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Ladies and gentlemen, good day, and welcome to the Lumax Auto Technologies Limited Q1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I'll now hand the conference over to Mr. Anmol Jain, Managing Director for Lumax Auto Technologies Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen, and a very warm welcome to our Q1 FY '24 Earnings Conference Call. Along with me on this call, I have Mr. Sanjay Mehta, Director and Group CFO; Mr. Vikas Marwah, CEO; Mr. Naval Khanna, Corporate Head, Taxation; Mr. Ashish Dubey, CFO; Mr. Priyanka Sharma, Head of Corporate Communications; along with Mr. Ankit Thakral from Corporate Finance and SGA, our Investor Relations adviser.
The results and presentations have been uploaded on the stock exchange and the company's website. I do hope everybody has had a chance to go through the same. I'll begin with some insights on the economy and industry followed by the operational and financial performance for the first quarter of FY '24 before opening the floor for questions.
Owing to the global economic challenges on account of high inflation, interest rate tightening and geopolitical tension, the world's GDP rate has been revised down to approximately 3% for both 2023 and 2024. Although the IMF has projected a slowdown in global inflation, anticipating a decrease from 7% in the calendar year '23 to 4.9% in the calendar year '24, driven by reduced commodity and energy prices.
On the contrary, India has displayed remarkable resilience in the face of the global economic slowdown. Projections for the year '23, '24 indicate a robust growth rate of 6% to 6.5% of GDP, positioning India at the forefront among the world's major economies. This impressive growth trajectory can be attributed to a combination of factors prominently including a surge in private consumption, investment and the dynamic expansion of both the service and manufacturing sectors.
Moving on to the automotive sector. Auto industry holds the pivoted position in Indian economy interlinked with numerous industries, thus playing a significant role in driving economic progress. It is noteworthy that India's automotive market has risen to global prominence as the third largest, surpassing Japan in 2022.
Furthermore, India has gained substantial recognition in the international heavy vehicles premium emerging as the leading manufacturer of tractor, the second largest producer of coper and the third largest producer of heading trucks. The expansion of this industry is underpinned by a variety of factors, including the rise in disposable income, the availability of credit and financing options and the massive surge on infrastructure spending.
Commodity prices have reached a state of equilibrium. Ship supplies are no longer a major challenge within the industry. And despite recent concerns regarding floods, we anticipate a consistent distribution of monsoons that would bolster the agricultural sector, consequently benefiting the automotive industry.
The passenger and commercial vehicle segments continue to bolster the promising outlook for future growth. Notably, India's passenger vehicle sales exhibited a significant 9% increase during Q1 FY '24 as reported by SIAM, when compared to the corresponding period of the previous year. This surge in passenger vehicle sales is largely attributed to the strong demand for SUV.
The prospects for the passenger vehicle sector remained highly favorable as seen by the trend of new car orders taking a waiting period of exceeding 6 months and increasing inquiries across models. Two-year sales witnessed an 11% expansion during Q1 FY '24, driven by the resurgence of the rural economy. Within the 2-wheeler segment, the consumer induration is progressively shifting towards higher CC model as opposed to the entry-level variance.
After a prolonged period of demand stagnation, this segment is now showing plans of revival. The EV revolution is in full swing, and India is swiftly positioning itself as a formidable global manufacturing car for electric mobility. On the EV front, the recent adjustment in paid subsidy structure promptly influenced consumer actions, resulting in an upswing in purchasing in May 2023.
We anticipate a continued rise in demand, the evolving consumer mindset towards renewable alternatives and contribution towards this momentum. During the quarter, we have made the following new launches in the passenger vehicle segment. Gear shifter systems for Maruti Suzuki, Jimny and Fronx model.
With continued new launches by the OEMs, we have also been able to garner new businesses. Our content per vehicle has been increasing owing to our presence across multiple product categories and long-standing relationships with all major OEMs in India. On the financial front, our consolidated revenues grew by 50% on a year-on-year basis and stood at INR 632 crores. Our EBITDA stood at INR 88 crores, up by 82% on a year-on-year with an EBITDA margin of 40%.
The stand-alone entity caters to Integrated Plastic modules, Aftermarket business, Seat Structure, chassis and swing arm for 2-wheelers, trailing arm for 3-wheelers under the metallic business and 2-wheeler lighting. The stand-alone entity has contributed 47% of the total consolidated revenues for Q1 FY '24.
IAC India, the recently acquired 75% subsidiary, which is a Tier 1 interior system supplier to key automotive OEMs in the country, including Mahindra, Maruti Suzuki, Volkswagen and Volvo Eicher commercial vehicles, among others, has contributed 32% of the total consolidated revenues for Q1 FY '24.
The IAC management team, along with Lumax will certainly continue to drive the business growth forward. The Board of Directors of IAC India has approved the scheme of merger with its holding company live on August 4, 2023.
Lumax Mannoh Allied Technologies, the 55% subsidiary, which manufactures manual, AMD and automatic air sector systems and has the market leadership position, contributed 12% of the total consolidated revenues. The company received awards in 2 categories, namely Inner Parts Localization and Value Analysis at Maruti Suzuki Dealer Conference held in May 2023.
