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Lumax AutoTechnologies Ltd
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Ladies and gentlemen, good day, and welcome to the Lumax Auto Technologies Limited Q1 FY '21 Earnings Conference Call.This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on 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 would now like to hand the conference over to the management. Thank you. And over to you all.
Good afternoon, ladies and gentlemen. A very warm welcome to the Q1 FY '21 earnings call of Lumax Auto Technologies Limited. I hope you all are staying safe and healthy.Along with me on this call, I have Mr. Deepak Jain, Director; Mr. Vineet Shani, Group CEO; Mr. Sanjay Mehta, Director and Group CFO; Mr. Vikas Marwah, CEO; and Mr. Ashish Dubey, CFO; Mr. [ Ankit Thakral ] from the Finance team; and Ms. Priyanka Sharma, Head Corporate Communications, along with SGA, our Investor Relations Adviser.The results and presentation are uploaded on the stock exchange and company website. I hope everybody has had a chance to look at it.Before we start with the discussion on the financial performance of the company, I would like to share a few highlights on the automobile industry.After a series of setbacks, nationwide lockdown, which added more pain to prolonged slowdown experienced by Indian auto industry, auto registration, which had fallen to near 0 in early May, has started showing signs of recovery from June onwards. Rural market is picking up faster than urban due to lesser impact of COVID, along with timely and normal monsoon this year. Tractor, small commercial vehicles and motorcycle sales picked up relatively faster while putting 3-wheeler segments on the backseat. However, entry-level car segment and 2-wheeler demand is growing as people avoid using public transport over hygiene and safety concerns. OEM volumes and supply chains are picking up speed since June, thereby improving utilization levels, which were almost nil in the month of April and May 2020.As per SIAM data, auto industry declined by 79% during the first quarter of 2020-'21 compared to the same period last year. Significant improvement has been seen since July '20 for passenger vehicles and 2 wheelers compared to previous month. In July, passenger vehicle sales witnessed a degrowth of just 3%, commercial vehicles of 77%, whereas 2 wheelers registered a decline of 15% year-on-year.The Q1 is an abnormal and exceptional quarter due to COVID conditions and is not comparable with the corresponding quarter last year.Let me now take you through the performance of each business entity. The stand-alone entity contributed 86% of total revenue at INR 61 crores out of the total consolidated revenue of INR 71 crores. Lumax Mannoh Allied Technologies, a 55% subsidiary, which manufactures manual, AMT and AT Gear Shifter systems and, has a market leadership position, contributed 8% to the total consolidated revenues. Lumax Cornaglia Auto technology, 50% subsidiary, which manufactures air intake system, commanding 100% share of business with Volkswagen and Tata, contributed 6% to total consolidated revenues.The company has started the commercial production of urea tank during the quarter and is confident to increase its revenue share substantially over the next few years.Lumax Gill-Austem Technologies is a 50% subsidiary, which manufactures seat frames and is a tier-2 supplier to LEAR and TM Seating. The negotiation for acquiring the balance stake from the JV partners is in final stages and is expected to be completed by the end of quarter 2, 2021.Post acquisition, it will become a 100% subsidiary of the company.Lumax Ituran is a 50% joint venture with Ituran Telematics Israel. Happy to inform that company has started commercial invoicing during the quarter. The revenue of this company is not considered in the consolidated revenue, being an associate of the parent company as per Ind AS.Lumax FAE, the installation of the plant, which has been delayed due to COVID, is under its final stages at the manufacturing facility in Gurugram, Haryana. The plant is expected to be operational by the end of quarter 2 FY '21.Lumax Jopp Allied Technologies is a 50% subsidiary, which engages in design, development and production of gear shift towers, AMT kits, all their sensors and spokes to start with. The commercial production has been started at the existing facility in Manesar, Haryana, and production is picking up as per the OEM demand.Lumax Yokowo Technologies is a new 50-50 joint venture with Yokowo Technologies Limited, Japan, to manufacture and supply antennas and other vehicle communication products to the Indian automotive industry. We expect to commence production in the later part of FY '22. The company has also made the following new launches during the quarter. In the Passenger vehicle segment, we supplied the fixed structures and the NP and AT shifters for the Mahindra's W601 platform. Also for the recently launched Thar vehicle, the company did produce the control housing, shift tower and the Gear Shifter system. In the 2 wheeler states, the company started supplying chassis for Bajaj's premium KTM family of RC and Duke models. For Honda Motorcycles and Scooters India, various plastic molded parts started the supplies for the Dream model. And for Mahindra & Mahindra 2 wheeler space, we started supplying of air filter for the 350 cc bikes. In the commercial vehicle segment, we also started supplies for the urea tank on Tata Motors, Magic and 712 platforms.Further, the Bengaluru plant received the prestigious JIPM TPM award for excellence in category A for the year 2019. In this challenging environment, our team has taken remarkable measures to rationalize our operations and cut down on costs to minimize the losses. Our human capital is our strongest asset, and we believe in growing together.This was an exceptional quarter, and our aim was to establish the resumption of operations smoothly and safely, preserving abundant liquidity, efficiently handling fixed costs and taking measures to operate a sustainable business. Along with this basic requirement, our aim is to further evaluate opportunities and potentially grow forward with global partnerships, which provide a better value-added product to our customers, thereby strengthening the brand equity of Lumax Technologies. As people resume commuting to their workspaces, we also expect a better demand to come from the After Market segment.Now I would like to hand over the line to Mr. Sanjay Mehta, Director and Group CFO, to update you on the operational and financial performance of the company for Q1 FY '21.
