Uno Minda Ltd:Annual Report 2023-24 Analysis

UNO Minda Ltd: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: UNO Minda, formerly known as Minda Industries Limited, was founded in 1958 by Mr. S.L. Minda.

Headquarters Location and Global Presence: The company is headquartered in Gurgaon, Haryana, India. UNO Minda has a significant global presence with manufacturing facilities and offices across various countries including Indonesia, Vietnam, Spain, Mexico, Colombia, Germany, Japan, USA, and Thailand.

Company Vision and Mission:

• Vision: To be a globally admired and preferred solutions provider of automotive components and systems, creating value for all stakeholders.
• Mission: To achieve excellence in quality, cost, and delivery through innovation, technology, and sustainable practices, empowering a motivated and skilled workforce.

Key Milestones in Their Growth Journey:

• 1958: Incorporation of Minda Industries Limited.
• 1980s-1990s: Expansion into various automotive components, including lighting, switches, and horns.
• 2000s: Focused on technological advancements and global expansion.
• 2010s: Acquisition of various companies to expand product portfolio and market reach.
• 2022: Renamed Minda Industries Limited to UNO Minda Limited, marking a significant milestone in its transformation journey.

Stock Exchange Listing Details and Market Capitalization: UNO Minda Ltd. is listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). The current market capitalization can be found on financial websites like Google Finance, Yahoo Finance, or the exchanges’ official websites.

Recent Financial Performance Highlights: Recent financial performance highlights, including revenue, profit margins, and key growth indicators, can be found in the company’s quarterly and annual reports published on their investor relations website or on financial news websites.

Management Team and Leadership Structure: UNO Minda’s leadership team consists of experienced professionals in the automotive industry, including:

• Chairman & Managing Director: Mr. Nirmal K. Minda
• CEO: Mr. Sunil Bohra
• The leadership team is further supported by various functional heads responsible for finance, operations, technology, and other critical areas.

Notable Awards or Recognitions: UNO Minda has received awards and recognitions for quality, innovation, and sustainable practices. Specific details on these awards can be found on the company’s website or in their annual reports.

Their Products #

Complete Product Portfolio with Categories: UNO Minda boasts a comprehensive product portfolio categorized as follows:

• Lighting Systems: Headlamps, tail lamps, auxiliary lamps, interior lighting
• Acoustic Systems: Horns
• Switches: Automotive switches for various functions
• Alloy Wheels: Aluminum alloy wheels for passenger vehicles and two-wheelers
• Seating Systems: Automotive Seating
• Information and Connected Systems (ICS): Cluster, Telematics, sensors.
• Die Casting: Aluminum and Zinc Die Casting parts
• Wiring Harnesses: Wire harnesses and connectors for automotive applications
• Aftermarket: Replacement parts and accessories.

Flagship or Signature Product Lines:

• Lighting Systems: Are a significant contributor to their revenue.
• Alloy Wheels: Have established a strong presence in the Indian market.

Key Technological Innovations or Patents: UNO Minda has been actively involved in developing technologically advanced products, including:

• LED Lighting: High-performance LED lighting solutions for automotive applications.
• Connected Car Solutions: Telematics and connectivity solutions for enhanced vehicle safety and performance monitoring.

Manufacturing Facilities and Production Capacity: UNO Minda operates numerous manufacturing facilities across India and globally. Details on specific production capacities for each product line can be found in their annual reports or investor presentations.

Quality Certifications and Standards: UNO Minda maintains high-quality standards and holds various certifications, including:

• IATF 16949: Automotive Quality Management System
• ISO 14001: Environmental Management System
• OHSAS 18001/ISO 45001: Occupational Health and Safety Management System

Unique Selling Propositions or Technological Advantages:

• Integrated Solutions: Offers integrated solutions across various automotive component categories.
• Technology Focus: Investment in R&D and adoption of advanced technologies.
• Global Presence: Provides a competitive edge in serving global automotive manufacturers.

Recent Product Launches or R&D Initiatives: Information on recent product launches and R&D initiatives can be found in their press releases, investor presentations, and annual reports.

Primary Customers #

Target Industries and Sectors: The primary target industry is the automotive sector, encompassing passenger vehicles, commercial vehicles, and two-wheelers.

Geographic Markets (Domestic vs. International): UNO Minda has a strong presence in the domestic Indian market, while also expanding its reach in international markets across Asia, Europe, and the Americas.

Major Client Segments:

• Original Equipment Manufacturers (OEMs): Supplying components directly to automotive manufacturers.
• Tier 1 Suppliers: Partnering with other Tier 1 automotive suppliers.
• Aftermarket: Serving the aftermarket segment with replacement parts and accessories.

Distribution Network and Sales Channels: The company utilizes a combination of direct sales to OEMs, partnerships with Tier 1 suppliers, and a distribution network to reach the aftermarket.

Major Competitors #

Direct Competitors in India and Globally:

• India: Motherson Sumi Systems Limited, Varroc Engineering Limited, Sona BLW Precision Forgings Ltd.
• Globally: Magna International, Denso Corporation, Aptiv PLC

Comparative Market Share Analysis: Market share information is dynamic and can be found in industry reports by research firms specializing in the automotive component sector.

