Lumax AutoTechnologies Ltd

NSE:LUMAXTECH

Earnings Call Transcript 2021-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to Lumax Auto Technologies Limited Q3 9M FY '21 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 date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anmol Jain, Managing Director. Thank you, and over to you, sir.

[Anmol Jain, MD & Executive Director]

Good afternoon, ladies and gentlemen. A very warm welcome to the Q3 and 9 Months FY '21 Earnings Call of Lumax Auto Technologies Limited. I hope you are all safe and keeping healthy. Along with me on this call, I have Mr. Deepak Jain, Director; Mr. Vineet Sahni, Lumax Group CEO; Mr. Sanjay Mehta, Director and Group CFO; Mr. Vikas Marwah, CEO; Mr. Naval Khanna, Executive Director, Lumax Management Services; Mr. Ashish Dubey, CFO; and Mr. Ankit Thakral from the Corporate Finance team, along with 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. It is heartening to say that the government has taken several measures to support the auto segment industry, which would help the auto component players expand their operations. The announcement of PLI schemes for the automotive sector, long-awaited scrappage policy for government and PSU sector, and green taxes augur well towards making the auto component industry a self-reliant one. Let me share the performance of the auto industry. As per data published by SIAM, total production of vehicles for 9 months ended December 31, 2020, showed a de-growth of 25% as compared to the same period last year. However, October month stand-alone showed drastic improvement in the performance. The total production of passenger vehicles, 3-wheelers, 2-wheelers and Quadricycles in the month of October showed a growth of 31%. November showed a growth of 1% and December also showed a robust growth of 20% over previous year 10 months. Let me now take you through the performance of each business entity. The stand-alone entity contributed 82% of the total revenue at INR 592 crores out of the consolidated revenues of INR 720 crores for the 9 months ended December 2020. Lumax Mannoh Allied Technology, a 55% subsidiary, which manufactures manual, AMT and automatic gearshift systems, has the market leadership position and contributed 11% to the total consolidated revenues. Lumax Cornaglia Auto Technology, a 50% subsidiary, which manufactures air intake systems commanding 100% share of business with Volkswagen and Tata Motors, contributed 6% to the total consolidated revenues. With effect from October 15, 2020, Lumax Gill-Austem Auto Technologies Private Limited became a 100% subsidiary of the company on acquisition of balance stake from the JV partner, Gill-Austem LLC. The name of Gill-Austem -- Lumax Gill-Austem Auto Technologies Private Limited is now changed to Lumax Metallics Private Limited. Lumax Ituran is a 50% joint venture with Ituran Telematics of Israeli . The company has started commercial invoicing, although at a low base. 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 started commercial production from its facility in Gurugram, Haryana in the month of September 2020. The Lumax JOPP Allied Technologies is a 50% subsidiary, which is engaged in design, development and production of gear shift towers, automated manual transmission kits, all-gear sensors and forks. The production has started to pick up as per the OEM schedules. Lumax Yokowo Technologies is the 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 this commercial production in the later part of FY '22. Some business and customer updates. New business orders worth INR 400 crores were awarded in the last 6 months. This INR 400 crores would be envisaged over a period of 3 years. This is a very encouraging and positive step towards our future plan. The company also received several awards during the quarter, the Chakan plant of the company secured first position in ACMA Kaizen award and also won QCC Gold Award held in December 2020. The subsidiary company, Lumax Metallics Private Limited won ACMA Award for Excellence in Health, Safety and Environment. The subsidiary company Lumax Mannoh Allied Technologies received its first-ever patent registration from the Government of India for invention in shift knob assembly. With the cumulative efforts across all businesses, we have posted strong financial results in the third quarter, with all our business segments recording healthy margins. Our sales grew faster than the industry average. 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 Q3 and 9 months FY '21.

