Rationale

The reaffirmation of ratings factors in JTEKT India Limited's (JIL) leading position as a supplier of steering systems to passenger vehicle (PV) Original Equipment Manufacturers (OEMs) in India, its healthy financial risk profile characterised by low leverage and healthy cash accruals as well as operational and technical support enjoyed by it from its parent company, JTEKT Corporation (JTEKT), Japan. JIL enjoys a leading position in the steering system segment in India with a strong presence in manual steering gears (MSG), electronic power steering (EPS) and hydraulic power steering systems (HPS). Besides the steering systems division, the company has a driveline division for manufacturing axle assemblies, case differentials and propellant shafts, resulting in a diversified product profile for the entity. The company has also developed a new product, Constant Velocity Joints (CVJ), to expand its driveline division, which would support its revenue growth over the medium term, besides aiding in further diversification of its product portfolio. JIL continues to maintain a healthy share of business (SoB) with some of the leading PV OEMs in India, including Maruti Suzuki India Limited (MSIL), Mahindra & Mahindra Limited (M&M), Honda Cars India Limited (HCIL) and Toyota Kirloskar Motor Private Limited (TKML), which provides healthy revenue visibility. The ratings continue to factor in the marketing support and technical support received by JIL from JTEKT, a leading global manufacturer of steering systems and driveline products. In addition, its strong parentage lends the company healthy financial flexibility, in terms of access to unsecured debt from Japanese banks (backed by corporate guarantee from the parent entity). ICRA notes that despite the impact of the second pandemic wave in May 2022 and semiconductor chip shortages during the year, the company reported a healthy revenue growth of ~29.7% to Rs. 1,118.8 crore in 9M FY2022, aided by a low base and pick up in demand. Although its operating profit margin has been impacted by the raw material price hardening and other inflationary pressures over the past few quarters, it continues to remain comfortable aided by the management's cost control initiatives over the past two years. JIL continues to maintain a healthy financial risk profile, aided by healthy cash accruals, low debt repayments and moderate capex plans. JIL incurred a capex of ~Rs. 120 crore during FY2022, which primarily included capex for setting up manufacturing Rationale The reaffirmation of ratings factors in JTEKT India Limited's (JIL) leading position as a supplier of steering systems to passenger vehicle (PV) Original Equipment Manufacturers (OEMs) in India, its healthy financial risk profile characterised by low leverage and healthy cash accruals as well as operational and technical support enjoyed by it from its parent company, JTEKT Corporation (JTEKT), Japan. JIL enjoys a leading position in the steering system segment in India with a strong presence in manual steering gears (MSG), electronic power steering (EPS) and hydraulic power steering systems (HPS). Besides the steering systems division, the company has a driveline division for manufacturing axle assemblies, case differentials and propellant shafts, resulting in a diversified product profile for the entity. The company has also developed a new product, Constant Velocity Joints (CVJ), to expand its driveline division, which would support its revenue growth over the medium term, besides aiding in further diversification of its product portfolio. JIL continues to maintain a healthy share of business (SoB) with some of the leading PV OEMs in India, including Maruti Suzuki India Limited (MSIL), Mahindra & Mahindra Limited (M&M), Honda Cars India Limited (HCIL) and Toyota Kirloskar Motor Private Limited (TKML), which provides healthy revenue visibility. The ratings continue to factor in the marketing support and technical support received by JIL from JTEKT, a leading global manufacturer of steering systems and driveline products. In addition, its strong parentage lends the company healthy financial flexibility, in terms of access to unsecured debt from Japanese banks (backed by corporate guarantee from the parent entity). ICRA notes that despite the impact of the second pandemic wave in May 2022 and semiconductor chip shortages during the year, the company reported a healthy revenue growth of ~29.7% to Rs. 1,118.8 crore in 9M FY2022, aided by a low base and pick up in demand. Although its operating profit margin has been impacted by the raw material price hardening and other inflationary pressures over the past few quarters, it continues to remain comfortable aided by the management's cost control initiatives over the past two years. JIL continues to maintain a healthy financial risk profile, aided by healthy cash accruals, low debt repayments and moderate capex plans. JIL incurred a capex of ~Rs. 120 crore during FY2022, which primarily included capex for setting up manufacturing.