Competitive Advantages and Disadvantages:

• Advantages: Wide product portfolio, strong R&D capabilities, global presence, established relationships with OEMs.
• Disadvantages: Susceptibility to fluctuations in the automotive market, dependence on key customers, competition from established global players.

How They Differentiate from Competitors: UNO Minda differentiates itself through its integrated solutions approach, technology focus, and a commitment to quality and innovation.

Industry Challenges and Opportunities:

• Challenges: Increasing regulatory requirements, rising raw material costs, technological disruptions (e.g., electrification, autonomous driving).
• Opportunities: Growth in the automotive market, increasing demand for advanced automotive components, expansion into new geographies and product segments.

Market Positioning Strategy: UNO Minda aims to position itself as a leading technology and solutions provider for the automotive industry, focusing on innovation, quality, and customer satisfaction.

Future Outlook #

Expansion Plans or Growth Strategy: UNO Minda’s growth strategy includes:

• Expanding its product portfolio through acquisitions and organic growth.
• Increasing its global footprint by establishing new manufacturing facilities and strategic partnerships.
• Investing in R&D to develop advanced automotive technologies.

Upcoming Products or Innovations: UNO Minda is focusing on developing products and solutions related to:

• Electric vehicles (EVs): Components and systems for electric vehicles.
• Connected car technologies: Telematics, connectivity, and driver-assistance systems.

Sustainability Initiatives or ESG Commitments: UNO Minda is increasingly focusing on sustainability and ESG (Environmental, Social, and Governance) initiatives, including:

• Reducing carbon footprint through energy efficiency and renewable energy sources.
• Promoting sustainable manufacturing practices.
• Enhancing social responsibility through community engagement and employee welfare programs.

Industry Trends Affecting Their Business: Key industry trends influencing UNO Minda’s business include:

• Electrification of vehicles: Increasing demand for electric vehicle components.
• Autonomous driving: Growing adoption of advanced driver-assistance systems (ADAS).
• Connectivity and digitalization: Rise of connected car technologies and data-driven services.

Long-Term Vision and Strategic Goals: UNO Minda’s long-term vision is to be a globally admired and preferred solutions provider for the automotive industry. Its strategic goals include:

• Achieving sustainable growth and profitability.
• Becoming a leader in automotive technology and innovation.
• Creating value for all stakeholders.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue Growth: Consolidated revenues increased by 25% Y-o-Y in FY2023-24 (₹14,031 crores), up from ₹11,236 crores in FY2022-23, and ₹8,313 crores in FY2021-22.
• EBITDA Growth: EBITDA for FY2023-24 was ₹1,585 crores (11.30% margin), compared to ₹1,242 crores (11.05% margin) in FY2022-23, and ₹885.36 crores (10.65%) in FY2021-22.
• PAT Growth: Profit After Tax (attributable to shareholders) grew by 35% to ₹880 crores in FY2023-24, from ₹653.55 crores in FY2022-23, and ₹355.80 crores in FY2021-22.
• ROCE: Return on Capital Employed (ROCE) was 19.81% in FY2023-24, versus 19.16% in FY2022-23 and 15.76% in FY2021-22.
• Net-Debt to equity: 0.25 as of FY 2023-24, and 0.24,0.15 for FY 2022-23 and FY 2021-22 respectively.

Business Segment Performance #

• Switching Systems: Revenue of ₹3,663 crores in FY2023-24, a 14% Y-o-Y growth, representing 26% of consolidated revenues. Growth drivers include smarter switches, market expansion, and increased exports in the 2W segment.
• Lighting Business: FY2023-24 revenue was ₹3,368 crores, contributing 24% of consolidated revenues. This marked a 31% growth Y-o-Y. Expansion was supported by a new 4W lighting plant in Gujarat and orders for innovative products like logo projectors.
• Casting Business: Revenue of ₹2,830 crores for FY2023-24 (20% of consolidated revenues) with growth led by alloy wheel business for 4W and 2W. PV alloy wheel capacity reached 390,000 wheels per month with high utilization.
• Acoustic Business: Contributed ₹833 crores (6% of consolidated revenues) in FY2023-24. Stable growth was observed in both the Indian market and the European subsidiary.
• Seating Business: Revenue of ₹1,100 crores (8% of total revenues) in FY2023-24.
• Other Products Business: Contributed 16% to revenues. Key drivers were EV products, controllers, sensors, and ADAS. The joint venture with FRIWO AG for EV components had revenues of ₹195 crores.
• Aftermarket Business: Achieved revenue of ₹1,010 crores in FY2023-24.

Major Strategic Initiatives and Their Progress #

• Mergers and Acquisitions: Harita Fehrer Limited and Minda Storage Batteries Private Limited merged with Uno Minda. Minda I Connect Private Ltd also merged with Uno Minda. Increased stake in Minda Westport Technologies Limited to 76%. These are aimed at streamlining operations and achieving economies of scale.
• Capacity Expansions: Ramp-up of production at the new 4W lighting plant in Gujarat. Commissioning of two new EV plants under FRIWO JV and Buehler JV. Expansion of 2W alloy wheel capacity.
• Land Acquisitions: Completed acquisition of 86 acres in Khed City, Pune, and secured 94.32 acres in Kharkhoda, Haryana, for future expansions.
• Technology License Agreements (TLAs): Entered into a TLA with StarCharge for EVSE (wall-mounted AC chargers) and with Inovance Automotive for high voltage EV components.
• Centralized R&D (CREAT): Focus on embedded electronics, light weighting, software, and ADAS.
• EV Portfolio Expansion: Secured orders with a peak annual value of over ₹3,000 crores from EV OEMs.

