Lumax Industries Ltd

NSE:LUMAXIND

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Lumax Industries Limited Q4 and FY '22 Earnings Conference Call. [Operator Instructions]

Please note that this conference is being recorded.

I now hand the conference over to Mr. Deepak Jain, Chairman and Managing Director of Lumax Industries Limited. Thank you, and over to you, sir.

[Deepak Jain, executive]

Good afternoon, everyone. I hope everyone is continuing to do good health. Along with me on this call, I have Mr. Anmol Jain, the Joint Managing Director; as well as Mr. Vineet Sahni, CEO and Senior Executive Director; along with other members of the Lumax management team.

The results and investor presentation uploaded on the stock exchange and company website, and I hope everybody has had an opportunity to go through the same.

To begin with, the challenges for the automotive industry continued due to the shortage of semiconductors, geopolitical tension and supply chain disruptions on account of the third day of COVID-19. However, we have outperformed the industry growth and were able to stand our ground during these challenging times.

We have been able to manage our supply chain efficiently with our vendor network to overcome the short supply challenges, and are hopeful that a scenario of short supply will ease off during the current and the next quarters. Despite all the challenges, the auto industry posted growth even during these turbulent times, and the economy has bounced back, and are operating at pre-pandemic levels and showing signs of recovery and growth for the coming financial year.

In the [ PV ], the demand momentum seems to be sustained, led by easing supply chain constraints, new launches, growing preference for personal mobility and improved consumer sentiment. Further, the recent reduction of fuel prices announced by the government would also benefit the auto industry. The reduction in fuel prices will particularly benefit the 2-wheeler segment, the customers have been impacted adversely by persistent inflation in the total cost of ownership over the last few years.

We anticipate the auto sector to benefit both on the demand as well as on the cost side. Besides the curve in fuel prices, we also believe that the government's export duty hike on steel and plastic bodes well for the auto sector due to the elevated commodity inflation. The measures announced particularly should help in offsetting steel price increases, and help the auto industry to cope up with the inflationary cost pressures.

We at Lumax Industries continue to be the market leaders in preferred suppliers, the OEMs in India for automotive lighting solutions and 2-wheeler, pass car, farm equipment and commercial vehicle segment. Our technical and financial collaboration with Stanley Electric Japan makes us efficient in localizing the global technology for lighting. We are expecting new technologies such as ASL/ADB projected systems to play an important role in mobility in India towards safety, and we are working with our customers to develop these products. We are still holding to a long-term target of achieving [indiscernible] from the LED segment and [indiscernible] from the conventional lighting.

For FY '22, LED segment contributed 33% of the total revenues which is similar as last year. During the quarter, the company has commenced the commercial production of automotive electronic components at its new manufacturing plant situated Bawal, Haryana on 12th of January 2022, and the company has also started commercial production at its new Sanand plant situated at Gujarat on 29th March 2022. During the quarter 4 financial '22, the following models have been launched, which have our lighting.

In the passenger cost segment, we have MG Motors Aster and Toyota Fortuner. And in 2-wheeler, we have Heroes Destiny, 125, Hunter 150 and HMSI's CB 300r. The company was also awarded at the Pantnagar goods and Chatan plants for the Gold award in Excellence in Manufacturing, Silver award in Excellence in New Product Development and Excellence in Human Resources, respectively, in the Atmanirbhar Excellence Award category held by ACMA.

We further believe that is the customer revival with various new launches by the OEM ability of EV, especially the 2-wheeler and [ 3 ] and favorable policies by the government should elevate the demand in the near term.

At Lumax, we also committed to increase offerings in new products as well as increasing the wallet share in our existing OEMs, in addition to our product portfolio and new launches. We have a focused approach in R&D, and we continue to strive to provide more efficient and improved products for the market not only in the field of lighting, but also in the electronic localization. The company holds a strong order book of INR 800 crores, and we are looking forward to an improved and sustained performance in the coming fiscal.

Now I would like to hand over the line to Mr. Sanjay Mehta, our Group CFO, to update you on the financial performance of the company.

[Sanjay Mehta, executive]

Good afternoon, everyone. Let me brief you on the operational and financial performance for the quarter 4 and FY '22. With respect to product mix for FY '22 as a percentage of total revenue, 64% revenue is from the front lighting, 25% from rear lighting, and 11% from other.

