Board of Directors' Message

Amid the evolving market dynamics and uncertainties, INGRS quickly implemented accelerated staff and supplier chain protection, cash preservation and cost containment actions to address the new demanding environment.

THE BOARD OF DIRECTORS

Ingress Industrial (Thailand) Public Company Limited.

DEAR ALL SHAREHOLDER

Throughout 2020 and 2021, the world has been confronted with a major health crisis profoundly impacting the global economy. The pandemic has affected everyone across the globe, not least the healthcare workers and all the front liners who are risking their lives at the forefront fighting this COVID-19 outbreak. This prolonged crisis has led to the last year being the second successive year of unusual uncertainties. The Covid-19 pandemic, with its various strains like the virulent Delta and highly transmissible Omicron, has not only affected the health of the populace, but also the economic vitality and social stability.

The Governments have taken all necessary measures to contain the further spread of the virus. These include massive vaccination drive for the whole population as well as gazetting relevant healthcare related acts to empower the authorities to implement necessary standard operating procedures to curb the spread of the virus such as social distancing and movements restriction orders. Furthermore, to ensure its citizens are protected, a worldwide vaccination drive has been on-going and proceeding at a rapid pace. Based on the latest statistics given out by the World Health Organisation (“WHO”), the countries in which INGRS have operations recorded vaccination levels (based on the whole population) of 84% for Malaysia, Thailand 79% with Indonesia and India at 71% each. At the same time, various short and long term economic stimuli have been introduced by the Governments to revive the economy. Despite this, however, the economic recoveries are expected to be gradual and it will take time for the economy to fully recover to the pre-pandemic levels. INGRS hopes the vaccination program together with the various economic measures taken will contribute and lead to a faster social and economic recovery.

As part of our overall efforts to reduce the risk of workplace infections, INGRS has taken on board the recommendations by the Governments and implemented the Work From Home (WFH) working procedures for non-essential personnel. However, for those personnel still required to be present on-site, the Management have reinforced the workplace standard working procedures, as recommended by the local health authorities, to ensure the safety of our workers, customers and suppliers. We have implemented physical distancing in business operations, rotation shifts, changed seating arrangements, barred non-essential visitors from entering the company’s premises as well as provided additional essential equipment where possible. We have also undertaken nightly and daily sanitization of all our premises and manufacturing plants within the Group to ensure they are safe to remain open.

The new wave of Covid-19 variants, the Delta and Omicron in 2021, has disrupted the economic activities and severely impacted our operations. This has led to the decline in sales revenue for FY2021/22 to Baht 2,689.3 million compared to Baht 3,225.3 million budget. INGRS registered FY2021/22 Loss After Tax (LAT) of Baht 295.3 million in comparison to Loss After Tax (LAT) of Baht 259.9 million, the previous year, mainly due to lower revenue recorded by all INGRS operations.

However, going forward, the overall economic conditions are showing signs of recovery and improvement. The World Bank statistics showed a rebound in the global Gross Domestic Product (GDP) of 5.5% in 2021. The GDPs for Thailand, Malaysia and Indonesia rebounded to 1.9%, 3.6% and 5.0%, respectively, whilst the GDP for India declined to 5.4%. Improvement of the GDP are mainly contributed by higher domestic and external demand for goods and services, easing of containment measures to control Covid-19 spreads, increased in export and various stimulus measures causing recovery of various economic activities in both productions of goods and services.

BUSINESS UPDATES

In 2021, the new COVID-19 variants outbreak was not the only crisis that the Global World encountered. A notable deceleration in major economies, including the United States and China, was expected to negatively impact on external demands in emerging and developing economies. This was exacerbated by the Global crisis in energy, such as rising of oil prices and coal, as well as the persistent shortage of microchips have led to supply-chain bottlenecks and affected the overall automotive industry performance. Together with inflationary pressures, car manufacturers were unable to produce vehicles to meet the demands. As a result, the auto-part order volumes from the car makers have sharply declined as compared to the initial targets set by the INGRS Group.

Despite this, the overall automotive performances indicators in INGRS operating countries have shown an encouraging trend. Thailand recorded Total Industry Production (TIP) at 1.7 million units (+18.1%), but Total Industry Volume (TIV) dropped by 0.8 million units (- 4.2%), whilst the Malaysian TIP and TIV dropped to 0.5 million units (-0.7 %) and 0.5 million units (-3.9%), respectively. Whilst Indonesia and India’s TIP increased to 1.1 million units (+62.6 %) and 4.4 million units (+29.2%) and TIV increased to 0.9 million units (+66.8%) and 4.4 million units (30.6%), respectively.