Good afternoon, everyone. Operational highlights for Q1. Our financial results were substantially impacted by COVID-19 pandemic, which resulted in the extended production shutdowns and disturbance in working cycles. Integrated Plastic Modules contributed 28% to overall revenues, followed by Chassis at 22%, Lighting Products at 17%, After Market at 16%, Gear Shifter at 8%, Intake Systems at 6% and others at 4%.Two, 3 wheelers contributed 52% to our total revenue. Passenger Cars contributed 13% and After Market at 15%, and commercial vehicles at 10%.The consolidated financial highlights. The consolidated revenue stood at INR 71 crores for Q1 as against INR 288 crore in Q1 FY '20. The performance was impacted on account of nationwide lockdown in large part of Q1 FY '21. Company witnessed increased utilization levels as restrictions eased off and OEM production has increased from June 2020 onwards. The company reported consolidated EBITDA of INR 8 crores negative in Q1, while profit after tax and manufacture interest stood at negative INR 12 crores in Q1 FY '21. With easing lockdown restrictions and improvements in demand, OEMs across the industry have reported substantial pickup in sales from July 2020, which should benefit the auto component industry in general and particularly us. Now we open the floor -- call for questions.
[Operator Instructions] The first question is from the line of Sanjay from Alphaline Wealth.
Sir, in our clear focus on improving performance, you mentioned about diversification, ramping up After Market and benefits from BS-VI. Can you elaborate on all these 3, sir, please? Because it will help us a lot.
Going forward, I have always maintained that our growth will be driven primarily in -- under 3 buckets. For the current set of joint ventures and the current set of products, our aim is to improve and increase the contribution per vehicle, for certain products, also increase our wallet share with our customers, and also the recent joint ventures, which are pretty much at a starting stage, as they scale up, they will also provide growth to the organization. Along with this, as the volumes bounce back of our various OEM customers, the growth will continue and as on certain product lines like the Gear Shifter, the technology shifts will also add and contribute to the top line and bottom line. So this is our strategy for the current product portfolio.Obviously, we are constantly looking at new opportunities, new joint venture partners where either the regulations are opening new doors or the technology needs of our customers are sending us some signals of opportunities. We are also evaluating inorganic opportunities, which would strategically fit the group's core strength. And in the After Market, I've always maintained as a third bucket, that our growth will also come from nonlighting businesses, and going forward, you will see that nonlighting will start adding to a significant more chunk of the pie.So those primarily would be our key growth drivers or strategic initiatives for the company going forward.
So sir, in the After Market from current 15% share, what is our internal target? What we can do after launching all the products what we have lined up?
So I would address that question differently that I think, as I have always maintained that we would probably look at more than doubling our After Market revenues in the next 3 to 4 years. And depending on how the overall industry growth happens and depending on how our product mix of the 2 and the passenger car segment happens, After Market may contribute close to 20%, depending on how the other product lines do, but it will always be one of the top 3 contributors in terms of our segments or divisions.
And so my last is, how -- what are the benefits we get from BS-VI? How our company are benefited? Can you highlight on some terms?
So BS-VI for the organization has clearly sent out a lot of new opportunities. For example, the urea tank, the new product, which the company has started manufacturing recently was an outcome of the BS-VI regulation. Also the oxygen sensor joint venture with Lumax FAE was a direct result of the regulation changes of BS-VI. So I would say that the BS-VI regulation has only given the company a lot more opportunities to grow in new verticals and new product spaces than it did before.
The next question is from the line of Abhishek Jain from Dolat Capital.
