Detailed Narrative
Q4 & FY24 Financial Performance Overview
JTEKT India delivered a strong financial performance in Q4 FY24, with sales reaching ₹632.1 crores, a 19% increase year-over-year. For the full fiscal year 2023-24, sales grew by 10% to ₹2,245.5 crores, outperforming the PV segment market growth of 7%. The company also achieved consistent improvement in EBITDA margins, touching 11% in Q4 FY24 (up from 9.4% YoY) and 9.5% for the full year (up from 9.1% in FY23), reflecting effective cost control and management efforts.
Strategic Capacity Expansion Initiatives
To meet growing demand, JTEKT India has announced significant capacity expansions. This includes setting up two additional lines for MS Gear, increasing capacity by 8 lac units, and doubling CVJ capacity by 4 lac units. Furthermore, the company is expanding its third CPS line from 10 lakh to 15 lakh units and the sixth manual gear line from 23 lakh to 27.5 lakh units. These expansions are backed by a planned capital expenditure of over ₹120 crores in the current financial year.
Export Growth and New Order Wins
Exports are a key growth driver, with the company securing a final purchase order from JTEKT Brazil for 1.14 lakh units of steering components, valued at over ₹180 crores, with SOP slated for 2025-26. This is expected to increase the share of export sales from the current 4% to approximately 6%. Existing US customers, E-Z-GO and Club Car, also showed robust growth, with exports increasing by 18% to ₹56.1 crores and 19% to ₹27.4 crores, respectively, in FY24.
EBITDA Margin Sustainability and Cost Management
Management emphasized the sustainability of improved EBITDA margins, attributing it to benefits from the recently completed merger, better price negotiations, export expansion, and localization of critical components. Employee costs have been reduced to 10.1% from 13.4% in FY20 through rationalization and digitization, alongside strict control over administrative expenses, all contributing to margin enhancement.
Resolution of Old Receivables and Internal Controls
The company addressed a write-off of ₹7.7 crores in Q4 FY24, stemming from very old (dating back to 2011), unreconciled receivable entries related to OEM deductions not previously accounted for. A forensic audit by KG Somani & Company confirmed the nature of these entries, which were deemed immaterial relative to the FY24 PBT of ₹145 crores. Management has implemented recommendations for additional internal financial controls to prevent future recurrences.
Merger Benefits and Future Synergies
The amalgamation of JTEKT Fuji Kiko Automotive India Limited with JTEKT India Limited, approved in December 2023, is expected to unlock significant synergies. As both entities are part of the same value chain for Electric Power Steering (CEPS), the merger is anticipated to create opportunities for production and cost rationalization, enhancing the company's competitiveness in the market and contributing to sustained margin improvements.
Product Strategy and Content Per Car
JTEKT India is strategically increasing its content per car, particularly with CVJ (Constant Velocity Joints). While a complete driveline system is not supplied, the company provides CVJ sets at a current price of ₹5,600 per car, with potential to increase to ₹7,500 with improved technology. This represents a significant opportunity to increase content per car by as much as 50% compared to CPS (Electric Power Steering) at ₹12,000, with aspirations to grow market share from the current 5% by doubling capacity.