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Lumax Industries Ltd
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Ladies and gentlemen, welcome to the Q4 and FY '24 Earnings Conference Call of Lumax Industries Limited.
This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectation of the company as on date of this call. This statement 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 now hand the conference over to Mr. Deepak Jain, Chairman and Managing Director of Lumax Industries Limited. Thank you, and over to you, sir.
Thank you. Well, there is one correction. Mr. Deepak Jain is unable to join this call. So this is Anmol Jain, the Joint Managing Director of Lumax Industries Limited. Thank you very much, and a very good morning to all of you. I hope everyone is doing well. Along with me on this call today, I have Mr. Vishnu Johri, the CEO; Mr. Ravi Teltia, the CFO; Mr. Sanjay Mehta, the Group CFO; Mr. Raju Ketkale, the Group Head of Manufacturing and Corporate Planning; Mr. Naval Khanna, Corporate Head of Taxation; Ms. Priyanka Sharma, Head, Corporate Communications; along with Mr. Ankit Thakral, Group Corporate Finance; and SGA, our Investor Relations advisors.
The results and investor presentations are uploaded on the stock exchange and the company's website. I do hope everybody has had an opportunity to go through the same.
The global economy, with a few exceptions, has experienced a steady rebound in FY '24 and is expected to continue this synchronized in FY '25 as major uncertainties and conflicts subside. Domestically, India is witnessing robust consumer demand across all sectors with manufacturing reaching new heights due to the government's push for Make in India initiative and the global perception of India as a viable alternative to China. Anticipated rate cuts in the second half of the year are expected to improve capital flows, boost private investment and lead to a rebound in exports. However, inflation concerns do persist, which we believe may be only in the latter half of the year, provided there are no unexpected increases in oil or good prices. Overall, the economic outlook remains positive with political stability and significant growth opportunities on the horizon.
The economic outlook remains positive for the automobile industry, which is witnessing a structural shift in consumer perception as demand for premium variance continues to increase.
Talking about the performance of the industry. Passenger vehicles, which formed a large part of our revenues, saw a remarkable growth in FY '24 with production standing at 4.9 million units, which was a historic high, an increase of 7% according to data by [ CN ]. The sale in passenger vehicles are witnessing a shift from sedan and hatchbacks to more SUV, which formed around 60% of the total passenger vehicle sales.
2-wheelers, which again, are an important part of our business, witnessed a strong recovery in the latter half of the year with production standing at 22 million units, growing by 10% in FY '24 according to CN.
Commercial vehicles ended on a flat note, owing to demand uncertainties and a bit of slowdown in the private sector CapEx, but we expect post election, the segment to pick up on the account of government spending.
In FY '25, we do expect the growth momentum in passenger vehicles to moderate given a high pace and capacity constraints across OEMs. But 2-wheelers will continue to grow on the back of multiple high-end model launches by OEMs.
Rural demand, which was muted for the year, is also expected to rebound and will contribute to drive the growth ahead.
Coming to the automotive lighting industry. We are witnessing a significant shift from traditional halogen lighting to modern LED lighting, while truck lighting plays a crucial role in enhancing driver visibility, helping drivers detect uneven road surfaces, other moving vehicles, pedestrians and various road hazards. Rear lighting has become a bold style and signature element of vehicles with end-to-end styling and animation features. The industry holds substantial growth potential, driven by the development and adoption of advanced technologies aimed at improving safety standards.
LED lighting is expected to become increasingly popular due to its lower energy consumption and higher power output compared to halogen lights. Additionally, LEDs often feature sleek and stylish designs that add a touch of sophistication to a vehicle's appearance, attractiveness and contemporary look. Reflecting this trend, our current order book is -- stands at almost 88% of LED lighting.
Reflecting on the performance of Lumax Industries, we are happy to achieve our double-digit growth and report highest ever revenues for the year ended FY '24, standing at INR 2,637 crores and the highest ever EBITDA at INR 242 crores. This growth is on the back of strong industrial tailwinds, shift in business from halogen to LED and strong order wins, especially in certain key models.
Lumax Industries continues to be the preferred partner for major OEMs in the country, owing to our expertise in designing, developing and manufacturing comprehensive automotive lighting solutions for a wider range of automotive segments in India.
During the year, we inaugurated Phase 1 of the new Chakan plant, which is witnessing strong capacity utilization quarter-on-quarter, driven by robust order flows, and we are confident of a faster ramp-up in the coming months. In addition to this, we have also announced the Phase 2 expansion for the Chakan facility. This expansion is set to be commissioned by quarter 4 of FY '25 and will significantly increase our production capabilities and capacities, allowing us to cater to a broader range of client requirements and take on future models.
