Fiem Industries Ltd
NSE:FIEMIND
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Fiem Industries Ltd
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Ladies and gentlemen, good day, and welcome to Fiem Industries Limited Q3 FY '23 Earnings Conference Call hosted by Monarch Networth Capital. 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 the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you, and over to you, sir.
Thank you, Amal. Good afternoon, everyone. On behalf of Monarch Networth Capital, I welcome you all to Q3 FY '23 conference call of Fiem Industries Limited. We will start the call with the initial comments about the results and the future outlook of the company, and then we will open the floor for question and answers. So without much delay, now I hand over the call to Mr. J.K. Jain, Chairman and MD of the company. Over to you, Jain sir.
Thank you. Good evening, everyone, and welcome to Q3 FY '23 earnings call of Fiem Industries. Joining me on the call are Raul Jain Director; Rajesh Sharma, Director; Arvind Chauhan, Company Secretary; O.P. Gupta, CFO; and other members of the finance team. The results and the investor presentation for the Q3 FY '23 have been made available on both the stock exchange and the company website. I hope everyone has had a chance to review the same. As we start this calendar year, the Indian economy finds itself in the spotlight on the global stage, with the challenges facing the global economy, the world is relying on India to provide stability and growth. The domestic economy is projected to grow at 6.5% with the auto industries, playing a crucial role as it contributes 49% to the manufacturing GDP. Government also continues to play an active role for the growth of the industry. The recent union budget proposes a custom duty adjunction for the chemical groups and the machinery used in the production of lithium cell for EV. This move is expected to promote EV industries and will boost local manufacturing. In addition, the tax rationalization at the lowest layer is expected to increase the demand by enhancing the disposable income of the taxpayers. Overall, the Indian economy is likely to facilitate the growth of the industries as we move forward.Let me shift the focus to the operating environment for the 2-wheeler industries. Domestic sales have grown at a healthy rate of 15.8% for the quarter. We are optimistic that the demand will continue to improve, and the new peak will be needed in the coming years.Now looking at our operating performance, we have delivered the strong results once again, maintaining our outperformance of the industry. We have achieved the highest ever sales and the profitability for the first 9 months of the year, the sales have grown 30% to INR 1,401 crores with a net profit of INR 101.5 crores. The LED layer, as percentage of the total automotive lighting has touched 50% this quarter, reflecting the trend towards a faster adoption of this technology. As maintained by us, this would move to 50% going forward.Electric vehicle adoption continues to grow, and the total 2-wheeler EV have grown more than 3x over last year. During the quarter, we saw a number of the EV OEMs facing challenges relating to FAME-II incentives. I am confident that these are temporary hurdles and the industry will adopt and move forward swiftly. The share of the EVs will continue to grow at a rapid pace.As we enter the fourth quarter outlook for the economy remains bullish. There is a significant increase in the investment of the infrastructure and the rural economy, agriculture sector is looking promising due to the higher minimum support price. Overall, I continue to stay positive on demand outlook.With this, I hand over to Mr. O.P. Gupta and the finance team to update on operational performance.
Thank you, sir. Good evening to everyone. I am presenting the quarter 3 number for FY '23. The company registered a sales of INR 437.9 crores in Q3 FY '23, we see a 13.5% growth from INR 385.69 crores in same quarter last year. The sales for 9 months have shown a 30.71% increase on a year-on-year basis to INR 1,401.2 crores. The EBITDA for Q3 FY '23 is INR 59.63 crores [indiscernible] into the healthy margin of 13.62% as compared to an EBITDA of INR 47.59 crores, that is 12.24% in Q3 of previous financial year. 9 months EBITDA stands at INR 187.6 crores, which is a growth of 43.6% over the 9 months period for previous financial year. PAT increased by 33.19% to INR 32.02 crores as compared to INR 24.04 crores in [ opening ] quarter of FY '22. 9 months PAT is 61% higher, at INR 101.58 crores in comparison to 9-month period of previous financial year.During the quarter, the company has made a CapEx of INR 18.42 crores largely in plant and machinery at our Hosur plant.Now we continue to be a net 0 debt company. With this, I end the financial brief, and now the floor is open for question and answers.
