Lumax AutoTechnologies Ltd

NSE:LUMAXTECH

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '24 Earnings Conference Call of Lumax Auto Technologies Limited.

This conference call may contain certain forward-looking statements about the company, which are based on 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 now hand the conference over to Mr. Anmol Jain, Managing Director of Lumax Auto Technologies Limited. Thank you, and over to you, sir.

[Anmol Jain, executive]

Thank you. A very good afternoon, ladies and gentlemen. A very warm welcome to our Q3 and 9 months FY '24 earnings conference call. Along with me on this call, I have Mr. Deepak Jain, Director; Mr. Sanjay Mehta, Director and Group CFO; Mr. Vikas Marwah, CEO of the company; Mr. Naval Khanna, Corporate Head Taxation; Mr. Ashish Dubey, CFO of the Company; Ms. Priyanka Sharma, from Corporate Communications; Mr. Ankit Thakral from Corporate Finance and SGA, our Investor Relations adviser.

Results and presentations have been uploaded on the stock exchange and the company's website. I hope everybody has had a chance to go through the same. I would like to begin by giving some insight into the Indian economy, followed by the performance of the automotive industry in the quarter gone by and lastly, a few important updates on your company.

India has seen a host of reforms post-COVID that has accelerated the pace of growth of our economy. While the rest of the world economy is still recovering from the pandemic, India is racing ahead, thanks to peak manufacturing, strong demand and increased CapEx in the public and private sectors, which have raised GDP growth to approximately 7%.

However, challenges such as inflation and global uncertainty persist and any adverse geopolitical action can impact the country's growth momentum. Speaking of the performance of the automotive industry for the quarter. The quarter gone by has witnessed robust growth on the back of festive and marriage season as well as demand recovery in rural India. The robust expansion of passenger vehicles is driven by increasing disposable incomes and the availability of convenient financing options.

Notably, the premium SUV sector has witnessed noteworthy demand in 2023, contributing significantly to the overall growth in the passenger vehicle sales. Looking into the future, the positive momentum is expected to continue into 2024 and beyond, propelled by ongoing model launches, expanding market reach in rural India and an overall rise in per capita income.

Now let's talk about the two-wheelers, which also saw a remarkable upturn in the sale this quarter, thanks to the festive period from Navratri to Diwali.

Moreover, the escalating demand for mid- and high-end two-wheelers suggest significant growth opportunities for component solution providers like us. There have been significant advancements in the electric vehicle two-wheeler market with both new and established players venturing into this space.

It is envisaged that this segment will gain traction in the next years and offer significant advantages to component manufacturers. Commercial vehicles experienced a subdued quarter with respect to quarter 2, primarily due to price hikes from emission regulations and seasonal factors coming into play.

Moreover, construction activities were halted in several regions across the country due to increased pollution levels, further impacting growth in this sector. Similarly, the Tractor segment also witnessed a relatively stagnant quarter. EVs are seeing good acceptance across the country on account of multiple EV launches by OEMs, increasing consumer awareness for green mobility solutions and a push from government for this sector with subsidies.

However, despite this positive momentum, we acknowledge that the EV sector is still in its early stages of development for passenger vehicles, facing challenges such as inadequate charging infrastructure and limited domestic battery manufacturing capabilities. The widespread adoption of EVs on a larger scale hinges upon the improvement of charging infrastructure and the reduction of costs associated with EV ownership.

As these critical aspects continue to evolve and improve, we anticipate a further acceleration in the adoption of EVs across the country, paving the way for a more sustainable future in mobility. Coming to the Auto Ancillary sector, the increasing premiumization across passenger vehicles as well as two-wheelers require high technology components posting a significant opportunity for leading auto ancillary players like us to increase the content per vehicle.

Along with this, the sector is experiencing tailwinds led by increased focus on safety with the introduction of Bharat NCAP and changing emission norms.

Looking ahead, with multiple launches planned by OEMs, particularly in the EV space, we are confident in our ability not only to secure orders from leading OEMs, but also to expand our product and customer portfolio.

Leveraging our decade old -- decades-old partnerships with global leaders we are well positioned to indigenously design, develop and manufacture high-technology components, further strengthening our competitive advantage in the market.