With respect to segment mix for the FY '22, as a percentage of revenue, 65% from passenger vehicle, 28% from 2-wheelers, and 7% from commercial vehicles. With respect to financial performance at a consolidated level, the revenue stood at INR 549 crores for the Q4 FY '22 as against INR 504 crores in Q4 FY '21, up by 9%.

On a full year basis, the revenue stood at INR 1,751 crores for 12 months this year as against INR [ 1,426 ] crores for 12 months last year, up by 23%. Excluding moulding sales, the revenue for Q4 is INR 488 crores as compared to INR 491 crores in Q4 last year, down by only 1% as against industry growth of 16%. On a full year basis, the manufacturing revenue stood at INR 1,659 crores as compared to INR 1,375 crores in 12 months FY '21, up by 21%. The company reported consolidated EBITDA of INR 61 crores at 11.1% in Q4 FY '22 as against INR 65 crores or 13% in Q4 FY '21.

There was a subsidy income amounting to INR 13 crores in Q4 of last year. Excluding the same EBITDA margin for Q4 FY '21 would be 10.4%. The margins have improved by 17 bps in Q4 FY '22 versus Q4 FY '21 if I exclude the subsidiary income of the last year.

The EBITDA margin for 12 months FY '22 stands at 8.5%. The company has incurred an exceptional expense of INR 6.79 crores in Q4 FY '22 and INR 17.14 crores in FY '22 12 months towards voluntary separation scheme in one of its plants. The CapEx incurred during the current year is INR 149 crores, which mainly includes capitalization of new electronic facility at Bawal and Sanand plant expansion. This is all from my side. We will now open the call for questions.

[Operator]

[Operator Instructions]

Our first question is from the line of Ashutosh Tiwari with Equirus Securities.

[Ashutosh Tiwari, analyst]

Congratulations on very good set of numbers this quarter. Firstly, how should we look at margins because we had also higher mould sales. So do we make a good -- better than company margin on mould sales? Or this is just cost that comes through, lately?

[Anmol Jain, executive]

This is Anmol Jain. So I'll take that question. So we do make margins on tooling. However, it depends case-to-case. There is no standard answer that whether we make higher margins on moulds than operations. But overall, I would say we will definitely make better margins on the tooling in general vis-a-vis the operations. Yes, so that's on the tooling.

[Ashutosh Tiwari, analyst]

Okay. So you make better marginal tooling than operations. Okay. The second thing is that we had talked about that in the last con call that with this new electronics plant coming into operation, there will be 1%, 2.5% margin improvement over a period of time. So have we got any benefit that will quantify roughly also like what input we got that's better indication from the last quarter?

[Anmol Jain, executive]

So if you look at 2019, '20, when the in-sourcing of electronics happened, at that point of time, the EBITDA margins did go up by almost about 1% or so. And I think, obviously, in the last fiscal '21, '22, there were certain other challenges, which also increased the cost structure. But I would say that it's very difficult to quantify exactly how much in Q4 would be the benefit. But for the full year, I would say that, yes, it should be approximately the same as about 1% incremental because of the in-sourcing of electronics.

I don't necessarily see the additional margins being expanded because of the Bawal electronic facility per se because the in-sourcing did happen in 2019, '20. But going forward, as we scale up the Bawal facility, we will get better economies of scale.

[Ashutosh Tiwari, analyst]

Okay. Okay. And have you got a full pass-through from the OEMs in the last quarter? Or there's still something remaining, and broadly impacting margins still?

[Anmol Jain, executive]

Are you talking about raw material consumption?

[Ashutosh Tiwari, analyst]

Yes. Yes, yes. So we got the full pass-through of all the RM escalation or something similar is...

[Anmol Jain, executive]

So raw material is an ongoing discussion and dialogue with most of the OEMs. I would say that the majority of the raw material escalations have been received by the company. However, there is usually a time lag of about 3 months with certain OEMs. And whatever the spillovers are, we would expect to close them quarter 1, now that raw material prices have anyway softened and started to pull down.

[Ashutosh Tiwari, analyst]

So in general, how do you see the margins going ahead over the next 1-, 2- to 3-year perspective?