Sir, [indiscernible] on the business. And what is...
Abhishek, you were not audible. So I request you...
Are you able to hear me now?
We are able to hear you now. If you can repeat your question, please?
So what sort of recovery are you sensing in the business? What is current utilization level? And how much is the current inventory level?
So in quarter 1, if you look at the consolidated position of the organization, we only did 25% of revenues of quarter 1 of last year. In the month of July, the situation has actually reversed. We will be -- we -- or rather, we have achieved 75% of revenues of last year July. In August, we are expected to achieve close to 90% of our last year August revenues. And in the month of September, as of now, the forecast is that we should be able to attain the same level as last year September. Clearly, the recovery is faster than what we had anticipated in the beginning.
Okay. And sir, what is the current inventory level, which needs to be [ achieved ] in the second quarter?
May I request Ashish or Sanjay to address that, please?
So current inventory level is almost around 50 days because of low production in Q1 FY ‘21.
And what is the normal level?
Normal level is -- it used to be around 35 to 36 days.
Okay. So in that...
[indiscernible] the utilization is increasing. So we are damn sure that it will be within the -- well within the limit.
So most probably, it will impact the gross margin in the second quarter because of increase in the gross raw material cost because of this liquidation of inventory?
No, I don't feel like that, because the better utilization as explained by Anmolji, I think it will be compensated in that way, and we will be able to have a better gross margin.
Okay. And sir, as you mentioned that you have taken a lot of measures for cost-cutting in first quarter. So can you quantify the amount you are looking to save through cost-cutting measures in FY '21?
So for the full year, we had taken a target of roughly around INR 25 crores to INR 30 crores as annual cost savings on our fixed costs. And it seems to us that based on whatever reductions and whatever cost saving measures we have done in Q1, we should be, frankly, able to achieve that for the entire year.
Okay. Great. So -- and what is your current gross and net debt including short-term debt?
At consolidated level, we have a debt of around INR 30 crores and the working capital almost INR 100 crores. But if you see the cash and other, it is almost -- we are nil to net asset.
Net debt is -- so as the net debt is 0 and you have a INR 100 crores kind of the cash balance in your growth, so despite that your outstanding debt is around INR 95 crores and INR 100 crores, and you are paying some INR 10 crores of interest, which is about 15% of your EBIT. So just wanted to understand your thought process behind this. Are you looking for any business acquisition? Or it is onetime short-term way to finance your working capital?
Because of the challenging situation in the quarter, we -- as a present way we have capped the balance -- bank balances before, and therefore, we will have a mix of both. Maybe have a smaller debt and having the cash and bank balance to grab any opportunity going forward, as we mentioned in the previous calls also.
So can we assume that the interest base cost would be around INR 10 crores annually in FY '21 and FY '22?
No, [indiscernible] way forward, it will be reduced.
Sorry, sir?
Way forward, the interest cost will be reduced.
So it will be possible after FY '21 only?
No, in Q2 when the utilization will be there, definitely, we'll keep our limit less utilized. And with understanding that whenever we go for some kind of, I mean, inorganic acquisition, we will use that at a later date.
I think as the normalcy resumes and the volumes start to offtake, which they have currently and the cash flow starts to become positive, we will start to see a reduction in the interest cost.
Okay. As you mentioned with -- you have started your production of the urea tank and most probably will start oxygen sensor from second quarter. So just wanted to know that what is your revenue target from urea tank and oxygen sensor for FY '21, and what is your order book size?
So Vikas, would you be able to throw some light on that?
Yes. So as far as urea tank is concerned, as Anmolji mentioned, this year, the commercial suppliers have started to Tata Motors. I think the incremental revenue will definitely be a double digit figure, which will be an additional sale coming into Lumax Cornaglia in crores for the current year. We -- being a critical BS-VI product, we want to stabilize on the QCD for this year, and we are already looking at very, very good customer inquiries for the coming period, which is the next fiscal year. The urea tank will be produced within this year at 2 locations, one at Pune and second at Pantnagar, and we are also going to add further to this range.On the second product, which is oxygen sensor, it gets into the commercial production, the SOP happens towards the end of Q2, the beginning will be a little small. We should be doing some revenues on the light of launch of the oxygen sensor for the Mahindra motorcycle, but then again, we are sitting on an order book for the coming year.
And both these businesses will come in to the heading Air Intake Systems, right?
Sorry, can you repeat that, please?
So both of these businesses, like urea tank, oxygen sensor, that will come into the heading Air Intake System business?
