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Lumax AutoTechnologies Ltd
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Ladies and gentlemen, good day, and welcome to the Lumax Auto Technologies Limited Q3 and 9 Months FY '20 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Anmol Jain, Managing Director, Lumax Auto Technologies Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. A very warm welcome to the Q3 and 9 Months FY '20 Earnings Call of Lumax Auto Technologies Limited. Along with me on this call, I have Mr. Deepak Jain, Director; Mr. Vineet Sahni, Lumax CEO; Mr. Vikas Marwah, Chief Strategy Officer; Mr. Sanjay Mehta, Director and Group CFO; Mr. Naval Khanna, Executive Director, Lumax Management Services; Mr. Ashish Dubey, CFO; Ms. Priyanka Sharma, Head, Corporate Communications; and SGA, our Investor Relations adviser. The results and presentations are uploaded on the stock exchange and company website. I hope everybody has had a chance to look at them. Before we start with a discussion of financial performance of the company, I would like to share a few highlights on automobile industry. 2019 witnessed the slowest demand in the past 2 decades due to weak economic environment, higher vehicle prices and stricter lending rules. However, during the month of December, some signs of green shoots are seen as the pace of decline in demand of passenger vehicles did reduce. Though on a low base, an improvement in the rolling average in the last 3 months of the year led the industry to assume that the worst may be over. As per SIAM, the automobile sales declined by 14% in calendar year 2019. Passenger vehicles and 2-wheelers posted a decline of 13% and 14%, respectively. Commercial vehicles recorded the steepest decline in 6 years at 23%. Thus, it is clear that 2019 did not end on a good note for the industry. It is expected that the Indian economy will revive in FY '21, along with the low base of last year and availability of newer models should also support growth in the auto sector. The revival is expected to start from the third quarter of current calendar year and will be visible from the next festive season. Transition to BS-VI will lead to clearance of BS-IV inventory and also result in an uptick in the production of BS-VI vehicles. However, BS-VI will also lead to an increase in the cost of vehicles. And to ensure that this additional cost does not have any impact on the demand, SIAM has approached that -- the government to reduce GST rates from 28% to 18% on vehicles and also introduce an incentive-based scrappage policy. These proposals, if accepted, can give a major boost and accelerate the revival of the sector. Let me now take you through the performance of each business entity. The stand-alone entity caters to Integrated Plastic Modules, After Market business, Chassis, swing arm for 2-wheelers, trailing arm for 3-wheelers under the metallics business and 2-wheeler lighting. The stand-alone entity contributes 84% of the total consolidated revenue post-merger of Lumax DK with the company. Lumax Mannoh Allied Technologies is a 55% subsidiary, which manufactures gear shifter systems. Company has a market leadership position and has the capability to manufacture manual, AMT and automatic gear shifters. This company contributes 11% of the total consolidated revenues. Lumax Cornaglia Auto Technologies is a 50% subsidiary, which manufactures air intake systems, and the major customers are Volkswagen and Tata. The JV commands 100% share of business with Volkswagen and Tata. Lumax Cornaglia currently contributes 4% to total consolidated revenues. The company is confident of increasing the revenues over the next few years with the addition of new customers like MG Motors and the start of urea tanks business in FY '21. Lumax Gill-Austem Auto Technologies is a 50% subsidiary, which manufactures seat frames and is a Tier 2 supplier through LEAR and TM Seating added recently. This company contributes 2% of the total consolidated revenue. The Board has approved to serve termination notice to its JV partner, Gill-Austem LLC, due to nonperformance of obligation by the partner even after the expiry of cure period in terms of the JV agreement. The company does not foresee any material impairment in this regard due to going concern of the JV company, that is, Lumax Gill-Austem Auto Technologies Pvt. Limited. Lumax Ituran has generated business inquiries from OEMs preparing for regulatory norms to implement the track and trace devices, with additional features for future models. Trial phase has started and the response is encouraging. We expect to realize revenues starting in FY '21. Lumax FAE, the plant and machinery is under final preparation at the suppliers' end and the plant for oxygen sensors will be operational by Q2 of FY '21. Let me now share with you some important business and customer updates. The company has entered into a new 50-50 joint venture with Yokowo Company Ltd Japan to manufacture