Lumax Cornaglia Auto Technologies, the 50% subsidiary, manufacturing Air Intake Systems and urea tank commanding 100% share of business with Volkswagen and Tata Motors contributed 6% to the total consolidated revenues. This joint venture holds a strong order book, and we are optimistic for its performance for the remaining period of the financial year '24.
The company's new facility is expected to commence from Q3 with the addition of plastic fuel tanks as a product. Lumax Ituran Telematics has successfully commenced supply of telematic parts to Daimler India in the current quarter. The volumes are expected to grow significantly in the remaining part of the financial year with addition of certain new range products.
I'm happy to share with you that your company is sitting on a healthy order book of around INR 1,000 crores. 95% of it is new business and out of which, approximately 90% is in the JV and subsidiaries. Now I would like to hand it over to Mr. Sanjay Mehta, Director and Group CFO, to update you on the operational and financial performance of the company.
Good afternoon, everyone. I' will brief on the operation and financial performance for Q1 '24. For Q1 '24 integrated plastic model, post-IAC business, contributed 47% of our overall revenue followed by aftermarket at 13%, gear shifter 13%, fabrication at 8%, emission at 6%, lighting product at 5% and other, 6%, 7%. For the first time, share of passenger vehicle has overtaken 2- and 3-wheeler and CV at 45%, 2- and 3-wheelers at 24% to overall revenue. Aftermarket is 13%, CVs 9% and others at 8% for Q1 FY '24.
For more detailed operational highlights, one can refer our investor presentation uploaded on the company's website. With respect to financial highlights, the consolidated revenue stood at INR 632 crores for Q1 FY '24 and against INR 422 crores last year, up by 15%. Revenues per IAC stood at INR 201 crores and EBITDA stood at INR 37 crores.
EBITDA margin extended 14% for Q1 as against 11.5% for Q1 '24, up by 250 basis points. Absolute EBITDA for Q1 '24 stood at INR 88 crores, a growth of 82% on a year-on-year basis. PAT after Minority interest for the quarter stood at INR 22.1 crores as compared to INR 21.8 crores in Q1 '24. PAT margin stood at 3.5% for Q1. The lower PAT with respect to last quarter is because of higher interest costs on account of long-term tax of INR 400 crores and higher depreciation of intangible assets on account of acquisition of IAC India. The net debt as of Q1 FY '24 is INR 100 crores. The CapEx incurred in Q1 is INR 8 crores. With this, we open the floor for questions.
[Operator Instructions] We have the first question from the line of Abhishek from Dolat Capital.
Congratulations for a strong set of numbers in time. Sir, in this quarter, there is a sharp jump in depreciation and expenses due to consolidation of the IAC. But jump in depreciation is higher than the expected. So just wanted to know that is there any one-offs? And what would be the run rate in the coming quarter for the depreciation?
There is no one-off in that because the consolidation of IAC, and we have to recast consolidated figures on the -- as per accounting incented on the purchase price allocation. For intangible asset has been created almost around INR 334 crores. Out of that [ INR 230 ] where the depreciation is there from 5 to 15 years on account of non-company customer relationships, et cetera. That is the reason the depreciation is higher.
So how much gross block addition has turned because of the IAC India?
So the total gross or is INR 602 crores, including intangible of INR 334 crores.
Okay. So because of the intangible assets, there's a higher depreciation there. That's why the depreciation number is looking high.
Yes. Because what happens in particular merger is seen as a tax-efficient mechanism. We have provided the intangible assets so that way forward, we have the cash benefit to tax lesser PAT almost INR 6 crores post merger of IAC India line.
But in this quarter also, the tax was higher. So it did not -- we gave some benefit because of this?
No, the tax will be benefited when the merger will happen. So it is simply right now the consolidation and going forward, I think in the year's time, we are hopeful that much of it takes place. So this benefit be available is effectively from different area.
Okay. And in plastic integrated parts, how much is revenue from the -- this IAC India? And how much is from this Lumax Auto Technologies?
So the integrated plastic is about INR 300 crores for the quarter, out of which roughly about INR 200 crores would come from IAC.
And sir, in this quarter, in lighting business segment, we have seen degrowth and this is despite the quarter-on-quarter recovery in the volume of Bajaj Auto quarter. So what is the reason of this fall in the lighting business revenue?
The lighting business revenue is, again, largely driven by certain Bajaj Auto models. If you look at Bajaj Auto's export portfolio on a quarter-on-quarter basis, it has actually degrown by approximately 35%. So when you look at Bajaj overall, you don't see that impact. But within Bajaj Auto, the export models have taken a beating. And since we are also largely taking on the export model. So that's one of the reasons why you see a 20% decline or 28% decline in lighting on a quarter-on-quarter basis.
But we have not seen this sort of the impact in the previous quarter because that Bajaj's export is down from last many quarters. But this quarter, we have seen a very significant decline. Is there any model mix because of that it happened?