No. Air Intake Systems is under the Lumax Cornaglia joint venture. The urea tank is housed under that segment or vertical. The Lumax FAE is a completely different entity, and it is a different vertical under the oxygen sensors. So they are both very different entities with different partnerships. And as Vikas had mentioned, the incremental revenue [Audio Gap]So, I was saying that maybe from both these put together, we should be looking at maybe close to INR 100 crore annual revenue incremental over the next 1 to 2 years once we are in full production.
Okay. Sir, my next question is related with the lighting business. So what are the key growth drivers for the lighting business? Can we assume that this will move in line with the Bajaj volume growth? Or we can get the -- some benefit of the higher realization because of the change -- increasing penetration of the LED segment?
It will be a mix of all 3, as I mentioned earlier. We will be also increasing our wallet share of lighting with Bajaj Auto. We have already seen some traction on that by getting into the premium bikes, the lighting of the premium bikes of Bajaj Auto. So that's a step forward in that direction. Also, the technological shift towards LED will also add to the revenues of lighting. And of course, with Bajaj Auto volumes recovering back to 100% normalcy, we will see an upswing on the lighting business as well. So all 3 aspects will contribute.
[Operator Instructions] Next question is from the line of Bharat Gianani from Sharekhan.
So incrementally, you said there are 1 or 2 levers, basically urea tank is there and oxygen sensors, and then obviously, we have the After Market business also recovering. So considering that, can you put a guidance on like how much you really be able to outperform the automotive industry?And my second question is that the oxygen sensor and urea tank would be through the JVs and subsidiaries. So like what revenue would accrue to the -- our Lumax Auto Tech company as a whole? So that -- these are the 2 questions.
So I will take the first question, and then I'll ask the finance team to address your second question on the presentation. The first question, I think I've made it very clear that the growth drivers are not just urea tanks or oxygen sensors. As I mentioned, we are also increasing the contribution for vehicles and that is the reason why I mentioned that we have also started supplying the chassis to the premium bike models of the Bajaj Auto on the KTM platform, it adds the contribution per vehicle. So that is also going to garner a higher revenue pie for us. Also, as I mentioned, the wallet share, we are increasing the wallet share on certain products with respect to our share of business with the customers and also the technological shift in, let's say, the Gear Shifters or even in the lighting, as I have mentioned, that the LED lighting will also add to the revenue. So those, coupled with the new product lines which we have entered into, will definitely add to the growth of the organic entity.However, as you correctly pointed out, the current year is going to be a very difficult year for the industry despite the normalcy, which is seen to come back in quarter 2. For the full year, we still expect the industry to post a degrowth on an overall basis. Coupled with the degrowth of 18% last year which the industry posted, you're looking at almost close to 40% or somewhere around 35% degrowth in 2 years. So what I'm trying to say is that Lumax Auto Technologies may fare better than the industry, that we do not anticipate our revenues to go down by 40%, 35%, 30%, primarily because of these growth drivers, which would offset a lot of the degrowth, which would happen in the industry. I hope I've been able to clarify that, and I'll request...
Sir, minus -- sir, just one clarification, minus 18% industry was -- you're talking about FY '20 and minus 18% is again for FY '21, right?
FY '20, the auto industry, we grew by 18%. That is the SIAM data. And in the current year, your guess is as best as mine. Right now, it is foreseen by SIAM that the industry perhaps would degrow by about 25% to 30%. That is the current SIAM estimate. And I'll let Sanjay or Ashish address the Lumax FAE and the urea tank consolidation of revenue.
So both are the subsidiary of Lumax Auto Tech and 100% revenue is consolidated in the consolidated balance sheet.
Okay. So both of these subsidiaries are 100% subsidiaries.
Yes.
The next question is from the line of Resham Jain from DSP Investment.
So my question is on After Market business. So if you can just help us understand whether you appoint the dealer directly from your side or do you have distributors who, in turn, then appoint dealers? Or is it like a wholesale business where you supply to the distributor? If you can just help on this side?And also is there any plan to appoint like direct dealers with a core branding with -- at a store level with Lumax? That will help.
So I will throw some light here. I think the business model of the After Market is that we have our own dealers, which the company appoints on a pan-India basis. Currently, we have close to more than around 200 such dealers across the length and breadth of the country. These dealers, some of them are exclusive to Lumax and some of them also would be dealers for certain other brands in the After Market. These dealers, obviously, buy our goods across different product ranges. And then they further sell it to the retailers and the distributors at their regional level. So our connect is not just with the dealers, but we, our After Market teams also do a lot of brand building, sales and brand, let's say, training at the retailers, even at the grassroot level of the mechanic to promote the brand awareness, and that is what pulls the demand in the After Market.