and supply antennas and other vehicle communication products to the Indian automotive industry. The start of production is expected to commence in later part of FY '21, '22. The company has also signed a MoU with Ananda Drive Techniques of China for manufacturing electric vehicle products for 2-wheelers and 3-wheelers. This MoU is expected to lead to setting up a manufacturing facility in India towards the end of FY '21. The company has also made the following new launches during the quarter: in the 2-wheeler category, the swing arm for the Bajaj Dominar; in the passenger vehicle category, air ducts and filter assembly for the Altroz and Tiago models of Tata Motors; and gear shifter systems for the Harrier vehicle of Tata Motors and the eKUV model of Mahindra & Mahindra. In the commercial vehicle category, the company also started the urea tank to the 407 and Ace platforms of Tata Motors. The company has also received the following business nominations during the quarter: the AMT gear lever system for the Nexon, Tiago and Tigor passenger vehicles of Tata Motors. The Bengaluru plant of the company has won the prestigious TPM award for excellence in category A from Japan Institute of Plant Maintenance, the ceremony of which is to be held in Japan on March 18, 2020. At Lumax Technologies, we constantly reinvent ourselves to meet the changing needs of our dynamic business environment. This enables us to achieve greater heights and serve our customers better. We believe in constant innovation and as a technologically driven company, we prepare ourselves for the future challenges and opportunities. Our collaborations with elite names globally, along with their expertise, helps us to provide the best solutions to our customers, even before they are introduced in the Indian market. All this put together allows us to maintain our strong position in the industry. Now I would like to hand over the line to Mr. Sanjay Mehta, Group CFO, to update you on the operational and financial performance of the company for 9 months FY '20.
Good afternoon, everyone. The operational highlights for 9 months FY '20. Integrated Plastic Modules contributes 30% to overall revenue, followed by After Market at 18%, Chassis at 17%, Lighting Products at 13%, Gear Shifter at 11%, Intake Systems at 4% and Others at 7%. 2- and 3-wheelers contributed to 50% to overall revenues, Passengers Cars, 20%; After Market, 18%; and CVs, 7%. Consolidated financial highlights for continued business post-PCB disposal for 9 months stood at INR 868 crores as against INR 886 crores last year are down by 2% against industry downfall of 13%, which is due to increased sales to Bajaj Auto Limited and After Market division. EBITDA, including other income and share of profit or loss from JVs stood at INR 88 crores vis-à-vis INR 95 crores last year. EBITDA margin for 9 months stands at 10.1% as against 10.8% in 9 months last year. The contraction in margin is on account of lower profitability in Lumax Cornaglia Auto Technologies Pvt. Ltd. and Lumax Gill-Austem, subsidiaries of the company. The profit after tax and minority interest stood at INR 44 crores against last year, which is the same as for the last year. The company has opted for reduced tax rates, the impact of which has been taken in Q2 FY '20. The effective tax rate would be around 25% going forward. PAT margin for 9 months is 5% against 4.9% of the last year. EPS stands at INR 6.41 per share, which is same as in 9 months last year. The CapEx incurred up to 9 months stands INR 16 crores. The expected CapEx for FY '20 is around INR 40 crores. Now I will just update the company-wide revenue. Lumax Auto stand-alone post-merger with Lumax DK Auto, the revenues stood at INR 726 crores as against INR 722 crores last year, witnessing a growth of 1% with EBITDA margins at 10.4%. Lumax Mannoh revenue stood at INR 96 crores as against INR 105 crores last year, with EBITDA margin in mid-double digits. Lumax Cornaglia revenue stood at INR 34 crores as against INR 33 crores in the last year, with EBITDA margin in single digits. Lumax Gill-Austem revenue is INR 16 crores as against INR 28 crores last year, with a negative EBITDA. Now we open the floor for questions.
[Operator Instructions] We have a first question from the line of Hardik Sodha from Crescita Investment.
Congrats on a good set of numbers. So I just wanted to get understanding on 2 things. One is, you said in your comment that the revival in the auto sector will start from CY -- third quarter of this CY, so basically, Q2 of the next year. So I just wanted to understand, it is because of 2-wheeler? We've already seen the revival, 2-wheelers numbers have been good. Passenger vehicle, already, we have seen in the last 1 month to be good. So while we are putting that forward to 6 months, hence the revival. And secondly, in terms of BS-VI transition, how we are positively or negatively impacted in terms of our products? So if you can just touch upon these 2 things.