Further, we are establishing a new manufacturing facility in Sanand, Gujarat to cater to strong demand for advanced tracking solutions from certain OEM partners. We are overall confident that we will outpace industry growth and achieve our targeted growth rate with strong operating margins in the coming years. This optimism is based on the increasing efficiencies and the planned ramp up of our operations at both Chakan and Gujarat facilities. By enhancing our production capabilities and streamlining our processes, we are well positioned to capitalize on certain market opportunities and deliver a superior performance going forward.
As a leading automotive lighting solutions provider, our dedication lies in providing latest technologies in our products at competitive prices with a forward-looking vision aimed at fostering sustainable growth. Our state-of-the-art manufacturing facility, combined with our unwavering focus on R&D with our strength of over 500 engineers, do position us at the forefront of the industry. As we continue to innovate and expand, we remain dedicated to delivering exceptional value to our partners and stakeholders.
During quarter 4 FY '24, we have launched the lighting system for the new Swift model of Maruti Suzuki, which was recently launched and the Jawa motorcycle of Mahindra & Mahindra. We also won orders from Maruti Suzuki for a spot lamp on the Grand Vitara Moto.
I now hand over to Mr. Ravi Teltia, CFO of Lumax Industries, to give some financial updates.
Good morning, everyone. I'll take you through the operational and financial performance.
For FY '24, the share of LED lighting stands at 39% and conventional lighting at 61%. With respect to segment mix for FY '24 as a percentage of revenue, is 58% from passenger vehicles, 27% from 2-wheelers and 6% from commercial vehicles. With respect to product mix for '24, as a percentage of total revenue, 66% of revenue is from front lighting, 25% from rear lighting and 9% from others.
Talking about the financial performance. I'm delighted to share that in Q4 FY '24, our company has continued its strong performance with a quarterly revenue standing at INR 743 crores, depicting a growth of 22% on a year-on-year basis. Revenue for FY '24 stood at INR 2,637 crores, growing at 14% with a margin of 9.2%. Revenue for quarter 4 FY '24 for our manufacturing business grew by 26%, and mold's revenue witnessed a degrowth on account of deferment of some molds to FY '25. The company reported consolidated EBITDA of INR 71 crores with a margin of 9.6% in Q4 FY '24 as against INR 53.4 crores in Q4 FY '23, a growth of 33%.
PBT before exceptional expenses and share of associates is INR 30 crores in Q4 FY '24 versus INR 24 crores in the corresponding quarter last year. The profit after tax stood at INR 36.1 crores for Q4 FY '24 versus INR 21 crores in Q4 FY '23. The effective tax rate for the company is 39.8% for FY '24 with an impact of net reversal of INR 3.83 crores.
CapEx excluding lease assets incurred for FY '24, is INR 228 crores, mainly towards new facility at Chakan, that is INR 129 crores, and land and building at our PCB plant, which was appearing as capital advance before this capitalization. CapEx excluding lease assets for FY '24 will be close to somewhere INR 250 crores to INR 300 crores, mainly for extension of our Chakan facility and Sanand facility.
With this, we can open the floor for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Pratik Kothari from Unique PMS.
Sir, my first question on margins. We -- I mean we had an aspiration that we want to do 11%, 12% over some time period. Can you share where are we in that journey and what does it take to reach there?
So thank you. From the margins, I think the guidance I had earlier given was that quarter 4, we should definitely trying to get into the double-digit margins. Now there are 2 aspects of our business: one is the manufacturing or the operational profitability. And second is the tooling, which really depends on the model launches, et cetera.
Now if I look at the Q4 stand-alone, the manufacturing or the operational EBITDA actually stands at 10.4%. There has been a loss in certain toolings. And because of that, the overall margin stands at 9.6% as reported for the quarter. But if I look at a consecutive quarter basis or even on a year-on-year basis, from a manufacturing, we've actually improved almost close to 110 to 160 bps, depending on if you're looking at a consecutive quarter on a year-on-year quarter. So the margins are in line with the guidance of double-digit. And as I said, we continue to believe that going forward, we will slowly inch forward towards more 11% or upwards EBITDA margin.
Sir, my question was, I mean, you were trying to optimize older plants which used to be at low margin. The new plant had to scale up. So along those lines, where are we in that journey? And how is that progressing?
So that journey continues. I think the new facilities, obviously, as the capacity utilizations are becoming better, we are definitely seeing a very good incremental jump in the bottom line from the new facilities. The older facilities also, we are doing a lot in terms of manufacturing, cost management, more efficiency from the current setup as well as trying to reach in the product mix.