Okay. But do you have like something what we see in U.S. where a store -- a specific brand like has stores and then you do a co-branding of Lumax along with it, and only Lumax products are available over there. Is there -- that a model which has yet developed in India? Or -- because I could see 1 or 2 stores where they keep exclusive Lumax goods only?
Yes. So there are few examples, but this business model per se has not really taken off in India, as it is popular in the western world. There are multi-brand retail outlets in the Western world, which is not necessarily a big driver of business in India. So primarily, yes, you're right. There are certain exclusive showrooms or exclusive distributors as well, but they would not be a significant chunk of the overall pie.
Okay. Okay. So our strategy will be to basically appoint more dealers, like 200 may further increase going ahead. Is that something which you are looking for or to appoint more retailers at -- who can buy from those dealers in turn?
So it will be both, depending on region. So certain regions, the challenge would be at appointing more dealers. And certain regions or certain states, we may already have enough dealers, but we may need to add more touch points and hence, the focus would be on the retailer side.However, the back end focus is clearly in adding and building a very strong new product lineup for the After Market on both the lighting as well as the nonlighting segment. And that is what we see will be our key growth drivers going forward.
Okay. And sir, my second question is you mentioned about inorganic opportunities like what we see last year, which somehow got postponed, the OK Play acquisition -- asset acquisition, which you were planning. So if you can highlight what kind of inorganic opportunities you are looking at the nature of the same?
This is Deepak Jain here. I think as a group, we keep on evaluating whatever best fits in terms of the core competency and the customer needs for any inorganic opportunities. We firmly believe that COVID had kind of paused, but will fast track these kind of opportunities within the market. There is also expectation to resetting both from buyers and the seller points. Our core competence still remains in basically 3 or 4 domains, which are primarily on the electrical and electronics, on the plastics and on the metallics. So with these basically competencies, we will keep on exploring what could be the best opportunity for us. During the COVID times, the company's first responsibility was to further conserve cash and -- which we did, but I think with this now fast uptick, we will be open to be looking at opportunities.
Mr. Jain, does that answer your question?
Yes, sorry. Just one -- another question is on the overall export opportunity, a lot of sectors globally have or within India has been the supply chain, which used to happen from China and all, and now shifting some of those sourcing coming to India. Do you see that as an opportunity for us going forward?
Yes. I mean, so definitely, auto components, exports is actually one of the key sectors, which the government of India is promoting for basically long-term export opportunity. The China plus One opportunity, there are obviously certain supply chain, I would say, strategies, which would be more delivered or probably front-ended by the customers. From your company perspective, I think we are in dialogue with our respective partners to see whether we can utilize India's competitiveness as manufacturing bases going forward. And also we are on the lookout for the opportunity. So hence the opportunity does exist. However, we have to just see where we would want to find. Currently, of course, we are looking at both the domestic, After Market as well as looking at the export.Strategically, I think export is important to us in the long run, but I think we will have to time it correctly because right now, our focus would be to get started and capture a respectable pie of the Indian market share. And once we have our feet off the ground, we will definitely look at the export opportunities as well for our product line.
[Operator Instructions] The next question is from the line of Pratik Kothari from Unique AMC.
Sir, just to consider the last comment, which you made to the earlier participant regarding export opportunities. Just, earlier, we were very clear that we have so much to do here in India itself that export -- we had put export on a back burner maybe a year or 2 back. And I think maybe for the first time, you have mentioned in the presentation that now we are looking at setting ourselves on a global scale, maybe even on the Gear Shifter side you mentioned something. So is this disruption in China, the motivation for us to now starting -- start looking at export or something else has also seen?
It's a great question. And you're absolutely right because the company was more focused on the domestic market. But if you please understand that last 4 months, I mean, say, there has been a massive disruption on not just basically supply chain, but also thoughts. So hence, I'll just repeat my comment, what I just said, it has also a lot to do with how now the customer perceives this whole import substitution and also looking at taking -- using India as a manufacturing base for basically exporting. And if the customer shift has happened, because in terms of the China, or this whole COVID experience and the disruption, then definitely, we -- having very strong linkages with certain key customers, which also have a good export aspiration, we do definitely have and see an opportunity there. So I think it's too premature to say what is the opportunity, what is the size, what are we targeting. But definitely, now we are looking and evaluating with the export opportunity. I would say now given the current situation, there is also another advantage that we have multiple JV partners, and hence, we can even dialogue with them because this is not any more Indian phenomenon. This has actually become a global phenomenon. So as I think China plus One opportunity, India is evaluating, I think it has also been globally evaluated, where I think we can try and see what opportunities this company can have. Because we've already done investments in certain products. But before waiting to see how the domestic market, and of course, the focus will remain the domestic market. But if any opportunity we see in this concurrent time with exports, we would definitely like to seriously consider.