[Anmol Jain, executive]

So I've always maintained that our first endeavor was to maintain a double-digit margin. And I think we had the highest margin in 2019, '20, where we crossed the double-digit threshold. Post that, of course, the last 2 years -- because of certain challenges of COVID, cost structures as well as the industry growth the margins did fall back into single digits of sub-9% at EBITDA levels.

But I would say that in the coming year, we would be able to plow back to double-digit margins. And going forward, over a 3-year period, I think our endeavor is to reach the teen margins, get to a close to a 13% margin at EBITDA level. That would be our guidance for the next 3 years or so. But at least for the coming year, we would be able to at least sustain into the double-digit territory, which has been reported in the last quarter as well.

[Ashutosh Tiwari, analyst]

And lastly, we had talked about HVAC panel orders should probably begin in FY '24. Is it '24 only? Or this is start before that? This was for the Toyota, Maruti model, right?

[Vineet Sahni, executive]

This is Vineet Sahni. The HVAC panel is for Honda. And we are starting in as per the plan, FY '24. And this will be the first product, and there is a plan to it, and we are following the same plan. There is no change.

[Ashutosh Tiwari, analyst]

It's for Honda, you said?

[Vineet Sahni, executive]

That's correct. It was Honda 4-wheeler, it was not Toyota.

[Ashutosh Tiwari, analyst]

Okay. And just one more question. When we highlight order book of INR 800 crores, what does that at this means? And this order book means, over what period of -- like over what month or quarter or is that why you pay this order book?

[Anmol Jain, executive]

So when we talk about the order book -- this is Anmol Jain, again. There is usually a development lead time between 18 to 24 months for the launch. And thereafter, there is some lead time for reaching the peak volumes. So the INR 800 crores order book is probably going to get peaked out in the next 2 to 3 years. .

However, I would say that the good part to look at is that only about 20% of this order book is replacement orders and almost 80% of the INR 800 crore business is actually new orders. That means the company has either got new platforms or got new products of certain platforms where the company was not present today. So that is a healthy sign. But answering to your question, the peak of this INR 800 crores would probably come after 2 to 3 years.

[Ashutosh Tiwari, analyst]

This is a peak order revenue potential from the new orders that we have won, basically, in the recent past.

[Vineet Sahni, executive]

This is based on RFT volumes.

[Ashutosh Tiwari, analyst]

That I understand. Yes. But this is, like say, will this -- in this order book, does it mean that you're probably gaining market share or -- how should -- is it ex-Maruti, a bigger order winning good order book as well?

[Anmol Jain, executive]

Absolutely. We will be gaining market share. I would not be able to divest details in terms of which OEM we will be gaining market share in, and vis-a-vis which competition. But as I said, these are new orders, almost 80% of them, which the company does not have today. So clearly, we have increased the wallet share in certain OEMs, and we've been able to get orders of certain new platforms, which the OEMs are launching.

[Operator]

Our next question is from the line of Abhishek Jain with Dolat Capital.

[Abhishek Jain, analyst]

Congrats for the strong set of numbers. Sir, is there any one-off benefit in quarter 4 in EBITDA level like this quarter same that was accounted in this quarter?

[Unknown Executive]

There is one-off cases in FY '22 except that if you're looking at the EBITDA margin, there is a very high mould sales, and has a strong margin on the mould sales in quarter 4 specifically. So going forward, I would say that, that would kind of even out. But that is the only one-off case because mould sales are not every quarter, they are dependent on the launch of the OEM.

[Abhishek Jain, analyst]

So next year, we are expecting a lot of the new launches will come from the different OEMs. So mould sales -- how is the outlook for the mould sales for the next financial year?

[Anmol Jain, executive]

I think on an annualized basis, the mould sales will be approximately INR 100 crores to INR 150 crores, which is much similar to what the company does on an annual basis. I don't expect any significant increase or drop in that, but I was more referring to [indiscernible] and to make you understand that there was a high tooling sale in quarter 4 itself, which would obviously not be recurring in each quarter.

[Vineet Sahni, executive]

Also, just to add, I think. So there is no exceptional addition on profit. There is an exceptional expense, which is about INR 6.79 crores during the -- for the [indiscernible] scheme, which we had launched on.

