Hyundai Motor I

Leveraging its deep understanding of consumer preferences to successfully expand its passenger vehicle portfolio.

Focus on continued premiumisation of its passenger vehicle portfolio.

Calibrated manufacturing capacity expansion and efficient capital allocation.

Focus on increasing EV market share.

Further strengthening its position as the export hub for HMC.

Continue to enhance its brand as a trusted brand in India.

Further deepen its physical-and digital network for sales and services across India.

The Company has been the second largest auto OEM since Fiscal 2009 in the Indian passenger vehicles market in terms of domestic sales volumes, according to the CRISIL Report.

The Company has diverse portfolio of passenger vehicles across powertrains and across major passenger vehicle segments. Its current portfolio of passenger vehicles caters to a diverse customer base, such that it is able to offer "something for everyone". Currently, its portfolio includes 13 passenger vehicle models (including N Line models which are the passenger vehicle models that feature sporty performance features) across all major passenger vehicle segments by body type.

The Company identifies emerging market trends in a timely manner and introduce innovative passenger vehicles and technologies to meet customer needs in India. The Company identifies emerging market trends, latent customer needs and aspirations based on its and HMC`s global network, in-depth market and product research.

The Company has pan-India sales and distribution and after-sale services network offered by its dealers. As of June 30, 2024, the company had 1,377 sales outlets across 1,036 cities and towns in India and 1,561 service centres across India across 957 cities and towns in India, which has grown from 1,167 sales outlets across 873 cities and towns in India and 1,307 service centres across 814 cities and towns in India as of March 31, 2021.

The Company has digitised its customers and dealers` interactions with each other and with the company. Through the "myHyundai" app and its website, customers can interact with the company at every stage of the passenger vehicle purchase journey and access after-sale services.

The Company has flexible and automated manufacturing capabilities. The Chennai Manufacturing Plant was amongst the few large single location passenger vehicle manufacturing plants in India in terms of production capacity as of June 2024, according to the CRISIL Report. Its passenger vehicles are based on five different platforms (four for ICE passenger vehicles and one for EVs).

The Company has an experienced management team with a track record of delivering profitable growth and superior returns.

Increases in the prices of parts and materials required for its operations could adversely affect the company`s business and results of operations.

Two of its Group Companies, Kia Corporation and Kia India Private Limited, are in a similar line of business as the company which may involve conflict of interests, which could adversely impact its business.

The company depends primarily on its Group Company, Mobis India Limited (being a subsidiary of Hyundai Mobis Co., Ltd. which is specialised in after-sale parts business for HMC Group Companies), to supply spare parts for after sale services to it and the company dealers. Further, its also depend on Mobis to supply modular parts to it that the company use in the manufacturing process of passenger vehicles and parts and constituted 17.91% of its total parts and materials supplied in the three months ended June 30, 2024. Any failure by Mobis to supply these parts could adversely impact its business. Further, Mobis may engage in transactions with it and other HMC Group Companies that may give rise to conflict situations.

The company depends on a limited number of suppliers for parts and materials. Any interruption in the availability of parts and materials could adversely impact its operations. Further, any failures by its suppliers to provide parts and materials to it on time or at all, or as per the company specifications and quality standards could have an adverse impact on its ability to meet its manufacturing and delivery schedules.

The company depends on HMC, its Promoter, for the company operations, including for parts and materials (such as engines and transmission assembly) and research and development. Any adverse change in its relationship with HMC and the companies in the Hyundai Motor Group could have an adverse impact on its business, reputation, financial condition, and results of operations.

The company has entered into the Royalty Agreement with HMC, its Promoter, and termination of the Royalty Agreement could adversely impact its business and results of operations.

Any increase in the royalty fee payable by the Company to HMC, its Promoter, under the Royalty Agreement, including up to and exceeding the limits of 5% of the annual consolidated turnover of the Company as prescribed under the SEBI Listing Regulations, could adversely impact its profitability metrics, including the company earnings per share.