So thank you. The first question, I think we do not -- we have not seen a 2-wheeler up -- offtake being positive in Q3. On the contrary, if you look at the sequential quarters, Honda Motorcycles as well as Bajaj Auto, the 2 main 2-wheelers customers for the company, have shown a negative trend on Q2 to Q3. We do expect that post BS-VI, the rationalization of the pricing will happen at least by Q2. That is the earliest when we expect the demand to somewhat revive. As I also mentioned, in the passenger car space, there has been some green shoots, which has been seen in the months of January and February and Q4 of this financial. We expect that there would be some momentum post the BS-VI transition. And again, Q2 would be the earliest when we would see some positivity or momentum, probably going into the festive season in Q3 of the next financial. Coming to your question on BS-VI, from our product standpoint, we are going to be gaining on the emission products, basically, the air intake systems and the ducts, which would be a -- and the company has already transitioned and is already supplying to the BS-VI variants of the model for these products. Oxygen sensors is another product which is directly impacted because of the BS-VI regulation. And as I mentioned, we will get into mass production in Q2 of the coming financial year.
Okay. So sir, just one more question in terms of After Market things. After Market, the contribution has increased. But overall, on the margin side, After Market margin being higher, it's not getting reflected in the overall margin. So is the OEM, the price increase and all that are getting past? Or what is the issue in terms of margins overall?
No. So as Mr. Mehta had mentioned, that the margins are getting impacted because of the consolidation of certain subsidiaries, which have probably had a decline in their performance on a year-on-year basis. And After Market, still the growth continues and the margin expansion also continues. So going forward, we do anticipate that the growth in After Market would actually add a lot more value in the consolidated results for the company.
Okay, sir. And sir, just last thing, in terms of the new product that Mr. Jain has talked about. How much will be the contribution that you're expecting from 3, 4 -- 2 new ventures and 3, 4 new products that you talked about in the current year?
You're talking specifically about the new joint venture of Yokowo?
Yes, yes. Probably electric vehicle one you talked about and one for -- and the other one that you talked about, 2 ventures that you talked about. And secondly, you talked about new product part to be -- means -- like produced from this year, so starting with oxygen sensors and others. So how that will ramp up and how much the overall new business will contribute to the...
So the joint ventures in totality contribute close to 15% of the consolidated revenues. And going forward for the year, we expect that to remain pretty much similar. We don't expect a major change there. Most of the new joint ventures like Yokowo and the MoU with the Ananda Corporation will actually see any movement of revenues perhaps in FY '22 onwards. FY '21, which is the next financial year, it would be basically just to set up and get the joint venture going.
We have next question from the line of Abhishek Jain from Dolat Capital.
Sir, in third quarter, there is a significant increase in other expenditure. So what is the key reason for the increasing run rate, which has gone up to the INR 34 crores during this quarter?
It is, in fact, if you add the manpower and other expenses, you'll find the similar trend. It is because of regrouping of the expenses and other expenses by the auditor.
Okay. So can you throw some more light on it? Because in most of the cases in auto ancillary space, we're looking that there's a significant cut in the other expenditure, employee cost, because of the cost control measures taken by most of the companies. So in your cases, it is just opposite. So just wanted to know more about this.
It includes the merger expenditure of around INR 1.4 crores because of -- due to merger of LDK with LATL, okay? Actually, it is because of that other expenditure is more -- you are saying that is higher than the last year as well as the regrouping of the manpower and -- in other expenses.
Okay. So is it a one-off, and this will be normalized in the coming quarters?
Yes, it is one-off.
Okay. Sir, during this quarter, revenue from the passenger vehicle increased by 23% Y-on-Y. And even in the last 9 months, it de-grew only 2%. So can you throw some light on the reason of this outperformance? Is it because of the plastic molded parts supply to the Kia or winning new business from the Maruti?
No, it is -- in fact, Maruti, in the last year, the Gujarat facility was not there while consolidating the gear shifter. It is largely because of that.
Okay. And sir, but if you've seen the last 9 months performance in the Gear Shifter business, that was down 11% Y-on-Y despite the significant increase in the Maruti revenue. So what is the reason of this?
It is -- because the Maruti is down, if you see the Maruti is down by 14% and the Gear Shifter is largely on the 4-wheeler. See 9 months, industry is down by 13% total. So it is due to that it is down, Gear Shifter.
Sir, but in your presentation, it is showing that the Maruti revenue had increased during this quarter significantly and in the last 9 months as well. So just there is some mismatch or something, what?