[Operator Instructions] The first question is from the line of Viraj Kacharia from Securities Investment Management.
Congratulations on a good set of numbers in such a challenging environment. I have a couple of questions. So first is just a clarification for Yamaha, when we report sales for Yamaha, would majority of the sales be purely LED? Or there will be some traditional lighting business as well?
This is all purely LED.
So if you adjust the sales in Yamaha, which is close to 15%, 16%. And if you look at the overall LED sales for us is close to 35% of our overall sale. So ex-Yamaha, the overall LED penetration would just be around 20% for us. And in that relation, how would you compare for the industry, sir?
I think your first -- this is Arvind -- regarding the LED penetration to the -- yes-- so this LED is not 35% it is 50% as of now for this quarter.
No, no -- I am so Yamaha as a percentage of sales is close to 15%, 16% -- and -- of sales. And LED penetration -- LED sales is roughly 35% of our overall sales. So if I -- for continuity if I remove this for the Yamaha sales, roughly LED penetration is still around 20% for the rest of the business, SSMI, TDS and -- so in that sense, I'm just trying to understand how does it compare for the industry?
I think the total sales you are comparing it also include plastic [indiscernible] for the Yamaha. But anyway, to clarify the LED of what the percentage you are looking for, it is already clear this Yamaha all lamps are LED. That is one thing. Second thing about the LED as a percentage of ICE in our 50% LED portion, 43% is coming from the ICE vehicles and 7% is from the EV.
And when you say 43% it's for ICE. But when I say for the 2-wheeler industry, say, what will be the penetration for LED in [indiscernible]?
See, it is -- because the industry at volume levels, it should be lower because we can work it out because we are reporting here on the value basis, not about the volume business.
Yes -- value only, sir.
Value loans, it is -- for the industry, we have to collect all companies automotive LED -- sorry, lighting case.
Moreover, what we are talking about out of our turnover, the LED constitute 50%.
Total lighting.
Basically, my question was just to understand, when I talk about the LED industry in India, what would be the penetration of LED just to get a sense?
Yes, the penetration is very strong because day by day, most of the conventional lamps are being changed into the LED. So we hope that in the coming years, the penetration will be, as we mentioned, it is going to be higher and higher.
But giving the industry volume is not possible.
Second question was when I look at the new launches in the last few calls, we've talked about having a very strong pipeline. Now some of those customers see Yamaha basically launch -- upgraded a whole new portfolio and they launched new models like F0F and all. So if you could just provide some perspective are we kind of a supplier for those new models as well. And sales for the Hero Motors, the launches we were expecting. When do we expect that to come in?
Yamaha, as it is we are the sole supplier for headlamp at [indiscernible]. There are 2 kind of model is being launched. One is for the domestic and one is for the export. So export and domestic both products we are at a 100% supply of [indiscernible] in that and those are all in LEDs.
I think they also launched MT-15 and F0X and a whole lot of other…
All modern -- there are 14 models, which is already launched for the domestic as well as export market or MT series is being supplied by Fiem only.
And for Hero Motors, sir.
Yes, Hero Motors, as we already communicated in last con call also, we are into right now on ramp-up situation. So it might be in the next quarter, we will be having sales figuring also in our overall turnover.
But will this be for the new products in the ICE or EV? Or this is also for the older products where you're seeing LED?
Yes. These are both. As of now, it is very difficult for a player -- binding also, we cannot announce.
Just 2 more questions, sir. If I look at the other segment, which -- correct me in my thinking, which is EV and other categories. Q-on-Q it's been flat despite the volumes and the issues a lot of EV guys are facing in the industry. So what has given a stable performance in third quarter or in other?