[Sanjay Mehta, Group Chief Financial Officer]

Good afternoon, everyone. Let me brief you the operational and financial performance for the company. Operational highlights for Q3. Integrated plastic models contributed 27% overall revenue followed by aftermarket at 20%, chassis at 16%, lighting products at 12%, gear shifters at 11%, intake systems at 7% and others at 6%. 2 and 3 wheelers contributed 44% to overall revenue, passengers car contributed 18% with aftermarket at 20% and CVs at 10%. Consolidated financial highlights for Q3. The consolidated revenue stood at INR 365 crores for Q3, highest ever quarterly revenues, as against INR 287 crores in Q3 last year, up by 27%. The ramp-up in demand continued post the festival season and is expected to continue in the coming quarter and next financial year as well. Revenue for 9 months was INR 720 crores as against INR 868 crores last year, down by 17% due to abnormal Q1 of FY '21. The company reported consolidated EBITDA, excluding gain on sale of property of INR 2.2 crores at INR 43 crores against INR 29 crores in Q3 last year, up by 46%. EBITDA margin stands at 11.7% for Q3 as against 10.2% for Q3 last year. Margins improved by 150 basis points on account of increased revenue coupled with continuous cost-saving measures. Profit after tax and minority interest stood at INR 23 crores against INR 12 crores of the last -- Q3 of last year. The CapEx during 9 months was INR 47 crores as estimated for 12 months is NR 60 crores to INR 65 crores during this financial year. Now we'll open the floor to call for questions.

[Operator]

[Operator Instructions] First question is from the line of Abhishek Jain from Dolat Capital.

[Abhishek Kumar Jain, Vice President of Research]

Thanks for taking my question and congrats for a strong set of performance. Sir, despite the weak volume of HMSI, your revenue have gone up significantly in its plastic modules part. And now quarterly run rate is near about INR 100 crores. So have you added any new clients in the 2-wheeler? Or is it because of the incremental contribution from 4-wheeler?

[Anmol Jain, MD & Executive Director]

Vikas, would you like to take that question?

[Vikas Marwah, Chief Executive Officer]

Yes, please. So Abhishekji, your observation is right. While there was a reduced offtake from HMSI in the month of December, but the October and November offtakes on them was very, very strong. In fact, October was like extremely high. Further, you are right again in your observation that the incremental offtake from the other customers has managed to offset even that impact for December a bit. But overall, when we see HMSI has stayed on par and, in fact, exceeded our projected expectation.

[Abhishek Kumar Jain, Vice President of Research]

So if we see the HMSI number in third quarter, that is around INR 32 crores. But your revenue is around -- near about the INR 100 crores. So just wanted to understand that if we have been -- new orders in the 2-wheeler space? And I just wanted to also understand that what is the mix for the 4-wheeler versus 2-wheelers in this segment.

[Anmol Jain, MD & Executive Director]

So if I give you, 4-wheelers, 2-wheelers, for the 9 months, 2-wheelers is contributing to 47% of our consolidated revenue. Passenger car is roughly at about 18%, followed with aftermarket, obviously, which is at 19%.

[Abhishek Kumar Jain, Vice President of Research]

Sir, sorry to interrupt you. Just I wanted to understand the business of the plastic modules part only. So just I'm asking about the mix for the 4-wheeler, 2-wheeler only for the plastic modules part.

[Anmol Jain, MD & Executive Director]

For the plastic module standalone, majority of the revenue is coming from 2-wheeler where their customer is primarily Bajaj Auto,as well as HMSI. We have made some gains in the 4-wheeler space of plastics business for Maruti Suzuki. However, that incremental effect will only come in next year. And right now, it would be significantly driven by the 2-wheeler space.

[Abhishek Kumar Jain, Vice President of Research]

Okay. And how much revenue opportunity you are looking from this in 4-wheeler parts? And what could be the EBITDA margin?

[Anmol Jain, MD & Executive Director]

There is a very significant opportunity of plastics in the 4-wheeler. As I had mentioned before, one of our key strategic growth driver in the future would be the plastics segment. In terms of EBITDA margins, I'm happy that all of our businesses are currently operating at broadly a double-digit EBITDA margin, and we envisage that even the future order book for plastics would be in the double-digit EBITDA margins.

[Abhishek Kumar Jain, Vice President of Research]

Okay. Sir, my next question is related with the gear shifter business, which had shown impressive growth in this quarter and the quarterly run rate is near about INR 40 crores. So just apart from the volume gain in the PV segment, is it because of the increase in the realization led by the shift towards the automatic gear shifter?