Risk Landscape Changes #

• Increased Geopolitical Risks: Mentions of potential for war outbreaks, government instability, and social unrest, impacting supply chains. Mitigation involves diversifying sourcing and localization efforts.
• Market and Technology Shifts: Focus on the transition to cleaner energy sources and adapting product lines to meet the demands for EV components. This includes significant R&D investments in EV-specific technologies.
• Competition Risk: The auto components market is described as rapidly evolving and intensely competitive. The Company’s strategy includes strong collaboration with customers and development of innovative products.
• Compliance Management: Implemented comprehensive compliance and monitoring to manage the risk.

ESG Initiatives and Metrics #

• Environmental:
  • Over 90% of plants are ISO 14001 and ISO 45001 certified.
  • Focus on energy and emissions management, water management, and waste management.
  • 18% share of renewable electricity in total electricity consumption.
  • Water withdrawal: 954,817 kL in FY2023-24.
  • 49% of waste recycled during the year.
  • GHG emissions intensity: 0.03 (‘000 tCO2e/Revenue in ₹ Crores).
  • Avoided 32,624 MtCO2e in GHG emission.
• Social:
  • CSR initiatives through the Suman Nirmal Minda Foundation, focusing on education, skill development, healthcare, and community development.
  • CSR expenditure: ₹13.14 crores in FY2023-24.
  • Workforce diversity: 17.75% female representation in the workforce.
  • Health and safety training: 100% of the workforce trained.
  • 83% procurement from local suppliers.
• Governance:
  • Board composition: 9 members, with 5 Independent Directors and 1 woman director.
  • Adoption of comprehensive codes of conduct for the Board, senior management, and all employees.
  • Implementation of a Whistleblower Policy and an Ethics Helpline.
• ESG road map to achieve carbon neutrality.

Management Outlook #

• Optimistic Growth Prospects: Anticipates continued growth in FY2024-25, driven by strong demand, strategic expansions, and partnerships.
• Focus on Sustainable Mobility: Committed to leading innovation in sustainable mobility solutions and capitalizing on emerging opportunities in the EV sector.
• Market Leadership: Aiming to strengthen its position as a market leader, particularly in EV components and other key product segments.
• Continued expansion in capacity for EV plants, 2W alloy wheels, and 4W switches are indicators of sustained performance and long-term success.

Detailed Analysis #

Financial Position Analysis #

Balance Sheet Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity #

(₹ in Crores)

Significant Changes in Major Line Items (>10% YoY) #

• Property, Plant and Equipment: Increased by 19.82% from FY 2022-23 to FY 2023-24, net increase.
• Capital Work-in-Progress: decreased from 291.08 cr in FY 2022-23 to 214.31 cr in FY 2023-24
• Goodwill: Increased by 8.82% from FY 2022-23 to FY 2023-24
• Other Intangible Assets: Decreased by 7.79% from FY 2022-23 to FY 2023-24.
• Right of use assets: Increased by 51.44% from FY 2022-23 to FY 2023-24
• Investments in associates and joint ventures: Increased by 18.33% from FY 2022-23 to FY 2023-24.
• Other Financial Assets (Non-Current): Increased by 11.58% from FY 2022-23 to FY 2023-24
• Non-current tax assets (net) increased 80.89% from the prior year.
• Inventories: Increased by 23.02% from FY 2022-23 to FY 2023-24.
• Current Investments: Increased by 128.64% from FY 2022-23 to FY 2023-24
• Trade Receivables: Increased by 19.85% from FY 2022-23 to FY 2023-24
• Cash and cash equivalents: Increased by 98.12% from FY 2022-23 to FY 2023-24.
• Other Financial Assets (Current): Increased by 173.62% from FY 2022-23 to FY 2023-24.
• Other Current Assets: Increased by 30.45% from FY 2022-23 to FY 2023-24.
• Other Equity: increased by 19.47% from FY 2022-23 to FY 2023-24.
• Non-controlling interest: Increased by 15.75%
• Non-Current Borrowings: Increased by 19.92% from FY 2022-23 to FY 2023-24.
• Lease Liabilities (Non-Current): Decreased by 12.73% from FY 2022-23 to FY 2023-24.
• Other financial liabilities(non-current) decreased by 63.05% YoY.
• Provisions (non-current) increased by 17.89% YoY.
• Deferred tax liabilities (net) decreased by 60.22% YoY.
• Other Non-Current Liabilities: Decreased by 40.67% from FY 2022-23 to FY 2023-24.
• Contract liabilities increased by 100.43% YoY.
• Current Borrowings: Increased by 30.78% from FY 2022-23 to FY 2023-24
• Lease liabilities increased by 18.67% YoY.
• Trade Payables (Micro and Small Enterprises): Increased by 17.90% from FY 2022-23 to FY 2023-24
• Trade Payables (Other than Micro and Small Enterprises): Increased by 17.00% from FY 2022-23 to FY 2023-24
• Other Financial Liabilities (Current): Increased by 29.87% from FY 2022-23 to FY 2023-24
• Provisions: Increased by 25.24% from FY 2022-23 to FY 2023-24.
• Other current liabilities: Increased by 15.40% from FY 2022-23 to FY 2023-24.
• Current tax liabilities (net) increased significantly by 133.44% YoY