You're talking about the EV industry overall this quarter?
No. So when we report, Others, it's around 12% of our revenue, so it's around INR 50 crores to INR 53 crores. The revenues from other customers in this particular quarter. And I think last quarter also, we did something around similar which is around INR 50 crores to INR 53 crores.
So I think in EV, what we are looking at is, obviously, there is disruption with some of the customers. But if you see our portfolio, we are active with more than 23, 24 customers. So I think one customer, which is not moving up, there is another customer, where there is increased volume. So for us, EV has only gone up this quarter over last quarter.
And do we have any money outstanding because a lot of companies are facing working capital issues or…
There is no issue.
No, it is not that we are getting our money on time. This is based on whatever the sale.
Just last question was on the margins. I think we did something like close to 39% contribution margin. And in the past, we talked about us having pricing pressure -- I mean, cost pressure from various raw materials. So have we kind of recovered all of the price increase from the customers? Or there still some more debt? So how should one understand the contribution margin moving for us in coming months?
So these margins you are saying this improvement, I think you are talking about the EBITDA margins.
No, I am talking about contribution margin, which was close to 39%. So last few quarters, we were facing raw material cost pressure. So in that sense have you got all the pricing side?
Yes, we have got all our escalations from the customer. Virtually, if you see that the margins have increased, this is because of all, most of the escalations have come in the company. So that is the reason hardly escalations yet. And the company is very closely monitoring these escalations as we are getting money on time. So this is what has developed in our margins also.
Next question is from the line of [ Chetan ] from RTL Investments.
My first question is on your Yamaha revenue trajectory. Now from a peak of about INR 90 crores a quarter, we are now down to about INR 67 crores. This quarter, it was on a Y-o-Y basis also down 14% to 15%. So just wanted to understand how should we think about this going forward?
Yes. In last quarter also, we have explained about this. There were some certain models, which were fixed volume for the export market, especially for the European market. And those margins has already been covered. So might be there are a few more quarters which are under pipeline will again come in next quarter or time to last quarter. So this is only because of the fixed volume…
Moreover, the exports are down. The total industry exports are down as compared to the domestic, --
So what you are saying for Yamaha, India, the product that they export from here to Europe, those export numbers are down and that is what is impacting these numbers. Right.
Not only for Yamaha, for the whole industry.
I didn't get -- quite catch the first comment. When you said there was a fixed number for exports. So is there -- was that like a onetime order which you supplied? But typically in the auto industry, you always have orders for the life cycle of the model, which would be normally much longer than rather in a one time ---
It is regular it is always a 5 years of order. One model will be launched for 5 years. But the order line is always for 2 quarters will be okay and 2 quarters will be -- always be down. In a normal trading at basically export is down for the 2-wheeler industries at the moment.
Second question was on your -- sorry, just on the Yamaha line, so you mentioned that there are these exact series of models which have got launched. So should this boost the Yamaha number going forward?
Can you repeat your question?
This is just a follow-up on the Yamaha side, where I was asking that you responded to an earlier question that on the FZ series you are there as a sole supplier, could we extend that, that would support the Yamaha revenue going forward? Or is that something that is already there in this quarter's numbers as well?
That will definitely be supported. That will support for recovery of all whatever loss we have.
And my second question was on margins. Now if I look at our company for a very long period of time, our margins have been INR 12 crores -- in that 12%, 13% kind of range. Now we are seeing them starting to inch up to 13.5% and gradually, hopefully, even higher. So what is really driving this margin performance?
Actually, if you see that in earlier periods, we have been declaring margins to the tune of 12%. And every time, we have been telling our escalation during the period of raw material costs has been not -- I guess we'll discuss with the customer, but customer is taking time to pay the same. But now you see that we have virtually received most of the escalations on time, and you see that the raw material consumption is also going down by 1%. So that is why -- you see that is mentioned in our EBITDA margin. That is why EBITDA has gone up by 1.5% from 12% to 13.5% and which we have to maintain, right.
