Igarashi Motors India Limited - NSE

GICS Industry : Machinery l Sub Industry : Industrial Machinery l Website : www.jp-igarashi.com
Igarashi Motors India Limited
Key Stock Indicators
NSE Ticker : IGARASHI
Bloomberg Ticker : IGM:IN
Face value / Share: 10.0
Div. Yield (%): 0.0
CMP (as on 13 Apr 2011—Rs/share): 64.4
52-week range up to 13 Apr 2011 (Rs)(H/L): 99.7/43.4
Market Cap as on 13 Apr 2011 (Rs mn): 893
Enterprise Value as on 13 Apr 2011 (Rs mn): 1,566
Div. Yield (%): 0.0
Shares outstanding (mn) : 13.9
Free Float (%) : 37.0
Average daily volumes (12 months) : 27,923
Beta (2 year) : 1.2
Igarashi Motors India Limited (IMIL) was established in 1993 as CG Igarashi Motors Ltd, a joint
venture between Crompton Greaves Ltd (CGL), Igarashi Electric Works (IEW), Japan and Igarashi
Electric Works (H.K) Limited, Hong Kong. IMIL is engaged in development, production and sale of
small, permanent magnet DC motors and gear motors with accessory mainly for the automotive
sector. The company also provides assembly services like end cap /case / armature.
KEY HIGHLIGHTS
Strong parent support
Igarashi Electric Works Ltd., Japan, IMIL’s parent company has an international presence with sales
offices, manufacturing facilities, and distribution centers worldwide. The company has sales offices
located in Japan, USA, Germany and Hong Kong. It also has manufacturing facilities spread across
geographies in Japan, India and China. During FY10, IMIL’s 45% revenue came from USA, 17% from
Europe and 38% from Asia.
Substantial stake acquired by Agile Electric Drives Technologies and Holdings Private Limited
(Agile)
Agile has executed a share purchase agreement on December 6, 2010 with IEW the promoter
company of the IMIL for the acquisition from IEW of 48,56,034 Equity Shares of Rs.10/- each fully
paid up, constituting 35% of the present issued, subscribed and paid-up share capital of IMIL at a
price of Rs. 60.74 each. Further, through open offer Agile has acquired 27.9% stake in the company.
Agile’s total stake in IMIL as on March 2011 stands at 62.9%. Agile was incorporated in 2003 at
Chennai; it is engaged in the business of manufacturing of motor sub-assembly and precision
components, and provides motor technology.
Key Financial Indicators
Mar-08 Mar-09 Mar-10
Revenue (Rs mn) 2,785.0 2,616.4 1,611.2
EBITDA margins (%) 1.1 -3.0 12.3
PAT (Rs mn) 96.3 -602.9 27.3
PAT margins(%) 3.5 -23.0 1.7
Gearing (x) 1.9 5.7 3.5
EPS (Rs/share) 6.9 -43.5 2.0
PE (x) 7.6 n.m 32.7
P/BV (x) 0.9 0.8 3.8
RoCE (%) 12.0 n.m 10.7
RoE (%) 12.7 n.m 12.8
EV/EBITDA (x) 62.1 n.m
n.m. : Not meaningful
7.9
Shareholding (As on March 31, 2011)
Others
37%
Established joint venture with Bosch
IMIL and Robert Bosch GmbH have established a joint venture in February 2008 for developing,
manufacturing and selling DC motors and systems for wiper, Heating, Ventilating, and Air
Conditioning (HVAC), engine cooling and window lift applications for the Indian automotive market.
The joint venture is headquartered in Chennai, India, with a 51% shareholding of Bosch in the joint
venture and 49% of IMIL. During FY10, the company invested an additional amount of Rs.19 million
in the Joint Venture with Bosch Electrical Drives India Private Limited.