Working Capital Trends #

• Increase in Current Assets: Current assets increased by 26.33% for the period.
• Increase in Current Liabilities: Current liabilities increased at a lower rate (24.42%) in comparison.
• Debtors’ Turnover Ratio: Increased slightly from 56 days in FY 2022-23 to 54 days in FY 2023-24.
• Inventory Turnover Ratio: Stable, 43 days both in FY 2023-24 and FY 2022-23.
• Creditor’s Turnover Ratio: Reduced from 73 days in FY 2022-23 to 68 days in FY 2023-24.

Asset Quality Metrics #

• Impairment Allowances: The company reported impairment allowances for trade receivables and other assets. The impairment allowance on trade receivables increased, indicating potential issues with collectability.
• Goodwill: The company carries a significant amount of goodwill, which needs to be tested for impairment annually.

Debt Structure and Maturity Profile #

(₹ in Crores)

Debt Structure:

• The Group has a mix of short-term and long-term borrowings, including term loans and working capital loans.
• A significant portion of the debt is in the form of Rupee term loans from banks.
• There are also foreign currency term loans, although a portion has been repaid during the year.

Maturity Profile:

• The maturity profile indicates a substantial amount of debt maturing within one year (current maturities of long-term debt plus short-term borrowings).
• Long-term borrowings are spread over subsequent years.

Off-Balance Sheet Items #

• Contingent Liabilities (Note 29 (A)):
  • Claims against the Group not acknowledged as debts: ₹3.21 Crores (FY 2023-24) and ₹3.09 Crores (FY 2022-23).
  • Disputed tax liabilities (Income tax, Service tax, Sales tax/VAT, GST): ₹75.34 Crores (FY 2023-24) and ₹71.99 Crores (FY 2022-23).
  • Corporate guarantees given by the Company: ₹130.73 Crores (FY 2023-24) and ₹130.73 Crores (FY 2022-23) in respect of loans taken by subsidiary company.
  • Letter of comfort provided by company to banks: ’ 63.76 Crores (31 March 2023: ’ 63.76 Crores)
• Commitments (Note 29 (B)):
  • Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances): ₹49.24 Crores (FY 2023-24) and ₹20.28 Crores (FY 2022-23).
• Forward exchange contracts: There’s exposure to foreign currency receivables and payables.

Implications:

• Contingent liabilities represent potential future obligations that are uncertain.
• Guarantees and letters of comfort expose the Company to credit risk of the entities for whom the guarantees are provided.
• Commitments indicate future cash outflows for capital expenditures.

Operating Performance #

Income Statement Analysis #

Revenue Breakdown by Segment/Geography with Growth Rates: #

• Switching Systems: FY2023-24 revenue was ₹3,663 crores, a 14% Y-o-Y growth, representing 26% of consolidated revenues.
• Lighting Business: FY2023-24 revenue was ₹3,368 crores, a 31% Y-o-Y growth, representing 24% of consolidated revenues.
• Casting Business: FY2023-24 revenue was ₹2,830 crores, representing 20% of consolidated revenues. The casting division’s revenue share increased from 12% in FY2020-21 to 20% in FY2023-24.
• Acoustic Business: FY2023-24 revenue was ₹833 crores, representing 6% of consolidated revenues.
• Seating Business: FY2023-24 revenue was ₹1,100 crores, representing 8% of consolidated revenues.
• Other Products Business: contributed 16% to consolidated revenue.
• Aftermarket Business: FY2023-24, revenue was 1,010 crores.
• Geographic Revenue (FY2023-24):
  • India: ₹12,993 crores
  • Outside India: ₹540.51 crores
• Consolidated Revenue from Operations for the FY 2023-24 increased by 24.87% over the previous year.
• OEM Revenue: FY2023-24 saw OEM revenue of ₹12,993 crores, up from ₹10,194 crores in FY2022-23.

Cost Structure Analysis: #

• Cost of Raw Materials and Components Consumed: ₹9,064 crores in FY2023-24, up from ₹7,224 crores in FY2022-23, represents a major expense.
• Employee Benefit Expenses: 1,779 crores.
• Other expenses: 1,603 crores.

Margin Analysis (Gross, Operating, Net) with Trends: #

• EBITDA Margin: 11.30% in FY2023-24, up from 11.05% in FY2022-23, demonstrating increase.
• EBIT Margin: 7.79%
• Net Profit Margin (Attributable to Shareholders): 6.59% in FY2023-24, a slight increase from 6.23% in FY2022-23.

Non-Recurring Items: #

• Exceptional Items for FY 2023-24 of 26.62, related details were not disclosed.

EPS Analysis (Basic/Diluted): #

• Basic EPS: ₹15.36 in FY2023-24, up from ₹11.42 in FY2022-23.
• Diluted EPS: ₹15.34 in FY2023-24, up from ₹11.37 in FY2022-23.