Its success depends on the company and HMC`s ability to identify market trends, including technological trends, and meet evolving customer demands, while maintaining or improving its profitability. If the company is unable to do so, its sales volumes, business and results of operations would be adversely affected.

A significant portion of its sales volumes are derived from the sale of non-EV passenger vehicles, and there is no assurance that the company will be able to adopt its EV strategy successfully and cost-efficiently or at all.

Its global operations involve challenges and risks that could increase its costs, adversely affect the company results of operations and require increased time and attention from its management. Further, its primarily depends on HMC for the company exports business and revenue generated from its exports sales constitutes 22.34% and 23.70% of the company revenue from operations in Fiscal 2024 and in the three months ended June 30, 2024, and also need their prior permission for exports, including regarding the model and jurisdiction of its exports. Any failures or delay by HMC or it in accessing the export markets could have a material adverse effect on its results of operations and prospects.

Its manufacturing plants currently operates at high capacity utilisation levels and its may not be able to meet additional demand for the company products until the company is able to increase its capacity by operationalising Talegaon Manufacturing Plant on time or at all. Further, if the company underestimate or overestimate the demand for its products, the capacity utilisation of its manufacturing plants may be under-utilised or over-utilised, respectively, which could adversely affect its manufacturing schedules and related costs.

The Company, one of its Subsidiaries and the company Promoter are involved in outstanding legal proceedings and any adverse outcome in any of these proceedings may adversely impact its business, reputation, financial condition and results of operations.

Th company has entered into and may continue to enter into related party transactions with HMC and companies within the Hyundai Motor Group that may involve conflicts of interest, which could adversely impact its business.

The company depends on its dealership and distributorship network for the sale of the company passenger vehicles and the provision of services, including after-sale services. Any disruption in this network could adversely affect its business and results of operations.

The company currently manufacture its passenger vehicles and parts only at the Chennai Manufacturing Plant. Any disruptions or stoppages at its manufacturing plants, including at the Talegaon Manufacturing Plant once it is operational, could adversely impact its operations, financial condition and results of operations.

Its may not be successful in implementing the company`s business strategies including those relating to product launches, sales and marketing, which could adversely affect its business, results of operations and future prospects. Further, its business strategies may change over time and the company may not be able to execute its strategies as planned.

Any actual or perceived defects in its passenger vehicles and parts or the sales and after-sale services provided through dealers or third parties may requires its passenger vehicles to be recalled, and adversely impact the company brand, reputation, and ability to sell its vehicles, which could have an adverse impact on its operations.

The technology platform and software deployed in its passenger vehicles is critical for the company success. Its failures to maintain, upgrade or adapt these platforms and software could adversely impact its operations and the company competitive position.

The company is subject to impact of foreign exchange fluctuation. Any significant movement in foreign exchange rates, could adversely impact its costs of sourcing parts and materials through imports, and also affect its export related expenses, which in turn could adversely impact the company operations.

There have been certain instances of delays in payment of statutory dues by the Company in the past. Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

The company is undertaking research to develop a cost-effective green hydrogen energy ecosystem in India. However, there is no assurance that technology for green hydrogen will be commercially viable.

The unavailability, reduction or elimination of government incentives could have a material adverse effect on its business, prospects, financial condition, results of operations and cash flows.

Its may not be able to compete successfully in the highly competitive and fast evolving automotive market which could have an adverse impact on its operations.

The redevelopment of the Talegaon Manufacturing Plant or other plants its may expand or acquires in the future may be subject to delays, disruptions and cost overruns, or may not produce the expected benefits, which could adversely affect its production capacity, financial condition, and results of operation.

The company is exposed to risks in connection with the provision of services. Further, after sales service by the dealers is an important aspect for its success. Any failures by the company or its dealers to provide satisfactory after-sale services could adversely impact its operations and financial condition.

