Dear Shareholders,

FY 2022-23 was definitely the first normal year in the last four. The last pages of FY 2019-20 to the first chapters of FY 2021-22 were profoundly affected by the Covid pandemic. Like in FY 2021-22, India did remarkably well economically; both standalone and relative to other Emerging Markets. The appreciation of India’s performance extends beyond the Virtuous Cycle we may be in economically to other important domains of geopolitics, international security, digital public goods, science, art and culture. Magnified by its immensely talented, successful, and vocal diaspora, the Image of India seems to be at a defining moment. There is an over abundance of commentary and analysis on this subject. Most of it is positive, some of it egregiously so. I find Akash Prakash’s assessment to be very balanced, thoughtful and accurate. He finds India to be an ‘oasis of growth and stability’. The numbers on Macro, CAD, Savings and Investment, financialisation of savings, Fiscal Policy, Twin Balance Sheets, Exchange Rate, corporate performance and confidence, earnings growth potential, all are at their best and superior to the beginning of the 2003-2008 period of record growth. There are many risks to this future gazing – climate change, competing populism, a war in Europe, border tensions, to name a few – but in balance it’s never been better or Luckier to be Indian. National pride is not a GDP related sentiment but as Swami Vivekananda said it’s hard to appreciate our wonderful culture, history, achievements on an empty belly. Poverty is a curse and India with its Democracy, Diversity, Demographics, and Development is poised to eradicate it forever. India with its Reform, Perform and Transform is ready to move from low middle income to its rightful place as a developed benevolent leader by FY 2047.

Numbers tell a story and I thought a comparison from when we started may tell a hope filled, inspiring and also humbling tale. From macro to micro my youthful, hype filled, delirious slogan of 40/40/40 which I made in 1987 needs a factual test (in 40 years India will increase its passenger vehicle production from 40 thousand to 40 million). Let’s see where we stand after 35 years:

*Optimistic Projections

** A leading Indian auto components company

#Investment valuation of both companies assume no reinvestments of dividends and non-participation in AIS’s Rights Issue

At glass half full, Company X reached escape velocity, India’s done very well and AIS rode its coattails, possibly slightly better than the average market. At half empty, China made us look ordinary, and the gap with the richest, most powerful country in the world is a bit narrower but a wide chasm nonetheless. With 5 years to go, 40 thousand to 4.4 million is amazing but it’s a long way from China’s 27 million or my dreamy 40 million.
But what of the future? The drivers of growth are several : volume, value, premiumisation, new products, adjacencies, systems instead of products, EV’s and technology shift with Connected, Autonomous, Shared, Electric. I agree with so many optimistic commentators- the horizon has rarely looked brighter. And the competition has never been as intense to seize this Opportunity of India.

So what of AIS’s plans?

Before that, a summary of our mixed year of FY 2022-23: The good news is it was a record year: highest turnover, highest EBIDTA, highest EPS. We had some other notable achievements, few of which are as below-
• AIS posted its highest ever consolidated revenue of ₹ 4,035.15 crores and EBIDTA of ₹ 811.24 crores.
• Commencement of work for our F3 plant
• Commencement of work for our Fire Rated Glass (FRG) plant
• Completion of Phase 2 expansion at our automotive glass plant at Patan
• Significant in-roads into automotive sunroof segment
• Nomination for Global Quality Award by Daimler AG
• IGBC Green Building Gold Certification for Patan plant
• Commencement of supplies to premium models like Lexus and Camry
• Commencement of exports of toolings to our partners AGC in Japan, US and Thailand
• Receipt of several prestigious awards for our digital ads

Our float business did very well. We rode the tailwind of strong prices probably better than most because of our strategy of value addition, operational excellence, committed and talented management, and customer loyalty. The float business posted a total revenue of ₹ 1,675.84 crores. Our auto business recoded its highest turnover but margins compressed significantly. We had huge input cost increases- many of them sudden and unplanned- which we could not fully recover through price increases. We also had internal cost increases beyond our very tight budgets as we struggled to respond to the sudden and fluctuating surge in demand post covid. We are confident of our very solid competitiveness and with some of the inflationary forces peaking, with internal improvements, and price recovery, we hope the margins will recover to their mean values. We continued to lose small amounts of money in our downstream architectural glass business comprising of Glass solutions, Glass Experts and AIS Windows. We firmly believe these are investments to be ready for the significant change in usage of glass that is already taking place in the commercial and retail markets in India. Currently by small shifts in consumer choice, and later by regulations and large-scale consumer preference, the shift towards safety, energy conservation, heat, noise and light control, aesthetics, and preference for branded solutions will fundamentally change the glass market. AIS will be experienced, well known, and ready for that.

Looking Ahead

It took us 7 Years (from FY 2008-09) to increase from ₹ 200 crores EBIDTA to ₹ 400 crores in (FY 2015-16) and another 6 years to reach ₹ 800 crores. (Note – 2 years lost due to COVID) We are lucky that India provides the opportunity to significantly improve this in the next 3/4 years. To catch that opportunity we have to work hard to make necessary investments, run our operations at world class levels, invest in technology, localisation, design and development, and deeply satisfy the SEQCDDM requirements of our esteemed customers. Keeping in mind the profile of our customers, we have to make the Quality of Japan at Cost of India. We have already announced our main investments. In the current year we will be spending the highest amount of capex at ₹ 1400 crores ever. Most of this and the subsequent years investments are in our third Float furnace in Rajasthan (F3), the modular and brownfield expansions in our auto glass business in Patan, Chennai and Bawal. The biggest ticket item is F3 which is 100% a vertical integration investment. We are taking the policy of Atmanirbhar Bharat very seriously as a responsibility and great opportunity. While F3 is designed for the highest quality as an input for making auto glass, it has the flexibility to make the best architectural glass too. With internal demand at more than 100% of its capacity, the risk of this largest investment in AIS history is extremely low. Because of our Value chain integration, the combined technology strength of AIS and AGC for this project, and our management capabilities in design, localisation and project execution, we believe this project will be highly competitive and value accretive right from the beginning. During the year, we lost our Chairman and my dear father Mr. B.M. Labroo, which is a deep personal loss to all of us at AIS We have a tribute to his contribution and everlasting spirit.

Mr. Satoshi Ogata went back to Japan after 5 years with AIS and on behalf of AIS team I express my gratitude to Mr. Ogata for his teachings and contributions to AIS Auto. I welcome Mr. Masao Fukami on Board during the year. I also welcome Ms. Nisheeta Labroo on AIS Board. AIS continues to remain committed to all ESG goals and strives to enhance the use of sustainable practices in all areas of operations across all plants – water consumption, ZLD, extensive use of renewable energy, reduction of emissions, reduction in use of plastics, using Miyawaki concept of afforestation and measurement and reduction of carbon footprints. AIS will continue to invest in knowledge, manpower resources and technologies to achieve to its ESG goals for itself and its supply chain. All our significant investments in this next capex cycle will be done judiciously with dynamic risk management on the ground and for financials. We will use debt and internal accruals well within very conservative norms of leverage, cash flow management, and managerial bandwidth. We may be Lucky to be Indian, we may have earned the right to invest and grow, but we are never going to be complacent or disrespectful towards any of the opportunities and extremely wary and watchful of our threats. On behalf of the Board, I would like to thank all our stakeholders, including our customers, employees, partners, suppliers, shareholders, policy makers and the communities around our various manufacturing facilities for their continued support to AIS in FY 2022-23. We continue to look forward for your support and encouragement in the coming years as well.

With Best Regards,

Sanjay Labroo

Chairman & Managing Director