Look, there's basically a mix of the domestic and the export. The domestic business is also just under pressure for Bajaj. So it's just an overall product mix I mean, export is down, but then certain models which we cater to on the domestic has also not seen a top line growth rather that also declined on a quarter-on-quarter basis, year-on-year. So there is nothing untowards but we do expect that in the subsequent quarters, there will be recovery on the Bajaj volumes era.
Okay, sir. And my last question is the aftermarket business, we have seen a significant decline in this quarter. So just wanted to understand what is the reason and what would be the run rate going ahead in aftermarket business?
I think you're seeing a decline if you're comparing with Q4, but if you look at from a Q1-to- Q1 perspective, there is almost flat or a negligible 3% growth. But traditionally, aftermarket in the Q1 because the full year contracts, et cetera, are still signed and committed commitments are taken from the channel partners. So Q1 is probably the lowest. If you see that trend historically, it remains intact. For the full year, I think we are still bullish. We are still looking at good maybe upwards of 18% to 25% growth for the aftermarket for the current year for the full year.
[Operator Instructions] We have the next question from the line of Harsh Shah from AM Investments. .
I have a couple of questions, sir. And firstly, congratulations on great set of numbers. Sir, my first question is on each of the subsidiaries. Can you elaborate the time line as we plan with each of the subsidiaries that contributing?
Is there a specific subsidiary or joint venture because, for example, Mannoh and Cornaglia are already contributing. And...
So I would like to say, like last FY '23 around 4 subsidiaries were loss-making. One second. So Lumax FAE, Lumax JOPP, Lumax Yukowo, Lumax Alps and Lumax Ituran. So these 5 subsidiaries, which are not contributing as of now, and can contribute. Can you just give us when can they be meaningful contribution? Like INR 20 crores, INR 30 crores kind of thing.
So I'll let Vikas take this first, and then maybe I'll supplement whatever it.
All right. So Harshil, I will elaborate on the subsidiaries and the joint venture. So Lumax Mannoh you are aware, already well established and very profitable subsidiary for us. Lumax Cornaglia also is a profitable subsidiary for us and is showing significant revenue growth. Lumax Alps has been a joint venture, which has been formed in December 2021 only. And this is still a transformation period in terms of the order book generation where we have seen a very healthy order book generation and in terms of the product life cycle of the OEMs, the first major revenue contribution will start coming from FY '25. However, they are technically not losing any money right now. They are just about breaking even.
Then we come to Lumax JOPP. Lumax JOPP has gained significant orders for the first time from major OEMs time in Q1. And again, we are expecting the Q1 of FY '25 to be a higher profit turn for this joint venture when those products start getting established. Lumax Yokowo, this year, will turn profitable by Q4 because it has already gone into entropy. Also, Lumax Ituran wider profitable as early as probably Q3 only because it is going into the SOP in next 1 to 2 months from now.
So this pretty much says everything, except met because meta continues to be impacted highly by the government regulations. We have seen 2 departments of OBD II deadline. We are still not very, very sure if the OBD II norms will be implemented even in April '25 as per the last together seeing the surge in EVs. So about FAE, we would like to reserve our comments right now, and we'll be able to give a better picture maybe in another 1 or 2 months from now.
Okay, sir. Okay. And sir, can you -- this question is from Sir Anmol. Sir, can you give us like now the growth -- I mean where will the incremental growth come from? Like if we want to go from INR 2,800, INR 2,900 crores this year to INR 4,000 crores in a couple of years or 2 to 3 years. So where does this incremental growth come from? Like IAC is done. And this INR 1,200 crores, INR 1,400 crores of top line, where did it come from, sir?
So I would like to say that I think -- let's look at the bucket industry. One is IAC, one is aftermarket, unless they're one of the rest of the business, which was the legacy business were multiple joint ventures. I think all 3 will contribute. Aftermarket, we are still very bullish. Aftermarket continues to grow at, let's say, give or take, as I mentioned, to 25% on a year-on-year basis. So that will continue to grow at maybe at least a 15% even going forward in the next 2 to 3 years.
IAC by itself will also have a significant growth. We are trying to also grow the account of Maruti Suzuki and we've got some very deep engagements already. So we are hoping that maybe in the next 2 years, Maruti Suzuki should -- the footprint in Maruti Suzuki expand for IAC. But until then, I think we have a very strong order book at IAC for all the EV platforms of Mahindra as well. So that by itself should give us significant incremental revenue to the entire consolidated revenues.
Coming to the third bucket, which is the legacy joint venture. I think I'm very optimistic on specifically 2 joint ventures. One is the Lumax Alps Alpine. There is a good order book and not just dependent on the domestic OEM volumes. We are also very deeply in talks with the partner to try and make India a global manufacturing have put some of their products. These are some old technology products from Japan standpoint, and we may actually relook at India becoming a massive hub. So that would not be dependent on the domestic OEM production numbers, but it will be like a global export business out of India.