KEY RISKS
• Dependency on performance of auto industry
• Fluctuation in foreign exchange as exports contributed ~77% of FY10 revenue. The
Promoter
63%
Indexed price chart
company also imports ~89% of raw material consumption
• Volatile prices of ferrous and Non-ferrous raw materials
Stock Performances vis-à-vis market
Returns (%)
YTD 1-m 3-m 12-m
IGARASHI 40 -3 -11 17
NIFTY 12 7 3 11
(index)
200
180
160
140
120
100
80
60
40
20
0
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
('000)
700
600
500
400
300
200
100
0
Note:
1) YTD returns are since Apr 01, 2010 to Apr 13, 2011.
2) 1-m, 3-m and 12-m returns are up to Apr 13, 2011.
Volumes (RHS) IGARASHI NIFTY
CRISIL COMPANY REPORT | 1

Igarashi Motors India Limited
BACKGROUND
IMIL was promoted as a joint venture between Crompton Greaves Ltd (CGL), Igarashi Electric Works (IEW), Japan and Igarashi Electric Works (H.K) Limited, Hong Kong.
During 2003, CGL divested its holding in favour of IEW following which the company changed its name to present one. IMIL is engaged in the business of assembling DC
motors and actuation system for various automotive and non automotive applications and manufacturing sub assemblies that go into a DC motor. The company has its
manufacturing plant in Chennai , India. The company has an installed capacity to produce 9 million numbers of electric micro motors as on March 2010. During FY10, the
company produced 7,854,211 numbers of electric micro motors as against 6,677,856 produced in FY09. During FY10, the company earned ~77% of its revenue from exports
and ~23% from domestic sales.The company’s subsidiaries include Igarashi Electric Works (H K) Ltd, Igarashi Motor Sales LLC, Igarashi Motoren GMBH, and Agile Electric
Drives Technologies and Holdings Pvt Ltd. The company’s associate companies include IJT Plastics & Tools Pvt. Ltd., Agile Electric Sub Assembly Pvt. Ltd. and Agile Electric
Technologies Pvt. Ltd. As on 31st March, 2010 the company employed 396 employees. Recently the company has been nominated as a Lead Supplier for an Igarashi ETC
Motor for the Global USCAR platforms which will be a growth driver for the future with several existing and New Tier One customers across several car platforms.
COMPETITIVE POSITION
Peer Comparison
Particulars
Igarashi Motors
India Limited KEI Industries Ltd.
Lloyd Electric &
Engineering Ltd
Transformers & Rectifiers
(india) Ltd
PeriodEndsOn Mar-10 Mar-10 Mar-10 Mar-10
Revenue (Rs mn) 1,611.2 9,096.8 8,187.1 5,230.3
EBITDA margins (%) 12.3 6.9 10.0 16.6
PAT (Rs mn) 27.3 142.3 338.1 520.8
PAT margins(%) 1.7 1.6 4.1 10.0
Gearing (x) 3.5 1.7 0.7 0.4
EPS (Rs/share) 2.0 2.2 10.9 40.3
PE (x) 32.7 11.3 6.0 6.9
P/BV (x) 3.8 0.7 0.5 1.2
RoCE (%) 10.7 10.3 9.9 24.1
RoE (%) 12.8 6.8 9.1 19.1
EV/EBITDA (x) 7.9 7.9 5.3 3.4
n.m: Not meaningful
FINANCIAL PROFILE
Higher operating profit brought company into black in FY10
Top line for IMIL has continued to show a downward trend in the last 2 years. For
FY10, the revenue dropped by ~38 % to Rs. 1.6 billion in FY10 as against Rs. 2.6
billion in FY09. Decrease in revenue was on account of slowdown in global
automotive industry as a result of the 2008 recession. The company earns majority
of its revenue from exports; out of which more than 60% came from USA and Europe
where the impact of slowdown was rampant.
Higher margins on trading business and better control over inventory cost has
improved EBITDA margins to 12.3% in FY10.
PAT turned positive to Rs. 27.3 million in FY10 from a net loss of Rs. 602.9 million
reported in FY09. This was due to better operational performance coupled with
lower interest and depreciation cost. The company reported higher net loss in FY09
because of Rs. 415.10 million of foreign exchange losses.