Additional Notes: #

Commissioning of the third line on 23 December 2023, and all three lines aggregating to an additional capacity of 2 Million are now fully operational and ramping up.

Uno Minda Limited: Segment Performance Analysis (FY 2023-24) #

Revenue and Profitability by Segment #

• Switching Systems: ₹3,663 crores (14% YoY growth), 26% of consolidated revenues.
• Lighting Business: ₹3,368 crores (31% YoY growth), 24% of consolidated revenues.
• Casting Business: ₹2,830 crores, growing from 12% (FY2020-2021) to 20% (FY2023-2024) of total revenue.
• Acoustic Business: ₹833 crores, 6% of consolidated revenues.
• Seating Business: ₹1,100 crores, 8% of total revenues.
• Other Products Business: 16% of revenues.
• Aftermarket Business: ₹1,010 Crores.

Market Share and Competitive Position #

• Switching Systems: Over 50% market share in both 2-wheelers and 4-wheelers (India).
• Lighting Business: India’s third-largest player in automotive lighting.
• Acoustic Business: India’s #1 player and #2 globally for horns.
• Casting Business: Market leader in alloy wheels for passenger vehicles and two-wheelers.
• Seating Business: India’s #1 supplier of seating in commercial vehicles, buses, and 2-wheelers.
• Aftermarket Business: One of the largest players in the Indian automotive aftermarket.

Key Products/Services Performance #

• Switching Systems: Growth driven by smarter switches, market expansion, and increased exports in the 2-wheeler segment.
• Lighting Business: Passenger car exterior lighting growing with successful launch of India’s First Indigenous 4-feet-long tail lamp, securing incremental orders, and witnessing technological advancements surpassing headlamps in kit value.
• Casting Business: Revenue growth led by alloy wheel business for 4-wheelers and 2-wheelers; alloy wheel penetration increased to 45% in FY 2023-24.
• EV Products: Strong growth due to escalating demand for EV products, controllers, sensors, and ADAS.
• Aftermarket: Growth attributed to product portfolio expansion, addition of new product lines.

Geographic Distribution and Market Penetration #

• Switching Systems: Serves markets in India, US, Europe, Japan, ASEAN, and Brazil.
• Lighting Business: R&D and design centers in Taiwan, Spain, India, and Germany.
• Aftermarket: Spans 6 export regions, including SAARC, ASEAN, EU, LATAM, MENA & Africa.
• Overall: Significant presence in India; caters to a vast international customer base with facilities/offices in Asia, Europe, North America, and South America.

Segment-wise CAPEX and ROIC #

• Casting Business: Commissioned additional capacity for 2-wheeler and 4-wheeler alloy wheels. Ongoing expansions and a new greenfield plant are planned, with a phased investment of ₹300 Crores for 2-wheeler alloy wheel.
• Overall Group CaPex: 1,049 Cr.

Operational Efficiency Metrics #

• Switching Systems: Focus on consolidation of plant setups in North India (Farukhnagar, Haryana) to enhance profitability.
• Casting Business: High capacity utilization (almost 100%) in 4-wheeler alloy wheel plants.
• Environment: Over 90% of plants are ISO 14001 and ISO 45001 certified.

Growth Initiatives and Challenges #

• Growth Initiatives:
  • Strategic capacity expansions in EV plants, 2-wheeler and 4-wheeler alloy wheels, and 4-wheeler switch plants.
  • Focus on localizing production and increasing market share.
  • Development of EV-specific components and solutions.
  • Technical license agreements with StarCharge and Inovance Automotive for EV supply equipment and high-voltage EV components.
  • Expansion of product portfolio and distribution networks in the aftermarket segment.
  • Land acquisitions in key auto hubs for future expansions.
• Challenges: Potential future challenges may revolve around competition, technological shifts, geopolitical risks, and economic slowdown.

Risk Framework #

Strategic Risks #

Market and Technology Shifts #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies: Investment in R&D for EV-specific components, technical license agreements (StarCharge, Inovance Automotive), expansion into high-voltage EV components, and focus on PACE megatrends.
• Control Effectiveness: Partially Effective. Aggressive expansion and partnerships demonstrate proactiveness, but the evolving market presents continuous challenges.
• Potential Financial Impact: Significant. Inability to adapt could lead to loss of market share, reduced revenues, while investments need to prove its worth. Orders with a peak annual value of more than ₹ 3,000 crores from EV OEMs were secured.

Competition Risk #

• Severity: High
• Likelihood: High
• Trend: Stable
• Mitigation Strategies: Strong collaboration with key customers during product development, stringent product quality controls, development of innovative products, and bolstering product portfolio.
• Control Effectiveness: Moderately Effective. Strong customer relationships and focus on innovation, but displacement by new technologies remains a threat.
• Potential Financial Impact: Significant. Loss of market share or displacement by competitors could impact revenues and profitability.

Business Geographies #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Maintaining diversified facilities across auto hubs.
• Control Effectiveness: Partially effective.
• Potential Financial Impact: Cost reduction in operations.