So that's something which we are currently working upon. And the other joint venture, again, Mannoh and Cornaglia will continue to have a decent growth based on penetration of new customers on Cornaglia and technological changes in Mannoh. But the second is the Lumax JOPP. I think Lumax JOPP has already got some good order book from one of the key customers, Maruti Suzuki. And I think going forward, now we are strategically aligned with Maruti's overall expansion plan. And that would be 1 joint venture where we see a good incremental revenue coming over the next 2 to 3 years.
Okay, sir. And one last question from my end. Sir, are you seeing Mahindra are trying to ramp up the production. So are you seeing their any inquiry, sir?
Absolutely. I think Mahindra is every day trying to ramp it up and specifically on to models on their sport and XUV700, where there is a very high waiting period and a high demand. But again, we are ready, but as I said, the vehicle is not be made under until the entire supply chain is ready. So there is a constant pressure and I think it will still take some time for Mahindra to attain the levels we're talking about, but I'm sure that they will get there.
[Operator Instructions] We have the next question from the line of AM Lodha from Sanmati Consultants.
Actually, if I look at your standalone result, there is degrowth in sales and profit [indiscernible] to 50%. can we see at the region of the degrowth in the deal to year-on-year June -- to June '23?
So if you take out IAC the year-on-year revenue is just flat. It's a 2% negligible growth from about INR 422 odd crores to...
I am talking about standalone, sir. Then I will come to the consolidated.
You're talking about what, sir?
The standalone, it's standalone, standalone.
So on a standalone basis..
[indiscernible].
So this is largely because of 1 customer, which is Bajaj Auto. There are 2 specific businesses which operate in the stand-alone entity, which contribute majority of it from an OEM perspective, apart from market. One is the lighting and the second one is the chassis business. Bajaj Auto, as I mentioned, has taken a huge meeting in their quarter-on-quarter volumes, specifically with respect to the export segment.
And that is one of the key reasons why we have seen a decline in Bajaj Auto. Secondly, the HMSI side also as we have is on the revenue of the plastics business primarily because there have been certain parts dilution from some of the models. And that got a loss of revenue, specifically on the plastic business.
And the third is Aftermarket. If you see on a year-on-year basis for quarter 1, the aftermarket business is pretty flat. So there is a degrowth in the Bajaj and HMSI business and aftermarket is pretty flat. These 3 put together contribute almost close to 80% or 75% of the stand-alone revenues. So this is primarily the reason why you don't see or rather you see a gap in a stand-alone on a year-over-year basis.
Can you expect growth in coming quarters [indiscernible] sir?
Yes. I think largely, it would be driven by Aftermarket, because Aftermarket, as I mentioned earlier, is likely to grow between 18% to 25%. And really, it depends on the Bajaj Auto volume. I am hopeful that from quarter onwards, Bajaj Auto should be back on track in terms of volume. They've still been struggling in terms of the domestic and export. But I think for the full year, I would be safely saying that there should be a double-digit growth for the stand-alone business overall. So I do look at maybe a 10% plus growth for the full year on the standalone.
No, I am concerned coming to the consolidation. I attended the conference call -- I mean the last conference -- the last con call. And management has projected 25% to 30% growth on [indiscernible].
That means INR 1,800 crores turnover not there. And manage it while projecting 25% growth in the stand-alone and as well as subsidiary. In addition to the numbers [indiscernible] approximately INR 50 crores to INR 80 crores. Now you tell us what in this current year, what is -- what turnover which company can expect to and again FY '24 and FY '25?
FY '24, there are -- again, for example, there has been a delay in the oxygen sensors based on regulation. So that is one of the reasons which we had forecasted revenues in FY '24, but that again gets moved forward. So that's one of the reasons why there will be a dip in the projected revenues from earlier. But my til guidance for FY '24 would still be close to around 12% to 15% top line growth of the consolidated entity without the IAC revenue. In FY '25, if I look at my order book without almost close to 65% to 70% of my order book will come into the revenue in FY '25. So for FY '25, this growth, I would anticipate would be much higher. It would be probably around the 20% to 25% bank.
After the -- in FY '25?
In FY '25.
In FY '24, I remember very well that I attended the con call. I remember well where the money is oat least 25% to 30% growth in stand-alone as well as the consolidated -- along with the subsidiary apart from the IAC. Now you are saying that it is not 12%. It is substantially down from the 25% to 34% to 12% -- 12% to 13%.
Well, I think maybe there is some misunderstanding. I will have to check the transcript of the earlier call, but I think we probably gave a guidance of around 15-odd percent to 20% for the -- without IAC growth. However, this again is slightly downward, as I said, to 12% to 15% based on market dynamics.
12% to 15% income [indiscernible]. And then for last year, we have achieved that turnout without IAC. It comes to INR 250 crores approximately. Approximately INR 250 crores. You need INR 2,000 crores turnaround plus IAC INR 800 crores. Can we achieve that number of INR 2,800 crores currently, sir?
That is the outlook for the year, then yes, we should be looking at a similar number between maybe INR 2,700 crores to INR 2,900 crores is what the estimated number is with IAC this year.
And then next year, we can expect 20% growth in the turnover in FY '25?