No, you're right. So our Gear Shifter accounts with Maruti Suzuki specifically has grown, but since there are multiple other customers, they have de-grown. For example, Toyota Motors, the revenue on a 9-month, year-on-year basis has de-grown largely because of Toyota's own volumes being impacted and same is the case for someone like Honda as well. So Maruti's stand-alone growth has kind of been nullified by the degrowth of other OEMs of gear shifter systems. And that is why as a product of gear shifters, you're still seeing a negative growth on a 9-month year-on-year basis.
Okay, sir. Sir, how much incremental revenue you got from the plastic molded part in 4-wheelers space as you have started to supply to Kia Motors? And what is the revenue opportunity in the coming years?
Kia Motors is approximately a INR 12 crores to INR 15 crores additional revenue per annum, which has recently started. So that would be the kind of incremental from the Kia Motors business as a Tier 2.
Okay. And are you looking to add some more clients in this segment, especially for the 4-wheelers plastic molded parts?
No. So for the plastic molded parts, our play is largely on the 2-wheeler space, and we would continue to be on the 2-wheeler space. There has been some incremental revenues from Kia Motors as a Tier 2. But right now, we would be expanding our product -- our portfolio in the 4-wheelers also on perhaps the emission space going forward.
So in the last con call, you had highlighted that in the 2-wheeler space, you have win new business from the few OEMs in -- basically in plastic molded part, apart from the HMSI. So can you throw some light to the business opportunity, when it will be [ 55 ]?
So as of now, we have got some further guidance from the OEMs that because of the current slowdown, their expansion plans have been put on hold or on a back burner. We are in constant discussions with the OEM. And once they decide to go ahead and put in additional capacity, only then we would be also gearing up to put in our investments towards the plastic business. But as of now, they do not have any concrete plans as to when they would like to operationalize these new capacities.
Okay, sir. Sir, in last 9 months, your revenue from the LIL has increased by 22% despite the discontinue this SMT supply. So how this business has gone up significantly?
Well, for 9 months, the revenue of Lumax Industries without the PCB has gone up by 10% on a year-on-year basis, and it is predominantly because of certain specific models being catered by this company for Lumax Industries.
Sir, is it for the 2-wheeler? Or is it for the 4-wheeler?
It is primarily for the 2-wheeler.
Okay. So is it the reason for the contraction in the margin during this quarter?
No. This has no correlation with any contraction of the margin in the quarter.
Okay. Sir, my last question is related with the interest cost that has gone up significantly in the third quarter. So have you taken some debt, short-term or long-term debt, so interest has gone up? And what will be the run rate for the -- from the next quarter, especially for the interest cost?
Interest has gone primarily because of the higher utilization of working capital, because of the faster repayments to the creditors to support. And the second reason is because of Ind AS, there is an impact of almost 0.13% because of the Ind AS impact -- impact was there. So far long term is concerned, we have taken the debt in the subsidiary companies for expansion. So that is almost around INR 21 crores was the debt outstanding as on date for the long term for urea tanks and for other joint venture.
And how much is the short-term debt right now?
Short-term debt is almost around INR 60 crores, but it's...
Okay. So total debt is around INR 80 crores now in the business?
Yes, yes.
[Operator Instructions] We have next question from the line of [ Achal Kala ] from Finvest Advisors.
Sir, congratulations for a nice set of numbers in these difficult times as far as 9 months are concerned. Sir, I just wanted to know, in our September balance sheet, I see an item, intangible fixed asset has increased substantially from INR 1.36 crores to INR 45 crores. So what was that on account of?
It is because of accounting standard right-to-use. The rented assets, what are our plants are on rent, we have to recognize as a asset in the books.
Okay. So that you have classified as intangible?
Yes. INR 30 crores right-to-use asset it is [ vis-à-vis ].
Yes. I understand, right-of-use. And how much matching liability was created, that is included under which head?
It is included in other liabilities.
In other liabilities. So now out of INR 45 crores, you are saying that INR 30 crores was account of right-of-use asset. What was the other INR 15 crores?
The other INR 16 crores is on the -- our facilities of Bangalore and Pantnagar. And also, in the other plant, [ in the aspect ] operational CapEx of the facility.
No. This, I'm talking about only, sir, in intangible, sir.
The INR 45 crores, you are saying that must be in the stand-alone balance sheet, but if you look at the consol...
