Corporate Overview

The overall GDP growth is revised to 7.2% in FY 2022-23, remaining one of the fastest growing economies in the world. This growth was underpinned by strong investment activity bolstered by the Government’s capex push and buoyant private consumption particularly among high income earners. Inflation remains high averaging around 6.7% in FY 2022-23 wherein recently the WPI has spread into negative with higher base effect, this should lead to continuation of the pause in interest rate hike. The current account deficit narrowed on back of strong growth in service exports and easing global commodity prices.

Industry Perspective

Speaking about auto industry the automobile production achieved robust growth of 13% in FY 2022-23 with growth witnessed across all vehicle categories. Passenger car segment achieved highest ever production crossing 4.5 Million for the first time. The steep growth was the function of series of new model launches and better product availability due to the easing of supply chain. The demand for high end variants and premium SUVs remained robust. After three consecutive fiscal years of headwinds, two-wheeler category also recorded growth of 10%; however, production volumes are still significantly lower than pre-Covid-19 pandemic levels. There is a weakness at the lower end of the market as visible from sale of smaller cars and entry level two-wheelers. The industry grew despite rising interest rates and inflation reducing disposable earnings. Commercial vehicle category too registered healthy growth of 29% in FY 2022-23 and is close to the previous peak of 2018-2019 supported by healthy pickup in macroeconomic activity.

As per the Society of Manufacturers of Electric Vehicle; in the electric two-wheeler segment the industry sold 7.26 Lakhs high speed E-two-wheeler in FY 2022-23 in comparison to 2.52 Lakhs units in FY 2021-22. EV penetration in this category during the year was at 4.5%, EV two-wheeler sales for the quarter was around 2.16 Lakhs representing overall penetration of around 5.4%. Penetration level has been gradually increasing quarter-on-quarter basis. Going forward we expect growth momentum in the automobile industry to continue into one of the FY 2022-24 and will be poised for reasonable growth owing to strong demand especially in passenger cars and easing supply chain issues. Initiatives allowed in the budget will also positively affect the passenger vehicle sector growth in FY 2023-24; however, an increase in cost of ownership remains near term headwinds for the industry. The long-term prospect for the auto industry remains highly optimistic. India embraced the challenges faced in the past few years and now it is at the cusp of rapid growth over the next decade.

Company’s Perspective

The Company has been well placed to reap benefits from smart recovery in automotive industry with its well diversified product portfolio, entrenched OEMs relations and technology & innovation focussed approach. During the year, the Company has demonstrated excellent performance with 35% growth in annual revenues to ₹ 11,236 Crores in FY 2022-23 as against ₹ 8,313 Crores in FY 2021-22. While industry volumes have grown by 13%, we continued our outperformance by registering growth at 35%. EBITDA for the same period in FY 2022-23 is ₹ 1,242 Crores in comparison to ₹ 885 Crores in FY 2021-22. Talking about margins EBITDA margins, were higher at 11.1% in FY 2022-23 as against 10.7% in FY 2021-22 owing to the benefits of operating leverage partially offset by higher material costs. We would like to inform you that the Company has achieved pre-tax ROCE of 19.2% in FY 2022-23, a significant improvement from previous financial year.

Segment Highlights

Switching Systems

The segment achieved revenues of ₹ 3,203 Crores for FY 2022-23 contributing 29% of our consolidated revenues. Increasing features like infotainments, sunroof, power windows, overhead console, etc., led to increase in number of switches in PV continue to drive the business growth along with increasing SOB with Indian and Korean customers. During the year, we received incremental orders from Korean customer further strengthening the relationship. In two-wheeler switch business we have started export of heated grips and CAN-based switches. Our expansion of four-wheeler switch plants at Chennai and Farrukhnagar are going as per the plan and is expected to commence operations in H2 FY 2023-24.

Lighting Business

We have achieved revenue of ₹ 2,575 Crores in FY 2022-23 contributing to around 23% of our consolidated revenues. We have secured incremental orders of more than ₹ 1,000 Crores in four-wheeler lighting business in last one year. We have been working on various innovative lighting products and are accredited with various first in the business. We recently launched cornering lamps for one of the two-wheeler OEMs and connected lamp for a Japanese four-wheeler OEM. Four-wheeler with lighting Gujarat plant has been commissioned and is ramping up from current quarter with SOP of underlying model in the last week of March 23.

Besides we have completed land acquisition for our new lighting plant announced in November 22. The lighting plant will be set up in Khed City, Pune. We have acquired 86 acres of land in Khed City for lighting plant as well as for future requirements. The above acquisition also marks a shift in the complete strategy from buying pockets of lands as per exact requirement to buying a large plot of land to meet current as well as future requirement. The revised strategy will serve dual purpose. Firstly, it will expedite future extension as it will eliminate any delay on account of land acquisitions. Secondly, we can build bigger plants and consolidate our existing plants to be able to better manage our operations and achieve economies of scale.

Casting Business

The segment has achieved revenue of ₹ 2,175 Crores for FY 2022-23 contributing to 19% of our consolidated revenues. During the year we started commercial production of 30,000 line in Gujarat plant and 60,000 line in Bawal. Aggregate four-wheeler alloy wheel capacity at Gujarat and Bawal now stands at 3.2 lakh wheels per month of GDC technology and 25,000 wheels of LPDC technology. We are in process of further enhancing our capacity at Bawal.