Fair enough. That is very encouraging, sir. Sir, just to take this forward, I think that, again, you're expecting some large JVs to form someone, which will contribute maybe 5-odd percent to the top line, et cetera. So is this back on the radar now? Is that being fast tracked? Will we see anything on those gains?
Well, we are still under discussion. And hopefully, I must say that there has been some delay in the JV discussions, primarily for about 3 to 4 months. But we are very hopeful and still very much engaged with certain strong potential groups JV partners. And we -- hopefully, when we are able to make the announcements, we'll definitely let you know.
Fair enough. And be it inorganic or be it JV, it will be in the field that we are currently presenting, like you said, electrical, electronics plastics and metals?
Absolutely. I think we will stick to our core, which is the plastics, electronics, metallics and mechatronics. We will play in the same field.
Next question is from the line of [ Anubhav Rawat from MNCL. ]
Just a couple of questions. Sir, could you give any ballpark figures for our market share across the segments we are present in?
So I will start with the Gear Shifter business, where we're clearly the market leaders with close to approximately a 70% market share. In the lighting space, of course, as I mentioned, we are only restricted to Bajaj Auto, and we would be close to about 35% of Bajaj Auto's market share. In the Chassis, again, we have only Bajaj Auto as our customer, and we would continue to be close to about 40% of the Chassis market share in Bajaj Auto. After Market, obviously, I don't think this question really holds true, because it's a very large After Market segment. This constitutes both organized and unorganized players. And also for the Plastics business, it's a very generic question, because Plastics, I don't think we can forecast what is the market share of plastic products. But whichever customers we are supplying the plastic parts to, take in point, the Air Intake System, we are almost 100% of the share of business of -- across those customers. So I would say wherever we are operating, we fairly are at a respectable market share position across all our products.
Okay. Perfect. Understood, sir. Sir, any guidance on the wallet share that we have with our clients?
Well, it again differs from product segment to product segment. But again, as I mentioned, these would be similar in terms of the wallet share, which I just mentioned to you on the Gear Shifters as well as the wallet shares of Chassis and lighting on the Bajaj Auto.
All right. Perfect. Understood. And sir, what would be our CapEx guidance for this year?
For this year, the CapEx guidance is about INR 70 crores, 7-0. And largely because of the oxygen sensor as well as the urea tank projects, those are the 2, which would constitute a significant part of the INR 70 crores.
Okay. Understood, sir. And just one last question. So what would be your current cash and debt position?
I will request Sanjay to take that, please?
So current debt position is around INR 30 crores long-term debt at consolidated level, which is around 0.07% debt equity ratio. And working capital limit is around INR 100 crores to INR 110 crores, and I'm having the cash and bank balance, investment in mutual fund is approximately around INR 120 crores.
The next question is from the line of Apurva Mehta from AM Investments.
[indiscernible]
Apurva, you're not clear. Can you repeat, your line is...
Sir, on the OK Play front, where we had planned to acquire the plastic business, are we still negotiating with them or is it on the back burner?
So the target, which we were looking at is on the back burner, and we are not pursuing that very target; however, the space, which we were evaluating still continues to be of interest to us. And strategically, we will -- we are still evaluating how we can enter that space going forward.
Are you still -- if we are renegotiating with them? Or that cannot happen now?
Well, as of now, we have suspended all the discussions. And as I said, it's too early to restart the discussions, has to be [ split with those parties ]. So currently, we are not in discussions.
[Operator Instructions] Next question is from the line of Bharat Gianani from Sharekhan.
So I just wanted to know what's your revenue mix if we -- FY '20 at the consolidated level, what would be our revenue mix between After Market and various segments that we cater to, like, for example, PV, 2 wheeler and CV, what will be the contribution?
You're talking about FY '20?
Yes.
So FY '20, the customer wise After Market contributed 18% of the total consolidated revenues. And Bajaj Auto was still at #1 with about a 37% share of the consolidated revenues. In terms of segment, FY '20, the 2 and 3 wheeler segment contributed close to 50% of the revenues. Passenger vehicle 20%; and After Market, as I mentioned, 18%, and the remaining close to about 7% to 8% came from commercial vehicle and other segments.