Key Financial Indicators
Units Mar-08 Mar-09 Mar-10
Revenue Rs million 2,785.0 2,616.4 1,611.2
EBITDA margins Per cent 1.1 -3.0 12.3
PAT Rs million 96.3 -602.9 27.3
PAT margins Per cent 3.5 -23.0 1.7
Revenue growth Per cent 11.1 -6.1 -38.4
EBITDA growth Per cent -78.9 n.m n.m
PAT growth Per cent 58.5 n.m n.m
Gearing Times 1.9 5.7 3.5
RoCE Per cent 12.0 n.m 10.7
RoE Per cent 12.7 n.m 12.8
INDUSTRY PROFILE
Auto Component
The auto components industry production, in India, is estimated at around Rs 1212 billion in 2009-10. The industry has been reducing its dependence on the domestic
automobile industry over the long term; it also continues to maintain its ability of being cost-competitive and technically proficient in niche segments. These factors along
with foray of Indian auto component players in the international markets through acquistions have enhanced the industry`s popularity among international original
equipment manufacturers (OEMs) in terms of their outsourcing needs. Currently, domestic OEMs account for around 67% of the total auto component production off take,
whereas the replacement and export segments account for around 21% and 12%, respectively. The industry is largely fragmented with over 558 players operating in the
organised segment and many unorganised players catering to the replacement demand. However, with auto OEMs adopting vendor rationalisation, proportion of the
organised segment is likely to increase over the long term. In the long term, exports are expected to grow at a faster pace as global OEMs are expected to implement cost
rationalisation strategies by increasing their sourcing from low cost regions. The bargaining power of players is moderate with OEM's and has been historically high in the
replacement market. The technological edge of a particular auto component segment determines the bargaining power of its players. Further, players with higher
exposure to replacement segment are able to have better margins given higher bargainning power in the segment. However, increasing competition from imports is
impacting the ability to pass on input cost increases in replacement market as well.
CRISIL COMPANY REPORT | 2

Igarashi Motors India Limited
ANNUAL RESULTS
Income Statement
Balance sheet
(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10
Net Sales 2,740.2 2,578.1 1,587.1 Equity share capital 138.7 138.7 138.7
Operating Income 2,785.0 2,616.4 1,611.2 Reserves and surplus 660.8 55.1 93.3
Tangible net worth 799.6 193.9 232.0
EBITDA 31.3 -77.8 198.3 Deferred tax liablity:|asset| 67.5 82.3 92.7
EBITDA Margin 1.1 -3.0 12.3 Long-term debt 323.7 476.0 553.5
Short-term-debt 992.3 535.2 149.2
Depreciation 106.1 83.5 64.8 Total debt 1,316.1 1,011.2 702.7
Interest 133.6 569.6 96.8 Current liabilities 704.7 465.6 505.4
Other Income 44.8 144.1 0.9 Total provisions 75.2 9.0 8.1
Total liabilities 2,963.1 1,762.0 1,540.9
PBT 123.4 -586.8 37.6 Gross block 1,143.7 1,133.1 1,165.0
PAT 96.3 -602.9 27.3 Net fixed assets 1,000.0 876.2 835.2
Investments 134.1 124.3 143.3
PAT Margin 3.5 -23.0 1.7 Current assets 1,829.0 761.5 562.5
Receivables 666.0 323.2 227.1
No. of shares (Mn No.) 13.9 13.9 13.9 Inventories 332.8 159.1 136.5
Cash 101.1 40.8 29.9