Well, let me clarify. You are seeing 30% growth. I would not say 30% growth on INR 2,700 crores, INR 2,800, INR 2,900 crores. Please understand, IAC is the single -- largest single customer-driven business. You cannot anticipate a 30% growth. If you tell me [indiscernible]
No, I am not talking of 30% growth in IAC. I am not talking of 30% growth in IAC, sir. I am taking the IAC based under core only. I am not taking 30% growth. I just wanted when -- once you reach 2,800 crores, INR 2,700 crores in the FY '24, how much turnover we can expect in FY '25?
So in FY '25, based on the guidance that we [ review ], out of INR 2,800 crores, let's say, if you take out INR 800 crores of IAC, the other entity -- the other business is INR 2,000 crores. On that value, take out 20% to 25% growth. That, by itself, comes to around INR 500 crores. And then you add back around INR 800 crores with some organic growth of 10% to 12%, INR 900 crores. So there, if you do the math, that number works out to be close to around INR 3,500 crores, give or take.
Okay. Thank you very much for clearing that. And what about margins, sir?
Well, our endeavor is always to get into key margins. Again, we've reported 14% for the quarter, which is largely driven by IAC. But even without IAC, there is a slight margin expansion of 0.3% quarter-on-quarter, year-on-year basis on the non-IAC business. And I think we do expect the margins to remain intact or slightly further growth for the full year basis with IAC.
We have the next question from the line of Abhishek from Dolat Capital.
Sir, in case of the depreciation, what will be the mandate from FY '25 when the impact of this intangible asset would be gone away? So what would be the run rate?
No. Intangible asset is the group that, in fact, will be -- and because it is from 5 to 15 years, so that would be there -- [indiscernible] [ third quarter ].
And what kind of the benefit will you get in terms of the tax?
So the tax can't impact it because we will place a depreciation in the income tax there. So the tax benefit, that would be in the operation of 6 to 7 years, so should be around INR 53 crores to INR 60.
Okay. And on annual basis, what would be the benefit?
Annual basis will be around INR 6 to INR 8 crores per annum. In the cash outlook, less tax, I mean, need to be paid.
Okay. And sir, in this quarter, if I talk about the margin of IAC India, that is very much strong of around 18%. So it includes other income as well?
Yes, it includes other income.
And excluding other income, what is the margin and what -- will this margin will be sustainable in the coming year -- coming quarter?
Excluding other income, it will be closer to 16%, and that will continue in the range of around 15% to 16% throughout the year, excluding other income. And including other income, it will be closer to around 17% to 17.5%.
Okay. And sir, you were talking about the new business from the Maruti and IAC India. So what is the potential of that business? And second, what is the current customer base in IAC India?
So there is definitely a lot of potential. I would like to clarify that Maruti Suzuki is already a customer of IAC India. And if you look at the customer mix, I think almost close to INR 130 crores of business is of IAC to Maruti for the quarter -- sorry, for Mahindra. But Maruti is about INR 15 crores or so for the quarter. So my take is Maruti will definitely will expand in the coming years.
But it will take some time because there is going to be obviously a lot of policy changes probably to be done at Suzuki Japan level as well based on cockpit manufacturing. Right now, Maruti is not in a complete cockpit manufacturing to a Tier 1.
So -- but the engagement is already on. We also did a tech show at Maruti Suzuki, which was very, very highly appreciated and accepted. So that engagement has already started. Apart from that, your second question was, who are the key customers of IAC India? Is that correct?
Yes, sir.
So about 70% of the customer base is Mahindra & Mahindra. About close to 10% would be Maruti Suzuki. Close to around 5% each would be Volkswagen and Volvo Eicher. And then we have about 13 -- 3% to 5% of some export business to IAC Group companies as well.
So how much growth you are looking from your existing customer? I mean to say that Mahindra & Mahindra is a major customer. And there is a strong growth there because they're adding the capacity. So what kind of the growth you are looking for from the Mahindra & Mahindra perspective?
So if you look at Mahindra & Mahindra, I think Mahindra & Mahindra has, anyways, for the consolidated entity, become the #1 customer. We've done almost INR 160 crores of revenue from Mahindra in the first quarter, out of which INR 130-odd crores is IAC. And Mahindra, even without IAC, has gone from INR 19 crores in quarter 1 of last year to almost close to INR 30 crores or INR 28 crores in the current quarter.
So I think we are very bullish on Mahindra. Multiple other joint ventures of ours in Lumax Mannoh, with Lumax JOPP, are all pretty deeply engaged and entrenched into Mahindra already, where we have a current supplier relationship. And we will further grow and expand onto that in the coming quarters and the coming years, for sure. And Lumax Cornaglia also has recently started engagement with Mahindra & Mahindra, and we are hopeful to get into SOP for some orders, probably in the subsequent quarters.
So what is the current capacity in the IAC India? And do you need any capacity expansion because of the new business from the Maruti?
So yes, there will be some capacity enhancements as a brownfield expansion in IAC India, but again, not for Maruti, it would be mainly for Mahindra. As I mentioned, we are sitting on a very strong order book of Mahindra & Mahindra for their EV models also. So the capacity expansion would be for both enhancement of the volume of the current model, including the forthcoming model, and also the new platforms of their electric vehicles, which will start rolling out from FY '25 onwards.