[Anmol Jain, MD & Executive Director]

That's correct. It's a mix of both. Obviously, it's majority because of the penetration of the automatic gear shifter, which is a higher contribution per vehicle because we have grown on a Q3 basis almost 38% on the shifter account. And obviously, this is much higher than the -- whatever, the industry has not grown so significantly.

[Abhishek Kumar Jain, Vice President of Research]

Sir, your mix is 38% right now for the automatic gear shifter of overall business.

[Anmol Jain, MD & Executive Director]

I'm sorry, can you repeat that question?

[Abhishek Kumar Jain, Vice President of Research]

I just wanted to understand what was the mix for the manual versus automatic in the gear shifter business?

[Anmol Jain, MD & Executive Director]

For quarter 3?

[Abhishek Kumar Jain, Vice President of Research]

For the last 9 months.

[Anmol Jain, MD & Executive Director]

Vikas, would you have some light on that, what would be the mix of manual and automatic in the 9 months.

[Ashish Dubey, CFO & Head of Finance]

Sir, 40% would be about automatic and AMT is something, which we have very successfully launched in the current quarter. In fact, incremental revenue is also visible on account of 7,000 AMT shifters supplied for the first time to a major OEM. But currently, what is at 40% we envisage that going ahead the figure would be closer to about 50-50 in the next 12 months or so.

[Abhishek Kumar Jain, Vice President of Research]

So have you won any...

[Anmol Jain, MD & Executive Director]

Answering to your question, I think if you look at the 9 months, I would think that from a revenue standpoint, the breakup would be more like 75% would be manual and roughly 25% of the revenue would come from automatic/AMT. However, as Vikas had mentioned, going forward, we have a strong order book of the gear shifter system whereas we also had some significant automatic and AMT wins. And hence, going forward, we see that by changing, instead of a 75-25 to maybe perhaps a 60-40.

[Abhishek Kumar Jain, Vice President of Research]

So have you won any business from Tata Motors or Kia in this business?

[Anmol Jain, MD & Executive Director]

Tata Motors, yes, we have added. Kia is not presently a customer of the company. It is being serviced by another group associate company.

[Abhishek Kumar Jain, Vice President of Research]

Okay, sir. And sir, my last question is related with this air intake business. So just -- can we expect that the increasing volume of Tata Motor CV business is positive for the air intake because third quarter number is quite impressive in air intake system.

[Anmol Jain, MD & Executive Director]

So the third quarter number is primarily being driven because of the urea tank business, which was started in Q1. That's the reason why you see a very strong number in the emission space for quarter 3. Almost close to 30% of the revenue is coming from the urea tank business in this quarter. So that is what has driven the growth. And it is, yes, definitely going to sustain in the subsequent quarters as well.

[Abhishek Kumar Jain, Vice President of Research]

So what sort of the revenue opportunity you are looking from this urea tank for the full year FY '22?

[Anmol Jain, MD & Executive Director]

Vikas, would you like to take that?

[Vikas Marwah, Chief Executive Officer]

For the full year, we are looking at about INR 20 crores of revenues coming in from urea tank for the current year.

[Operator]

[Operator Instructions] The next question is from the line of Atul Kothari from Progwell Securities.

[Atul Kothari; Progwell Securities]

Sir, just some details which I require. Sir, in terms of -- sir, you haven't provided any details on orders received from various OEMs during this quarter in your press release. So could you provide some update on the same?

[Anmol Jain, MD & Executive Director]

I would not have the OEM-wise breakup, but out of the INR 400 crores I had mentioned, the new order book, I would say that the gear shifter business would have about INR 150 crores, the largest pie out of the INR 400 crores, followed by the Metallics business, which is fragmented into both seat frames as well as the chassis business. That is almost about INR 100 crores out of the 400 crores. The plastic there itself would be close to about another INR 100 crores, INR 120 crores. And then we will have the mechatronic, let's say, the emission business, which would be another INR 20 crores, and lighting of Bajaj Auto would be broadly about another INR 30 crores to INR 40 crores. So this would be the breakup. Primarily, the gear shifter would be a very diverse set of customers ranging from Maruti Suzuki and Tata Motors and other OEMs as well. The Metallics would be largely between Bajaj Auto and LEAR. The lighting is all Bajaj Auto. And yes, the plastics would be again driven by Maruti Suzuki as well as Honda Motorcycle and Scooter India as well as Bajaj Auto. So this would be broadly the breakup of the INR 400 crores order win.