No, my question was more on a slightly longer period. I understand that right now, this is [ RM ] lead lag but even before this entire process where RM started shooting up happened, we were always around that 11%, 12% kind of margin. We were never at this 13.5%. So just wanted to understand what you--
Hopefully, because now the turnover is growing. We see every year, the turnover is growing. But our cost of overhead is not going in that amount. So the percentage is coming down. So that is -- revision in our overall percentage. So if your top line has grown, we are -- every year, we are growing by 15%, 20%, 9 months we have grown by 30%. So that increase in sales with the corresponding not increase overhead is going a bit of our improving margins.
My last question was on Hero. Now we understand that from Hero, the largest supplier was United and they are having kind of their own issues, financial issues, and we recently checked with Lumax, and they mentioned that they are already a very large supplier, and hence, they have not seen any benefit from United share going down. So would it be fair to assume that a large part of that benefit would accrue to a company like Fiem?
No, it is not like that. The technology which -- on which we are working as of now that has given us boost to get that business. And that business is not only for the domestic market, even though for the export market also.
So then who is that business going to? Because I would assume typically when an auto OEM finds a supplier in stress, they're kind of trying to diversify away from the supplier?
Out of the 3 suppliers who are already there. But what the point is that we are getting the business on our strength, and we can only talk about our company.
Yes, we cannot talk about the [indiscernible] dealers.
Next question is from the line of Komal Ladha from YellowJersey Investment Advisors.
Can you please give you a share of business with the different customers?
Yes. So you want customer-wise? So the business -- the volumes here, I think you are asking.
Yes.
Okay. So this -- we are giving for the full year based on 2021-'22 numbers. The period for headlamps, we are having 73%; tail lamps, 69%; blinker, 82%; and for rear view mirror, 55%. For Yamaha, headlamp is 91%; tail lamp is 64%; blinker is 5%; and rear view mirror is 32%. Suzuki, headlamp is 80%; tail lamp is also 80%; and blinker is 23%; rearview we are full supplier for 100%. For HMSI, headlamp is 40%, tail lamp is 76%; blinker is 85%; and rearview mirror is 100%. Apart from the rear view for RR and position lamp we are 100% with Yamaha.
And I wanted to ask that what kind of demand can you expect from 2 wheeler industry when coming to your -- as well as in export market?
So domestic 2-wheeler industry or you're talking about the exports or both?
Domestic 2-wheeler industry and as well as export.
So domestic 2-wheeler industry, I think there is -- you can see over the last few quarters, there is a lot of activity, and I think which is well positioned for growth in. There is over the next couple of years, it should get back to the peak that the industry had achieved in FY '19. So there is enough headroom, all the economic factors, the macro factors seem to be stacking up well. So we feel very confident that the industry will grow very confidently from here on. Export market, I think, is also something that our company specifically is working actively with our OEMs. And I think there is a lot of potential with China Plus One strategy is coming in Thailand, other markets, even European markets are looking for a lot of diversification. So there is a lot of positive development there. So over the next 2, 3 years, the industry should be regular.
Can we expect to cross the peak in FY '24 or FY '25?
It is tough to give an exact estimate. There are many macro events at play, but clearly, we are heading there.
The next question is from the line of Aashin Modi from Equirus.
Question regarding the raw material prices trend. So how is the raw material prices currently? And do you expect some sort of price decreases that we have to take in order to --
The prices, there is of late there are softening in the prices, but this is never a concern for us. Actually. This is always part of our -- there will be a lag of, say, 1 quarter or 2 quarter, but this is always part.
And sir, my second question that we've talked about is that we grow ahead of the industry going forward. So I wanted to understand what sort of the volume growth do you expect because of including sale of business with the customers or adding new customers. So do you expect volume growth in the industry?
