lumax auto technologies ltd share price Management discussions


Global Economy

The global economy has been primarily in a favorable state since the beginning of the CY 2022. Countries such as the United States, China, and India have demonstrated proficiency in returning to their pre-Covid-19 pandemic levels, while nations in Europe and South-East Asia are on track to do the same. All nations have taken the requisite precautions to brace themselves for potential future ‘black swan disasters.

Nevertheless, due to elevated commodity prices and other geopolitical factors, the post-pandemic economic rebound encountered setbacks. The International Monetary Fund (IMF) has forecasted a deceleration in global headline inflation, with a drop from 8.7% in CY 2022 to 7.0% in CY 2023, followed by a further decline to 4.9% in CY 2024 on the back of lower commodity prices but underlying core inflation is proving to be stickier.

(Source: World Economic Outlook, April 2023: A Rocky Recovery (


Incoming activity data for the third quarter of FY 2022-23 has surpassed expectations, demonstrating that economies have become more adept at handling the challenges mentioned above. However, they still do point growth to remain negatively skewed. In most economies, struggling with the cost-of-living crisis, the priority remains achieving uninterrupted disinflation. On a positive note, there is a possibility of a stronger boost from pent-up demand in various economies or a faster reduction in inflation. This is because central banks are now adopting a hawkish stance to counter the persistently high inflation levels, which are lasting longer than anticipated.

Furthermore, according to the IMF projections, the advanced economies are expected to experience a more significant slowdown than developing economies. Emerging markets and developing economies are projected to grow from 4.0% in CY 2022, 3.9% in CY 2023, to 4.2% in CY 2024, whereas the growth rate of advanced economies is expected to decline from 2.7% in CY 2022 to 1.3% in CY 2023 and grow at 1.4% in CY 2024.

(Source: world-economic-outlook-april-2023)

Indian Economy

India has scored a relatively faster recovery from the Covid-19 pandemic. Looking ahead, strong domestic demand and an increase in capital expenditure are expected to drive growth in the coming years. Notwithstanding the continuous multiple shocks, global agencies continue to recognize India as the fastest-growing major economy, owing to its robust fundamentals and adaptability.

To add to this, India has made significant progress in the field of digitization in recent years. In the wake of the Covid-19 pandemic, technology went from being a luxury to a necessity in the Indian domestic market. This is further highlighted by the fact that by 2027, roughly two-thirds of Indias e-commerce business is projected to consist of essential commodities, including clothing and food, among others. On the manufacturing front, Government policies are being progressively tailored to encourage and upturn this critical sector of the economy. Innovative approaches for boosting manufacturing output, include PM GatiShakti, the

National Logistics Policy, and the Production-Linked Incentive Programs (PLI).

Moreover, the inherent domestic momentum, global macroeconomic factors such as geopolitical issues, supply chain gap, and rising trade conflict, deliver the spur to force the economy towards its objective of USD 5 Trillion in nominal GDP from USD 3.75 Trillion this year. Indias economy has demonstrated its immense potential by surpassing that of the

United Kingdom, and it is now the worlds fifth-largest economy.


Real GPD

As per the forecasts for a country of its size, the Indian economy has nearly regained what was lost, revitalized what had halted, and rejuvenated what had deteriorated during the Covid-19 pandemic and since the conflict in Europe in FY

2022-23. Based on RBI projection, Indias GDP is projected to stand at 7.2% in 2023 and 6.5% in 2024. This projection considers several events on the macro level.

Furthermore, the Governments initiatives, as previously mentioned, are also contributing to the growth. In the budget for FY 2023-24, the Union Minister of Finance and Corporate Affairs outlined the vision of Amrit Kaal, which encompasses seven priorities or ‘Saptarishi. These priorities include

Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth,

Youth Power, and Financial Sector, all aimed at empowering the economy.