Coming to Lumax Auto Technologies. I would like to give you an update that we have expanded our operations by opening a new facility in Chakan, Pune called Lumax Cornaglia Auto Technologies. The facility is equipped with state-of-the-art precision European machinery to ensure top-notch production quality and productivity. It boasts of a diverse product range, including air filter systems, snorkel and various blow-molded products such as urea tank and expansion or cooling tank.

Notably, this plant represents a significant milestone as it will be the first to manufacture plastic fuel tanks for commercial vehicles. With this new facility, Lumax Cornaglia will enhance its current production capacity by almost 40% in a phase-wise expansion.

Additionally, with an aim to boost our aftermarket presence we have forged a strategic partnership with Germany's bluechemGROUP, a leader in innovative automotive car care solutions to offer Indian consumers world-class automotive care products spanning from preventive and maintenance solutions, additive, current by care, diagnostic software and tools. A large network and the extensive experience of bluechemGROUP puts us in an advantageous position to cater to the high-quality automotive care solutions that will enhance customer satisfaction and reliability in the Indian market.

Coming on the entity-wise performance. The stand-alone entity caters to Integrated Plastic Modules, the aftermarket business, chassis and swingarm for two-wheelers, trailing arm for 3-wheelers under the metallic business and 2-wheeler lightings.

The stand-alone entity has contributed 47% of the total consolidated revenues for 9 months FY '24. The Pantnagar plant of the company won the prestigious JIPM TPM Special Award in the month of February 2024, being now the first supplier of Bajaj Auto Supplier Cluster to achieve this milestone.

IAC India, the recently acquired 75% subsidiary, which is a Tier 1 interior systems and component supplier to key automotive OEMs in the country including Mahindra & Mahindra, Maruti Suzuki, Volkswagen India and Volvo Eicher commercial vehicle. The entity has contributed 32% of the total consolidated revenues for 9 months FY '24. IAC management team, along with Lumax will certainly continue to drive the business growth forward. The Board of Directors of IAC India has approved the scheme of merger with its holding company live on August 4, 2023, with effect from the appointed date of March 10, 2023.

Further the scheme has been filed with the honorable NCLT Mumbai bench on August 28, 2023, which is pending for approval. Lumax Mannoh Allied Technologies, the 55% subsidiary, which manufactures manual, AMT and automatic gear shifter systems and has the market leadership position, contributed 13% to the total consolidated revenue.

Export business of automatic gear shifters for a global platform is on track and is performing well. We are also working in tandem with the joint venture partner to increase our reach to newer markets. The company is sitting on an order book of approximately INR 50 crores.

Lumax Cornaglia Auto Technology is a 50% subsidiary, manufacturing air intake systems and urea tank commanding 100% share of business with Volkswagen and Tata Motors contributed 6% to the consolidated revenue. This joint venture holds a strong order book of over INR 70 crores. And keeping in mind the same the company's new facility has commenced its operations in Q4.

Lumax Ituran Telematics Private Limited has successfully commenced supply of telematics parts to Daimler India in the current quarter, the volumes are expected to grow significantly in the remaining part of the financial year with addition of a new range of products.

Lumax Alps Alpine India Private Limited, a 50% subsidiary for the manufacturing and sale of electric devices and components, including software related to the automotive industry, contributed 1% to the total consolidated revenues. This joint venture holds a strong order book of more than INR 100 crores.

During the quarter, the Board of Directors of the company has considered and approved the acquisition of Lumax Ancillary Limited by acquiring the entire equity share capital.

Accordingly, Lumax Ancillary's has become wholly owned subsidiary of the company with effect from January 25, 2024.

Lastly, on the order book front, the company has a healthy order book of approximately INR 1,100 crores out of which almost more than 90% is new business and EV contribution is approximately 40% of the total order book.

Now I would like to hand it over to Mr. Sanjay Mehta, the Director and Group CFO, to update you on the operational and financial performance of the company.

[Sanjay Mehta, executive]

Good afternoon, everyone. I will brief on the operation and financial performance for Q3 and 9 months FY '24.

For 9 months FY '24, integrated plastic modules contributed 48% to overall revenue, followed by aftermarket at 14%, gear sector at 13%; fabrication at 8%, emission at 6%, Lighting Products at 5% and others at 6%.

Passenger vehicles contributed 47% to the overall revenue. Two and three wheelers at 24%, aftermarket at 14%, EVs at 9% and others at 6% for 9 months FY '24. For more detailed operational highlights, one can refer our investors presentation uploaded on the exchanges and company's website.