No, in consol balance sheet, sir. In the consol balance sheet, from INR 1.36 crore, our intangible fixed assets have increased to INR 45 crore. So out of which, I believe that INR 30 crore is on account of this lease accounting. So the INR 15 crore could be on account of what? It's intangible.
Give me 1 minute.
Yes, sure. Sure, sir.
We will -- subsequently will reply after seeing that.
No problem, no problem, sir.
[Operator Instructions] We have next question from the line of Kashyap Jhaveri from Emkay Investment Managers.
Just one question. In your consolidated P&L, there is this line item on fair value through other comprehensive income, which is a fairly large number of about INR 2 crores. So what -- which investments have been revalued here?
Actually, LATL is holding the Lumax Industries share. So it depends the comprehensive income on the basis of market price, it is to be adjusted. So that is the [ debt ] effect.
[Operator Instructions] We have next question from the line of [ Ankit Agarwal ] from [ Arc Capital ].
Sir, I have a couple of questions. Actually, I joined late so I might have missed a few answers. So my first question is on the JVs. First of all, if you look at our JVs, they haven't been able to scale up as expected, as the profit currently is negative from the JVs. So how do we see that contributing positively there?
So as I said, the JVs are currently contributing to 15% of the consolidated debt. There has been a [indiscernible] in a couple of the JVs and a few JVs have taken a little more time to come on their feet than expected. However, we are still very bullish on our partnerships going forward, of the current partnerships as well as even the new partnerships [ we had with ]. We do expect that JV, first should be able to contribute at least 1/4 of our consolidated revenues over the next 5 years or so.
Okay. Okay. Fine, sir. Sir, I have one more question regarding the current situation in China for the coronavirus. So how do we -- how much do we source from China? And how it will impact our supplies?
We do have some sourcing from China, specifically for the Gear Shifters and the metallic business. However, our supply chains are well covered with sufficient stocks for the next 3 to 4 months. And alternatively, we also have alternative supply arrangements made in view of any likely impact which may happen. But we do not foresee any major impact in the near future on account of coronavirus on our supply chain.
Okay. And sir, the -- one last question. Sir, given that the BS-VI implementation is nearing, how does the production schedule look like from the [ earnings ]?
As I mentioned, production schedule in the pass car space has started seeing some positivity in the month of January and February, specifically from Maruti Suzuki being the leader of the industry. And even in the 2-wheeler space, our major customer is Bajaj Auto, who is possibly the most insulated on account of BS-VI, primarily because of their strong export portfolios. So to that extent, we feel that BS-VI should not have any detrimental impact on the company.
And sir, sorry, if I could, just one last question. So regarding that we [ hand off ] the PCB business to Lumax Industries, what are our plans to cover up the revenue from there?
There is actually no cost of revenue, if I look at from a last year 9 months to the current year 9 months without the PCB business. As Mr. Mehta explained, without the PCB sales of last year, the year-on-year growth is actually just negative 2%. So from that perspective, we have actually been flattish on our performance. However, in absolute amounts, yes, there was a almost INR 150 crores revenue which had gone out from Lumax Auto Technologies, and that would be surely bridged by other product lines. And going forward, I think you will see a offtake from pretty much all the product lines, including the After Market division. But all I'm trying to point out is even for the current year, despite the PCB business going away, we have been able to maintain a muted revenue on a year-over-year basis.
[Operator Instructions] We have next question from the line of Manish Bhandari from Vallum Capital.
I have 2 questions regarding your latest joint venture with the Chinese company. So would -- can you tell me more about the products which you are going to manufacture for 2-wheeler and 3-wheelers? And would your product find a place with the new launch of Bajaj in the electric 2-wheeler, Chetak? And my second question is, how you're progressing on your After Market? And what kind of ambition now you are resetting on the After Market? What kind of turnover we should look forward on After Market and what time frame?