Operational Risks #

Production Processes #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Regular assessments of market conditions, adjustment of production plans, inventory management, stringent quality controls, lean manufacturing principles, and adoption of advanced technologies.
• Control Effectiveness: Effective. The Company had a 25% growth in annual revenue, showing the successful application of the mitigation strategies.
• Potential Financial Impact: Moderate. Under-absorption of costs and inability to meet market demand due to interruptions can affect earnings.

Sustainable Procurement Practices #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Sourcing from multiple vendors across various geographies, localization of sourcing, strategic negotiation, and leveraging economic synergies.
• Control Effectiveness: Effective. Procurement division is focused on quality, cost-effectiveness, and timely delivery.
• Potential Financial Impact: Moderate. Adverse fluctuations in market prices or supplier financial distress can impact financial position and earnings.

Product Quality Management #

• Severity: High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Strict quality control, adherence to highest quality standards.
• Control Effectiveness: Highly effective.
• Potential Financial Impact: Lower quality can cause customer dissatisfaction.

Information Management and Security #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Implementation of robust IT security systems, comprehensive policies, procedures, and controls, role-based access controls, regular vulnerability assessments, and employee training.
• Control Effectiveness: Moderately Effective. Continuous investment and monitoring are required.
• Potential Financial Impact: High. Loss, theft, or compromise of data can lead to significant financial and reputational damage.

Financial Risks #

Business Capital Management #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: The Company increased its stake in joint ventures.
• Control Effectiveness: Effective. Company has a Net debt-to-equity ratio of 0.25.
• Potential Financial Impact: Medium.

Compliance/Regulatory Risks #

Compliance Management #

• Severity: High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Implementation of a compliance framework, monitoring regulatory developments, and adjusting processes as needed.
• Control Effectiveness: Effective. A dedicated compliance team and regular monitoring are in place.
• Potential Financial Impact: High. Non-compliance can lead to fines, penalties, and reputational damage. There were no complaints reported for environmental and social non-compliance, corruption, anti-competitive behavior, conflict of interest, or money laundering in FY 2023-24.

Emerging Risks #

Technological Obsolescence #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: To adapt to customer’s growing demand of advance features and shifts.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Medium.

Natural Disaster #

• Severity: Medium
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Oversight of potential ramifications and impact on financial health, emergency response plan.
• Control Effectiveness: Partially Effective.
• Potential Financial Impact: Medium.

Strategic and Management Analysis of Uno Minda Limited #

Long-Term Strategic Goals and Progress #

• Uno Minda aims for technology leadership, evidenced by its multiple R&D centers and focus on PACE megatrends (Personalisation, Autonomous, Connected, and Electrified).
• The company is actively pursuing sustainable growth, demonstrated by integrating ESG targets and a “Green Pathway to 2030” vision.
• Uno Minda’s geographic diversification, with a presence in Asia, Africa, Europe, and North America, indicates a goal of global market penetration.
• Growth in consolidated revenues and EBITDA by 25% and 28%, surpassing industry volume growth, indicates that the company is making progress in its objectives.
• The “Driving the new” with products like AVAS, EVSE reflects, commitment to stay ahead.

Competitive Advantages and Market Positioning #

• Uno Minda holds leadership positions in multiple product categories, such as being the #1 switch player in India and #2 globally for horns.
• The company’s diversified product portfolio across vehicle segments (2Ws, 4Ws, CVs, off-road) provides resilience against segment-specific downturns.
• Strong partnerships with 13 joint venture partners and 6 technical license agreements provide access to advanced technologies and market access.
• The Group’s proactive acquisition of ~86 acres in Pune, 94.32 acres in Kharkhoda and 37 acres in Hosur will enable to cater the increasing demand.

Innovation Initiatives and R&D Effectiveness #

• Uno Minda’s 37 R&D and engineering centers across multiple countries demonstrate a commitment to continuous innovation.
• The company’s focus on PACE megatrends indicates a forward-looking R&D strategy aligned with industry evolution.
• The establishment of CREAT and INITIA highlights a dedication to advanced research, engineering, and user-centric design.
• A robust portfolio of EV-specific components for 2Ws and 3Ws, with a peak annual value of over ₹ 3,000 Crores, indicates successful R&D commercialization.
• The R&D expense is ~4% of revenue.
• Patents filed are 444 and design registered are 463.

M&A Strategy and Execution #

• The merger of Harita Fehrer Limited and Minda Storage Batteries Private Limited, along with the amalgamation of Kosei entities pending approval, reflects a strategy of consolidation and operational streamlining.
• Acquisition of the remaining stake in Minda Kosei Aluminum Wheel, and increasing stake in Minda Westport Technologies Limited. show an ability to execute strategic acquisitions to enhance market leadership.
• NCLT approved the scheme of Arrangement of two wholly owned subsidiaries, Harita Fehrer Limited (HFRL) and Minda Storage Batteries Private Limited (MSBPL).
• Entered into a Technical License Agreement with Starcharge Energy to manufacture and sale electric vehicle supply equipment (EVSE).
• Secured a land parcel of 94.32 acres at IMT Kharkhoda.

Management’s Track Record in Execution #

• Consistent revenue and profitability growth, outpacing industry volume growth, indicates management’s ability to execute growth strategies.
• Successful commissioning of new plants (EV plants, 2W and 4W alloy wheel expansions) demonstrates project execution capabilities.
• The consistent acquisition of land in major auto hubs show the management commitment to future expansion.
• Approval for scheme of arrangement between Harita Fehrer Limited (HFRL) and Minda Storage Batteries Private Limited (MSBPL).