With respect to financial highlights, the consolidated revenue for Q3 and 9 months stood at INR 732 crores and INR 2,064 crores, respectively, up by 65% and 52% respectively year-on-year. The main reason for the same is consolidation of revenue from IAC India, which is stood at INR 246 crores and INR 665 crores for Q3 and 9 months, respectively.

EBITDA margin sustained at 15.8% for Q3 as against 12.2% for Q3 FY '23, up by 360 bps. The EBITDA margin for 9 months is at 14.7%, which is up by 270 bps from 9-month FY '23.

IAC EBITDA for 9 months FY '24 is INR 131 crores at 19.7%. PAT after minority interest for the 9 months stood at INR 86 crores as compared to INR 74 crores in 9 months last year.

PAT margins stood at 4.2% for 9 months as against 5.5% in FY '23. The lower PAT margin with respect to last year is because of higher interest cost on account of long-term debt of INR 375 crores and high depreciation of intangible assets on account of acquisition of IAC India.

The net debt as on 31st December '24 is INR 91 crores. The CapEx incurred during 9 months is INR 78 crores, which includes INR 31 crores on account of leasehold assets. The actual CapEx outlay is INR 47 crores. The full year estimate is around INR 90 crores to INR 100 crores, excluding any leasehold assets, which is slightly down from the earlier CapEx guidance of INR 110 crores to INR 120 crores. With this, we open the floor for questions.

[Operator]

[Operator Instructions]

First question is from the line of [ Nisarg Vakharia from NV Alpha Fund Management LLP. ]

[Unknown Analyst]

I had 2 specific questions. The first was that what sort of visibility do you have for the various subsidiaries that we have on what should be their contribution for next year? So Lumax Ituran, Lumax JOPP, Lumax Yokowo, number one. Number two, what are the plans for Lumax Alpine for FY '25. We are at, I think, some INR 30 crores, INR 35 crores of revenue for this year, what sort of revenue visibility you have for next year?

[Anmol Jain, executive]

So number one, for your first question. I think all the joint ventures put together in the current year are about close to 20% of the consolidated revenues. Of course, the larger pie comes from the Lumax Mannoh and Lumax Cornaglia, and there is some miniscule contribution from the rest of the joint ventures. As far as the order book goes, as I mentioned, about more than INR 100 crores of the order book is sitting on Alps, even the Lumax JOPP and Lumax Ituran are sitting at some order book of about INR 30 crores, INR 35 crores each.

So we are definitely bullish on the prospects of certain joint ventures like Lumax Yokowo, Lumax Ituran, apart from -- and of course, Lumax Alps apart from Lumax Cornaglia and Lumax Mannoh, which are the more established joint ventures.

Giving FY '25 specifically, I think while we will see the total contribution from joint ventures to remain approximately around the same vicinity of 20% to 25% of the consolidated revenues. But in absolute amount, we do expect it to grow by about 20% to 25% in revenue terms on a year-on-year basis because there are some strong orders, which will get into production in FY '25.

[Unknown Analyst]

Okay. Sir, and last question. We have a reasonably strong balance sheet. But there are some inefficiencies in the amount of interest fee pay versus interest expense that you have versus the other income that we make on the cash. Now I understand that you had a extremely strategic and fantastic acquisition in IAC. However, can this sort of inefficiency be rectified next year?

[Anmol Jain, executive]

I'll let Sanjay Mehta answer that.

[Sanjay Mehta, executive]

The debt which we have taken for IAC it is in the lock-in period for 18 months. So after expiry of debt period certainly we'll look into that.

[Operator]

[Operator Instructions] Next question is from the line of Abishek from Dolat Capital.

[Abhishek Jain, analyst]

Congrats for a strong set of numbers. Sir, this year, IAC India revenue growth is very increasing and margin is very much strong around 19%. So will this actual addition will continue, especially on the margin side?

[Anmol Jain, executive]

So I think IAC India, of course, since it's the first year of consolidation, you are seeing a very strong set of, let's say, growth for the overall company. On a consolidated basis, approximately 1/3 of the revenues comes from IAC India. We have a strong order book out of the INR 1,100 crores, almost close to more than 55% of the revenue is of IAC India from an order book standpoint.