So thank you, Manish. So first question, just a correction, we do not have any joint venture with the Chinese company. We have currently only signed a MoU with the Chinese company to explore this space further. And should the sales look exciting, and should we have a feasible scenario, possibly, we will convert this arrangement into a joint venture going forward. Answering to your question of what products. The specific products are the motors and controllers for the electric 2- and 3-wheelers. So that is the product. We are very confident because Ananda already has currently customers in India which are using their products. They're one of the largest manufacturer of EV controllers and motors in China, with annual volumes of more than 5 million to 6 million units per year. So they do have the scale as well as the technology for these products. And since I said they already have customers in India using their products, our endeavor would be to first try and localize these products to bring more value add to the Indian customers on -- in a phase-wise basis. So that is answering to your question one on the Ananda MoU. Second, on the After Market, I think one recent development has been that one of the OEMs, we had certain restrictions on the After Market. But we have been able to now overcome that hurdle by getting a clear approval with -- from the OEM to arrange our After Market -- continue our After Market supplies. That should significantly add to the revenues, just not in quarter 4 of this financial year, but even next financial year. So that would be one growth driving factor for the After Market. And as I mentioned before, I think the endeavor is to more than double the After Market revenue at least in the next 3 to 4 years.
My apologies. I didn't understood the limitation what you had on the suppliers and how it's going to change. I'm not able to put things in context.
So one of the OEMs had forbidden Lumax Technologies to supply lamps in the After Market because of our OEM relationship. And we respected that relationship, and we had withdrawn any supplies to the After Market for that OEM. This had impacted our revenues in the first 9 months and even in the previous fiscal year to quite an extent. To give you a number, it would be about close to INR 25 crores on an annualized basis. Recently, as recent as last month, we have gotten a go-ahead from the same OEM to resume the supplies in the After Market for the lamps of -- across all models of that OEM. So we will be resuming and restarting supplies in quarter 4 of this financial year, which would add to the top line of the After Market. And hence, the lost INR 25 crores average revenues on an annual basis will become a growth for the next year. I hope I'm able to clarify it.
[Operator Instructions] We have next question from the line of Abhishek Jain from Dolat Capital.
Sir, my question is pertaining to your investment in JV, sir. So what is the current total investment in JVs? And when do you expect that all the JVs will start significant contribution on the bottom line?
So in terms of the contribution to the bottom line, one of the JVs, like Lumax Mannoh, already adds a significant contribution to the top line as well as bottom line. The other few JVs which have not yet taken off, I believe Lumax Cornaglia also would add a significant amount of contribution to the bottom line starting next year, primarily because of the introduction of the urea tank business. Lumax Gill-Austem anyways, as was mentioned by me, has been served the termination notice. Lumax Ituran and Lumax FAE, we do expect that in FY '21 onwards, we would start the revenue and profit contribution to an extent. And as I mentioned, overall, the 15% of consolidated revenues from the joint ventures currently should go up to about 25% in the next 4 to 5 years. That's my take on the joint ventures. In terms of investments totally in all the joint ventures, I would let Mr. Mehta answer that.
It is around INR 27 crores.
Okay, sir. So including your investment in the urea tank?
Yes.
Okay. Sir, so how much revenue are you targeting from the urea tank from FY '21? And what would be the average realization?
So the average realization on the urea tank would be close to approximately 1:2.5 in the investment-to-sales ratio. So on a -- we should be realizing close to around INR 30 crores to INR 40 crores of revenue. Hoping that the volumes, as indicated by the OEMs, do take off.
And what will be the breakeven for this product?
So we would be making a double-digit EBITDA on the indicated revenue.
Okay. And sir, how much CapEx have you done in the last 9 months? And what is your CapEx target for FY '20 and '21?
So as a consolidated entity, the first 9 months, the CapEx has been to the tune of INR 16 crores, 1-6. The outlook for the full year would be approximately INR 35 crores to INR 40 crores. The primarily -- the urea tank capitalization would probably come in, in the quarter 4. Going forward, for FY '21, it would be too premature, since the budgets are still in the discussion phase, but we do not expect any significant CapEx for our organic growth next year.
So you have taken INR 33 crores debt. Is it because of installing plant for the urea tank or something else?
Yes. In urea tank also and in FAE also, oxygen sensors.
Okay. So your total investment would be the INR 35 crores in Q4, so total CapEx would be around INR 55 crores or INR 60 crores for FY '20?
No. Correction there. The total CapEx for FY '20 would be around INR 35 crores, out of which INR 16 crores has already been done. So perhaps INR 20 crores to INR 22 crores would be the additional CapEx.
Okay. And sir, how much -- what is the revenue target for the next 2 to 3 years horizon, total revenue target?
Well, it really depends on the industry offtake post-BS-VI transition. However, as indicated earlier, the management direction is that we try -- we should at least double the revenue of the consolidated entity, perhaps in the next 4 years or so.
Okay, sir. Sir, my last question is related with this new venture, 50-50 joint venture with Yokowo. What is the total investment in this venture? And what is the revenue opportunity?