So what kind of the CapEx you are looking for the FY '24, '25, both in the stand-alone and in IAC India?
For FY '24, I can give you a guidance, FY '25 is too far-fetched to give you a guidance. But I think for FY '24, we are looking at around INR 140 crores to INR 150 crores CapEx in totality, which IAC India, by itself, out of which would be around INR 55 crores, and the rest of the business would be roughly around INR 80 crores to INR 90 crores.
Okay. And my last question is on this order book. You mentioned around 10 million of order book. So how much order is from the IAC India out of 10 million?
So out of roughly INR 1,000 crores order book were more precise. It's around INR 950 crores or INR 960 crores order book. Roughly around INR 650 crores in IAC and then roughly around INR 350 crores to INR 375 crores is the non-IAC part.
So as the most of the other books are coming from the IAC India. And margin of IAC India is very much strong. So can we expect a margin of guiding 14% in the coming year because of the change in the mix?
So while we -- as I mentioned, I've already said that in Q1, we reported a 14% EBITDA margin consolidated for the full year. My guidance remains the same, and I think my first endeavor when before getting into IAC. If you recall, I've always said, our endeavor is to get into the teen EBITDA. So I'm happy that at least for the quarter and for the full year estimation, we are looking at a teen EBITDA of maybe around 14% or upwards. So yes, it should continue to sustain, and we will always -- our endeavor would be to further expand the margins in the coming years.
[Operator Instructions] We have the next question from the line of [ Raji Sharma ] from ACE Capital.
I just have a couple of questions. So on the performance front, our performance this quarter, excluding the IAC India, has been relatively flat. So I just wanted to know -- like against the industry and the peers, I just wanted to know where did we fall short this quarter?
Ma'am, I'm not sure if you just joined the call because I already explained this a few minutes ago. But just for your benefit, I think there are 3 fundamental reasons why you look at quarter 1 revenues being flat without IAC.
One, as I mentioned, there has been a degrowth in Bajaj Auto by almost close to INR 15-odd crores. And that primarily is because a hit on certain models of the domestic market for the lighting and export and a lot of significant hit on the export model for the chassis business. If you look in the overall production of Bajaj Auto, their export model production is down by almost 35% on a year-on-year basis. So that's the reason number one.
Reason number two is that aftermarket, obviously, if you look, has had a flat growth on a quarter-on-quarter basis. And that is largely because quarter 1, historically, is usually a lull quarter. And the pace picks up in quarter 2 and quarter 3 onwards. So we do expect, for the full year, the growth estimate of aftermarket still between 18% to 25%.
And the third reason is, on HMS side, we have had almost a 10% to 15% degrowth. And that largely has nothing to do with the wallet share or a reduction of share of business, but certain parts have been deleted in some models. And that's the reason why I would say that these 3 factors largely, put together, have had a flattish growth but -- I mean flattish revenue on a year-on-year basis. But as I mentioned earlier, for the full year, without IAC, we are still expecting anywhere between a 10% to 15% growth on the business of -- other businesses, let's say, without IAC.
[Operator Instructions] We have the next question from the line of A.M. Lodha from Sanmati Consultants.
Just I wanted to know the gross debt of the company as on the 30th June and the net debt of the company.
The growth is at least 22% as on 30th in June.
Debt -- one taken by the company.
Long-term debt is INR 409 crore long-term debt, and the net debt is INR 100 crores. It means we are having the cash and bank balance of INR 300 crores.
This is after the money utilized for the payment of the execution of IAC?
Yes, it is.
So it means can we -- after expending the INR 150 crores on CapEx, can we envision that the company will be net debt-free by March '24, sir?
We will try, but we are not sure at the time because after CapEx, there's a lot of programs [ tagged ] later. But yes, definitely, the debt will be decreased going forward.
[Operator Instructions] We have next question from the line of Nagraj Chandrasekar from Emerge Capital.
What is the long-term plan on the remaining 25% at IAC? And any agreement we have to make that a 100% subsidiary and then modeled for the stand-alone entity? And what would be the outlook for that?
So as of now, there is no such talks . I think for 5 years, there is a clear understanding that the partner, IAC, will continue to remain intact and invested in the Indian market. And please understand, I think the reason for them to sell out to an Indian local partner was not that they are not bullish or confident about the prospects of the Indian industry or the Indian market. The reason was fairly simple. IAC came in for their key global customers like the Ford and General Motors. And unfortunately, both of them have packed up and left.
They did manage to attract Mahindra & Mahindra over the years. And obviously, now they are a significant player within Mahindra & Mahindra, which continues to grow. So I think their interest remains in the Indian market. But to expand the footprint of IAC India to other customers and grow it further, they needed a local partner, which has deep-entrenched relationships.
So they were happy to continue supporting India as a market through technology and innovation, but they definitely didn't want to be in the driver's seat because they don't have that prominence and presence across the other OEMs. So that's the reason for their shift. But answering your question, as of now, there is no plans to make it 100%. I think we see significant value add coming from IAC Global. And for now, we will continue to manage it as 2 partners.