Capital Allocation Strategy #

• Significant investments in capacity expansion (EV plants, alloy wheel plants, switch plants) indicate a focus on organic growth.
• Strategic acquisitions and increased stakes in joint ventures demonstrate a balanced approach to inorganic growth.
• Consistent dividend payments to shareholders, with an increase from ₹1.50 to ₹2.0 per share, show commitment to shareholder returns.
• Land acquisitions in key auto hubs indicate long-term capacity planning and anticipation of future demand.
• Debt to equity ratio is healthy (.25).

Organizational Changes and Their Impact #

• Changes in share capital reflect mergers, acquisitions, and ESOP exercises, all of which are strategically aligned with the Group’s growth objectives.
• Changes on the Board such as the ceasing of Mr. Rakesh Batra as an independent Director due to his term completion and other changes in Board composition can affect strategic decisions.

Uno Minda Limited: ESG Analysis for FY 2023-24 #

Environmental Metrics and Targets #

• Emission Intensity: 0.03 (‘000 tCO2e/ Revenue in ₹ Crores) in FY 2023-24.
• Renewable Energy: 18% of total electricity consumption from renewable sources in FY 2023-24. Achieved 1,84,570 GJ of RE consumed.
• GHG Emissions: Scope 1 emissions were 3,48,704 MtCO2e, and Scope 2 emissions were 1,44,706 MtCO2e in FY 2023-24. GHG emissions were reduced by 32,624 MTCO2e.
• Energy Consumption: Total energy consumption was 58,83,193 GJ with an energy intensity of 0.38 (‘000 GJ/Revenue in ₹ Crores).
• Water Withdrawal: Total water withdrawal was 9,54,817 kL, and consumption was 7,57,329 kL in FY 2023-24, with a water intensity of 0.05 (‘000 kL/ Revenue in ₹ Crores).
• Waste Management: 49% of the total waste, amounting to 7,260 MT, was recycled, while 5% was disposed of with energy recovery. Waste intensity stands at 0.001.
• Waste Generation: Total waste generated in operations was 14,923 MT, with 2,841 MT of hazardous waste diverted from landfills.
• Targets: The Company has set a specific objective for a 3% annual reduction in absolute water usage.

Social Responsibility Programs #

• CSR Expenditure: ₹13.14 Crores were spent on CSR initiatives, focusing on education, skill development, healthcare, and community well-being.
• Beneficiaries: CSR projects directly benefited over 24,000 individuals, with 3,608 receiving educational and vocational training. 100% are local community programs.
• Employee Engagement: Over 90% training completion rate, 87,632 hours of mandatory training provided and 100% workforce trained on health and safety.
• Gender Diversity: 17.75% of the workforce are women; 11% women representation on the Board. The gender ratio is 4 males:1 female.

Governance Structure and Effectiveness #

• Board Composition: The Board consists of 9 members, with 5 Independent Directors, 1 are Women director, ensuring a 33% annual director election and achieving an 11% representation of women on the board.
• Board Committees: Includes Audit, Nomination and Remuneration, Stakeholders’ Relationship, CSR, and Risk Management Committees. All committees demonstrated high attendance rates (majority at 100%) in their respective meetings.
• ESG Materiality Assesment: The company has carried out the Materiality Assesment and reported the key material topics.
• Code of Conduct: 100% of employees and Board members have been trained in ethical business practices. A Whistleblower Policy and Prevention of Sexual Harassment (POSH) policy are in place.
• Regulatory Compliance: No complaints were reported regarding environmental and social non-compliance, corruption, anti-competitive behavior, conflict of interest, or money laundering during FY 2023-24.
• Supplier Training: 365 suppliers were trained in ethical business practices.

Sustainability Investments #

• R&D Expenditure: Approximately 4% of revenue was spent on R&D, indicating a significant investment in innovation.

ESG Ratings and Certifications #

• Certifications like ISO 14001 and ISO 45001 for over 90% of plants indicate a commitment to environmental and occupational health & safety management systems.
• Great Place To Work Top 30.

Regulatory Compliance and Future Preparations #

• Compliance Framework: A comprehensive framework ensures adherence to all relevant laws, regulations, and statutory obligations, supported by a dedicated compliance team.
• Risk Assessment Matrix: includes a risk assessment matrix that is designed to identify and manage ESG risks, recognizing their potentially significant impact on our business model, value drivers, and financial performance.
• Regulatory Adherence: Prompt disclosures and compliance with regulatory requirements are maintained, including Companies Act 2013, SEBI Regulations, and Secretarial Standards.
• Data Privacy: No complaints were received regarding data breaches or privacy concerns in FY 2023-24, with measures such as Next-Gen Firewall and EDR Antivirus in place.

Segment-Wise Financial Analysis: Uno Minda Limited #

Switching Systems #

Management Guidance and Assumptions #

Management assumes continued growth in the switching business, driven by smarter switches and increased exports in the 2W segment.

Market Growth Forecasts #

Market share of over 50% in both 2Ws and 4Ws.

