Natural Disasters

The automotive markets can be significantly impacted by natural disasters. Natural hazard risks, such as floods and earthquakes, have the potential to disrupt business continuity and jeopardise economic output. Additionally, our supply chain is also vulnerable to disruptions stemming from natural disasters.

The Company maintains vigilant oversight over evolving developments and potential ramifications arising from natural calamities on its financial health, liquidity, and operations. The Company has a mechanism to track where the material comes from and how it flows through the value chain. Additionally, our supplier base is diverse to ensure reduced vulnerability. Furthermore, we have developed an emergency response plan at all the locations to be prepared for the catastrophic events. Through continuous monitoring and proactive measures, the Company endeavours to minimise any adverse effects on its operations, ensuring resilience and stability even in the face of unforeseen challenges.

Compliance Management

There exists a persistent risk of non-compliance with relevant laws, regulations, and statutory obligations. This encompasses potential breaches concerning labour laws, environmental regulations, health and safety standards, taxation, trade compliance, data protection, and various other legal and statutory requirements. Proactively addressing and mitigating these risks is essential to uphold the Company's integrity, reputation, and operational stability amidst evolving regulatory landscapes.

The Company has implemented a comprehensive compliance framework to guarantee adherence to all relevant laws, regulations, and statutory obligations. This framework is designed to systematically identify, evaluate, and mitigate legal and statutory risks across our operations. Our dedicated compliance team remains vigilant, continuously monitoring regulatory developments and assessing their potential implications for our business. Through this proactive approach, we can anticipate regulatory changes, adjust our processes as necessary, and maintain compliance with evolving legal and statutory requirements, thereby safeguarding the integrity and stability of our operations.

Product Quality Management

We acknowledge the potential risk associated with manufacturing and delivering products that fail to meet the required quality standards. This encompasses various issues such as manufacturing errors, component failures, design flaws, or deviations from specifications. Failing to uphold these standards can lead to consequences such as product recalls, legal liabilities, fines, or reputational damage to the Company. Understanding the gravity of these risks, we prioritise stringent quality control measures throughout our production processes to ensure the delivery of reliable and compliant products, thereby safeguarding both customer satisfaction and the Company's reputation.

We have implemented robust quality control systems across all aspects of our operations. These systems involve meticulous inspection, testing, and monitoring at every production stage. Furthermore, we’ve set stringent supplier criteria and actively collaborate with them to align with our quality standards. Through these measures, we uphold our commitment to delivering uncompromisingly high-quality products while nurturing strong supplier partnerships throughout our supply chain.

Employee Health and Safety

Accidents such as slips, trips, falls, or machinery-related incidents can occur, leading to injuries ranging from minor cuts to serious injuries or even fatalities. A serious accident can disrupt production schedules, leading to delays in manufacturing timelines and delivery commitments to customers. This can have financial implications due to lost production time and potential penalties for delayed shipments.

We are implementing regular and thorough training programmes for all employees on safe work practices, operation of machinery, handling of hazardous materials, and emergency procedures. Regular risk assessments are conducted to identify potential workplace hazards, assess their severity and likelihood, and prioritise corrective actions. Additionally, regular trainings are provided to supervisors and managers to recognise potential hazards, enforce safety protocols, and promote a safety-first culture among teams.

Market and Technology Shifts

There has been a noticeable shift in policies towards decarbonisation, indicating a transition from carbon-based fuels to cleaner energy sources. Consequently, there has been a growing demand from customers to embrace these changes. However, transitioning to cleaner energy sources entails both a shift in approach and technology from current production capacities. This poses a higher risk of diminishing value creation and market contribution. Recognising these challenges, it is imperative for the Company to adapt swiftly and innovatively to meet evolving customer expectations while mitigating potential risks to maintain their competitive edge in the market.

We are actively implementing diverse proactive measures to embrace the shifts in market trends and customer preferences. This includes adapting our production lines and systems, diversifying the types of products offered, and introducing modular offerings to cater to evolving customer needs. We are dedicated to enhancing our work efficiencies, elevating product quality standards, and expanding our product range to meet the escalating demands in the market. By continually evolving and improving our offerings, we aim to remain responsive to the dynamic landscape and maintain our competitive position in the industry.

Competition Risk

The automotive components markets are undergoing rapid evolution, characterised by intense competition, with expectations for further escalation in competitiveness. Across all its business sectors, the Company encounters competition. Consequently, it confronts the dual risk of either being displaced by existing or emerging rivals or having its products displaced by innovations or new technological advancements. Customer discontent related to pricing, quality, delivery reliability, and design could result in a decline in market share.

The Company maintains strong collaboration with its key customers throughout the product development process. By implementing stringent product quality controls, it aims to minimise the possibility of substitution. Moreover, the Company is actively engaged in the development of innovative products that enable it to ascend the value chain while bolstering its product portfolio. This strategic approach not only strengthens relationships with key customers but also enhances competitiveness and sustainability in the market landscape.