[Abhishek Jain, analyst]

Okay. Sir, during this quarter, material expenses to sales ratio has again gone up. So what would be the key driver for the gross margin at Sanand going ahead?

[Anmol Jain, executive]

As I mentioned earlier, the guidance for the margins going ahead would be to sustain the double-digit EBITDA. And EBITDA in 2019, '20 was close to about [ 10.5% ], and we would definitely like to sustain that EBITDA going forward during the financial year. And given a 3-year outlook -- guidance, our endeavor is to expand the margins to get closer to the 13% EBITDA levels, close to 13%.

[Abhishek Jain, analyst]

Okay. Sir, how much is your current import content? And what would be the import content after the commissioning of this Bawal plant? Will it reduce?

[Anmol Jain, executive]

So the import content in terms of the LED lamp is approximately still, I would say, 50% to 60% on the head lamp and about 30% on the tail lamp. This is primarily for the LED lamps. And with the localization, I would say that probably about half of it should be able to get localized over the next couple of years.

[Abhishek Jain, analyst]

Sir, my next question is related with the capacity additions. So you have done a capacity addition which -- for the Gujarat. So what would be the incremental revenue from this?

[Anmol Jain, executive]

So the incremental revenue of Gujarat plant would come into play in FY '23. Approximately, we are expecting about INR 200 crores incremental revenue from the Gujarat facility because of the investments made in last year.

[Abhishek Jain, analyst]

Okay. And if I talk about the total capacity and capacity utilization, what is the capacity utilization as per the quarter 4 numbers?

[Anmol Jain, executive]

I would say, in general, the capacity utilization would be close to about 80%. Certain plants, it could be even low at 70%, but I don't see any plant, which is operating less than 70%. But 80% would be a good ballpark to go with in terms of the utilization of capacities as on quarter 4.

[Abhishek Jain, analyst]

Okay. Sir, next year most of the OEMs are guiding around 15% to 18% growth on the passenger result side. So are we looking for some CapEx to increase your capacity to meet the demand?

[Anmol Jain, executive]

So we will be incurring some nominal CapEx in FY '23 as well. It would be definitely much lower than what we had incurred in FY '22. Because in FY '22, there were certain expansions in the Gujarat facility. So in FY '23, there would be some CapEx. Nothing on a greenfield expansion, but yes, there would be certain brownfield expansions and enhancements across the plants.

[Deepak Jain, executive]

So just one also comment here. So let me put it for the outlook for this financial year. I think that would be relevant in this question. The industry probably we're expecting to grow somewhere between 10% to 15% for this financial year. For the current existing, let's say, whatever revenues you've clocked, hence, since you are doing all across the segments. So we should anyway, get a 10% to 15% increment on the revenue.

However, because of certain new order launches and the investments that we have done in Sanand, they basically will start looking at -- as what Anmol said, as an incremental revenue of additional INR 200 crores to INR 250 crores. With that, I think we would be tracking probably double to what industry average would look at. So hence, we're expecting a strong financial year in the coming year.

[Abhishek Jain, analyst]

So we can expect around 18% to 20% growth in the passenger vehicle, lighting side?

[Deepak Jain, executive]

So we are expecting maybe more than that as well for this financial year. Our outlook would probably be an EBITDA of double-digit, and probably a revenue growth of somewhere probably -- as you said 18% to 20%, I probably would say 25% to 30%.

[Abhishek Jain, analyst]

And the TVS growth was quite strong around 48% in the last year. And this year also, it is expected to be very strong. So what is the outlook of for the...

[Deepak Jain, executive]

I'm giving you all segments outlook factored in within our revenue book, right? Because I talked -- yes, so I'm talking about the revenue what we have done in this last financial year to this financial year.

[Anmol Jain, executive]

Let me just clarify that, Abhishek. The revenue forecast for next year is probably going to be a shade better than the revenue growth we have clocked in FY '22. Now that comprises of all segments and our wallet shares with each OEM.

Now we cannot forecast how much the passenger car is likely to grow and how much the 2-wheeler is likely to grow. There are a lot of volatility and challenges which still lie ahead. But despite based on our discussions and our schedules received and production plans received, we will be able to do a shade better than FY '22 growth rate as a company.

[Abhishek Jain, analyst]

Okay. Sir, my last question is related with SL Lumax. So what is the outlook there? And can you please provide us the revenue return back of SL Lumax?