The company or HMC may not succeed in continuing to establish, maintain and strengthen the "Hyundai" brand and the "Hyundai" brand could be harmed by complaints and negative publicity, in India and globally, which could have an adverse impact on its reputation, business, results of operations and financial condition.

The company requires certain approvals and licences in the ordinary course of business, and the failures to obtain or retain them in a timely manner may adversely affect its operations.

Its long-term competitiveness depends on the evolution of the EV market including any impact from a global shift in consumer preferences and government policies in different jurisdictions. its failures to recognise these market trends and meet customer demands for EVs, could adversely impact its operations.

Its business depends substantially on the continued efforts of the company management including members of its Senior Management and other qualified personnel, and the company operations may be disrupted if its lose their services.

The company source some of the equipment, spare parts and software for its Chennai Manufacturing Plant from third parties. Any failures to source equipment, spare parts and software on time or at terms reasonable to it could have a material adverse impact on its operations.

A form filing relating to an allotment of its equity shares in the past, is not traceable. The company cannot assure you that any action will not be initiated against it in the future or that the company will not be subject to any penalty imposed by the competent authority in this regard.

The company and its Promoter are potentially subject to laws related to anti-corruption, anti-bribery, anti-money laundering, financial and applicable primary and secondary economic sanctions and similar laws of the US and EU or other jurisdictions, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, all of which could adversely affect its business, prospects, financial condition, results of operations, and cash flows.

Its business is subject to costs, risks and uncertainties, including those associated with laws and regulations in domestic and foreign jurisdictions in which the company operates. Breach of applicable laws and regulations could adversely affect its business, operations and reputation.

Its domestic market share in passenger vehicles decreased from 17.6% in Fiscal 2020 to 14.6% in the three months ended June 30,2024, according to the CRISIL Report. Further, its market share of hatchbacks Indian passenger vehicle market decreased from 20.2% in Fiscal 2020 to 12.3% in the three months ended June 30, 2024, according to the CRISIL Report. If such downward trend continues in the future, its business, financial condition and future prospects may be adversely affected.

The company substantially depends on the sales of its SUV models in India. Sale of SUVs may be affected by changes in government regulations, taxation and emission norms and any decrease in the demand for or disruption in the manufacture of SUVs, or any other passenger vehicle models the company relies on in the future, could adversely impact its operations.

The company depends on contractors and sub-contractors for the timely and successful completion of construction works, and their failures to complete the project on time or at all may adversely affect its business and profitability.

The company use heavy machinery at its manufacturing plants which could cause bodily harm and accidents, which in turn could adversely impact its operations.

The company may be affected by competition law in India and any adverse application or interpretation of competition law in India could adversely affect its business and activities.

Its warranty reserves may be insufficient to cover future warranty claims, which could adversely affect its financial condition and results of operations.

The locations of its dealers and distributors` showrooms are critical to the company success and any failures by its dealers to strategically open showrooms could adversely impact its operations and sales volumes.

The company does not have any explicit non-compete agreement with its Promoter. The company Promoter may be involved in ventures which are engaged in the same line of activity or business as that of the Company and this may result in conflicts of interest with it. Its Directors, Key Managerial Personnel and Senior Management may have interests in the Company in addition to their remuneration and reimbursement of expenses.

Disruptions of transportation network and transportation infrastructure or deficiencies in service provided by its logistic service providers may have an adverse effect on the company business and results of operations. Further, the company significantly depends on Glovis to provide logistics services. Any failures by Glovis to provide such logistics services could adversely impact its business and raise conflicts of interest.

Its business is seasonal in nature and a decrease in the company sales during some quarters could have an adverse impact on its financial performance.

Changes in tax laws may materially and adversely affect its business, prospects, financial condition, results of operations and cash flows.

The company has certain contingent liabilities, which if materialise, may adversely affect its financial condition.

Its ability to pay dividends in the future will depends on the company earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements. Failures to pay dividends in the future may lead to a negative perception of its business among investors, which may have a material adverse effect on its business, results of operations, financial condition and the price of the Equity Shares.