So there are a bunch of things which are continuing. And again, all put together, it has resulted in a double-digit EBITDA for quarter 4. It's not just the new plant. Of course, that's one of the factors. But there has been a contribution from the earlier facilities as well, which are now operating at, let's say, give or take 80% to 85% of capacity utilizations.
Okay. And my second question is the Chakan Phase 1, if you can share what kind of numbers did you do this quarter? And have you finalized on the CapEx that we intend to do for Phase 2 and also the Sanand plant? I mean, what kind of capacity we are putting up and what kind of CapEx for the same?
Sure. So I'll probably hand it over to Ravi to give you a sense. But for Phase 2, I think we are looking at somewhere around INR 130 crores to INR 150-odd crores CapEx expansion between FY '25 current year and maybe some spillover to FY '26. And again, the peak revenue from phase -- let's say, the Chakan plant, we are expecting close to around between INR 900 crores to INR 1,000 crores of revenue from that facility in somewhere FY '28. So that would be a sense of Phase 1 plus Phase 2 put together.
As I mentioned earlier, the capacity we've incurred is about 0.5 million 4-wheeler vehicle sets in Phase 1 and then about another 0.25 million to 0.3 million vehicles sets we will be expanding in Phase 2, whereby about 0.75 million to 0.8 million vehicles sets capacity utilization, which, as I mentioned, will -- Phase 1 investment is already over. Phase 2 will be about INR 130 crores to INR 150 crores with the peak revenues about INR 900 crores to INR 1,000 crores. Regarding how much we've done in the quarter, et cetera, maybe Ravi can answer.
So in quarter 4, we have running this Phase 1 of our new Chakan facility somewhere around 50% capacity. So as we have already mentioned in the past that the first phase we are expecting the revenue somewhere around INR 600 crores. So we are running it at around 50% in quarter 4.
Sir -- plan for Sanand?
In FY '25, we are likely to reach for this Phase 1 asset utilization of plus 90%.
And plans for Sanand?
The Sanand investment plan, as Ravi mentioned earlier, is about INR 60 crores to INR 70 crores in FY '25. And again, the peak revenue from Sanand is...
When we will have this complete facility, which will be operational, we will reach around INR 1,000 crores of peak revenue from the Sanand facility itself in FY '26.
Sure. And congratulations for the growth which we reported this quarter.
[Operator Instructions] The next question is from the line of [ Abhishek Jain ] from AlfaAccurate Advisors.
Great set of numbers. Sir, in Chakan plant, you said that the capacity is around 70% to 80%. But you had mentioned that incremental revenue would be around INR 30 crores on a monthly basis. It means that on quarterly, it's less than INR 90 crores. If I see the number of Mahindra & Mahindra, now it is around -- it has moved from the INR 126 crores to INR 148 crores only. So it is best at INR 20 crores, INR 25 crores incremental earning in quarter 4 FY '24. So if you can throw some color on that, why that number is not matching?
So thank you, and there is a bit of a gap. Number one, the Chakan Phase 1 in quarter 4 is operating at about 50% to 60% capacity utilization. We may get to almost 90% plus capacity utilization in FY '25. And hence, we said we will parallelly kickstart the Phase 2 expansion because there are certain orders which will be get fructified stratified only in FY '25. Regarding the revenue for the quarter, for quarter 4 from new Chakan, I'll maybe let Ravi answer the specific numbers.
So it is close to INR 85 crores for new Chakan facility, Phase 1, and that's what we mentioned that by end of this current year, FY '25, we will reach the 90%, which is somewhere around INR 550 crores. .
So incremental revenue from the Chakan plant is INR 85 crores, but it was offset by the decline in the revenue of some other plants. That's why we have seen only INR 20 crores kind of the growth in overall revenue on quarter-on-quarter basis?
Correct. So there was the model mix. So some other -- so if you're looking at from a quarter-on-quarter, quarter 3 to quarter 4, you're absolutely right, the revenue is about INR 100 crores up in absolute amount, which is about 15-odd percent, 15% to 17% on a trailing quarter basis.
A large part of this, obviously, has come from Chakan new facility, but there has been certain pullbacks on certain other models in the existing facilities, which has had to tried to -- I mean, hence, looking you're seeing a little lower uptick in the overall company revenues.
Okay. So given that there's a strong numbers you are talking about around INR 500 crores to INR 600 crores on the revenue from the Chakan plant. So going ahead, if we assume that the passenger vehicle would be around flat to 5%, then what would be your top line guidance because of this [indiscernible] from the Chakan plant for FY '25?
So the guidance for FY '25 continues to be in about 25% to 30% top line growth for the company. And again, a large part of this will come from the new Chakan facility, provided the model do get launched on time. As of now, we do not anticipate any delays there.