Okay. So after this BS-VI products that you pointed out as well as your strategy of increasing the wallet share. So oxygen sensor is basically a 2 wheeler product and urea tank would be basically a product for the commercial vehicle, right? So post -- like after 2 years or 2 years down the line, do you expect any significant shift in the mix that is what it is currently today?
Not a very significant shift. But strategically speaking, I think going forward, we do expect that the growth of commercial vehicles and passenger cars should be far more than the 2-wheeler segment. So having said that, the 2-wheeler segment would continue to grow, but perhaps because the fact car and the commercial will grow at a faster stage or per vehicle contribution in those segments is far greater, the contribution of 2 and 3-wheeler pie over time may not be as high as 51%, and that will be strategically driven. So I'm saying while we will continue to grow in absolute amounts in the 2 and 3-wheeler segment, the contribution pie will probably come down because the other segments will grow faster.
Okay. Okay. So sir, oxygen sensor is basically for 2-wheeler, right? Or is it for the passenger vehicle space as well?
Primarily from BS-VI regulation, it's driven for 2 wheelers.
[Operator Instructions] The next question is from the line of Abhishek Shah from Valcore Capital.
Am I audible?
Yes, you are.
So I just wanted to understand on the cost cutting measures. I heard a figure of INR 25 crores to INR 30 crores. I just want to understand if that number is correct? And also, how much do you expect it to be even post-COVID -- once we sort of scale up back to pre-COVID levels, how much of these costs might sort of go on for -- cost-cutting might go on for the coming years as well? And then hopefully, if you can comment on what would be the margin expansion due to that?
So good question. I think, number one, I want to say that the number, which you heard was absolutely correct, INR 25 crores to INR 30 crores for an annualized basis. A majority chunk of this cost-cutting comes on the manpower cost. Our strategy and our thought process has been very clear. We have not resorted to layoffs, thereby cutting the manpower cost. However, we have resorted to a voluntary, let's say, reduction in the salaries and wages, which have been offered by our employees. And for Q1, across various segments across various slabs, we have taken a hit, including the so-called blue-collar basis. So in Q1, and some of it also continues in Q2. So for H1, we would have had a substantial savings on account of manpower reduction. As things normalize, we do also anticipate that the similar cost savings on manpower will not continue for the remaining part of the year. As things come back to normalcy, we would probably restore the salary cuts going forward as well.However, on the other aspect, the non-manpower cost related, which would be, I would think about 30% of this total pie, and that would go from all different fixed costs, be it rental, be it traveling, be it other overheads, be it insurance, et cetera, et cetera. All of those are being evaluated for cost cutting. Some of them have already seen a very positive trend in Q1. Some of them will come in Q2 and so on and so forth. And these are the costs which we do not anticipate to escalate even post-COVID. These are the costs, which once they are cut in the system, would actually become, let's say, the new normal, and the company would gain from those.
Right. Sir, my next question is you mentioned the capacity utilization levels for August, and September seem to be substantially higher than what we were anticipating. I just want to understand, do you think this is just a pent-up demand for the festive season coming ahead? Or what is your take? I understand there's a lot of uncertainty, but just wanted your view on the same.
So it's a good question. And I personally feel that in certain cases, the demand would continue. I'm just happy that at Lumax Auto Technologies, we have a very diverse mix of segment as well as customers. So we're not necessarily dependent on one segment doing great or bad or one customer doing great or bad. Having said that, I think After Market, I'm very bullish. Because After Market really only last month, we have started to see a good traction. So from that sense, I would say that this growth would continue.Bajaj has been very strong in terms of their export volumes. Even in quarter 1, if you see Bajaj compared to the rest of the OEMs, they almost did close to 40% of their last year's quarter 1, so-called, volumes. So from that perspective, I think that I personally feel this demand to be sustainable, and it's not just a pent-up demand because of the festive season.
Got it. Got it. Sir, one last question is -- it's on the After Market front. I understand if we forget the first half of the year, what are the normalized margins that you would expect in After Market? Is a 13%, 14% margin safe to assume?
Well, I have always advocated that the After Market continues to operate at similar margins as you had mentioned yet. And our endeavor would be to sustain those margins and grow the top line going forward.
[Operator Instructions] The next question is from the line of Bharat Gianani from Sharekhan.
Yes, just one on the After Market side. While you stated to the last participant that you saw good traction in the After Market volumes from July. So I mean, do you consider After Market will perform relatively better than the OEM segment in this year? Or what's your take? Like could we see a kind of flattish top line for the After Market division? What's your view on that?