[Deepak Jain, executive]

I think SL Lumax remains to be 1 single entity, customer-directed entity. And as you see, I mean, say, we are expecting what the revenues of that Korean customer comes in, in terms of the growth. We would probably see a similar kind of revenue growth with SL Lumax.

[Abhishek Jain, analyst]

And what is the number for the revenue EBITDA and PAT for FY '22, sir?

[Deepak Jain, executive]

We haven't disclosed that yet. I mean, again, we would probably be talking about a double-digit growth.

[Abhishek Jain, analyst]

It clocked double-digit EBITDA in FY '22?

[Deepak Jain, executive]

I'm talking about the revenue growth.

[Operator]

[Operator Instructions]

Our next question is from the line of Sanjay Shah with KSA Securities. Please go ahead.

[Sanjay Shah, analyst]

So appreciating your performance in this challenging circumstances. Deepak sir, my question was regarding our growth trajectory where we are moving. So can you highlight upon the rationale? How do you see these challenges on chip side, logistic issue, supply chain? When do you see this automobile industry coming out of all these vows? And when you see this normal growth trajectory comes back to our domestic market?

[Deepak Jain, executive]

Sanjay, thank you for question. I think, these challenges of chips, shortages, conflate, commodity prices, I'm factoring all this already in. What I've not factored is, what is another surprise, which comes out. But I think if you look at it, I think the industry, as I mentioned in my opening remarks, is poised for a very, very good growth and a bounce back. .

There will remain challenges. I tell you the challenge is what they are. Challenges would be probably the inflation, probably would be the interest costs, could also be certain demand-side escalations, based on which there could be supply side constraints. So these will remain out.

I think what we have to focus upon is the industry is looking at a double-digit growth. And as ancillary, our focus would be to beat the industry growth. And hence, I may say we, as Anmol also said, whatever last year performance had been on revenue. And last year, we have to see that the quarter 1 was pretty much muted.

We will probably see, again, that in this next 12 months, with new launch products, with basically already investments in place, we should be able to ramp up better, much better than what the industry growth average is. And if you're able to do that, we would also be able to offset some of our more fixed cost, and basically have incremental, I would say, margin expansion as well to come back to a good double-digit system. So that's, I think, what our outlook is for this financial year.

[Sanjay Shah, analyst]

Sir, as we have been learning about the industry, especially Maruti is coming out with great CapEx announcement of a new project. Plus, we are even looking at our portion of LED may go up from here on, which we have been desiring, and the new AFS functionality and metrics headlight and on.

So do you think that we, at a stage now, we have to start think of expanding or having a new strategy of growth from 2 years from -- after 2 years from now or maybe 3 years from now.

[Deepak Jain, executive]

So long-term strategy remains similar. I think we had already made an investment commitment for electronic facility, which is auguring well with the localization plans as well as localization competency. Whatever -- the new technology lamps, you talked about, ADB, AFB, I think the fundamental thing is they have more LED input in it.

There is more electronics in any of the new lighting technology. I must also say that we have opened up our Czech office which is a European office. And we are also -- and the main reason is we are expanding the competence and capacity of our engineering strength.

So I think there will be a lot of new RFQs coming in, more complex RFQs coming in into the company. And to handle that, I think we are now building up the capacity and the competence on the engineering capability. About 5 years ago or 6 years ago, we had basically opened the time on design center, and that was mainly for the project management on the imports of tooling.

I think that has augured well we have been able to come. And the next step we have already taken is to expand in basically the European design center. So I think these 2 strategies remain a localization strategy on competence, and capacity on electronics will remain in the company so that we are able to maximize the potential RFQs, which comes through.

[Vineet Sahni, executive]

Yes. So Vineet Sahni. The side, just to add on, I think all the related competencies that are required for new technology that you mentioned, for example, ADB metrics. That is today in-house in our European office, as just explained. So the company has been proactive in creating these resources to address the changing need of the technology in the market condition.

[Operator]

[Operator Instructions]

Our next question is from the line of Ankit Agarwal, an investor.