And assuming that the passenger vehicle growth would be 2% to 5%, you would be able to outperform industry growth of around 20% to 25%, right?
That's correct. We still continue to maintain a 25%, give or take, top line growth guidance in FY '25, despite the fact which I mentioned in my opening remarks, that the passenger vehicles will have a more muted growth this year because of a higher base and certain capacity constraints. But yes, we are -- our growth is coming from largely new models and not just coming from the current models organically growing in FY '25.
And this quarter, the other expenditure has gone up significantly, and that's why it impacted our margin a lot. So what is the reason? Is there any one-offs that will be stabilized in the coming quarter?
In quarter 4, as we mentioned on our [indiscernible] side, we have overall shown a better margin compared to last quarter 3. Last quarter, we were at 9.3%, and now we are at 10.4%. So there's an improvement in our quarter-on-quarter margins for this quarter.
I'm talking about the other expenditure, that is at very high side. .
So on our other expenses side, we had a certain expenses related to the repair and maintenance, which we have like annual repair, which we have conducted in this quarter, and therefore, we have certain higher, but that's one of the situation, which will be [indiscernible] quarter.
Okay, sir. And another -- this effective tax rate. What would be the effective tax rate in FY '25, Anmol?
In FY '25, we will move to the new tax regime, and effective tax rate would be 25.17%. That is going to the effective tax rate. [indiscernible] so definitely in the next year would be in the new regime. The 25-point-something, that regime will be starting from the next year.
Okay, sir. And my last request is that why don't you go for this split of the sale, especially because that retail participants are not able to come well. And that's why there's always a problem of liquidity on the stock.
Sure, we'll take it into consideration.
[Operator Instructions] The next question is from the line of Saurabh Jain from Sunidhi Securities.
Congratulations, sir, for your wonderful performance. Sir, this is just adjoining to the question -- to the question of the previous participant. So we are talking about INR 4,000 crores top line in the next fiscal. That is like more than 23% CAGR. So how do we anticipate this kind of growth since we already have a leading market share? So why I'm asking because one of our competitors who were primarily into 2-wheelers till now, has got approval for supplying LED automotive lights to 3 passenger vehicles and 3 are in discussions. So competition is also rising. So how do we plan to achieve this kind of outperformance to the industry?
So thank you for the question. I think, again, I would like to correct your understanding. I think I clearly mentioned that the guidance for FY '25 is between 25% to 30% growth on the top line. And if you see that growth on a total revenue of about, give or take, INR 2,600-plus crores, it actually does not add to INR 4,000 crores, as mentioned. It should be somewhere around INR 3,300 crores, INR 3,500 crores, somewhere around that number.
Number two, as I mentioned, that in our order book, we've got almost close to the development of 120 different lighting products across probably 40 different models across OEMs between 2-wheelers, 4-wheelers. So we continue to remain bullish because we continue to be a partner of choice for the OEMs. I think the specific competitor, which we're talking about is largely a 2-wheeler player, and the passenger foray is more on the small lamp and not on the front or the rear lighting of key OEMs. The front and the rear lighting continues to be dominated by us. Our presence in the new models, for example, on the Maruti's first EV, the new SUV platform, which Maruti is under development, also the Mahindra's 5-door Thar, which is likely to come in FY '25, the first EV of Mahindra, 3 models of Volkswagen, across all OEMs in 4-wheelers and a similar model lineup is there available in our order book for the 2-wheelers as well. So we are quite bullish that going forward, not just in FY '25, but as mentioned before, the FY '27 and FY '28 revenues for us once the Gujarat and Chakan facilities are also at peak revenue, we will be looking at a much bigger pie of revenue and the growth.
Yes, sir, I had mentioned INR 4,000 crores for next fiscal only, FY '26, I was talking about. And that's why CAGR of 23%. So what I meant to ask was, so despite having 60% market share, as you had mentioned on one of the previous calls, so we are further adding to that? Like we are gaining market share? Or the pie itself is growing so big that even if we maintain this market share, we'll have this kind of growth?
So the growth is coming on both aspects. One is we will be expanding our market share in certain OEMs. For example, TVS Motor Company, we were not the lighting supplier there 2 years ago. We have got entry into TVS last fiscal year. And we are already now a supplier to TVS with good engagement and discussions for future models as well. So that is one simple example how we are gaining market share.
Secondly, as I mentioned, almost 90% of our order book is on LEDs, where the value per lamp and the value per vehicle is much higher. And with advanced technologies more and more coming into the premium segment, the value growth of us will be far more than the volume growth by the OEMs. So these are the 2 fundamental reasons why I'm still able to do a better CAGR growth going forward compared to what the industry is kind of forecasting.