[Atul Kothari; Progwell Securities]

Okay, sir. That's helpful. Sir, what has led to achieving -- we have achieved the highest ever revenue during the quarter. So which product line helped us to achieve this growth?

[Anmol Jain, MD & Executive Director]

Well, in terms of -- if you look at the growth, almost pretty much all our businesses have reported a pretty robust growth. I mean, if I look at all most businesses, which are significant contributors, the Plastics, the Aftermarket as well as the Metallic business, they have all grown in lower, almost 20% to 25% growth. The gear shifter has obviously driven the maximum, which is at 40% as a growth driver, and the emission has obviously more than doubled in the current quarter. Emissions, rather, for the 9 months despite COVID, it's the only business which has actually had a positive growth for the full 9 months at 35% or 37% growth. And that's largely because of the urea tank business that I had mentioned before. So there is not just one business, which has driven this growth. It's practically a culmination of all the businesses, and that has always been the strength of this company, having a very diverse set of products and customer portfolio.

[Atul Kothari; Progwell Securities]

Okay, sir. Sir, secondly, sir, as I understand commodity prices wouldn't impact our operating margins as we pass on the cost to the clients. So what are the other factors which could help us in improving margins apart from our top line growth?

[Anmol Jain, MD & Executive Director]

Well, the margins have obviously been expanded. If you look at the current quarter, the margins stood at almost 11.7%, which is similar to the quarter 2. So the margins have sustained. I would say that going forward, yes, for the current quarter, it's sustainable as well. Going forward, as we would like to grow the business forward, there would be some incremental fixed costs. So I would say that there would be some partial stability coming into the margin. But definitely, it would continue to be in the double-digit state. And again, as I mentioned earlier, the long-term growth drivers is to increase the wallet share and the contribution per vehicle for our current businesses. Also as the technology shift happens and recent JV scaleup, which has now happened -- started to happen, you will see the incremental margins come into play.

[Atul Kothari; Progwell Securities]

Okay, sir. Sir, any update on PLI benefits, through these projects we are planning to create greater advantages for the PLI.

[Deepak Jain, Non]

So this is Deepak here. I'll just say that I think PLI, I think it's too, right now, premature. We are still waiting for the scheme and actual scheme to come out, post which I think we'll be able to make an assessment. Our understanding is, as of now, that the PLI scheme is mostly driven towards making export champions. Although the company's export orientation is relatively low because of our JV structures, but we are in discussions with our partners to see what it is. But it's not because of PLI, it's because of this thing. But I think particularly to comment on the PLI, I think we will need to just wait for a bit more until we actually get the details of it.

[Operator]

The next question is from the line of Apurva Mehta from AM Investments.

[Apurva Mehta]

Sir, congrats on great set of numbers. Sir, just wanted your outlook for Q4 and if possible, next year, what is your outlook for our company? And basically also on different segments like oxygen sensor, telematics, any update on this company, where we can see next year or maybe next 1 or 2 years?

[Anmol Jain, MD & Executive Director]

So the first -- I'll take the first question of the outlook for the next year, and then maybe I'll request Vikas to jump in and answer the second question on the outlook for the oxygen sensors. If you look at the company's performance in Q3 and also, we expect a very strong and robust performance in Q4. For the full year, I can only say that this company would probably record a very minimal negative growth in the vicinity of maybe negative 2% to 5%. And this would be a significant achievement because the industry is expected to clock a de-growth of roughly around 15%. So in these troubled times with quarter 1 being pretty much washed away, we're still reasonably close to our last year revenue numbers and having said that, as I mentioned, that because of the strong performance in Q3 and expected performance in Q4, our profit margins, specifically on EBITDA, should be better than last year, should be in the double-digit basis. Having said that, I think this momentum is expected to continue even in the next fiscal year, and we would expect us to bounce back to at least the '18-'19 levels, thereby looking, at least organically, anywhere between 20% to 25% growth with this current momentum for the next year. Having said that, I also mentioned that the company does have strategic plans to also perhaps fast track and accelerate growth through the inorganic route. And if that were to happen, then of course, the revenue numbers for next year would be significantly different than this growth rate. But speaking of organic growth, I do expect a 20%, 25% incremental growth next year coming across all our businesses put together.