See, when we're talking about our growth, there are not many growth sectors. And this is not only the volumes, everything the technology give us the advantage of more realization as well as whatever we can get more business from our existing OEM customers and the EVs and all LED. There are so many factors for this growth of our credits.
So third question is regarding LED adoption. So per our current order book, could you tell us how -- where there is a higher share of LED in the 2-wheeler segment? And given the pricing pressure that the 2-wheeler industry has seen, can we expect the LED adoption to be as fast as they are coming to?
Yes. As of now, as we have already declared, 50% penetration is already there. And year-on-year, every -- every year, you can see 10% of additional increase of conventional to LED is being adopted by the customer. So we hope in the next 5 years, 100% will be changed to LED.
And sir lastly, on our EV order book that -- what we have from our EV customers. So there are a few players which are taking issues from same to subsidy. So is that order book very much has a higher proportion of those 2 business, especially Hero Electric and Okinawa?
So we are supplying -- basically as I told in my speech, these are all short time hurdle. They are not permanent. So they will come out very easily. They have already started their volumes and production is on now.
Next question is from the line of [ Nazana Laha ] individual investor.
So good to see that you're saying that the EV impact will not be substantial or permanent. So just one question. I assume you faced some impact in quarter 3. So can you confirm that? And do you think there will be impact in quarter 4? Or are you expecting normalized volumes from quarter 4 from the EV players?
No, there is no impact on us -- I think the previous question you are asking is the subsidy issue, there is no impact on the business.
So in terms of orders received by Fiem from these players, there was no impact because business has been there.
No impact.
And you don't foresee any impact in the coming 1 or 2 quarters based on the orders you are receiving.
I think the way you have to look at it is that we have a very diversified customer base here. There will be 1 or 2 players who will be impacted. There will be other 2 players who will ramp up volumes. And that is what has happened to keep our volumes the way they are. So to that extent, we feel that the overall volumes, our share will continue to go up, our EV volumes. Now which player does what is something that remains to be sort of seen over the next few quarters. But overall, the industry is going up. And that is why we've been insulated because of our diversified --
So one figure, what percentage of your sales roughly are related to OEM exports, not your exports. But if you can give a rough figure, OEM exports?
No. So it is difficult to give because this is -- we are supplying to a group of motors in so many geographies in Europe and other Japan. But we cannot give the numbers how this is to export.
Our supplies directly to the end customers. And they are exporting their vehicles or their parts to their subsidiary companies [indiscernible]. It will be difficult for us to calculate the positives.
So not even a ballpark kind of number?
No.
So the reason I asked this question is because export demand may be impacted as you are saying, but domestic demand may grow strongly. So just to model that.
It's very difficult to give this level.
And for Hero Motors upcoming supply, are they going to be LED supplies or halogen? Or is it a mix of both?
All LEDs.
And a final question from my side. So you mentioned that margins are improving due to operating leverage and revenue is increasing. But also the gradual conversion to LED should also be one of the strong reasons, right?
Yes. Yes. Yes, that's true. That's true. It is one of the -- and moreover, it is our USP to how to get the margins, how to save the -- how to become economical because customer doesn't give any margin.
So basically this is all the internal efficiency?
Yes.
So given that you're saying you expect in 5 years, 100% conversion to LED, the margins should sustain, right? Of course, there can be one-off events, which nobody can predict. But the 13.5%, 14% kind of margins and everything else remains normal, should sustain. Is that the correct understanding?
Yes.
Basically, the trend is like that. So based on the trade, we can say that in next 5 years going to be bit of a --
And any developments on [indiscernible] marketing --
Yes, for your modeling purposes the answer is yes. I mean this is the margin we would expect going forward.
Any developments that you want to talk about with respect to any new products, either 4-wheelers and lighting or anything else at all?
Yes. So I think there is a lot of -- the ecosystem there is a lot happening in the EV system with the overall industry. And there is a thin discussion on a number of strategic sort of initiatives. However, we would be able to only talk about it when something actually comes in. And so at this point of time, it will be too premature.