Got it, sir. That was helpful. That brings to my next question. Since we do not give the breakup of revenue with respect to conventional lights and LEDs for Q4, we have given for FY '24 itself. But if we kind of deduct the first 3 quarters from the full year's number, and we found that LED share has come to 47% in Q4 because first 3 quarters were 35% and 36%. And for the full year, the LED share has gone to 39%. But then to my surprise, if we had 47% LED share, then why our margins were low below 9% at the EBITDA level?
So again, I would like to clarify. So your data on the penetration of LED is absolutely correct. Going forward in FY '25, we, in fact, do expect LED to be about 50% to 60% of our total revenue, a significant jump from, let's say, 39% where it was in FY '24.
Secondly, on the margin, as I had mentioned in my opening. If you're looking at the total margin, which has not improved on a quarter-on-quarter basis, you're absolutely right. We were at 9.5% in quarter 3 of FY '24, and we are at 9.6% in FY '24 quarter 4. However, if I look at the manufacturing aspect, these are 2 separate, let's say, manufacturing or profit centers. One is the tooling and one is manufacturing.
Tooling really depends on -- and that's not a yardstick to go back quarter-on-quarter, because of certain strategic models, we actually do not make the same margins as we would on certain other models. And tooling -- really the revenue on tooling depends on the model launch date by the OEM. So that's not really an apple-to-apple comparison. But if I look at the manufacturing, we were at 10.4%, which was up by -- quarter-on-quarter by almost 110 bps, and that was largely because, again, as I mentioned, operational efficiencies, capacity utilization of the new Chakan facility and, let's say, more penetration on LED?
So that means the share of tooling revenue has gone up significantly during the quarter, and that's why this mold revenue is that only because if we see that was INR 24 crores during the quarter, which was not there in the first 3 quarters?
That's correct. So in quarter 3, we had a tooling revenue of INR 8 crores. And in quarter 4, it was INR 24 crores. So it was 3x the revenue. But on a profit aspect, as I mentioned, because of certain strategic models, we were not making the same margin as we did earlier.
Right. Got it, sir. So going forward, will this trend of increase in tooling revenue will be there?
Yes, absolutely. I think the tooling revenue for next year, we are expecting almost 2 to 3x growth because, as I mentioned, there are some significant models in the development, which will get launched in FY '25. But I do hope that we are able to make better margins on tooling for the full year. Again, as I said, quarter-on-quarter, the tooling would not be the real picture, because of certain models, we may not have good margins. But for the full year, I do expect tooling margins to improve on a year-on-year basis.
Got it, sir. So FY '24, we ended up with EBITDA margin of 8.7%. So can we expect 70, 80 basis points of expansion on that for the full year? At least 70 to 80 basis points?
We ended FY '24 at 9.2%. And yes, we should look at the double digit, so expansion of, as you mentioned -- into a double-digit space for FY '25 on the total EBITDA. And manufacturing will continue to obviously outperform the tooling. But on a consolidated company level, yes, your understanding would be correct.
Got it, sir. Last question, if I can squeeze in. Just a small clarification because I have started looking at and covering this company very recently. So my question was about the market share. On one of the previous calls, you had mentioned that we hold somewhere around 50% market share. And if we include SL Lumax, it would come to 60% So just wanted more clarity on it. Is it only about 4-wheeler automotive lights? Or is it about LEDs? And it would really be helpful if you can explain how do we arrive at these numbers.
So when we talk about the market share, we actually talk with SL Lumax because we talk about the brand Lumax market share, not specifically the market share which Lumax Industries garners, and that it continues to be close to above 50%. When we come to passenger vehicles, again, the market share would be very different than the 2-wheeler space. Clearly, also the number of players, of lighting players which are there in 2 wheelers are far more than that of the 4-wheelers. And hence, the pie is divided in a very different way. So our 2-wheeler market share would be lower than our passenger car market share. I would not have the exact numbers because this keep changing based on product mix. But I'm sure we can send you the details later.
Got it, sir. What would be the CapEx number look like for FY '25 and '26 in total?
So FY '25 current year, the guidance is between INR 250 crores to INR 300 crores of CapEx, again, to fructify the order book which we are sitting on.
[Operator Instructions] The next question is from the line of [ Harshil Shah ] from [indiscernible] Investments.
Sir, my question is on the debt of the company. What is the long-term debt? And what is the working capital debt on the company? And what will be the peak debt for the company after all the...
Yes. Currently, our long-term debt as of 31st March is INR 185 crores, and total debt is around INR 600 crores.