[Apurva Mehta]

Great, sir.

[Anmol Jain, MD & Executive Director]

And again, the INR 400 crores order book, which we have won, almost 2, 3 years down the line, this would be at its peak. But next year by itself, this number is almost close to INR 150 crores to INR 180 crores, which would get into the P&L next year by itself.

[Apurva Mehta]

So this INR 400 crores will be aggregative next year itself -- will start aggregating next year itself.

[Anmol Jain, MD & Executive Director]

The INR 400 crores is on the program, right? Of the INR 400 crores about, as I said, 150 crores to INR 180 crores should come into the revenue stream next year by itself. And if you look at it from that perspective, that by itself is looking at a 15% to 18% growth on the expected revenues.

[Apurva Mehta]

So any update on the oxygen sensors, where we are currently?

[Anmol Jain, MD & Executive Director]

Sure. Vikas, do you want to just update that?

[Vikas Marwah, Chief Executive Officer]

Yes, please. I will answer that question. So as the Managing Director has rightly observed, the management focus has been very sharply on gathering a larger order book, which you can see is reflecting in the INR 400 crores order book parked in the last 9 months. Specifically on oxygen sensors and telematics, these are very, very futuristic-oriented businesses. And due to the pandemic, there has been a little reset in terms of the business traction there. The business plan envisaged along with our joint venture partner a very high focus towards gathering the customers from China and from Southeast Asia also. But obviously, due to the international trade getting very heavily impacted during the current year, that is one recalibration that we have been forced to do, which we will be addressing in the coming financial year. Secondly, the OEMs were very focused on the OBD II implementation norms for FY '22. We are to formally and officially now hear from the OEMs if that plan is still in place. So our major nomination from a major OEM is for that particular period. And if in '22 or '23, this thing is getting implemented, we would immediately get back to servicing that particular order book because being a BS-VI critical component, this requires a lot of validation and the OEM approval. So yes, during the current year, now immediately, the plan is to finalize the order book with 1 major OEM for oxygen sensors because for 1 OEM, we have already started the commercial production and we have 100% share on them, including the launch of the future models.

[Apurva Mehta]

So what will be the revenue for that for next year, it will be minimum? Very minimum?

[Vikas Marwah, Chief Executive Officer]

I would say that we are expecting definitely a double-digit figure in terms of revenue because the wheel started rolling on oxygen sensor only during the month of October very minimally. So you can safely expect double-digit revenue to be clocked. More importantly, the orders from -- the customers will need to get to be confirmed from a future point of view, of which we are fairly confident that as the trade restrictions open up, that is something that we'll be immediately addressing. And we are catering only to the 2-wheeler oxygen sensors in phase 1.

[Apurva Mehta]

Sir, on the aftermarket side, we have seen a smart recovery coming, we clocked almost INR 73 crores of turnover. What is your outlook for next year? Is this recovery going to accelerate? And can we see much more happening in the aftermarket side?

[Anmol Jain, MD & Executive Director]

So aftermarket, as you can see that for quarter 3, we have posted almost close to 25% growth. You're absolutely right that the aftermarket has bounced back, and we are seeing a very strong traction in the demand in the replacement market. For the next year, we do expect a similar growth momentum to continue and we do expect anywhere between an 18% to 20% incremental growth over and above the current year for the next year.

[Apurva Mehta]

And what will be the growth drivers for the next year? Basically, it will be -- aftermarket is one of it, any other big growth drivers that we can see?

[Anmol Jain, MD & Executive Director]

Sure. So the growth drivers, as I have mentioned, would be across most businesses. As I have mentioned that this INR 180 crores out of the INR 400 crores order book, which would come into play next year is fragmented across businesses, starting from the Metallic. Also the gear shifter business and also the plastics. So these would be the 3 key growth drivers for next year apart from the aftermarket. Obviously, the INR 400 crores order book, which I had mentioned is only on the OEM space. It does not include any incremental revenue growth of the aftermarket business.