Understood. And the margins there this quarter has really expanded to close to 20%. Would there be -- now that you own 75% of this and are focused on winning as many customers as possible driving that yourself, one is, can those margins sustain? And two, would there be some sort of royalty that would be charged by IAC for their technological know-how, transfer of these from their global entities to you?
So number one, the margins, we anticipate them to actually be sustainable, maybe 1% here or there. I mean, instead of 18%, 18.5%, which is reported, maybe around 17% is what I reckon would be a more sustainable one. Coming to the second part of the question, there is no royalty payments to be done.
And please do understand that there is almost 200 engineers, which work out of the engineering center in Pune and have the end-to-end capabilities of designing, engineering, doing a product development, along with validation for the customers. So we are not really dependent on IAC Global with respect to development and designing. But yes, there are cutting-edge technologies, which usually flow in from the high-end luxury segment into the more mass market segment, especially in the interiors.
When you look at the luxury vehicles, you will see a very different class of interiors than the mass market. So I think that is the innovation and, let's say, the future of interiors, where the value add comes from IAC Global. But with respect to designing and developing for the local market needs, the engineering center in Pune, with 200-plus engineers, is self-reliant and [indiscernible].
Understood, sir. One final question on the pushing back of the oxygen sensor business to -- not in the foreseeable future, what sort of delta to, I mean, your expectation of that 25%-plus growth ex IAC in FY '24, it's just only due to that and that being pushed to '25, maybe beyond?
I'll let Vikas speak specific to our oxygen sensor, and maybe I will come back in for the overall growth numbers.
So the oxygen sensor, the joint venture continues to be a question that we are internally calibrating largely because being a regulation-driven product. While this year, FY '24 was supposed to be the ramp-up year going to probably April '25 when the OBD II regime was to be announced. But unfortunately, again, the OEMs have taken a review call on oxygen sensors. And what was expected to be a 2 heated sensor, 2 heated oxygen sensors per vehicle, a lot of OEMs are internally, right now, deliberating if it should be 1 heated sensor and 1 unheated sensor.
Lumax FAE manufactures the high-end technology intensive heated oxygen sensor and does not manufacture unheated sensor. To this effect, we have moderated our order book right now. If you see the current order book that we are indicating without IAC to be about INR 334 crores, actually, if we took the last quarter's example, we should have been saying INR 450 crores.
But INR 120 crores, currently, in terms of the order book for oxygen sensors, we have put into hibernation because this is something that the OEMs have to answer and they have to clarify. This would take at least another 1 or 2 quarters before the entire situation clearly is [indiscernible] being a regulation-driven product, and this is not something which can get into a replacement market.
So given that, I think, as I mentioned earlier, we're still envisaging for the current year FY '24 anywhere between a 10% to 15% growth on the non-IAC part of the business, which you see flat in the quarter 1. And for FY '25, depending on certain organic volume growth as well as the new order books, we're looking at maybe 20% to 25% growth without the IAC piece for FY '25.
We have the next question from the line of -- I'm sorry, from the line of [ Neeraj ], an investor.
Can you hear me?
Yes.
I have just 2 sets of questions for the management. One, on the margin front. So before our IAC acquisition, you know even before that we used to target like a teen kind of a margin. So if I remove IAC and from our base business, do you still expect like 13%, 14% business margins, excluding IAC, please?
Yes, absolutely. The guidance remains intact. We had been hovering around a 12% EBITDA margin without IAC, which continues to be reported at 11.8% for the quarter, for reasons which I explained earlier. And we're very clearly in that vicinity of attaining a 13%-or-so EBITDA margin without IAC for the entire -- that the guidance remains intact.
That's great. And second question, I read a couple of articles just after our IAC acquisition. The management over there mentioned, because of the new regulation around the AC regulation in that upgrade, and it can provide incremental growth opportunities on the IAC side. So can you please elaborate a bit more on this, like what opportunities can shape up in the coming years because of this regulation?
So the regulation we're talking to is about what -- I didn't get you.
So around the mandatory AC in the truck cockpit, right? And we mentioned in some of the articles, like IAC has some offerings in this segment. This is what I understood from some of your interviews after the acquisition.
Correct. So as the cabins of commercial vehicles get regulated, there would be more and more changes in the, let's say, ambient temperature as well as the materials used for the interiors. So currently, for example, Volvo Eicher vehicle is already a customer, but the kind of materials we are using would be, let's say, very different than that what are going into a passenger car space. And hence, the content per vehicle is very, very different, driven largely by price and may be compromising on the look and feel, in totality, or the comfort for the driver. I think as the cabin becomes more flushed and maybe driven -- and air conditioning and all, we expect more premium materials or premium look and feel to also take center stage, and hence, the content per vehicle should also go up. That's what I have meant in terms of the opportunity for IAC with this regulation on commercial vehicle.
We have the next question from the line of Harshil Shah from A M Investments.