INR 600 crores. And with the CapEx of INR 250 crores, INR 300 crores over the next 2 years, what is the peak debt?
So peak debt would be around INR 280 crores in the long term. And I think slightly working capital will also increase. The total will be around INR 750 crores in FY '24-'25, total debt.
Total debt.
To manage the growth and to manage the working capital requirement, et cetera.
Okay, sir. And what was the utilization of Chakan plan, exit utilization like for the month of March? For the full quarter, it was 50%?
Yes. So basically, the March month utilization was plus 60%. So we'll be considering around 65% for the month of March.
And can you give the exact -- I mean, the revenue from the Chakan plant quarter-wise and the full year-wise for FY '24?
So basically, the expected -- okay -- FY '24, the full year Chakan plant revenue is plus INR 100 crores. And the quarter 4, somewhere around, as I mentioned earlier, INR 85 crores.
INR 85 crores.
And it was started in November as we mentioned in our previous calls [indiscernible]
Okay. And when we talk of growth of 25% to 30%. Our revenue band- estimated revenue band is around INR 3,300 crores to INR 3,450 crores. Sir, what is the share of Maruti that? What is the contribution from Maruti that you are expecting?
So Maruti, as a total customer stands at about 27% to our total sales today. In terms of the specific growth, I would not be able to give you an exact number right now in terms of what would be the growth from Maruti. But the Maruti's new Swift, which has just been launched should be able to give us some decent growth for the FY '25. The forthcoming models on which we have already the preferred supplier and under development, they only come in probably towards the end of FY '25.
So the capacity growth...
So we are looking at about a 20% growth in FY '25 from Maruti Suzuki.
Okay, Sir. In the last 2 years, if you see FY '24 and FY '23, wherein INR 675 crores to INR 700 crores range for Maruti for the full year.
Correct.
So can that be like INR 800 crores, INR 900 crores, right? If you saying 20%, yes?
Absolutely. .
Okay. Okay. And my last question is on the tooling business, sir. Like margins used to be around 20%. So can you -- is that like this is like one-off margin? Or like can we expect that to be 20% going ahead?
20% seems a bit unlikely because, as I mentioned, that there has been a lot of also competition pressure, localization. But I still believe that we should be able to continue to have a similar margin as the manufacturing, which is double digits. So I would still continue to give a guidance of maybe between 10% to 15% tooling margins on an annualized basis. Again, I'd saying, quarter-on-quarter, it may hugely vary depending on which models were launched and what were the margins on that particular model. But I think on an annualized basis, 10% to 15% tooling margins would still be definitely my guidance.
And just to come back on that question on Maruti Suzuki. So Maruti would be one clearly growth driver for us and also the growth driver would be somewhere like Mahindra & Mahindra. In Mahindra & Mahindra also, we already had about INR 150-odd crores growth in FY '24, and we are expecting close to about another INR 200 crores growth in the FY '25 from Mahindra & Mahindra.
The INR 458 crores, going to INR 650 crores?
[indiscernible] If all the models continue to perform based on their forecast, yes.
Correct. And Anmol, we are expecting double digits. Like we are targeting around 11% margin next year. So can we see the improvement from H1 onwards? Or like for the full year basis, you expect 11 percentage?
So I think it will be more from H2 onwards. H1, as I said, because I'm not expecting any significant new model launches or any new increase in the volumes because of capacity constraints at the OEMs end. I would say that H1 would probably continue to be in the same vicinity as what we have done in quarter 4. But I think in H2, we will definitely see an uptick. And for the full year, as I mentioned, we should inch more towards 11-odd percent for the full year.
Correct. Correct. And Anmol, can you elaborate some -- talk about SL Lumax? And then can this INR 58 crores is sustainable? Or what do you think of the growth of SL Lumax? Your perspective.
So I think SL Lumax clearly continues to be completely dependent on Hyundai and Kia. And I think Hyundai and Kia has very aggressive plans in Indian market. So I think SL Lumax will continue to grow. We are already expanding our geographic location. We are also setting up a new facility in line with Hyundai's further acquisition of the Talegaon facility. So I think SL Lumax will continue probably in the double digits, maybe about 10% to 15% growth is what I would expect at best on a value term going forward in FY '25 from SL Lumax on the top line. .
Okay. And last thing, SL Lumax's net profit margin will be around 10%?
That's correct. .
So -- okay. When can we expect our Lumax Industries as a stand-alone entity be at those levels, right, even 9% net profit lower margins, like even 3, 4 years' perspective? And are you targeting something of that sort?