So the investment over the next 3 to 4 years should be in the tune of INR 20 crores to INR 25 crores, from which we expect to garner a revenue of approximately about INR 120 crores to INR 130 crores. And the endeavor would be to take at least 1/3 of the market in the next 3 to 5 years.
[Operator Instructions] We have next question from the line of [ Nisha Desai ] from Raga Securities.
Sir, I have 2 questions. Sir, I wanted to understand, sir, what is the market size of the products that we plan to manufacture under these new arrangements?
So the market size, I would let Vikas, our Chief Strategy Officer, handle that.
Thank you, [ Nisha ]. So the joint venture being formed with Yokowo Technologies of Japan, it's an emerging market. Over the next 3 years, we anticipate the market size to be in the region of around INR 400 crores, out of which, as Mr. Anmol Jain has indicated, we will endeavor to take 1/3 of the market. And on the second opportunity under discussion, which is again in the MoU phase, this is about the EV vehicles, motors and controllers for 2- and 3-wheelers. Currently, we estimate that about INR 200 crores worth of these imported components are currently purchased largely out of China, Taiwan and other places. This market is still in a very nascent stage, but with the Phase 2 benefit kicking in and becoming mandatory from the government side. Over the next 2 years, this INR 200 crores should go up to more than INR 500 crores kind of a market potential straightaway. And depending on our market feasibility, the necessary decisions will be taken at our end.
Okay, sir. Okay. Sir, my next question is, if you could let us know what is the status on the Lumax Gill-Austem JV that we're doing? I mean how much is the investment that we have done in the JV so far? And I mean what is our basic outlook on that?
So on the Lumax Gill-Austem, the investment done total by each partner is about INR 4.2 crores each, so the total would be about INR 8.4 crores. The net worth as on date is at about INR 8 crores. And again, there has been a capital restructuring of Gill Industries globally as the management control is -- or perhaps going to also look at a change. And in that light, we do not expect any significant contribution towards the India strategy by our JV partner. And that's the reason why we would be terminating the joint venture.
Okay, okay. Sir, then I just wanted to know, so we've seen the finance cost and our depreciation has increased considerably. So the reasons are -- what's the reason for it, I mean?
Pardon, what is the last word?
What is the reason...
In the finance cost and depreciation has increased considerably. So what is the -- I mean what has led to the gain, I mean what's the reason for it basically?
So interest, I explained that it is because of the high working capital utilization and also the debt in the joint venture companies. So interest has -- almost it has been -- and there is a Ind AS impact of around 0.13%. So far depreciation is concerned, we are comparing 9 months, I mean the pool of the last year, where we have incurred a cap of around INR 80 crores, 50% almost in line building and 50% in R&D and automation. So the total impact of depreciation and INR 16 crores what we have spent during this 9 months. So that's why the reason is -- there's increase in the depreciation.
Okay, sir. Sir, can you tell me -- I mean again, I -- what is the working capital lease as on 31st December?
As on 31st, it is INR 60 crores utilization.
Okay. And what is our debt position as on December?
It is around INR 21 crores.
[Operator Instructions] We have next question from the line of [ Rupen Masalia ] from [ RN Associates ].
Congrats for a good set of numbers. See, my question is mainly would we be catering to our major OEM customer, Bajaj premium and super premium bike, like say KTM, Husqvarna and Triumph.
So we are already on the Pulsar platform, and as I had mentioned in my opening remarks, we also have got into the Dominar model for one of the products. So yes, we are present in their premium bikes as well.
[Operator Instructions] We have next question from the line of Apurva Mehta from A M Investments.
Sir, just wanted to know about our inorganic growth story. And on -- you were talking about some big JV coming in for -- maybe in Q4 or next 6 months, where we are talking. So where are we poised for this growth thing?
So Mr. Mehta, thank you very much. On the JV coming in, I think we made an announcement very recently about the new joint venture. So that is the joint venture which we have been talking about. And finally, it has been announced publicly, the Lumax-Yokowo joint venture. Regarding the inorganic growth, I think we at Lumax continuously evaluate opportunities inorganically, and we are currently also in status of evaluating certain opportunities, and I believe in the next maybe 1 to 2 quarters, we should be able to take certain sound decisions.
Okay. And on the -- what will be our loss which we have negative EBITDA? What is the amount of negative EBITDA in our P&L?