Geopolitical Risk

There are geopolitical risks including the potential for war outbreaks, government instability, social unrest, and the rise of nationalism and populism. Additionally, disputes between sovereign states pose further challenges. These geopolitical factors have the potential to cause severe disruptions in the supply chain, thereby impacting the Company's production levels.

The Company continually explores strategic sourcing options from multiple vendors situated across various geographies. Additionally, it consistently endeavours to localise its sourcing efforts. By diversifying its vendor base and focussing on localisation initiatives, the Company aims to enhance supply chain resilience and flexibility. This proactive approach enables the Company to mitigate risks associated with dependencies on specific regions or suppliers, ensuring continuity of operations and mitigating potential disruptions.

Production Processes

Given the capital-intensive nature of the Company's manufacturing facility, a significant portion of its costs are fixed. Consequently, any decrease in plant capacity utilisation results in under-absorption of costs, thereby negatively affecting earnings. Moreover, the impact of force majeure events could lead to delays or interruptions in production and supply chain operations, resulting in the inability to meet market demand. Various risks stem from inefficiencies or suboptimal utilisation of resources in production processes. These risks encompass wasted materials, energy inefficiencies, production bottlenecks, and diminished overall productivity.

The Company conducts regular assessments of market conditions and adjusts its production plan accordingly. Leveraging its strong relationships with customers and suppliers, the Company effectively forecasts and manages inventory levels during procurement and manufacturing stages.

Maintaining stringent quality standards throughout production processes is a top priority for the Company. Robust quality control measures, including frequent inspections, testing, and process monitoring, are implemented to ensure that products consistently meet or surpass customer expectations. Embracing lean manufacturing principles, advanced technologies, and data-driven decision-making, the Company continuously endeavours to optimise processes, enhance efficiency, and minimise waste.

Investment in comprehensive training programmes is another cornerstone of the Company's strategy. By providing employees with the necessary skills and knowledge, the Company aims to reduce human errors, improve operational efficiency, and foster a culture of safety and continuous improvement. Through these concerted efforts, the Company remains committed to delivering high-quality products, maintaining operational excellence, and meeting the evolving needs of its customers.

Information Management and Security

Given the interconnected nature of geographies and businesses, the Company is susceptible to operational risks associated with data breaches, cyberattacks, or unauthorised access to sensitive information. Such incidents can lead to the loss, theft, or compromise of valuable data, including confidential business information. This encompasses challenges in data classification, access controls, data retention, compliance with data protection regulations, and inadequate safeguards for sensitive information. Insufficient employee awareness and training on information security best practices further exacerbate operational risks. Human errors, such as clicking on phishing emails or mishandling sensitive data, can inadvertently expose the Company to cybersecurity threats and data breaches. Additionally, with the introduction of stringent acts like Data Protection and Privacy (DPDP) Act in India, implementing rigorous measures becomes crucial to ensure the compliance with the regulations.

The Company upholds the highest standards of IT security systems and continuously enhances its IT security infrastructure. Comprehensive policies, procedures, and controls have been implemented to protect sensitive data and prevent unauthorised access, disclosure, alteration, or destruction. Utilising role-based access controls, robust authentication mechanisms, and regular access reviews, we mitigate the risk of unauthorised access or internal threats. Additionally, regular vulnerability assessments and penetration testing are conducted to detect and address any potential weaknesses in our systems.

Investments are made in ongoing awareness programmes and training initiatives to educate employees on their responsibilities, best practices, and emerging threats in information security. By fostering a culture of security awareness, employees are empowered to identify and report potential security incidents, thereby reducing the risk of human error or negligence. Through these proactive measures, the Company remains committed to maintaining the integrity and confidentiality of its data assets, ensuring the resilience and security of its IT infrastructure amid evolving cyber threats.

Sustainable Procurement Practices

Procurement risks stem primarily from fluctuations in raw material prices and inadequate supply, among other factors. These challenges can be attributed to various influences such as economic cycles and political instability. Adverse fluctuations in market prices or financial distress experienced by suppliers can significantly impact the Company's financial position and earnings.

The Company's procurement division is dedicated to ensuring an optimal supply of goods and services, prioritising quality, cost-effectiveness, and timely delivery. Continuously exploring options for sourcing from multiple suppliers and localising production, we aim to enhance flexibility and resilience in our supply chain. Through strategic negotiation and leveraging economic synergies, the Company consistently secures competitive pricing, maximising value for stakeholders.

Recognising the significance of sustainable procurement practices, the Company is committed to environmental responsibility, social well-being, and long-term business sustainability. We conduct thorough assessments of our supply chain partners, evaluating their environmental, social, and governance (ESG) practices. In line with our commitment to sustainability, we have established a comprehensive Supplier Code of Conduct, setting forth clear expectations regarding human rights, labour standards, environmental protection, and business ethics. Encouraging our suppliers to embrace sustainable practices, we collaborate to reduce carbon emissions, minimise water usage, decrease waste generation, and address other critical environmental indicators. Through these initiatives, we strive to foster a supply chain ecosystem that promotes sustainability and contributes positively to our communities and the environment.