[Unknown Analyst]

Maybe if you can be covered in the earlier calls and start covering the company. So for the Lighting division, how do you decide what part of the business goes to Lumax Auto Technology versus the Lumax Industries? Because there seems to be a 34% contribution of Lighting even in that business. So are there certain customers which are demonstrated? Or is it basically orders and capabilities?

[Deepak Jain, executive]

So I'll answer that. I think the first question come in, and we have been already clarifying. I think Lumax Industries, this company does all basically the OEM lighting business, except for 1 account, which is Bajaj Auto. Bajaj Auto account is catered by the other group company, which is Lumax Auto Technologies.

And the aftermarket of lighting is serviced by Lumax Auto Technologies. Lumax Industries does not directly do lighting into the aftermarket. However, it does support Lumax Auto Technologies on certain of the aftermarket product lines where we do not have any conflict with our OEM customers. And this will continue to go on as is. Other than that all lighting products, lighting customers, lighting opportunities are captured in Lumax Industries.

[Unknown Analyst]

Makes sense. Makes sense. And for this, in Lumax Auto Technologies, you've added an expanded quite a few lines over the last several years, and the companies don't very well. So is there a plan to add more lines within Lumax Industries? I know you mentioned the...

[Deepak Jain, executive]

Lumax Industries remains as a single product line with our single partner, which is Stanley Electric. As we had just mentioned in the call, there is a product line called HVAC panel systems that is produced by Stanley. We will be doing that in FY '24 going forward, find some electronic components which Stanley does. So Lumax Industries remains as a major lighting product manufacturer with Alliance with Stanley promoted equity as well.

[Unknown Analyst]

Makes sense. And on the lighting side, sir, how much market share do we have in the OEM lighting industry? I know the market, but how much market share would we have? And who would be the key competitors? And what would be there market share?

[Deepak Jain, executive]

So first, basically, Lumax Industries also has an associated company, which is SL Lumax, which caters to the Koreans. Lumax Industries caters to all other segments and the non-Koreans, which are basically the Kia, and the Hyundai has gone to that. If I accumulate that lighting listing business, and we almost have about close to 65% to 70% market share within the country.

[Unknown Analyst]

If you exclude the Korean business, then how much you have?

[Deepak Jain, executive]

Then it would come to around about -- then it would come about 40 -- 50%.

[Unknown Analyst]

50% without the Koeran, and 65%, 70% with the Korean.

[Deepak Jain, executive]

Because if you see the market structure, I mean you say almost 45% is Maruti Suzuki, and the balance basically, 20% is Korean, 10% start-up. And we actually get it to almost all segments. Of course, I mean not 100% on all the other customers.

[Unknown Analyst]

Understood. But within these accounts also, you will have a disproportionate wallet share. So all the line purchased by OEM in the country, you are saying, if $100 of lighting is bought by OEMs in the country, $70 is sold by Lumax through all its...

[Deepak Jain, executive]

Through -- with SL Lumax, yes. Correct.

[Unknown Analyst]

I understand. And one last question, sir, you mentioned that for the coming year industry forecast of growth is about 10%, 15% and U.K., you can grow at about 20%, 25%. Are there specific drivers for the market share gain given you're already at a pretty high market share?

[Deepak Jain, executive]

Yes. As I said, I mean, there was, again, 2 platforms which we have got 2 new customers -- not new customers, but 2 customers will actually drive that growth. The company had already invested in our facility in Sanand, and those 2 customers will drive the additional growth apart from the nominal 10% to 15% growth, which anyways, we will be getting as per the industry growth. So because of that, we're expecting a 25% to 30% growth.

[Unknown Analyst]

Got it. And from the current capacity that we have, what would be our revenue potential at full utilization? And how do you -- have it taken utilization possible in this intact share? What sort of revenue can you attain with the current capacity that exists?

[Deepak Jain, executive]

Well, in this -- go ahead, Anmol.

[Anmol Jain, executive]

So I can't give you an exact number like that because it's more complicated than that. If we're talking about capacity utilization in terms of numbers, then it hugely differs from a 2-wheeler lighting to a 4-wheeler lighting. And there are certain plants which cater to both. Also, based on the technology levels in each lamp, the revenue per lamp or the revenue per vehicle can be hugely different to the tune of 2x or 3x, LED versus non-LED et cetera.