So going forward, I expect the contribution on the revenue side of IAC to continue in the same vicinity of about 30% to 35%. And in terms of the margins, I think a sustained margins of IAC would be probably close to around 18% EBITDA. There were a few, let's say, extraordinary incomes one-timers for the quarter 3. So the number you look at for quarter 3, specifically of about close to 20% plus is a little bit of a abnormality, but I think on a regularized basis, yes, the margins of 18%, 19% should continue.

[Abhishek Jain, analyst]

So in this quarter, EBITDA margin stood at 14.8%, this is excluding the other income. So this margin will continue to be higher because of the higher revenue contribution from the IAC.

[Anmol Jain, executive]

I think for both reasons. Number one, as I mentioned, I would not say higher contribution, the contribution, as I mentioned before, from IAC will continue to be steady. However, there will also be a growth on the joint ventures and also the stand-alone from the aftermarket perspective. So all those -- those also, the growth, which is in the joint venture is coming at a much better margin than the current performance of the joint ventures.

So the margins will definitely get better, not just because of IAC operating at a higher margin, but also significant portion of the order book of the joint ventures coming at a better margin than what they are operating at presently.

[Abhishek Jain, analyst]

And you're putting a new business, new plant for the air intake system. So what kind of the incremental revenue will come from this plant and when it will start to kick in revenue.

[Anmol Jain, executive]

So I'll let Vikas answer that.

[Vikas Marwah, executive]

So we have commissioned a new plant as you are aware at Pune. This is, of course, the Lumax Cornaglia joint venture that went live last week. This is intended to add 40% additional capacity from our current capabilities and our machine capacities over the next 12 to 18 months, but you can simply assume at least INR 40 crore upside in terms of revenue that will accrue to us in FY '25 alone.

[Abhishek Jain, analyst]

Okay. And in this quarter, basically tax rate was high, tax rate is around -- right now, is a 30%. So what would be the effective tax rate for FY '25.

[Sanjay Mehta, executive]

So actually, we are just waiting for the merger of IAC also. So whatever the intangible assets is there, we'll get at better tax deduction. And also, the auditor has taken the view of the -- some kind of that joint venture loss they have taken as it is without keeping mind in the future recoverability. So way forward, the tax would be almost around 25% to 26%.

[Abhishek Jain, analyst]

Okay. And the depreciation, it is very high because of the intangible assets in the IAC India. So when -- will it start to come down?

[Sanjay Mehta, executive]

No. In fact, with the intangible assets we have created on the acquisition that will depreciate in the period of 5 to 10 years. So we are getting that after the merger, the tax efficiency will be there. So tax, we are getting almost benefit of INR 53 crores approximately in the period of 10 years. So tax will -- I mean, the depreciation will remain slightly higher for the next 5 to 7 years.

[Abhishek Jain, analyst]

And what is this intangible asset?

[Sanjay Mehta, executive]

Almost INR 213 crores.

[Abhishek Jain, analyst]

And for what, sir? Is it goodwill or is it software?

[Sanjay Mehta, executive]

Well, there is no depreciation. Of course, the goodwill is there. But they are 3-type of: one is the debt customer connect assets and the technologies, and the -- I mean, one more asset created, 3-types intangible assets are that we [ create ] customer relation phase.

[Operator]

[Operator Instructions] Next question is from the line of Resham Jain from DSP Asset Manager.

[Resham Jain, analyst]

And many congratulations on a solid performance. Sir, so my question is on growth. This year has been very strong, led by acquisition. But if I look at the base business ex IAC, the growth is maybe slightly slower. So overall, let's say, going forward, how should one think about, let's say, the growth between the two businesses? The IAC growth and the growth in the base business, which we used to have, that is my first question.

[Anmol Jain, executive]

So thank you. So you're absolutely right. I think if we remove IAC, the growth is kind of similar to the industry growth for the 9 months period. So we have not outperformed the industry, but it is pretty much in line with the industry without IAC. Of course, the solid 52% revenue growth for 9 months is majorly contributed because of the IAC.

I think going forward, number one, the revenue forecast for, let's say, FY '25, we do anticipate that we will fare much better than the industry. A, because of the diversity of the products and also we are on various models, the new model introductions. So in terms of a guidance, I would say that we should be growing probably anywhere around 20% plus on a top line for the next full financial year.