Earnings per share (EPS) 6.9 -43.5 2.0 Total assets 2,963.1 1,762.0 1,541.0
Cash flow
Ratio
(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10
Pre-tax profit -163.5 -586.8 37.6 Revenue growth (%) 11.1 -6.1 -38.4
Total tax paid -34.0 -1.3 0.0 EBITDA growth(%) -78.9 n.m n.m
Depreciation 106.1 83.5 64.8 PAT growth(%) 58.5 n.m n.m
Change in working capital -443.7 702.0 227.0
EBITDA margins(%) 1.1 -3.0 12.3
Cash flow from operating activities -535.1 197.4 329.4 Tax rate (%) 27.5 n.m 0.0
Capital Expenditure -118.1 37.4 -12.9 PAT margins (%) 3.5 -23.0 1.7
Investments and others -60.8 9.8 -19.0
Dividend payout (%) 21.6 0.0 0.0
Dividend per share (Rs) 1.5 0.0 0.0
Cash flow from investing activities -178.9 47.2 -31.9 BV (Rs) 57.6 14.0 16.7
Equity raised/(repaid) 0.0 0.0 0.0 Return on Equity (%) 12.7 n.m 12.8
Debt raised/(repaid) 453.9 -304.9 -308.5 Return on capital employed (%) 12.0 n.m 10.7
Dividend (incl. tax) -24.3 0.0 0.0
Others (incl extraordinaries) 287.0 0.0 0.0 Gearing (x) 1.9 5.7 3.5
Interest coverage (x) 0.2 n.m 2.0
Debt/EBITDA (x) 42.1 n.m 3.5
Cash flow from financing activities 716.6 -304.9 -308.5
Change in cash position 2.6 -60.3 -11.0 Asset turnover (x) 2.4 2.3 1.4
Opening cash 98.6 101.1 40.8 Current ratio (x) 1.0 0.8 0.9
Closing cash 101.1 40.8 29.9 Gross current assets (days) 156 106 127
n.m : Not meaningful;
QUARTERLY RESULTS
Profit and loss account
(Rs million) Dec-10 % of Rev Dec-09 % of Rev Sep-10 % of Rev Dec-10 % of Rev Dec-09 % of Rev
No of Months 3 3 3 9 9
Revenue 527.8 100.0 450.8 100.0 460.8 100.0 1,451.9 100.0 1,155.2 100.0
EBITDA 76.4 14.5 59.7 13.2 69.1 15.0 208.3 14.3 103.8 9.0
Interest 26.6 5.0 21.8 4.8 25.2 5.5 73.6 5.1 69.8 6.0
Depreciation 25.8 4.9 16.3 3.6 30.8 6.7 78.7 5.4 48.7 4.2
PBT 24.1 4.6 21.6 4.8 13.1 2.8 55.9 3.9 (14.7) (1.3)
PAT 26.3 5.0 21.3 4.7 17.1 3.7 64.1 4.4 (15.7) (1.4)
CRISIL COMPANY REPORT | 3

Igarashi Motors India Limited
FOCUS CHARTS & TABLES
Rs mn
1,200
1,000
800
600
400
200
0
Quarterly sales & y-o-y growth
Per cent
80
60
40
20
0
-20
-40
-60
-80
Rs mn
200
150
100
50
0
-50
-100
-150
-200
-250
Quarterly PAT & y-o-y growth
Per cent
1,000
0
-1,000
-2,000
-3,000
-4,000
-5,000
-6,000
-7,000
-8,000
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Sales
Sales growth y-o-y (RHS)
Net Profit
Net profit growth y-o-y (RHS)
Rs/share
5
0
-5
-10
-15
-20
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
EPS
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Per cent
30
20
10
0
-10
-20
-30
-40
-50
-60
-70
Jun-08
Movement in operating and net margins
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
OPM
NPM
Dec-10
Shareholding Pattern (Per cent)
Jun 2010 Sep 2010 Dec 2010 Mar 2011
Promoter 60.0 60.0 60.0 62.9
FII - - 0.3 -
DII - - - -
Others 40.0 40.0 39.7 37.1
Board of Directors
Director Name
Kewal Krishan Nohria (Dr.)
Mukund Padbhanabhan (Mr.)
Chandra Prakash Dusad (Mr.)
Kazuharu Igarashi (Mr.)
Keiichi Igarashi (Mr.)
Tadaharu Igarashi (Mr.)
Gopalasamudram Narayana
Mani (Mr.)
Designation
Non-Executive Chairman
Managing Director
Non-Executive Director
Promoter-Director
Promoter-Director
Promoter-Director
Non-Executive Director
Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).
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CRISIL COMPANY REPORT | 4