My question -- so our net debt stands at INR 100 crores. And we will do around INR 350 crores, INR 400 crores of EBITDA annually. So my question is, are we looking at any other acquisition, inorganic growth and which segment of the market?
So currently, we do not have any plans to look at any other acquisition. However, as I mentioned, the company continues to remain engaged with certain opportunities, both organic and inorganic space, and we're always open to exploring opportunities where the organization can go forward on its core competency. So I think, right now, there are no such plans. But as and when there are -- there is something concrete, we'll be happy to share with you.
We have the next question from the line of [ Puneet ], an individual investor.
[indiscernible]
Sir, you're not audible. Please, could you increase the audio from your end?
Sure. Any better now? Is it any better now? Yes, is it better now?
Yes.
[indiscernible] I'm an individual long-term investor.
Your audio is fluctuating again.
Hello? Is it any better?
Yes.
Okay. Sorry. So Mr. Jain, my specific question is like -- I'm a chartered accountant and an investor in your stock for almost more than 50 years now. And I have just 1 [ follow-up ] observation. And my specific question is on the volatility of the stock, right? And although I'm not worried or I'm not disturbed but my observation is that sometimes the -- during the intraday, it gives you a lot of spikes and [indiscernible]. And that's happened just about 4, 5 years ago. So anything that we, as management, can do [indiscernible].
Thank you for your faith and confidence to being a -- for being a long-invested shareholder of the company. In terms of your second question, I really don't have an answer. I mean, I don't follow the stock market. The management is the same. The strategy and the long-term plans remain the same. So we actually spend a lot of time in running the business. You are the guys who run the stock market. So I actually have no idea why the volatility why it goes up or going down. But happy to hear your views on a separate platform, if you have any, but I have absolutely zero input there.
I respect your comments, thank you. And I have full faith in the management and also the performance of the company, and therefore, I said in the [ contract ] that I respect [ your prognosis ].
Thank you.
We have the next question from the line of Apurva Mehta from A M Investments.
Yes. Congratulations on the great set of numbers. Just wanted to -- our long-term plans on the EV -- participating on the EV side, on the EV part, especially on -- any long-term plan on looking at EV parts?
Well, absolutely, I would say that out of the roughly INR 960 crores order book, almost close to 1/3 of it will be on EV. So there's a large EV play, which IAC has, whether in complete entire interior systems for the forthcoming BEV platforms of Mahindra & Mahindra. So almost, as I said, 1/3 of the order book is going towards the EV models in the future.
No, not exactly the new models. I want to go [ across ] that any EV part, specifically parts -- related parts, which are the electric part or electric components or on the battery side around different components which are there.
So probably, we've been [ queried ] internally a lot. And frankly, the way EV is going, I think, number one, from a passenger car space point of view, I think, at best, the estimate there, that's anywhere between 10% to 12% would be the EV penetration, even up to 20%, 30%. Two-wheelers will obviously have a higher penetration, but that is a very low value-add proposition, where there are very few parts and very many players.
It's already kind of gotten too crowded and commoditized. Plus the legacy players would continue to drive this according to me rather than the new entrants. There are already a lot of issues with respect to the pain, and you know that better, on the EV part.
So for us, what we are rather exploring is how do we get into certain alternative energies, alternative fuel, let's say, product line instead of getting into specific EV-critical components. So we are still in the evaluation stage, but I think the more we are evaluating, we are getting that sense of confidence that rather than going into EV-specific, we would probably go into certain other adjacent alternative fuel or alternative energy product lines.
Okay. And on the export potential, where we were talking a lot of things about your JVs turning into export, for example, in Mannoh, if there are, maybe Ituran, if there are. Maybe any other units which you think can be a big potential for it. Can you throw some light on that side of business?
The only joint venture, which we are very bullish about export is the Lumax Alps Alpine. The rest of the joint ventures do have some export opportunity. Well, Lumax Mannoh already does some export directly into Indonesia and other markets through the OEMs domestically. But I think the big one there is the Lumax Alps Alpine, as I mentioned.
What we're trying to make Lumax Alps Alpine is, because of cost competencies, make India as a global manufacturing hub for Lumax Alps Alpine products, especially those products which either are old technology for the Western markets, but they are very relevant still in India. So we'll probably shift the manufacturing base globally for Alps Alpine into India, starting exporting back to Alps globally.
And then also penetrate to the OEMs because when we have the manufacturing capabilities and capacities of those products, it's very easy for us to open doors into OEMs for the same product and the same technologies. So that's probably the only joint venture where we are talking about big numbers for exports.
Okay. I wish you all the best here.
Thank you. Thank you very much.
Ladies and gentlemen, that was the last question, and we will now close the question queue. I would like to hand the conference back to the management for closing comments. Please go ahead.
Well, I'd take this opportunity to thank everyone for joining into the call. We will keep updating the investor community on a regular basis for updates on your company. I hope we have been able to address all your queries. For any further information, please get in touch with us or Strategic Growth Advisors, our Investor Relations advisers. Thank you once again, and have a good day.
Thank you, members of the management. Ladies and gentlemen, on behalf of Lumax Auto Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.