Growth is in all the 3 buckets, the stand-alone, the joint ventures, as well as IAC is expected to be in a similar vicinity. I would assume that IAC would still continue to grow at about a 15% year-on-year basis on a revenue. And on the joint ventures and stand-alone, I think the growth would be definitely a lot better because of the orders in hand and also probably because this year was not a significant growth year. So a lot of this growth will kick in the next year from a revenue perspective.

So overall, yes, we should be looking at a 20% consolidated revenue growth in FY '25.

[Resham Jain, analyst]

Okay, understood. And IAC merger, you have acquired 75%, 25% is what will get merged, right? So there will be some dilution because of the same, is that understanding correct?

[Anmol Jain, executive]

No, I don't think that understanding is correct. So IAC is getting merged with the parent company of [ lights ]. So then it will become a wholly owned subsidiary of LATL.

[Resham Jain, analyst]

Okay. Okay, understood. So 75% still remains, okay. Got it.

[Anmol Jain, executive]

The 75%, that 25% will continue to be held by the foreign partner.

[Resham Jain, analyst]

Understood. And sir, just one more thing. Given that IAC and some of these JVs have a better margin than the stand-alone business. So what should be the company level margin one should expect, let's say, going forward, next 2, 3 years?

[Anmol Jain, executive]

I think at a company level, if you see that, obviously, I already mentioned the sustainable EBITDA margin on our IAC would be, let's say, closer to around 18-odd percent, which would be on a sustainable basis. If you see the other consolidated stand-alone and joint ventures, we are already operating at close to around 12.5%.

I do expect that next year, this should definitely jump and get into the teen margins, as I've always envisaged. And I think the IAC will also continue to be in the same level of vicinity. So from a 14.5% EBITDA, which currently the consolidated entity is looking at, I would definitely feel that this would hinge more towards 15% plus.

[Resham Jain, analyst]

Okay. Understood. Sir, one last one is on IAC. So when we took over the business, we had Mahindra & Mahindra is the only customer. And we said that we will mine more customers over a period of time. So how is the progress happening on that front? And because Mahindra is #3, #4 player and you already have relationship with some of the larger ones. So also from, let's say, 3, 5 years perspective, how should you look at this business given you are not present with some of the larger customers there?

[Anmol Jain, executive]

So I think, number one, there is a correction. Mahindra & Mahindra is not the only customer. Mahindra is the largest customer. IAC continues to enjoy an existing relationship with other OEMs, namely Maruti Suzuki, Volkswagen as well as Volvo Eicher. Just for your consumption, I think IAC did a revenue of over INR 50 crores with Maruti Suzuki for the 9 months of this current fiscal. The objective here was that we will take IAC and expand our relationships for IAC with the other OEMs.

We will probably definitely grow our wallet share in Maruti Suzuki and also try and get business from other OEMs with which IAC does not have a current ongoing relationship and that's where the Lumax management or the Lumax advantages come into play. So we are working with Tata Motors very closely. I do hope that in the subsequent quarters, we should be able to share some positive news on other OEMs development and traction.

[Operator]

[Operator Instructions] Next question is from the line of Amit Hiranandani from SMIFS Limited.

[Amit Hiranandani, analyst]

[Technical Difficulty] performance. Sir, my first question is basically on the IAC, you said there is some one-off income in this quarter. Can you please quantify that? And what is that one-off?

[Anmol Jain, executive]

So when I say one-off income, it's a regular operational income, but it is more pertaining to the previous quarters as a price increase because there are 1 or 2 quarter lag, but that amount is not significant, is I think they're only about INR 3 crores or so.

[Amit Hiranandani, analyst]

Okay. And sir, on the stand-alone, margins were pretty much impressive this time. So can you please guide what is the sustainable run rate we can assume?

[Anmol Jain, executive]

So I think, as I mentioned, if you look at standalone as well as the joint ventures, let's say without the IAC piece, we are currently sitting at almost close to between 12.5% to 13% margin. And definitely, the endeavor would be because we are gaining a lot of the new order book is coming at a better margin than what we've traditionally performed in some of the joint ventures. And also, if you see, we had a pretty flattish revenue in the stand-alone entity for the current fiscal and we are expecting a double-digit growth in the stand-alone entity even going forward in the next fiscal. So there will be definitely cost optimization of fixed cost and better realization. So for those reasons, I would envisage that we should be operating at anything around teen EBITDA margins for the entity without IAC. So 13% to 14% would be my best guidance from a sustainable EBITDA margin for the entity without IAC.