Its ability to utilise the company internal accruals and cash and bank balances to invest in the business has been reduced and have been adversely impacted on account of the special dividend aggregating to Rs.107,824.20 million paid to HMC, its Promoter, in March 2024. As a result, its may need to borrow and incur borrowing costs which could impact its profitability, key financial ratios and results of operations.

The level of its cash and cash equivalents as well as bank balances other than cash and cash equivalentsmay continue to remain high. Maintaining a high level of cash, cash equivalents and bank balances. Other than cash and cash equivalents exposes it to risks in relation to increased inflation and potential tax inefficiencies, as its may realise lower after-tax returns on cash compared to other investments.

Its EV strategy may requires the company and HMC to expend significant financial and other resources. Any failures to execute its EV strategy may adversely affect its financial condition.

The company may not realise the anticipated benefits of existing or future strategic alliances, joint ventures, acquisitions, divestitures, or business strategies.

Its business depends on adequate and uninterrupted availability of electrical power and water, and any failures to do so may have an adverse impact on its operations.

The company depends on building relationships with insurance companies for its insurance brokering business, and any failures to do so could adversely impact the company insurance brokering business.

If passenger vehicle owners customise its passenger vehicles with aftermarket products or use counterfeit parts, the passenger vehicles may not operates properly, affecting their performance, which could result in complaints and negative publicity, which may harm its brand and business.

The company is subject to risk associated with the availability of automobile financing. Its dealers` inability to source adequate finances to maintain their inventories of its passenger vehicles could adversely impact the company operations.

Its may be unable to adequately protect the company intellectual property rights and may be subject to intellectual property infringement claims, either of which may substantially harm its business.

The company has experienced negative cash flows in the past, and if its continue to experience negative cash flows from operations the company financial condition may be adversely impacted.

The company relies primarily on third-party policies to insure its operations-related risks. If the company insurance coverage is inadequate, it may have an adverse effect on its business, financial condition, and results of operations.

Any actual or perceived cybersecurity or privacy breach could interrupt its operations, harm the company brand and adversely affect its reputation, brand, business, financial condition and results of operations.

Its may be negatively impacted by any early obsolescence of the company manufacturing equipment and the spare parts or software used in such equipment.

The company has used information from the CRISIL Report which has been commissioned and paid for by the Company for industry related data in this Red Herring Prospectus and any reliance on such information is subject to inherent risks.

Internal or external fraud or misconduct by its employees could adversely affect the company reputation and its results of operations.

Its may be subject to unionisation, work stoppages or increased labour costs, which could adversely affect its business and results of operations.

Complaints by third parties may adversely affect its reputation and business.

Some of its financial ratios, such as Net Asset Value Per Equity Share, have decreased in Fiscal 2024. Continued decrease in such ratios could adversely impact its financial condition and results of operations.

Its may be unable to renew the company existing leases or secure new leases for its existing offices.

If the company is unable to comply with repayment and other covenants in its financing agreements, its business, financial condition, cash flows and credit rating could be adversely affected.

Any downgrade in its credit ratings could increase the company finance costs, affect its ability to obtain financing, and adversely affect the company business, results of operations and financial condition.

The company track certain operational metrics and non-GAAP measures for its operations. Certain of its operational metrics are subject to inherent challenges in measurement and any real or perceived inaccuracies in such metrics may adversely affect its business and reputation.

Its Statutory Auditors` report for March 31, 2024 and 2023, includes observations with respect to proper maintenance of accounts by one of its Subsidiaries and the enablement of the feature of recording audit trail (edit log) facility by its Promoter and two of its Subsidiaries.

Increased scrutiny and changing expectations from stakeholders with respect to the Company`s ESG practices may result in additional costs or risks.

If the company is classified as a passive foreign investment company for U.S. federal income tax purposes, U.S. investors in its shares may be subject to adverse U.S. federal income tax consequences.

The requirements of being a listed company may strain its resources which may have a material adverse impact on its operations.