But would you like to highlight at least any area of the universe that you're looking at?
We are doing strategically -- at the moment, we can't disclose --
But it will be all efficiencies only across the industry there is [indiscernible] so it will be very related businesses.
This is not seeking guidance, but just in how many quarters do you think you'll be a position to announce something on this? Just to have an idea.
No, no, no. See, the things we have shared that this will be all our related industries and next thing we can definitely inform is as when something come in.
Next question is from the line of [ Shakthi Agarwal ] individual investor.
Congratulations on a good set of numbers. I wanted to understand what is our capacity utilization at this point?
See our capacity utilization is in the range of 75% for this quarter, 75% that's for this quarter. So what is the capacity utilization that we can achieve, sir? It can peak -- it can be go beyond 90%.
And any breakthrough in the 4-wheeler division, sir? Because we've been discussing for the last couple of quarters about breakthrough in the 4-wheeler division and diversification towards it. Has there been any breakthrough in that?
Yes, no. We are now -- already informed that -- we are working on the facility, but definitely nothing to inform.
And sir, what is the overall contribution in the entire 2-wheeler -- kind of our contribution in terms of life? What is the overall cost contribution in that?
You are talking about the -- our market share in that 2-wheeler right?
No, no. Like in the 2019, you had mentioned that our overall contribution is about like INR 2000, INR 2,500 in the entire thing. So I want to just -- wanted to know what is the overall contribution in the entire 2-wheeler -- kind for headlights, tail light, and -- supply the overall --
I think you are talking about the kit value per vehicle.
Yes. Yes.
So it depends, means the INR 2,000 to INR 5,000 and maybe more in some cases because -- it varies from INR 800 to INR 5,000.
And now the 2-wheeler industry has grown about 10%. We have grown about 30%. So is that the kind of outperformance that we are going to continue going forward as well? Let's say if the 2-wheeler industry grows by 10%, we are going to grow by 30%.
Basically, as you see, we have to reach minimum year 2019 level. We are much below, much, much below. So we reached 2019 levels. Then it comes very high. The percentage come very, very high.
No, no, sir, I'm just saying that, let's say, industry has grown 10%, the 2-wheeler industry. And we are grown --
See, what we maintained that we always outgrown -- outperformed the industry growth. So it is -- and we are very hopeful this is nothing to say that we will not grow better. In fact, we will grow very strong.
And sir, what are we -- in terms of CapEx, what are the CapEx numbers that we are looking for FY '24?
So I think for the current year, we should close maybe between INR 45 crores and INR 150 crores. And for next year, again, there should be another outlay of INR 40 crores to INR 50 crores additional. So over -- yes, so another INR 50-odd crores, you should estimate.
Next question is from the line of Viraj Kacharia.
Two questions. First is you talked about an opportunity in exports for us. So is this direct export opportunity? Or we are talking more about say, supply to Yamaha or HSMI for their global models.
Our supplies are domestic to all the domestic customers and domestic customers are exporting. There are a few supplies we are doing direct export that is for Harley Davidson and Piaggio. These are our direct exports. And some of -- Suzuki and Yamaha also we do direct export. But major percentage are with Indian customers only, Indian OEMs.
So when we talk about an increasing opportunity in exports, can you provide some perspective? What is that opportunity? And how are we looking to play that?
Overall volume forecast from the customers are good. I think we hope there will be a good opportunity for the growth of numbers overall.
And typically, in exports also, the product development cycle is between, say, 3, 4 years or 5 years. So when we are talking to customers for export opportunities, where would we be in that journey?
It is always like -- development time at 5 years total vehicle side that is the life time of the vehicle.
So a lot of that would start materializing in next 2, 3 years? And as you understand, we are --
As of now, we are working on all -- 85%, 90% plus new models, for different OEMs, with all our OEMS for domestic as well as export market.
Second question was on the cash part. What would be the cash as of December 31.