[Amit Hiranandani, analyst]

Okay. And sir, can you just help me with the revenue and EBITDA numbers for all your subsidiaries for 9 Ms.

[Anmol Jain, executive]

So can we share these numbers offline with you because this would be a long thing. But if I were to just give you a breakdown. I mean, 50% of the consolidated revenues approximately comes from the stand-alone entity. I think 47% to be more precise and about 32%, 33% is from IAC and about 20% is from joint ventures. This is the 9-month actual data in terms of the contribution of the total pie.

The stand-alone has had a almost flat growth or a negative 2% to 3% growth in 9 months. The joint ventures have actually grown by 25%. And of course, IAC was a new piece, so that's added to the revenue. In terms of EBITDA margins, I think we've already spoken about the sustainable EBITDA margins for IAC as well as the joint ventures and stand-alone business.

So I mean, on a consolidated basis, if you look at the current year on a full year, we're expecting maybe a growth compared to last year of almost 50%, which is seen in 9 months. So you're looking at anywhere around INR 2,750 crores to INR 2,800 crores of top line and probably a INR 400 crore-plus EBITDA at the full year consolidated level.

[Amit Hiranandani, analyst]

Okay. Okay. I'll take the exact number offline, no issues. Sir, one question on the order book, if you can share it on the subsidiary wise, if you can share IAC, Mannoh, Cornaglia and other 6 subsidiaries?

[Anmol Jain, executive]

Sure. So out of the INR 1,100 crores, about 60% or about INR 600 crores to INR 650 crores is IAC. About INR 300-odd crores is all the joint ventures, out of which the major ones are about INR 110 crores in Lumax Alps Alpine. Lumax Cornaglia is sitting at almost about INR 70 crores. Lumax Mannoh is sitting at about INR 50 crores, INR 55 crores. And then you have Lumax Ituran and Lumax JOPP, both sitting at around INR 30 crores, INR 35 crores each. That's the bulk of the orders for the joint ventures. And then apart from that, we have about INR 150 crores of order book for the stand-alone entity, largely coming from Bajaj Auto for their new EV model.

[Amit Hiranandani, analyst]

And sir, if you can also give guidance on the order execution, especially for Alps Alpine, JOPP [ that you're in ] subsidiaries?

[Anmol Jain, executive]

So out of the INR 1,100 crores, I would say around 50% of the total order book will come into FY '25 revenue and approximately 30% of it would come into FY '26.

[Amit Hiranandani, analyst]

In FY '26. Okay. Okay. Sir, we were planning to enter into EV products as well. So any update on this thing? A new JV or something?

[Anmol Jain, executive]

Yes. So definitely, I mean, out of the total order book, almost 40% is coming from EVs. EVs both in passenger vehicles as well as EV in 2 wheelers. As I already mentioned, we are already secured some orders for the born electric vehicles of Mahindra & Mahindra as well as the new variants of electric platforms of Bajaj Auto.

[Amit Hiranandani, analyst]

No. Specifically, the EV specific product like the BMS, controllers, and et cetera. So we're planning to enter into those products as well, right?

[Anmol Jain, executive]

So we are still on the drawing board on that. We've still not firmed up a clear strategy on to the EV. But I do believe that there are many more opportunities which are on alternative fuels and alternative technologies than EV, which could be of more interest and gain more traction. So we're still evaluating on that.

[Amit Hiranandani, analyst]

Just one last question. If you can throw some light on the CapEx side for the next 3 years, please? A broad number would be fine.

[Anmol Jain, executive]

So we're looking at approximately INR 400-odd crores in the next, let's say, give or take 3 years to get this order book of around INR 1,100 crores. And just to give you a feel, asset turnover ratio today is that about 1:2.5 and I think that is only going to improve going forward.

[Operator]

[Operator Instructions] Next question is from the line of Apurva Mehta from AM Investments.

[Apurva Mehta, analyst]

Yes, sir, congratulations on great set of numbers. My question was on the aftermarket side. We have seen some tough kind of growth measure expecting and doubling the turnover in next 3 to 4 years. We are going slow on that side. Any specific reason on that front?