Towards addressing this critical situation, INGRS’ Management has continued the implementation of a 2-year “Transformation Strategy” to ensure our survivability through the COVID-19 pandemic and beyond whilst, at the same time, looking into the potentials of focusing and investing in promising “Growth Engines” especially in Thailand and within the ASEAN region. Fortunately for INGRS, we are delighted to report on two (2) exciting “Growth Engines” projects in the pipeline for Malaysia and Indonesia which successfully commenced Mass Productions at the beginning of 2022. In Malaysia, the project is spearheaded by our new Joint Venture company (JV Co) - Ingress AOI Technologies Sdn. Bhd. (IATSB). In Indonesia, the Hyundai Project involves all three of our Indonesian subsidiaries, namely, PT Ingress Malindo Ventures (PT IMV), PT Ingress Industrial Indonesia (PT III) and PT Ingress Technologies Indonesia (PT ITI).

IATSB is a collaboration between our subsidiary, Ingress Technologies Sdn. Bhd. (“ITSB”) , INGRS subsidiary for medium stamping in Malaysia with Perodua (a leading OEM in Malaysia and one of INGRS main customers) and D-ACT Co. Ltd. (formerly known as AOI Machine Industry Co. Ltd) (a Daihatsu-owned company in Japan). IATSB’s fully completed modern and advanced manufacturing facility located next to Perodua’s manufacturing facility, shall be the model and at the forefront of “High Tensile” stamping and Assembly, providing strong and lightweight parts for “Energy Efficient Vehicle (EEV)” in Malaysia and the region. In 2021, IATSB has already commenced Mass Production supplying components for the Sports Utility Vehicle (SUV) utilizing the Daihatsu New Global Architecture (DNGA) platform and has secured Letter of Intents for the development of second and third DNGA models which are expected to be launched in 2022 and 2023, respectively.

In regards to our major expansion project in Indonesia, INGRS has commenced the mass production at PT Ingress Malindo Ventures (PT IMV), PT Ingress Industrial Indonesia (PT III) and PT Ingress Technologies Indonesia (PT ITI) in beginning of 2022 to supply door sash and stamping related parts for a new Hyundai’s SUV model to PT Hyundai Motors Manufacturing Indonesia (HMMI) and, subsequently, a new model expected in 2022.

We are also delighted to inform our Shareholders that our INGRS Indian operation, Ingress Autoventures (India) Private Limited (IAIPL), in addition to its existing Manesar plant (Gurugram), has expanded its operation to a new facility in Surendra Nagar-Gujarat, Gujarat about 3.3 km away from Suzuki Motors Gujarat (“SMG”) plant. The Gujarat plant has been operational from August 2021 for the supply of three (3) Suzuki’s PV models up to end of 2022.

BEYOND COVID-19

Despite some encouraging economic indicators and the on-going successful vaccination roll-out program across all nations, the World Bank has forecast that, in 2022, the global economy is projected to decelerate to 4.1%, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. The world Bank has also projected the 2022 GDPs for Thailand, Malaysia, Indonesia and India, all of which to expand by 3.9%, 5.8%, 5.2% and 8.3%, respectively.

Amid the evolving market dynamics and uncertainties, INGRS quickly implemented accelerated staff and supplier chain protection, cash preservation and cost containment actions to address the new demanding business environments. In appreciation of INGRS’ disciplined management process, INGRS continue to serve our customers in recovery even in the most challenging of conditions.

CONCLUSIONS

The COVID-19 pandemic has transformed the global economic landscape and brought to the foreground the importance of prioritizing the health of employees, supply chains and customers all of which are essential to the success of the business. The pandemic also highlighted our immense responsibilities and our direct actions do have far-reaching and lasting effects on the world. We at INGRS has never been prouder of our company’s ability to meet and endure this toughest of challenges.

Once again, INGRS would like to express our utmost gratitude and thanks to our more than 1,588 employees and families around the Region (12 companies in 4 countries). INGRS’ Management also would extend our most sincerest appreciations to our Shareholders, Board of Directors, our business partners and all our stakeholders for the co-operations and understandings shown by all parties as we work together amidst these most difficult of circumstances.