Absolutely. I think the target is there and the opportunities do exist. I think there is multiple things, both from internal efficiencies as well as trying to get new businesses, which are much more profitable than the current crop. So there are multiple factors. And I do believe that I can't give you an exact time line. But yes, over the next, let's say, 4 to 5 years, we must be getting into that space as well for sure.
[Operator Instructions] The next question is from the line of [ Niraj ] from [indiscernible] Properties.
I have a very generic broad-ended question. I have followed the company for the past 5-plus years. In your assessment, what's your view in terms of competitive intensity in the segments where we operate? I have seen us talking about reaching to double-digit margin. And it is taking us forever to reach there. I do agree we have made progress over each year, there was COVID also in between. But at a very broad sense, what's your view on the competitive intensity in our segments where we operate?
So interesting question. So I think from a competitive intensity, I think pretty much all the top lighting players globally are present in India. I think as the Indian market continues to grow, more and more interest of lighting players continues to be there in India because it is perhaps one of the only growing markets in the world when it comes to automobile.
I think competition intensity is probably at peak, and it will only continue to grow going forward. But I think how we are well positioned with respect to the competition is, again, clearly, one, with a strong partner; number two, because a lot of the competition in India, more specifically in the 2-wheeler space, does not necessarily have a foreign partner. Number two, there is obviously a lot of focus on localizing research and design and innovation at a much more competitive cost advantage to what would be offered if it was to be done in outside of India or in Japan.
Clearly, there are these advanced technologies, and that's one of the reasons where we see OEMs like Mahindra and Tata have a lot more room and opportunity for us to penetrate forward because there is a lot of new technologies which they are willing to innovate and explore with the Tier 1s like us.
I think some of the Japanese makers will still continue with the similar global design language, which will flow in from Japan. So from an R&D aspect, I think we are very well positioned. Our [ check ] development center already has now 22 engineers, which are only doing core technology and advanced lighting development. And as I mentioned, we almost got about 500 engineers in India, which are doing more and more application engineering for the OEMs.
So that's a huge presence. And the customer definitely sees that as a big plus compared to many other competitions where the engineering spend locally in India is not so significant. They may have engineering centers outside of India, but I think, the customer wants on-site support on each model. So that's one.
Second, clearly, I think we are spread across the all geographies, more -- much more than any other lighting competitor in terms of our presence of manufacturing. I think the key is how do we try and optimize our resources, optimize our cost structures because we do feel that the more the spread, there could be a likelihood of more fixed costs being added. So that's something which we are already working on. And that's -- these are the 2 fundamental reasons why I feel that we are well placed with respect to competition and well placed in terms of having an upside in our margins going forward as well.
Very helpful. And just one thing. If I look at our P&L, it seems next year, the situation will inch up further and even finance cost was higher in Q4. So obviously, our sales will increase, EBITDA margin is expected to increase further. But at PBT level, like will the growth be lower than the sales growth? What's your view over there?
So on a PBT level, I would think that perhaps in FY '25, we may not see an expansion because of higher depreciation in the interest [indiscernible]. But I think, again, as we try and get a lot more internal accruals out, probably from FY '26 onwards, you will start seeing a jump in the PBT as well. But right now, the focus is clearly on the operating margins for now.
The next question is from the line of Dhaval from Clear Blue.
This is Dhaval Agarwal from Clear Blue. Just one question from my side. We see a sharp increase in inventory vis-a-vis the cost of good sold as well as the revenues. Could you just comment on that?
So basically, one of the reason, as we mentioned, about the inventory related to our tooling, which we have [ deferred ], that is one reason, that we have additional inventory in our balance sheet. And second is, since we are moving more LED penetration, so the electronic inventory, which is having long lead time is adding up to the inventory even.
So do you have a steady-state guidance for next year on the inventory levels? .
On the inventory level, right now, see, we are working on our -- right now we are at -- inventory turn of single digits, and our focus is to move it to the double digit in the next financial year [indiscernible].
The next question is from the line of [ Jatin Chawla ] from RTL Investments.
You mentioned that Chakan, you are broadly running at 50% to 60% run rate. And for the full year, you are expecting 90%. But on the same other end, you mentioned that first half, there are not too many new model launches, so growth will be more second half driven. So if the pickup will happen only in the second half, then on a full year basis, how will you get to 90% utilization?