Moreover, in April 2023, the Reserve Bank of India (RBI) finally decided to halt its series of successive hikes to the key benchmark policy rate, bringing it to 6.5%. The aim was to provide more stability and adaptability to the market, as well as to alleviate the adverse global conditions that had been affecting the economy.

(Source: aspx?PRID=1895313


Global Perspective

The automotive industry remained vulnerable to global headwinds in FY 2022-23. As the industry continued to deal with major global disruptions, the automotive sales were hit hard by the pandemic. The situation was further aggravated later by the war between Russia and Ukraine which formed a climate of uncertainty and hesitation. Then, of course, shortages from semi-conductors to labor are distressing nearly every touchpoint along the disruption in automotive supply chain.

Despite facing headwinds, the industry remains committed to advancing electric vehicles (EVs) by improving battery performance and increasing charging infrastructure. EVs are poised to become one of the most significant growth drivers globally. Furthermore, automobile manufacturers are investing significantly in research and development (R&D) in the EV segment, despite facing various challenges. Overall, the industry is making strides towards EV technology.

Indian Perspective

The automotive industry is a crucial pillar of Indias economy, as it has strong linkages to multiple sectors, making it a key driver of economic growth. Its growth has a positive impact on the commodity sector, including the demand for steel, aluminum, and plastic, among others. Indias automotive market has become the worlds third-largest, surpassing

Japan in 2022, according to the Society of Indian Automotive Manufacturers. Furthermore, India has a significant position in the global heavy vehicles market, as it is the largest producer of tractors, the second-largest manufacturer of buses, and the third-largest producer of heavy trucks. Additionally, the growth of this industry is attributed to several factors, such as increasing disposable income, availability of credit and financing options, and a growing population. The passenger and commercial vehicle sectors are also contributing to the potential for future growth.

Moreover, the Indian Governments industry-friendly policies and initiatives are expected to play a significant role in further enhancing connectivity and fueling the industrys prospects. For example, the allocation of 3,000 Cr. for the Indian Semiconductor Mission is set to boost the auto component ecosystem, benefiting the auto component sector. Additionally, businesses are collaborating with the

Government to develop hybrid vehicles as a transitional step towards a fully electric model. The Union Minister of Heavy Industries has allocated Rs. 800 Crore for 7,432 public fast charging stations under FAME India Scheme Phase II. This funding aims to boost EV adoption, address range anxiety, reduce charging time, and create employment opportunities in the automotive sector.

Segment-Wise Sales of Automobiles in India from FY 2019 to FY 2023 ( in Thousands)

April-March ( in Thousands)

FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 CAGR %
PVs 2,774 2,711 3,069 3,890 12%
CVs 718 569 716 962 10%
3-wheelers 637 216 261 488 -8%
2-wheelers 17,416 15,119 13,466 15,862 -3%


Auto Component Industry

Over the past few years, Indias auto component industry has experienced significant growth, with its market share expanding considerably. This surge is primarily attributed to the increasing demand for automobiles from the growing middle class and rising exports globally. The automobile component in India contributes 2.3% to Indias GDP, while about 1.5 Million people are directly and indirectly employed by this industry.

The automobile component industry in India comprises various product segments, such as lamps, fasteners, lighting, castings, suspension and braking parts. It also includes gears, valves, steering parts, engine parts, carburettors, axles, strips, forgings, pistons clutches, gaskets, chassis, and shock absorbers, among others. Indias automobile component market is split between organized and unorganized sectors. Original Equipment Manufacturers (OEMs), part of the organized sector, are in charge of producing final vehicle. Notwithstanding energy crisis, gas shortages, rising inflation and disruption in the supply chain, the automotive industry had a successful year. OEMs, aftermarkets, and exports have all contributed to the sectors outstanding growth during the year. Domestic auto sales and exports began to gain pace in FY 2022-23. Fuelled by the ongoing momentum, the auto component industry is expected to reach USD 200 Billion by

FY 2025-26. As per Automotive Component Manufacturers

Association of India (ACMA), automobile components exported from India are projected to reach USD 80 Billion by 2026. Furthermore, the rapid globalization is creating new opportunities for the transportation industry, particularly the shift towards electric, electronic and hybrid cars. At present, the focus of the auto industry is on deep-localization, further propelled by the various Government PLI schemes.