[Apurva Mehta]

Wish you all the best.

[Operator]

[Operator Instructions] The next question is from the line of [ Aarush Oberoi ] from [ VT Securities ].

[Unknown Analyst]

Sir, Maruti has mentioned in its earnings call that it's losing market share in SUVs. So sir, do we see any impact on our business due to that?

[Anmol Jain, MD & Executive Director]

No, we do not see any significant impact. You're talking about Maruti Suzuki, right?

[Unknown Analyst]

Yes, yes, right.

[Anmol Jain, MD & Executive Director]

Yes. So Maruti Suzuki, the key product for this company is the gear shifter system. And as I have mentioned, we enjoy a very strong wallet share in Maruti Suzuki, so I don't see any significant change because of them losing the market share in SUV. The advantage which we have is that as a leading gear shifter manufacturer in the country, we have a strong relationship and business presence across all OEMs in the passenger car and SUV space. So as a matter of fact, we have gained significant ground on Mahindra & Mahindra with our shifter systems. So I would say that overall, we should be able to sustain our market leadership in that product.

[Unknown Analyst]

Okay. And sir, what is the CapEx plan for the next year?

[Anmol Jain, MD & Executive Director]

So as Mr. Mehta had mentioned, for the current year 9 months, we have already incurred INR 47 crores, and we expect for the full year to maybe incur about close to INR 60 crores to INR 65 crores. For next year, there would be some incremental CapEx, largely to fulfill the commitment on this INR 400 crores order win. I do not have an exact number because the budgets are still in the making, but I would think the next year CapEx outlay should be in the vicinity of about INR 80 crores to INR 100 crores give or take.

[Unknown Analyst]

Okay, sir. That was helpful. And sir, what was our ROE and ROC for the current year? And what are we targeting as a ROE and ROC for long term?

[Sanjay Mehta, Group Chief Financial Officer]

So currently, if you see up to 9 months, our ROC would be around 11% because of the first quarter wash out and our desire would be around 20%. So I think we will be around somewhere in 13% to 14% this year because of the Q1 impact and because of the Q4 the growth we are expecting.

[Anmol Jain, MD & Executive Director]

So if you see our peak ROC was at financial year FY '19, where I would say that the ROC was close to almost 25%, 28%. The endeavor over the next few years would be to maintain upwards of 25%. However, in the next couple of years, we do -- the first milestone would be to get towards 20%-plus growth.

[Operator]

[Operator Instructions] The next question is from the line of [ Priyanka Singh from Atidhan Securities ].

[Unknown Analyst]

I have a few questions. If you can throw some color on the sale of property mentioned in the current quarter? I mean, the other income, is it related to any material business generating unit?

[Anmol Jain, MD & Executive Director]

I'm sorry, you are not really audible. There is some noise in the background. Could you repeat your question, please?

[Unknown Analyst]

Hello? Am I audible now?

[Anmol Jain, MD & Executive Director]

Yes, could you repeat your question?

[Unknown Analyst]

Yes. So can you share some light on the sale of property mentioned in the current quarter? I mean, I'm talking about the other income.

[Sanjay Mehta, Group Chief Financial Officer]

Sure. In fact, we had land at one of our -- in western region, which we have sold, and we got a profit of INR 2.2 crores. So that is unused property lying as a surplus. We have disposed it during this quarter.

[Unknown Analyst]

And can you...

[Sanjay Mehta, Group Chief Financial Officer]

Am I able to clarify? One of the idle property we have sold during this quarter, and we had a profit of around INR 2.2 crores on that property sale.

[Unknown Analyst]

Got it, sir. Got it. And can you share some details on INR 400 crores order win, is it from like which customer and in which segment?

[Anmol Jain, MD & Executive Director]

I think I already mentioned that, ma'am. Maybe you missed it out. I will repeat it for you.

[Unknown Analyst]

Yes. Sorry, sir. I must have missed it.