Number one, I think I was -- the earlier commentary was only specific to Chakan. When I talked about H1, I was talking about for the whole company? There are model launches, which continue to be there in the other manufacturing facilities as well, for which we have sufficient capacity. So it's not that in H1, we will be absolutely having 0 model launches and all model launches will be in H2. It's not like that. But I'm saying, if I look at the significant growth, it will start kicking in, in H2 primarily because the capacity and the volumes ramp-up of OEMs is also likely to be in H2. Quarter 1 also because of, let's say, either elections, we are also saying that retail sales in the market have definitely cooled down. We also try and track the inventory levels of passenger vehicles at the dealer's end. And if you start seeing that trend based on FADA reports, there is an uptick in the inventories which are sitting on the dealer lots. So with all those macro factors put together, I mentioned that H2 is where we see a much better growth compared to H1. That was my guidance earlier. Specific to Chakan, I think the -- every quarter, the utilization levels will only get better, not necessarily only based on new launches, but also based on better offtake of the current models.
Got it. Got it. On the margin side, whilst you explained that 4Q margins are softer because of that Tooling. But when I look at even our full year numbers, we have seen very healthy top line growth, but our EBITDA margins have actually come down from 9.6% to 9.2%, even including other income. So what is -- what parts of our cost structure are we kind of not able to get a handle on? And why is the margin improvement continuously getting pushed out to the next financial year?
So I think if I look at the specific numbers, you're absolutely right. On a consolidated, it's gone down from 9.6% to 9.2% at an EBITDA. That is largely because of Tooling. The Tooling profit has dropped from last year to this year by almost -- let's say, become 1/3. So almost 2/3 of the Tooling profit in absolute amount has dropped. That is one of the significant reasons why overall, you don't see the growth of top line reflecting in the growth of the bottom line.
Manufacturing EBITDA has actually inched up slightly from about 8.8-odd-percent to about 9.1%, 9.2% for the full year. Specifically, in that also, until last year, there was a subsidy income, which amounted to almost close to INR 6.5 crores, which, in the current year, we stopped booking that income. We will, as a good audit practice, we said we will only book it now when the income is realized. So if you take that out, then the margin expansion on operational EBITDA is even more compared to on a year-on-year basis. And as I mentioned earlier, quarter 4 stands at 10.4%, which is highest in the last 8 trailing quarter.
Got it. Got it. Just one last question. We are seeing that some of your other competitors are talking about how interior lighting or illumination is likely to emerge as a large segment over the next few years. So what are your plans in this segment?
So we are absolutely working. In fact, we have already got certain advanced development go ahead from certain OEMs. And if -- for Lumax Industries, we'll continue to develop the interior lighting, but interior lighting cannot be sold as a product to OEMs. It has to be integrated with the interior systems. And if you see globally, the trend is now people of interiors are actually getting integrated with the lighting systems. And you can take the example of Coesia with HELLA or you can take the example of Plastic Omnium with respect to Visteon. It's a global trend. And that's one of the reasons strategically as a group now, I'm not talking about Lumax Industries, Lumax went ahead and got into IAC India, which is a group company today. And IAC is a dominant player in the interior space. They do the cockpits, they do the door panels, they do the roof linings. So they will take lead with respect to integrating the interior lighting in the overall interior cabin. But yes, the technology and the development and manufacturing of the interior lighting per se will continue to be in Lumax Industries. But we will be able to position ourselves as a full system integrator and a full system supplier to the OEMs, and that's what they want. They don't want a interior lighting supplier. They want someone who can package it into the interior cabin and supply to them as a complete module, which is where Lumax gets a competitive advantage over the rest.
Got it. So you basically act as a Tier 2 there to somebody else who is supplying directly to the OEM?
It may or may not, depending on how the OEM wants it. It could be a Tier 1 arrangement as well. But the design and development lead will be done by the IAC India or whoever the interior maker is for that OEM.
Okay. And your order book numbers for at the end of the financial year?
Sorry.
The order book number at the end of the financial year? You mentioned 120 products, but in terms of rupees, crores?
It stands at about INR 2,400 crores in terms of value terms. We do expect this number to come almost close to 1/3, 1/3, 1/3 over the next 3 years. So about close to INR 800 crores to INR 900 crores in FY '25, and similar number will come in FY '26, FY '27 out of this INR 2,400 crores. But again, this number continues to evolve every quarter. The marketing teams continue to be deeply engaged with OEMs for new businesses. And as I mentioned, 90% of this order book is LEDs.
Just one last question. Sanand, you said the INR 1,000 crore revenue potential, how much have we invested?
[indiscernible]
Sure, sure, no worries.
Ladies and gentlemen, due to time constraint, that was the last question for today's conference call. I would now like to hand the conference over to the management for closing comments.
Well, I take this opportunity to thank everyone for joining in to the call. We will keep the investor community posted on a regular basis for updates on your company. I hope we have been able to address most of your queries. For any further information, please do get in touch with us or Strategic Growth Advisors, our Investor Relations advisers. Thank you once again, and have a good day.
On behalf of Lumax Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.