So it's very difficult for me to give you a number of revenue in terms of that's what we can do in terms of full capacity utilization. But I think, as I mentioned earlier, 80% is probably the ballpark capacity utilization as of end of quarter 4. And you would probably -- you can see the revenue of quarter 4 as a stand-alone quarter.

And if you were to pro rata it for an annualized basis, I would say, give or take, that would be the -- broadly number, which we should be able to attain with some improvements to a 90% capacity utilization.

As a thumb rule, we always start putting investments towards capacity expansion. The minute we reached a threshold of about with the 10% to 15% capacity, we always keep as a buffer for spare parts or other urgent one-off requirements.

[Unknown Analyst]

I understand. So what you're saying is INR 550 crores was the revenue in Q4, and that was at 80% utilization. So broadly [ INR 2200 ] crores if I annualize, you can adjust for it 80%. About [ INR 2600 ] crores ballpark, INR 10 crores can be done with the current capacity.

[Anmol Jain, executive]

No. That is not what I'm saying. Please take out the tooling from INR 550 crores. Tooling has nothing to do with the capacity utilization. INR 488 crores is my manufacturing revenue in quarter 4. And if you were to pro rata that, it would broadly be less than INR 2,000 crores, give or take, INR 1,900 something crores which is what I am saying that at a 80%, 85% capacity utilization, that should be my revenue.

So if I'm looking at a 20%, 25% incremental growth next year, obviously, if we do the math, it should be crossing INR 2,000, INR 2,100 crores. And for that, there would be some brownfield minimal expansions or capacity enhancements or CapEx, which will go in FY '23.

[Unknown Analyst]

Understood. Got it. Got it. And one last question, if I may. How do you think about volume growth versus value growth? Because, obviously, the volumes are -- in India, for passenger vehicles are almost 20% below FY '19 levels, but still the company's revenues are not closed, not at exponential levels but with an odd-percent lower. So is there a lot of inflation happening in lighting? And what's the right tumble that one can take for inflation for the coming year and for the years after?

[Anmol Jain, executive]

So answering to that question, I think someone mentioned that the pass car is expected to grow at about 10% to, let's say, give or take, 15% in the coming year. And these are all volume numbers. the 2-wheeler is probably going to grow in single digits as far as the industry goes.

So cumulatively, the industry will probably be just a little less than 10%. That's the forecast, which we are getting on a FY '23. But if I am growing as a company, in my revenue at, let's say, 20% to 25% then clearly, the delta difference is not just coming out of volume, but also a significant part is coming out of the technology and the realization per vehicle or per lamp.

So I would say that, give or take, 50% to 60% of the growth would be driven by volumes, and about close to maybe 30%, 40% would be driven by the technology shift.

[Abhishek Jain, analyst]

So you think of the 25% to 30%, let's say about 12% to 15% is volume and the balance 10%, 12% is coming from realization for lamp for dilution per vehicle.

[Anmol Jain, executive]

Yes.

[Unknown Analyst]

1

Understood. And has that been the trend historically that 10-odd percent realizations going up year-on-year?

[Anmol Jain, executive]

I would say it would be probably lesser, technology would be lesser. It would be more volume driven, I would say that. But this year, because of certain technological ships and winning certain new platforms, which are on the higher technology, their contribution of technology would be a shade better than the previous year.

[Operator]

[Operator Instructions]

Our next question is from the line of Sunil Kothari with Unique Investments.

[Sunil Kothari, analyst]

Sir. And congratulations for really good numbers during at least last quarter. And this also is very challenging, but we have done really well. Sir, my question is -- I mean just listening to the -- apply it to our revenue capability,which we are seeing may be around INR 2,000 crores or INR 2,100 crores or something like that.

During '17, '18, I think our year -- '17, '19 financial year. So net contribution was roughly 15%, 18%, and it is 33%, which you rightly say always that and in pricing is always 2x or 3x. We have invested almost INR 600 crores during this 5 years -- during last 5 years, combined CapEx.

And we were doing roughly INR 1,650 crores during that time now INR 1,750 crores revenue. So this incremental investment, we not add any sustainable revenue capability with 2x digit pricing of LED. I'm a little bit not able to understand these investments. If you can please explain.