So After Market, if you look at the quarter 1, obviously, compared to last year, it has pretty much been in the similar trend as the OEM. We only did about 25% of our Q1 revenues in After Market compared to the Q1 of last year. And so has been the case for the OEM business as well. So I do not anticipate After Market for the full year to post a growth. I think After Market would also continue to show a degrowth compared to last year's revenues. But I do think that the degrowth would be comparatively lesser than perhaps the degrowth of the automobile industry. That's my take on After Market for the current year.
Okay. And sir, earlier, you also pointed out that apart from lighting, you would be introducing new products in the After Market space. So currently, we have lighting. So just wanted to know what kind of products you plan to introduce in the After Market segment going ahead -- in the nonlighting segment.
So currently, apart from lighting, we already supply close to 5 different products or product lines into the After Market. These are varied from air filters to mirrors to even electronic products and also plastics bars and so on. So these are 5 or 6 product categories. Our first endeavor is to try and grow each of these product verticals into a respectable size with respect to competition. Please understand that in lighting, we are the market leaders in the OEM space. So it is easier for us to penetrate and maintain that leadership in the After Market, whereas for the rest of the product, we are not the market leaders in the OEM space. So for us, it's very important that we climb that ladder first, before we enter into 6 or 7 product categories. So it will be a mix of both. It will be organic growth of the nonlighting product categories we are currently under. And at the same time, we will also be evaluating what the After Market needs for an organized, respectable brand like Lumax, and we will enter those spaces.
Okay. And sir, I missed your point on the After Market margins that you said, it's comparable to the margins of the company? Or like it's slightly better than that? I actually missed that question. Your response to the earlier one.
Our After Market margins are better than the consolidated margins, which the company has posted. Having said that, there are many products and many verticals within the OEM group as well, which also operate at a similar or better margin than After Market. So what I want to say is that After Market is not the only vertical, which has those kind of margins. There are other verticals also, which have a similar margin.
The next question is from the line of [ Ankan Jain ], individual investor.
I just wanted to know whatever the new products which we are launching, like urea tank, oxygen sensor or any other future products, which are in the pipeline. If any of these products are made only by Lumax Auto Technology or only Indian company making these products?
Sir, as of now, the products, which we are recently entered into and which we are, let's say, going to enter into, I do not foresee anything which is currently not manufactured by somebody else. However, there are definitely a few products where we might be the first ones to localize it in India.
Okay. Sir, these 2 products, that is urea tank and oxygen sensor are supposed to be for the BS-VI vehicles and BS-VI is implemented from April. Are we not a little bit late into production of these products?
Vikas, may I ask you to take that, please?
So we are not late for these products. The urea tank launch was started in the last week of March actually and due to the COVID situation, the ramping up and the scaling up has started only in the month of May. We are very much on track there. We are also on track as far as the Lumax FAE sensor is concerned, oxygen sensor and that oxygen sensor gets into commercial production for supplies by October. So very much in it, we are not far from those targets.
Sir, for whomever, we have received the orders for this, let us say, oxygen sensors. So whatever they are producing as day, they need to have these products in their vehicle, right?
You are right. So that is a pass-through that is happening with our JV partner currently from Spain and which we will localize from October.
So they are importing -- and we are importing and we are supplying it to the customers?
No. FAE is directly supplying to the customer right now, and we will start localizing it from October.
Okay. Fair enough. My second question is that I keep hearing, for a lot of the products across the segments we are there, we keep getting either new orders or increasing our share with the existing customers. So whatever these new orders keep coming, is it clearly the price is the criteria? Or is there any other reasons due to which our company is getting this business?
I'm sorry, I didn't understand the question.
No, what I'm asking is, we keep hearing a lot of new orders, one, new customer. With the new customer, increasing our mark -- share in the existing business. What is the criteria for getting these additional business in our company's share?
So the criteria is very simple. I mean, obviously, it's not just quality, cost and delivery. I think those are hygiene factors. But primarily, it is a long-term strategy and with our customers, we enjoy very, very strong relationships, both on performance and as well as at the management level. So I think the customers see a lot of confidence and merit in parking these key businesses on to Lumax, and that's why we have -- we enjoy that confidence and faith from our customers. So it's a 2-way street.
So ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments.
Well, I would like to thank you all for joining in to the call today. I hope that we were able to answer all your questions. For any further queries, you may please get in touch with us or SGA. We will be more than happy to address all your inquiries. Until we talk next, please stay safe and please stay healthy. Thank you, again.
Thank you. On behalf of Lumax Auto Technologies Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.