(Source: Care Edge Research Auto: Auto Components, IBEF Mission%20Plan,%2C%20with%2023.9%25%20annual%20growth.)


Electric Vehicles

Currently, most of the innovation in the auto industry is being fuelled by electric vehicles. As the adoption of electric vehicles increases, the distribution networks for automotive electrical systems are expected to undergo significant changes. Vehicles are expected to have more complicated electrical components in the future, which calls for an electrification system, capable of handling higher voltages. Over the past few years, electric vehicles have garnered increasing attention due to falling ownership costs and stricter

Government regulations for emissions. The rising share of EV sales has the potential to present new opportunities for the auto components industry in India.

Government Launched PLI Scheme

The Government has launched the Production Linked

Incentive (PLI) Scheme for the automobile and auto components industry to enhance Indias manufacturing capabilities for advanced automotive products. This scheme proposes financial incentives aimed at increasing domestic manufacturing of advanced automotive technology products, as well as attracting investments in the automotive manufacturing value chain. The goal is crystal clear: to make India self-reliant (Atmanirbhar) by enhancing the competitiveness of our manufacturing sector on a global scale.

To enhance the global reach of the auto sector, the

Government has granted direct incentives through PLI (Production Linked Incentive) schemes for ‘Advanced Technology Auto Components aimed at green vehicles and for ‘Advanced Chemistry Cells, as well as indirect incentives through PLI schemes for semi-conductors and electronics. The scheme aims to encourage the use of advanced technology components and electric and hydrogen fuel cell vehicles in order to prepare the industry for the future. The PLI scheme aims to revitalize the automotive sector, positioning it as a sunrise industry once again even though the persistent shortage of semiconductors and electrical components acts as an alert for the Indian manufacturing sector. The PLI scheme for electronic, along with the dedicated scheme to develop semiconductors and demonstration of fab ecosystem, is also a great promoter for spreading home-grown advanced auto technology components.


Shortage of Semi-Conductors

Due to the current geopolitical tensions, the auto component industry at present is dealing with a number of challenges, along with a lack of semi-conductors. The industry has been obstructed by the global shortage of semiconductor chips since a long time, while the sales of automobiles in India have been considerably affected by this. The semiconductor chips are an essential component of an automobile which are used across various segments in vehicles which includes:

Interior and Exterior Lightening Safety Control-related System and Chassis (ABS and Airbag)

Telematics Communication Systems Audio and Video-based Infotainment System Interior Body Control System (Climate Control, Power

System and Electric Power Steering, among others)

Autonomous Driving System & Drivers Assistance

Upcoming BSVI Phase 2 Regulations

The Indian Governments top priority is to protect the environment from pollution, and it is committed to following international standards in this regard. Phase two of the BS-VI emission is expected to be eventually implemented in India by the Government in an effort to control pollution levels.

Passenger vehicles, 2-wheelers, and commercial vehicles will have to comply with the new emission norms. With the introduction of new emission requirements, achieving both fuel efficiency and low costs becomes increasingly challenging for automakers. Therefore, the shift towards stricter emission control regulations poses a significant challenge for the industry.

Excessive and Inconsistent Tax Rates

Another challenge that the auto components industry faces is of the high and non-uniform tax rates. In India, some auto parts are liable to a greater GST rate of between 18% and

28%. Vehicles with Internal Combustion Engine (ICE) are one of the highest taxed manufactured goods in India, due to the compensation levy imposed on these items, which is in the range of 1-22%. The auto component industry also faces the challenge of two separate GST rates. The GST rate is 18% for nearly 60% of auto components, while on the remaining 40% auto component, GST rate is 28%.

(Source: of%20the%20BS6%20norms%2C%20which%20is%20scheduled%20 to,major%20contributors%20to%20air%20pollution.