The application level of alloy wheel is gradually increasing in passenger vehicle presenting tremendous opportunity for the growth in the alloy wheel segment. Given the enormous potential, the Company acquired the remaining 22.64% ownership in Minda Kosei Aluminium Private Limited in March 2023, making it a wholly owned subsidiary. The Board has also approved the scheme of amalgamation for merger of Kosei Minda Aluminum Company Private Limited, Kosei Minda Mould Private Limited and Minda Kosei Aluminum Wheel Private Limited with Uno Minda Limited. The various necessary approvals from authorities and NCLT for the scheme are in process.

Two-wheeler alloy wheel plant has also ramped up well achieving ₹ 449 Crores revenues for FY 2022-23 as against ₹ 287 Crores in FY 2021-22. We have secured more orders for two wheeler alloy wheel leading us to announce further expansion our capacity from ~ 3.6 Mn wheels to 5.6 Mn wheel.

Acoustic Business

Our acoustics business had achieved revenue of ₹ 736 Crores for FY 2022-23 contributing 7% of our consolidated revenues. While India business remains stable European subsidiary Clarton Horns is making gradual recovery supported with price increases from some of its customers.

Seating Business

Moving to seating business we achieved revenues of ₹ 1,053 Crores for FY 2022-23 contributing 9% of our consolidated revenues. The seating business achieved highest exports of ₹ 200 Crores in FY 2022-23. Exports are expected to be one of the key drivers of growth of the business. Seating business is poised for healthy growth in coming years with SOP of at least three new two-wheeler EV OEMs in next six months.

Other Products Business

We have achieved revenue of ₹ 1,494 Crores for FY 2022-23 contributing 13% of overall topline. Other businesses mainly composed of controllers, sensors, blow moulding business, battery and aftermarket. Blow moulding business, sensors, controllers, EV systems continue to grow as guided.

Aftermarket Business

Aftermarket revenues have grown 25% year-on-year basis. Our aftermarket division for the first time has crossed ₹ 1,000 Crores mark and achieved revenues of ₹ 1,042 Crores for the entire year. We are successfully running various B2C marketing campaigns for our aftermarket division. Our products have also been listed on Amazon marketplace widening the reach. We have also launched our own website: www.unomindakart.com for showcasing and marketing our aftermarket products.

Electrifications

The production of EV specific products had commenced though at temporary locations at Manesar and Controller division at Pune. We will start commercial production from our new EV specific component plant in Farrukhnagar, Haryana in FY 24. Uno Minda Buehler’s plant is also expected to commence operations in FY 24. Commencement of these plants should give further boost to our EV OEM revenues.

Strategic Business Update

During the year, we entered into joint venture with TACHI-S Company Limited (‘TACHI-S’), a global seat system creator headquartered in Tokyo, Japan, for manufacturing and marketing of seat recliners for four wheeler passenger vehicle in India. The Joint Venture will offer various products including recliners in first phase with the intention of expanding into other seating mechanisms, seat frames and complete seating assembly. Uno Minda is already a leading player in automotive seating systems for two wheeler and commercial vehicles. The joint venture will help Uno Minda expand its seating systems product, offering in 4W Passenger vehicle as well.

Environment, Social and Governance at Uno Minda

The climate change is one of the greatest challenges of our time and we as an organisation are acutely cognizant of the role that we are to play in mitigating greenhouse gas emissions. Energy conservation and optimisation is of the utmost importance to us; however, in addition to adopting various energy efficiency measures, we have significantly increased our uptake of renewable energy as key aspect of our decarbonisation strategy. In the last two years we have installed rooftop solar panels at 25 plants along with solar open access projects at six locations increasing our renewable energy share at 18%. As a testament to our commitment to decarbonising our operations, we have also set ourselves an ambitious target of meeting 40% of our energy needs from renewable energy by 2025.

People

Our employees play a vital role in our journey of growth and success. We are dedicated to fostering an inclusive and secure work environment that offers equal growth opportunities to all. In pursuit of this objective, we have developed a robust training and diversity strategy for our organisation. We are delighted to announce that our efforts have been recognised, as we have been honoured with a place in the Wall of Fame of the Great Place to Work Institute’s Top 30 Best Workplaces among manufacturing companies in India.

Looking Forward

We remain optimistic on our ability to outperform the industry growth. We will start production for multiple projects like new plant of EV, JV with FRIWO, new plant of EV motors, four-wheeler and two-wheeler alloy wheel expansion, four-wheeler switch plant in Chennai and ramp up for four-wheel lighting plant at Gujarat. This should significantly boost our revenues in next financial year.

Heartfelt Gratitude

Finally, on behalf of our Board members, I express my gratitude to our whole workforce, and all other key stakeholders for their ongoing support and encouragement as we strive for excellence. We look forward to continuing to work together to achieve our shared vision and make a positive impact on the world around us.

Best regards,

Mr. Sunil Bohra

Group Chief Financial Officer & CEO – Safety & Comfort systems