quarantine themselves.


The Company continuously strives to improve its procurement practices to ensure sustainability of its suppliers. To ensure compliances and adoption to global standard, it initiated the ‘Supplier Code of Conduct’ which requires that the supplier follows key ethical principles set forth by JTEKT Corp.

To ensure seamless communication between JTEKT and its suppliers, a supplier portal ‘i-Supplier’ has been kicked off. During and after COVID-19 lockdown, regular communication between the Company and its supplier network ensured synchronized deliveries and ramp-up aligned to customer requirements.

A centralize overarching platform for cost reduction activities comprising of value analysis and value engineering and localization has been established to ensure sustained competitiveness.

With a strong conviction of sustainability, the Company ensured that a total of 17MT corrugated waste was reduced to recyclable packaging.

Training of supplier is a continuous process undertaken by the Company. During the fiscal, low performance suppliers were selected for performance improvement programmes. Also, representatives from 20 suppliers were trained on safety measures to propagate safety culture in their respective organizations.


The Company continued to promote the ‘Zero Accident’ vision to create a safe workplace. During the fiscal, the following safety initiatives were taken to further strengthen the goal of the sustained safety.

Improving Safety Mindset – The company continues to believe that all the members can always remain safe when they perform work with correct methods and tools and do not take shortcuts. Hence company has been working on improving the thinking process of all employees towards Safety. Company is working towards evaluating each member by a well-defined process where shortcomings are identified, and members are taken through behavioural training programs to improve their mind-set towards Safety.

Red Machine Elimination – This action is continued from last year and this systematic Safety risk analysis is repeated periodically in the light of available latest knowledge. Accordingly, some machines are categorized as ‘red’. Kaizens are then implemented so that such machines do not remain in ‘red’ category anymore. The Company ensures that the machines always remain safe for the employees.

New Safety Initiatives – The Company has taken a lot of precautions during restart of operations after Covid-19 lockdown. Sanitization and social distancing facilities are provided according to approved standards. Detailed trainings sessions have been conducted and every employee (including contract employees such as canteen, security, drivers, etc) is required to follow ‘Covid appropriate behaviour’.

Apart from the above actions, we provide a mandatory 2-day safety training for every new employee.


Remote IT System Availability, Automation and IT Security are the key requirement in current pandemic situation as WFH is the new normal to perform business activities.

During the year, the Company initiated various IT Projects to meet the business requirements and to bring in key process improvements. During the pandemic, and given the high load on digital, IT Security was strengthened by conducting cybersecurity awareness training to all critical users to safeguard the company data and systems while working from home. A ransomware attack is an ongoing cyber risk that has a high potential to disturb business activities. To counter ransomware risk, the Company has implemented an automated data backup system for all business-critical user’s data. Online project management system has been implemented to meet the project timelines and also to provide a consolidated project dashboard to managers for better visibility.

The Company has done various process automation such as implementation of the Enterprise Asset Management to optimize the maintenance activity and keeping spare parts inventory under control. It has also upgraded budget control system in Oracle ERP to manage all Revenue and Capex expenses of all the departments. Budget control automation has brought transparency in the expense management and faster approval of users’ requirements. Apart from automation, it continued to improve the accuracy and efficiency of production data entry in the Oracle ERP by introducing a barcode system.


The Company understands that effective risk management is critical in meeting its objectives and achieving sustainable growth. Risk management policies have been designed in a manner that the Company can respond swiftly and implement the necessary mitigation actions. In compliance with the prudential norms, we have constituted a Risk Management Committee and developed a risk management framework. The objective was to ensure sustainable business growth and to promote a pro-active approach in reporting, evaluating and mitigating risks associated with the business.

The Committee reviews the framework periodically in view of the dynamic business environment. This risk management policy has helped enhance process robustness, ensuring that strategic & operational risks are addressed effectively.

The Company’s strategic & operational risks are broadly classified into the following four major categories:

Economic risk: Refers to risks resulting from the economic and political scenario in the country.

Operational risk: Refers to the risks that are inherent to the business and includes manufacturing and distribution operations.

Financial risk: Refers to the risk that results from fluctuations in the currency market.

Human resource risk: Refers to the risk of losing out on skilled workforce due to competition, risks related to health concerns caused by the COVID-19 pandemic. The Committee recognizes that risk management is an integral part of good management practices. Thus, it has made risk management as an essential element in achieving business goals and deriving benefits from market opportunities. While the Company cannot completely rule out the possibility of a negative impact owing to risks, we continue to take cautious steps to mitigate risks.


The Company has an effective and reliable internal control system commensurate with our size and operations. The internal controls are aligned with global standards and processes while adhering to local statutory requirements. The internal controls systems are supported through management reviews, verification by internal auditors, and verification by statutory auditors. The internal audit plan is also aligned to the business objectives of the Company which is reviewed and approved by the Audit Committee. Further, the Audit Committee monitors the adequacy and effectiveness of the Company’s internal control framework.

In addition to policies, procedures and guidelines, the internal controls system is facilitated by an automated "Compliance Manager Tool". This enables self-assessment by process owners on the status of all applicable regulatory compliances and internal controls. This includes the following:

Safeguarding our assets and prevention and detection of frauds and errors

Accuracy and completeness of the accounting records

Controls relating to adherence to the Company’s policies

Timely preparation of reliable financial information

Each self-assessment is approved by an immediate superior

Senior management review and deliberate upon and review self-assessments periodically

Verifying the accuracy of sample self-assessments through periodic internal audits

Our internal control system provides a high degree of assurance with respect to:

effectiveness and efficiency of operations reliable, timely, and transparent reporting and compliance with laws and regulations.


The Company considers social responsibility as an integral part of its business activities. The Company’s CSR initiatives are on the focus areas approved by the CSR Committee and include healthcare and rural development programs.

During the FY21, the Company has further extended these activities and has significantly increased its financial commitment for these projects. The Company focusses to directly implement these projects in local areas after detailed assessment of the requirements of the community with the objective to derive maximum benefit from these activities. During the fiscal, the Company’s CSR activities included setting of LED Solar streetlights and developing a community park in Malpura Village, Haryana. It also ensured setting up a CT Scan machine in Gurugram, Haryana.


The Company made further efforts towards harnessing solar energy for generating electricity for our manufacturing units. Currently, our six manufacturing locations have solar power generating facilities, and the total solar power generating capacity stands at 1928 KWp. The Company has an ambitious plan to double this capacity in the next two years. In addition to this, all other energy-saving efforts such as the adoption of energy-efficient fixtures and equipment, zero water discharge through water recycling, etc. continue to receive the focus of the management.


Statements in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Company’s operations include a downtrend in the automobile sector, significant changes in the political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labor relations, and interest cost.