It is INR 3 crores.
INR 3 crores. So going forward, sir, what will happen to this JV if we are terminating it? Then this would end the production line or we will continue with whatever -- with the technologies? What is our stance on that?
So we will continue our commitments to our customers for this current product line. We would actually probably get into growing these product lines going forward, and perhaps also get the equity of the foreign partner and perhaps run it as a subsidiary of the consol -- of the stand-alone entity.
Okay. So going forward next year, what will be -- it will be positive EBITDA? Or what is the outlook for this?
So the endeavor is yes, I would not be able to comment specifically for next year, but at least in the next 1 to 2 years, our endeavor would be to completely redo this business and get this into the positive territory on the profitability.
And on the front of, if [ you determine ] that JV does well, what kind of revenue can be seen in next maybe -- of 1 year time? Because we were expecting Q4 to have some revenues, when we were -- in the initial calls, we were expecting Q4 revenue from that.
So the JV, all the joint ventures revenue for the 9 months of current fiscal stand at approximately about INR 143 crores. Going forward, for the next year, I would expect this to have a growth of approximately about 15% plus more than the industry.
Okay. Okay. And in the specific JV of -- because that will come -- basically the growth will come from urea tank and oxygen sensors. That will be around whatever you are talking about, 15%. Then the rest of the JV should be contributing to the growth?
Correct. But for example, Lumax Gill-Austem would also go outside the JV purview, so there would be a loss of revenue of that JV stand-alone. So put together, if you take that out, there would be another 10% which will be going out. So if you add that 10% back, then you're looking at pretty much 25% growth on JV revenues next year.
[Operator Instructions] We have next question from the line of [ Achal Kala ] from Finvest Advisors.
Yes. Sir, just waiting for that clarification, if you could figure it out?
I will -- separately, I will call you.
Okay. Okay. No problem.
The figures which you have taken and -- I have to check and revert to you.
No problem. I will get in touch with you, sir.
[Operator Instructions] We have next question from the line Abhishek Shah from Valcore.
Congratulations on a decent set of numbers in such bad times. Sir, I was just reading through the news, and a couple of days back, we had a news article which said Lumax Group intends to invest about -- a sizable sum over the next coming years for us to double our turnover of [ growth ]. I mean if you can give me some clarity, what would be those investments? And how do you plan to schedule it, maybe a time line? Some clarity on that. That is a little vague. So I thought this might be a good platform to get an answer.
So thank you very much. So as I had mentioned in the interview, over the next 6 to 7 years of the next business cycle, we would expect to double our group revenues, which currently sits at about INR 3,500 crores. And this, again, I'm talking about as a group, which would include Lumax Technologies as well as Lumax Industries. We would definitely like to double that revenue. And the certain growth opportunities where we'll be growing would be on the electronics domain, the plastics domain. And for that, I mentioned that we will be getting into new joint ventures, expanding the current partnerships with our current partners, with like Stanley Electric or Lumax Industries Limited. And in order to meet this growth of additional INR 3,000-odd crores from the current base, we expect or envisage to incur a CapEx of about INR 1,000 crores, so approximately a 1:3 ratio going forward. This all growth would not be just organic growth. We will be also evaluating and are open to consider inorganic opportunities as well.
Fair enough. Sir, are you constantly looking at inorganic opportunities at this point in time? Or nothing on the pipe as yet?
Yes, we are, and we are constantly evaluating inorganic opportunities which synergize and meet our long-term strategy.
Sir, I'm just trying to pick your brain on maybe what sort of inorganic opportunities that we're looking at? Maybe trying to understand what would be the ideal size that you're looking at? Is it going to be a small INR 50 crore, INR 100 crore inorganic opportunity? Or it could be much bigger than that as well?
We are open to evaluating both small as well as big opportunities. Our balance sheets are healthy to go and raise the debt if there is a sizable opportunity available as well. But the more important point would be that the opportunity must be synergized with our core and should fit into our long-term strategy, as I mentioned. So there is -- it's not a number which we are chasing. We are open to evaluating both as long as it adds value going forward.
[Operator Instructions] As there are no further questions from the participants, I'd now like to hand the conference over to the management for closing comments. Sir, over to you.
Well, I would like to thank you all for joining in to the call. 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 happy to address all your queries. Thank you very much, again.
Thank you very much, sir. Ladies and gentlemen, on behalf of Lumax Auto Technologies, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.