INR 220 crores
INR 207 crores is on --
Sorry, your voice was not coming clear?
This is INR 207 crores.
Net cash, right?
Yes.
Next question comes from the line of Ashutosh Tiwari from Equirus Securities.
On this new order that we have got, is this for a scooter or our second models for EV?
Very difficult to specify the models you understand.
Yes, there are scooter and motor cycle both but mainly the first products will come with motor cycle.
And this is like a new model or from the -- like say they are launching -- there are a lot of the export models as part of that or it's a new model or resource.
Both models, one is existing another is a new model.
And you mentioned that a couple of more models will be added from next year.
Yes. There are 3 models will be adding a new next year that will be for domestic as well as for export.
So this is like -- so new models or continuing new models.
Completely new model.
So they are -- again go back to growth next year.
Yes.
And you mentioned INR 200 crores plus cash on balance sheet, right now, the net cash.
Net cash is INR 207 crores.
So any plans to increase debt and how should we -- because CapEx is going to be lower only for us so any plan to increase dividend or what is your thought process in cash in hand?
See, this is -- regarding the dividend, you've already seen 20% to 25% of our net profits as per the policy. But definitely, the cash is more it will be increased. And it all depends on the Board decision.
The next question is from the line of Anika Mittal from Invest Research.
Sir, what you said is any guidance for the complete financial year '23. Do you see quarter 4 will be better than quarter 3 financial year '23?
Generally, we have given our guidance of 50% revenue growth. But overall generally, Q4 is always better than Q3 for us. To kind of maintain that.
And that is the EV share for the quarter 3 financial year '23?
EV share is right now close to 6%.
The next question is from the line of Rahul Picha from Multi-Act PMS.
Sir, on the Hero business that we have won, what could be the contribution in the next financial year? Like will it be a meaningful contribution?
No, it is just a beginning. So next quarter will not be meaningful. Maybe from the next year, it will be very good for --
So can we expect it to be in the top 5 customers for next year, FY '24?
No.
We cannot comment as of now. It is totally to depend on the customer ramp up plan.
And what kind of wallet share are we expecting in the next quarter or the next year for you?
So it is too premature to talk about this parameter. So definitely, when the next year numbers will come, you will get a clear picture. Those vehicles will be launched. Those all figure will definitely come out under that.
Next question is from the line of Nidhi Babaria from Envision Capital.
But if you can help me understand the order book which we have right now. And also, when you say that the current margin is a lot of -- a lot of current margins has been contributed via other expense. So do you mean to say that the gross margins are going to be stabilized at 39% kind of range and the --
Yes, we have a 95-plus new projects as of now under development. Those will be materialized in next year or maybe next to next year. So we have a strong project portfolio, which is under development, which will give us our sales figure into a positive direction of sales growth.
And do we give order book guidance?
No, we generally don't give the order book guidance.
Approximate value is around INR 850 crores to INR 900 crores.
Yes. The projects we are referring, will -- this is INR 850 crores to INR 900 crores value in next year's time.
And this will be -- the -- come under production in FY '24 itself or it will be in the next 3 years.
Some in '24, some in '25.
The next question is from the line of Pritesh Chheda from Lucky Investment Managers.
Sir, what is the expected shift in LED to non LED in next year in FY '24. And even now the LED to non-LED pricing is 2:1 or -- sorry 3:1?
So your voice is breaking, what we can…
Can you repeat the question?
So question is what will be the LED to non-LED share shift in FY '24?
As we have explained earlier that at the moment, we are at 50% level, and we expect to 60% level.
Next year based on whatever models and RFPs and production plan that you have.
Yes.
And the premium LED to non LED is 3:1, 2:1 the pricing?
It will totally depend on the technology, what kind of technology is being input for with LED or without -- non LED. There are receptor type. There are projector type. So every cost is different. It will be very difficult to calculate by this way. But normal condition is conventional to normal LED, it is almost 1:3.