[Anmol Jain, MD & Executive Director]

The INR 400 crores order win is fragmented across our business lines. I would say that almost close to INR 120 crores of it would be in the plastics domain, almost INR 170 crores would be in the mechatronics domain where gear shifter system, which is a part of the mechatronics, would take a lead of INR 150 crores by itself. And Metallics would be about another INR 100 crores, which is the chassis and the seat frame business. So primarily these 3 domains would be the key drivers of this INR 400 crores order wins. In terms of customers, the key customers, I do not have a breakup, but the key customers would be Maruti Suzuki, Bajaj Auto, Mahindra & Mahindra, HMSI and Tata Motors.

[Unknown Analyst]

Okay. Got it, sir. And our 2-wheeler contribution has dropped by 3% in the current quarter. So are we getting any better margins from other segment?

[Anmol Jain, MD & Executive Director]

So our contribution has dropped primarily because of certain raw material.

[Sanjay Mehta, Group Chief Financial Officer]

Because of -- in fact, the contribution has not dropped, it is same as 11.7%. But I think the question may be because of the increase in sales. The Q1 was largely the cost saving metric was there, and because the Q3 is normal for debt-wise, that has been compensated. So margin has not gone down, it is maintained at 11.7%.

[Unknown Analyst]

Okay. And lastly, on the emission and the shifter business has witnessed like a larger share on a Y-o-Y basis. So is it given with the BS-VI compliance-related norms are we getting higher in this business segment?

[Anmol Jain, MD & Executive Director]

The key growth driver for this has been the urea tank business, which had just started in the Q1. And that is pretty much the reason why you see a significant growth in the emission space. Obviously, urea tank as a product is an offtake of the BS-VI regulation.

[Operator]

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

[Abhishek Kumar Jain, Vice President of Research]

Sir, aftermarket growth was around 27% in 9 months FY '21. And next year, you are talking about around 25% to 28% growth. So what would be the key driver for such high-growth on a high base? Please throw some light on the expansion of your network strength and product portfolio in aftermarket.

[Anmol Jain, MD & Executive Director]

So the key growth driver in the aftermarket is just the new product launches, and we had some significant new product launches in the last financial year. Naturally, a lot of it could not take off in the first half of this current financial year. It has started to see some traction in quarter 3, and that's why you see a strong growth of aftermarket in quarter 3. So we expect the full year advantage in the next year for these newly launched products to kick in and hence that is one of the key growth drivers. Apart from that, we will also be launching other than lighting new products in other categories. And those are categories where there is still some room to grow significantly. We are the largest in the lighting space. So I would say that the incremental growth in lighting would not be so significant, but the incremental growth in the nonlighting is -- the opportunity is much more. So because of these primary 2 reasons, I would -- I'm saying that next year, we should also look at a strong aftermarket growth.

[Abhishek Kumar Jain, Vice President of Research]

Okay, sir. Sir, seat material business also seen a sharp jump in this quarter. Is it because of the increase of sale of business from Bajaj Auto or you added new clients in that category?

[Anmol Jain, MD & Executive Director]

We have not added any clients in that business division. It is primarily driven by increasing our wallet share with Bajaj Auto and also some incremental volume growth of Bajaj Auto in the Q3 specifically.

[Abhishek Kumar Jain, Vice President of Research]

Okay. Sir, my last question is, how much current gross and net debt of the company?

[Sanjay Mehta, Group Chief Financial Officer]

The net debt is 0. Actually, we're getting to a debt of INR 72 crores on the books as on 31st of December. Against that, we are having the cash and bank balances of INR 97 crores. So for net debt, there's no debt. We are having the cash surplus of INR 25 crores.

[Abhishek Kumar Jain, Vice President of Research]

So can we expect that interest costs will go down significantly in FY '22?

[Sanjay Mehta, Group Chief Financial Officer]

Yes, it will increase. That depends on the, I mean, the CapEx and all these things, but yes, it will increase.

[Abhishek Kumar Jain, Vice President of Research]

So you are looking to increase your debt position? Or you want to take the -- some short-term debt for the working capital?

[Sanjay Mehta, Group Chief Financial Officer]

It would be the mix of that from the existing free cash and debt. You will see that time, it is a mix of that for the funding of CapEx.

[Operator]

[Operator Instructions] The next question is from the line of Resham Jain from DSP Investment Managers.