[Anmol Jain, executive]

Yes. So I'll just take that question. Number one, if you look at our highest revenue, it was in '18, '19 at about INR 1,850 crores. If you look at '17/'18, '18/'19, the LED penetration was about 25%, and about 75% was non-LED, which, today, has gone up by about close to, give or take, 30% and come to 33% of LED.

So LED in -- organically has grown up by almost 30% compared to that pace. The investment over the last, give or take, 4 years has been close to approximately INR 400-odd crores, which the organization has done. And as I said, a bulk of this investment also went into the electronics, which did not add the revenue, please understand that.

So a significant portion of the INR 400 crores went into the electronics plant which was adding to the margins, but it did not add anything to the revenue. So if I take that piece out, you are looking at a better sales to gross block ratio, and sales to gross block ratio is about 1 to 1.5. And if you take out the electronic investment out of the INR 400-odd crores, you are looking at almost close to about 1.8 or so in terms of the sales to gross block.

So my request would be to taking out electronics plant investment, and then seeing the gross block expansion vis-a-vis the revenue expansion, you'll probably see that we've done a better sales gross block ratio than the previous year.

[Vineet Sahni, executive]

Also, to add on -- Vineet Sahni. Investments done in the past would rectify in this year, as already explained for -- especially for the 2 models for 2 major customers, where the start of production has happened now in this month. The investments have been made in the previous financial years.

[Sunil Kothari, analyst]

Right. Okay. Sir, do we have any objective to a respectable ROC, which we were achieving during '17, '18, '18, '19, around 30%, 32%, maybe during next 2, 3 years, can we across those numbers? Or you would not like to comment on that?

[Anmol Jain, executive]

No. So the ROC level, as a group, as a strategy, usually, we are targeting a 25% ROC give-or-take. Yes, we did have a 30%, 32% ROC in 2017, '18 or '18 '19, but our endeavor would be to get to a 25%-plus ROC. And I'm hopeful that in the current year, we should be able to attain that.

[Sunil Kothari, analyst]

Great, sir. And sir, my last question is to Deepak. Sir, our organizational enterprise value equity around INR 1,000 crores and INR 300 crores debt, combined INR 1,300 crores. How do you look at this valuation, which is driven by equity investors? What's your thought process? I understand you should not comment on the stock prices.

But are you happy? Okay? Or you feel there is some mispricing of our equity valuation, looking at our -- I mean we have the capability or revenue capability, the way we are talking about improving margin. Would you like to comment? Or do you have any internal effort to improve this type of mispricing of our organization?

[Deepak Jain, executive]

Well, I think I rely on friends like you to have some offline chats about that. However, I think our fundamentals are driven not by stock market, but our fundamentals are always driven by customer. We strongly believe that as long as we are servicing customer needs and providing value to them, we will have good revenue and profitability outcome, which would eventually reflect in value creation for all our shareholders. That is the policy.

[Operator]

Our next question is from the line of Riya Verma with Oracle Securities.

[Unknown Analyst]

So firstly, I wanted to ask what is the proportion of order book from PV in our total order book is INR 800 crores?

[Sanjay Mehta, executive]

It would be about close to 40% or so.

[Unknown Analyst]

Okay. And sir, if you could throw some light on our product portfolio from our new facility at Bawal? And is there any anchor customers with it? Or will be cross-selling among our existing customers and increasing our wallet share?

[Anmol Jain, executive]

So when you're talking about Bawal, are you talking about the electronics facility?

[Unknown Analyst]

Yes.

[Anmol Jain, executive]

The electronics facility is actually more like a backward integration to the lighting. The customers of -- the end customers for the electronic facility are largely dependent on the order book of the lighting. So whichever orders we are servicing on the lighting aspect are the same customers and the same models, which -- whose electronic parts will be manufactured in the Bawal Electronics facility. So there is no B2B to the OEM from that facility. It is more of a internal facility as a backward integration strategy.

[Operator]

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Deepak Jain for closing comments.

[Deepak Jain, executive]

Well, I would like to thank everyone for joining on the call and would like to say that we remain confident on the growing prospects of India, and the automotive sector. I hope that we've been able to respond to all your queries adequately. And for any further information, I request you to kindly get in touch with our CEO, Investor Relations advisors. Thank you very much, and have a good afternoon.

[Operator]

Thank you. On behalf of Lumax Industries Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.