Lumax Auto Technologies Limited (‘LATL or ‘The Company) is a part of the Lumax-DK Jain Group established in the year

1981. LATL is one of the innovators and leading manufacturers and suppliers of automotive moulded & fabricated parts, emission and transmission systems for automotive industry.

Throughout its decades-long journey, the Company has built a strong reputation through strategic partnerships with global players and cultivated robust relationships with its customers. In addition, LATL is being driven by constant innovation, technological improvements and pan-India operational excellence operations. As a result, the Company is well-positioned and has established a significant market share in the Indian automotive component industry. LATL has emerged as a highly regarded supplier to OEMs in the 2-wheeler, 3-wheeler, and 4-wheeler automotive segments.

Additionally, the Company has acquired 75% stake in IAC at an equity valuation of 587 Crore. This is expected to bring multiple synergies, including cross-selling opportunities, engineering and operational manufacturing e cacy. It will further promote growth in the passenger vehicles share. At present, LATL has Twenty Three (23) manufacturing plants spread across states. In addition, the Company boasts Nine (9) international associations with global giants including, Cornaglia of Italy, Mannoh, Alps, Yokowo and IO of Japan,

Ituran of Israel, FAE of Spain, Jopp of Germany, IAC of USA to make LATL the countrys leading automotive component manufacturers. Moreover, the Companys plants are certified under ISO 14001 Standards for Environment Management Systems (EMS). These plants are equipped with energy conservation equipment, and have received recognition for quality initiatives at various forums.

LATL has a diversified product portfolio which comprises Integrated Plastic Modules, 2-wheeler Chassis, 2- & 3-wheeler Lighting, Gear Shifters, Transmission Products, Emission

Systems, Seat Structures, Telematics Products and Services, Oxygen Sensors, and On-board Antennas, Electric Devices and Components, and Aftermarket Solutions. This extensive portfolio further encompasses Vehicle Interior Systems and Components.

Advanced technologies related to safety, sensors, telematics, fleet management, auto cruise, navigation, parking assistance, infotainment and anti-theft systems are likely to drive evolution in the coming years. LATL is well-positioned to capitalize on these opportunities and has a strong track record of providing advanced solutions to its customers. Furthermore, the Company has also taken proactive measures to meet the challenges posed by the implementation of the BS-VI emission norms in India.


On standalone basis, the revenue from operations during the Financial year 2022-23 stood at Rs. 1,32,174.10 Lakhs as compared to Rs. 1,19,637.71 Lakhs in the last year registering a growth of 10.48%. For the Financial Year 2022-23, the profit before tax and exceptional items stood at Rs. 9,867.50 Lakhs as compared to Rs. 7,543.03 Lakhs in the last year witnessing an increase of 30.82%. The Profit after Tax (PAT) stood at

Rs. 7,352.04 Lakhs as compared to Rs. 5,481.11 Lakhs registering a significant increase of 34.13%. The Basic and Diluted Earnings per share stood at Rs. 10.79 registering a significant increase of 34.13%.

For the Financial Year 2022-23 on consolidated basis, the revenue from contracts with customers stood at Rs. 1,84,746.00 Lakhs as compared to Rs. 1,50,792.43 Lakhs in the last year registering a growth of 22.52%. The profit before tax and exceptional items for the FY 2022-23 stood at Rs. 15,558.53 Lakhs as compared to Rs. 11,465.61 Lakhs in the last year witnessing a significant increase of 35.70%. The Profit after Tax and minority interest for the FY 2022-23 stood at Rs. 9,287.53 Lakhs as compared to Rs. 6,940.90 Lakhs registering a significant increase of 33.81%. The Basic and Diluted Earnings per share for the FY 2022-23 stood at Rs. 13.63 registering a significant increase of 33.81%.

Details of Key Financial Ratios

Please refer to note no. 52 to the standalone financial statement for the year ended March 31, 2023.





