JTEKT India

JTEKT India reported a 7% sales growth for FY25, outperforming the passenger vehicle market's 3.7% growth. However, EBITDA margins saw a significant decline from 9.5% in FY24 to 7.6% in FY25. This compression was attributed to several external and one-off^📎 factors, including a 0.6% margin reduction from decreased export sales, a 0.3% impact from product recalls affecting 2,500 units, and a 0.4% impact from increased process costs and vendor price adjustments. Employee costs as a percentage of sales also rose slightly to 10.4% from 10.1% in the prior year, while administration costs were contained at Rs. 455 million, down from Rs. 494 million.

The company incurred a CAPEX of Rs. 287 crores in FY25, with Rs. 191 crore dedicated to new capacity. Looking ahead, JTEKT India plans a total CAPEX of Rs. 760 crores over the next three years (FY25-FY27), of which Rs. 430 crores will be for capacity expansion. This includes increasing CPS production capacity from 10 lakh to 15 lakh units and manual gear capacity from 24 lakh to 29 lakh units at Dharuhera, ultimately targeting 36 lakh units total. A new CVJ line, requiring Rs. 90-100 crores, is expected to be operational by July 2025. The Gujarat facility, near the Suzuki plant, is projected to cost around Rs. 650 crores and will start operations by FY27-28.

JTEKT India is actively expanding its Constant Velocity Joint (CVJ) business, currently holding about 5% market share. The company aims to increase this to 7.5-10% within the next year or so. Current CVJ capacity utilization stands at 65-70%, with 2.7 lakh units sold and 1.35 lakh sets of CVJ in FY25. Management expects utilization to improve significantly with new model integrations and export orders. The company is a 100% supplier for Maruti Suzuki's upcoming EV model, providing manual gear, CPS, and CVJ components, with lines ready for production expected to commence exports by July.

JTEKT Corp's global restructuring emphasizes strengthening Indian sites, positioning India as a global manufacturing hub. JTEKT India secured an export order for manual gear from JTEKT Brazil, a group entity. While export sales share declined to 2.4% in FY25, management aims to increase this to 4-6% in the future, driven by strong supply chain management and demand for global models manufactured in India. The new Gujarat facility is also expected to support this export-oriented strategy, particularly for the western region.

Despite the margin pressures in FY25, management is confident in improving profitability. They highlighted containing administration costs at Rs. 455 million and expect employee costs to reduce next year through optimization plans. Initiatives include localization of components like the drive shaft XL for CVJ, production rationalization by shifting jacket assembly to the Bawal plant, and continuous cost optimization involving vendors. The company also noted that new CVJ products for bigger vehicles are expected to have better margins due to different technology and pricing.