Planned Strategic Initiatives #

Consolidation of plant setup in the North region at Farukhnagar, Haryana.

Capital Expenditure Plans #

Commissioning of lines for the 4W switch plant in Chennai. Investment in 4W Switch Plant at Farukhnagar.

Efficiency Improvement Targets #

Maximize kit value.

Potential Challenges and Opportunities #

The main opportunity is the growth in the global market.

Scenario Analysis/Sensitivity #

Increased adoption of CAN-based switches in the American 2W OEM market presents a potential growth scenario.

Lighting Business #

Management Guidance and Assumptions #

Management expects the lighting division to be a key revenue driver and aims to become a top player, banking on value addition and market share expansion.

Market Growth Forecasts #

Growth is implied through secured incremental orders. LED adoption, particularly in the 2W segment, is driving growth.

Planned Strategic Initiatives #

Focus on cutting-edge technologies like logo projectors and illumination. Strategic expansion plans in Pune to meet growing demand.

Capital Expenditure Plans #

Commissioned a new 4W lighting plant in Gujarat. Expansion plans in Pune.

Efficiency Improvement Targets #

Focused on value addition, kit value expansion and market share expansion.

Potential Challenges and Opportunities #

Opportunities consist of becoming top layer in the lighting business, continued growth and innovative strides, with the commissioning of a new 4W lighting plant in Gujarat, manufacturing of India’s first indigenous 4-feet-long tail lamp, technological advancements in tail lamps surpassing headlamps in terms of kit value.

Scenario Analysis/Sensitivity #

The analysis is sensitive to the successful ramp-up of the new 4W lighting plant and securing further incremental orders.

Casting Business (Alloy Wheels) #

Management Guidance and Assumptions #

Alloy wheel penetration is expected to keep increasing. The assumption is of sustained strong OEM demand.

Market Growth Forecasts #

Alloy wheel penetration reached 45% in FY 2023-24.

Planned Strategic Initiatives #

Aggressive capacity expansion in PV alloy wheels.

Capital Expenditure Plans #

Expansion of 60,000 wheels in the Bawal plant. Greenfield plant with 120,000 wheels/month capacity at IMT Kharkhoda, Haryana (phased over 5 years, Phase 1 in Q2 FY 2025-26). Expansion of 2W alloy wheel capacity at Supa plant by 2 million wheels per annum.

Efficiency Improvement Targets #

Reaching capacity to 7.5-8 million units yearly for 2W alloy wheels.

Potential Challenges and Opportunities #

Opportunities consist of growth and expansion in production of 30,000 lines in Gujarat and 60,000 lines in Bawal, Haryana and supply to PV OEMS.

Scenario Analysis/Sensitivity #

Sensitivity lies in the timely execution of the 5-year phased plan and the necessary land acquisition approvals.

Acoustic Business #

Management Guidance and Assumptions #

Stable growth is expected in both the Indian market and the European subsidiary.

Market Growth Forecasts #

Higher adoption of electronics horns is a key driver to watch for

Planned Strategic Initiatives #

The Company is focus on adoption of electronic horns in India.

Potential Challenges and Opportunities #

Opportunities consist of stable growth in the indian market and the European subsidiary.

Scenario Analysis/Sensitivity #

The analysis is sensitive to the adoption rate of electronic horns in the Indian market.

Seating Business #

Management Guidance and Assumptions #

Management expects to reach targeted revenues of ₹1,500 Crores ahead of schedule.

Market Growth Forecasts #

Growth is driven by comfort and safety mandates in CVs, resulting in increased demand for advanced seating solutions.

Planned Strategic Initiatives #

Strategic customer diversification and partnerships (JV with TACHI-S).

Potential Challenges and Opportunities #

Opportunities exist in growth and expansion of new partnerships.

Scenario Analysis/Sensitivity #

The analysis is highly sensitive to the success of customer diversification and the partnership with TACHI-S.

Other Products Business #

Management Guidance and Assumptions #

This segment is fueled by escalating demand for EV products, controllers, sensors, and ADAS.

Market Growth Forecasts #

The segment is driven by a rising demand for EV products.

Planned Strategic Initiatives #

Localisation of wireless chargers. Building capabilities for high voltage EV-specific components. TLA with StarCharge and Inovance Automotive.

Capital Expenditure Plans #

Greenfield plant under JV with FRIWO AG.

Potential Challenges and Opportunities #

Opportunities exist in securing large orders of BEVs and ICEs, EV components for two and three wheelers.

Scenario Analysis/Sensitivity #

The analysis is highly sensitive to securing large orders from OEMs for EV and ICE vehicles and to successfully completing the Phase 1 of the EV components plant.

Aftermarket Business #

Management Guidance and Assumptions #

The division emphasizes delivering high-quality aftermarket products and a robust distribution network.

Market Growth Forecasts #

Growth is implied through strategic investments and proactive market strategies.

Planned Strategic Initiatives #

Introduction of new products, expanding distribution networks, creating awareness about genuine parts, and prioritizing customer satisfaction.

Potential Challenges and Opportunities #

Opportunities consist of strategic investments, proactive market strategies.

Scenario Analysis/Sensitivity #

The analysis is sensitive to the successful introduction of new products and the expansion of the distribution network.