Environmental Risk

The automotive sector significantly contributes to environmental pollutants, including air pollution and greenhouse gas emissions. In addition, it has an influence on water resources, and affects the ecosystem as a whole.

The Company offsets this by increasing fuel efficiency, implementing sustainable practices, abiding by environmental rules, and enlisting the support of manufacturers, suppliers, and law enforcing agencies in a coordinated effort. It also adheres to QCC, TPM, and LAC to boost production, e ciency, and quality.

Economic Risk

The automotive business is extremely vulnerable to economic situations. A recession or economic downturn can impact consumer spending and demand for automobiles.

Lumax mitigates this risk by keeping strong balance sheets, cutting costs, diversifying product offerings, and implementing dynamic strategies.

Supply Chain Risk

The automotive sector is dependent on complicated worldwide supply systems. Natural disasters, political instability, or a scarcity of raw materials can cause major delays; in process, increasing the cost in the supply chain.

The Company mitigates this risk by diversifying its supply chain, thereby reducing its dependence on any particular source or geographic region. By having alternate sources for key components and maintaining adequate inventory levels, the Company ensures that it can mitigate the risk of disruption in the supply chain.

Regulatory Risk

Numerous regulations relating to safety or emission standards are applicable to the automotive industry, which can increase costs for manufacturers. This may affect their ability to compete in the market and raise costs.

The Company lessens this risk by remaining updated with regulatory developments, frequently interacting with regulators, and investing in compliance programs to ensure adherence to all applicable laws.

Technological Risk

Industry 4.0, which represents quick technology advancements in the production process and the rise of electric and autonomous vehicles, is a key component of the automotive industry landscape. As a result, there is a growing demand for advanced products in the industry.

To counteract this risk, the Company is investing in joint ventures and acquisitions, R&D, while strategically expanding alliances with tech firms to stay ahead of the curve.


At LATL, a robust work culture plays a vital role in unlocking the full potential of its workforce. It upholds a strong commitment to diversity, valuing individuals regardless of gender, age, race, religion, or background. With a robust whistle-blower policy, the Company maintains integrity, transparency, and effective communication with business associates, suppliers, and vendors. LATL prioritizes the safety and preparedness of its workforce through mandatory training on skill development, hazards, and emergency procedures. Its robust ‘Safe Management System ensures compliance with laws, regulations, and safety rules, fostering a secure working environment. This commitment attracts top talent while maintaining a culture of workplace safety. The adoption of international shop floor improvement initiatives such as Kaizen, Total Productivity Maintenance, and Total

Quality Management, further strengthens the teams ability to work together and enhance processes and productivity.

Quality Control Circles play an integral role in the Companys growth and connect people, processes, and products to seamlessly deliver significant results. Lumaxs success lies in fostering connectivity and collaboration among its dynamic and diverse team of 923 employees.


The internal control systems are structured to function as a cohesive unit, comprising consistent risk assessments, effective risk mitigation, and continuous monitoring. The Company first identifies key business risks using its analysis and then takes mitigating steps towards the same. The Companys business operations are closely monitored by its internal team and an independent internal audit firm. Deviations, if any, are immediately brought to the notice of the Management and Audit Committee for timely action and correction. Well-documented policies and procedures enable the Company to strictly adhere to all applicable procedures, laws, rules and statutes. The Companys robust IT systems safeguard its sensitive data and ease out audit process. Accounting Standards are strictly followed while recording transactions. A host of strategies are devised in addition to robust MIS, for real-time reporting, and controlling expenses. Any variance from budgetary allocations is promptly reported and corrected to ensure strict compliance.


Statements in the Management Discussion and Analysis

Report describing the Companys projections, estimates and expectations may be interpreted as ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to its operations include economic conditions affecting demand and supply, price conditions in the domestic and international markets in which it operates, changes in Government regulations, tax laws and other statutes. The Company assumes no responsibility to publicly amend, modify or revise any ‘forward-looking statements, based on any subsequent development, information or events.