[Resham Jain, Assistant Vice President]

Yes. And good to see a strong set of numbers. So my only question, you also mentioned about the ROCE of around 20% next year and 25% going forward. But if I look back over the last 5 years and the overall incremental CapEx plus the incremental working capital investment, if I add up. So on the incremental capital employed, the ROC seems to be significantly lowered. But actually, when you look at businesses, the incremental CapEx typically give slightly higher ROCE because of the kind of on field expansion, which typically happens. So according to you, what could have happened in those years? And what, according to you, will change in the next 2 years', 3 years' time?

[Anmol Jain, MD & Executive Director]

It's a good question, and I'll just throw some light on the broader contours of it. So if you look at the last 3 to 5 years, there have been some significant investments made in, let us say, new joint ventures. And also, for example, the Lumax FAE joint venture. There were significant investments made into that. However, we have not really got some strong revenue picking yet, and that has been one of the reasons why it has significantly hit the ROCE. Also the Lumax Gill-Austem, we were struggling to get off the ground, and there had been some investments made there as well. So I would say that over the last 3 to 5 years, there were investments made, which did not fructify into a strong revenue realization and hence, did not add or contribute to the margin. Only the current businesses, which were the mature businesses, so to speak, were contributing, but the overall consolidated gross were getting pulled down. How I see the next 3 years getting different is that we are not significantly adding investments into new areas necessarily. We will be, first and foremost, making sure that all of our recent joint ventures and -- at least bring -- come up to speed and bring to an optimal capacity utilization. Thereby, without any significant major investments, the revenue growth would start coming in. Also, the new orders which we are getting, the INR 400 crores which I had explained earlier, we do not anticipate approximately more than INR 100 crores to INR 120 crores of CapEx being put in to meet this growth. So if you look at from an asset-to-revenue ratio, what we have been averaging at about 1:2, 1:2.5, the new order books is appearing to be much better ratio than that. And that also the margins would pretty much be the same or better of the new order books. And hence, the growth is expected to move from the current levels of around 13%, 14% to maybe upwards of 20%. I hope I'm able to give you some light on that.

[Resham Jain, Assistant Vice President]

So this INR 120 crores investment for the new INR 400 crores order win, INR 400 crores, on a yearly basis, will be around INR 150-odd crores. Is that a right understanding or?

[Anmol Jain, MD & Executive Director]

Some programs would be kicking in later, as I mentioned earlier, out of the INR 400 crores, perhaps about INR 150 crores to INR 180 crores is expected to come into the revenue stream next year itself. And I would think that out of the INR 100 crores, INR 120 cores CapEx, maybe about close to 80% of which should be incurred in the next financial year because there is always a lag between when we have to be ready for commercial production and validation vis-à-vis when the SOP of the vehicle starts and the revenue starts to kick in.

[Resham Jain, Assistant Vice President]

So just if we do this INR 170 crores, INR 180 crores of peak revenue, the amount -- the margin requirement for, let's say, 20% ROC also should actually, if I do reverse calculation, should be upward of 14%, 15%. I'm saying, in third year, fourth year, when you will reach full utilization, is that something which you're looking for?

[Anmol Jain, MD & Executive Director]

Absolutely. If I look at the third quarter stand-alone, I think most of our key businesses are running at middle double-digit EBITDA margins. So that has been also a significant change point compared to before. As I mentioned earlier, some of them would sustain and further grow, some of them would slightly course correct because, obviously, there -- in Q3, there were some additional volumes and certain other fixed cost and as we go along, will get added. But overall, I'm pretty bullish that the revenue growth will add to the margin as well as the growth in the next coming years.

[Resham Jain, Assistant Vice President]

Okay. Okay. Thank you, sir. All the best for the coming quarters.

[Operator]

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to management for closing comments.

[Anmol Jain, MD & Executive Director]

Well, I would like to thank you all for joining into this call today. I hope that we were all able to answer your questions. If you have any further queries, you may please get in touch with us or SGA, our Investor Relations adviser. We will be happy to address all your queries. Thank you very much again for your time, and please stay safe and be healthy. Thank you.

[Operator]

Thank you very much. On behalf of Lumax Auto Technologies Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.