On the margin side, is there any upside to margins when LED mix keeps on rising?
We are already doing 13.5% to 13.6% now. So it is always --
The margins are always same.
The margins are always same.
LED or non LED.
So when you move next year on a higher utilization at 90%, will there be a further margin upside from 13% that you are reporting 13%, 14% that you're reporting right now? Or do you think that a lot of the margin are attached as well?
Our margin in terms of amount will increase. But in terms of perfected [indiscernible] outperformed everybody, and we have crossed even 13.5% [indiscernible] tough to maintain this margin of 13.5%, 13.6%, 13.7%. But when sale grows, then definitely the amount the margin will be very huge.
And lastly, sir, on exports, I couldn't get your comments. Someone asked you on exports, whether are you getting any direct exports or most of your export opportunities that you are seeing are deal exports where you basically you supply to a Honda or Suzuki or a Yamaha in India, and they in turn tend to export the product lines.
Basically our export -- yeah, please continue.
Are you a part of any global supply, a direct supply? Or you [indiscernible] direct supply that was the part?
Yes. Basically, direct supply globally, we are giving to Harley Davidson. We are giving to Yamaha and Piaggio. So these are the direct supplies. But rest of the things we are giving to the OEMs in India and they are exporting with their own channel to different countries.
So how much is direct supply in total export for you, percentage?
Yes, 2.7% at the moment direct exports.
2.7% of the export or 2.7% of total sales.
Our sales.
[Operator Instructions] The next question is from the line of [ Kishan ] individual investor.
I just wanted to know like the overall market size of the 2-wheeler lighting. Is there any number you are looking forward to?
No. Basically, you can say about INR 8,000 crores -- INR 8,000 crores to INR 9,000 crores at the moment. And we are at the 33% level as on date.
And is there any ballpark number for the same, future opportunity growth for the same?
Yes. Basically, as we told that we have more than 95 projects in hand, it is going to be in the next 2 years. So we have a very level pipeline.
And sir, these numbers are including of LED numbers, right?
Yes, yes.
Next question is from [ Viswant ] from Swan Investments.
Just one question regarding -- sir, what will be our import content in LED and non LED lighting?
See the non LED lighting is nil.
Almost nil.
And for the LED headlamp, the content is more, it ranges from 35% to 60%. So it depends on the -- what product we are talking about. But LED, the import content is more.
And it varies from product to product.
Sir, then in that case, as the proportion of LED lighting increase, we have to maintain more of inventory and our working capital will be stretched. Is that -- that can happen? LED vis-Ã -vis non LED?
Yes. Basically, your question is correct because for the electronic product, we have to have a very, very high inventory and also projections we have to give for a year. Earlier it was 6 months now we have to give a projection for 1 year. So the inventory is very high. That's true.
Sir, then in that case, sir, does working capital cycle in LED stretch and the capital intensity in LED is also high. So in that case, how do you manage the ROC in both the business, LED and non-LED? Is the non-LED business more ROC accretive than the LED business? Is my understanding right?
Sales of the business is higher and being a fixed cost, so the profit is better. And with regard to the -- how you manage it is our USP to how we repay our turnover, what we install.
The one thing you have to understand -- this is the higher level of inventory secured because this is most of the electronics has value. Once the situation normalizes the lead time will also be reduced.
Is the price difference of -- in LED 3:1 still there or it is lower now?
Now better -- now getting better day by day.
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Sahil Sanghvi for closing remarks. Thank you, and over to you.
Thank you, on behalf of Monarch Networth Capital, we want to thank the management for very patiently answering all the questions. Jain sir, do you have any closing remarks?
Yes. I will. I appreciate everyone's participation in the conference call, and I hope that we have provided satisfactory answers to all your queries. If you have any further questions, please don't hesitate to put that to us. Thank you, and have a good day.
Thank you very much. Ladies and gentlemen, on behalf of Monarch Networth Capital, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.