[Anmol Jain, executive]

So yes. So if you look at, Apurva, the 9 months of the current fiscal aftermarket has grown by about 7%. The reason is primarily that we do see realizations becoming a slight challenge in aftermarket. So just to have a more prudent cash flow management we are not pushing the sales forward, and we are making sure that the realization remains intact. However, having said that, I think we are still very bullish that in quarter 4, we should be able to do a better growth and for the full year, we should still be able to report a double-digit growth for the aftermarket division.

But the guidance of the 2 to 3 years horizon remains intact with new partnerships, which we recently entered into with Germany's bluechem as well as the new product development portfolio, we're very confident that we will continue that momentum of doubling our aftermarket revenues in 3 to 4 years. And I think we are entering the second year in FY '25.

[Apurva Mehta, analyst]

Okay. And on the Bajaj side, can you throw some light. What kind of visibility we have for next year? Because Bajaj, the export is still not picking up. So we have any visibility where we can have other models where we can have some kind of a revenue growth coming from there?

[Anmol Jain, executive]

Sure. So I think, Bajaj, let's understand the two reasons why we've not done extremely well or we've not grown with Bajaj Auto. So significantly, rather, we've had a degrowth in Bajaj Auto from a 9-month perspective is largely because of the frames business. And let's understand in the frame our dependence on 2 or 3 models like the Platina and the City, which are mostly on the export and let's say, certain domestic is very high. And both these models have had a negative volume of almost 15% and 40%, respectively. So that's the reason there is a bit of an anomaly as far as our revenues with Bajaj goes versus Bajaj's own performance goes.

We've recently gone into the KTM. We've got the KTM Duke model chassis. We are also now, as I mentioned, confirmed for one of the EV variants going forward. We're also adding more value than rather than just being a fabrication and a frame maker. We are also doing a lot of painting and coating. So it will also increase our content per vehicle. And the next, of course, we are still in dialogue, but we are hopeful that going forward, we may come on the Pulsar platform as well.

[Apurva Mehta, analyst]

Okay. Cool. Great, [ this is. ] And sir, this margins of 15.8%, which was [ unbelievable ] margins and congratulations to you on the team of Lumax. But on a steady state going forward, can we assume as a 15% kind of margin for next year?

[Anmol Jain, executive]

Yes, I think definitely that margin should be sustainable, both from IAC perspective as well as from the stand-alone and the joint ventures perspective. So yes, a consolidated margin of 15% EBITDA should definitely be something which should be sustainable in FY '25.

[Apurva Mehta, analyst]

Okay. And can you throw some light on the Lumax Ancillary, who are the clients? And what kind of revenue we can visualize for next year and kind of margins in that.

[Anmol Jain, executive]

So Lumax Ancillary currently is more of a wiring supplier, is a backward integration to the lighting business of Lumax Industries. That's largely the current business model. However, we are looking at possibly growing this business not just internally as a captive backward integration, but also to OEMs.

I think the revenue pie is approximately close to INR 150 crores on an annual basis. And we do expect this to continue to grow in FY '25 as well based on 2 things. One is the organic volume growth. Number 2 is based on certain customer expansions and number 3 is also because of the technological change. As more and more LED applications come into lighting, the value per wiring harness assembly also goes up. So for those reasons, we do expect this to continue the upside in terms of the revenue growth going forward.

[Apurva Mehta, analyst]

Okay. And what kind of EBITDA margins could they have? Because wiring [ however ] is a low-margin business typically?

[Anmol Jain, executive]

So right now, it is still too early for us to give you a guidance because this business is something which we've just gotten into. But I think for now, it is still operating in single-digit EBITDA margins. And once we look at it closely, we will definitely try and bring this back up to a similar maybe a double-digit margin or so going forward.

[Apurva Mehta, analyst]

And when you are telling us that you'll have a 20% growth next year. So you have taken into account Lumax Ancillary also or you have not just taken.

[Anmol Jain, executive]

We have taken that into consideration as well.

[Apurva Mehta, analyst]

Because that will contribute around INR 175 crores to INR 200 crores.

[Anmol Jain, executive]

No, about INR 150 crores. We have taken INR 150 crores as a conservative figure for next year. So INR 150 crores, even if you take out, you will still be looking at or maybe around 17% or growth without the Lumax Ancillary. So it's not adding significantly on INR 3,000 crores, if you look at even INR 150 crores. So that's literally about 5%.

[Operator]

Next question is from the line of Karan Mehra from Mehta Investments.

[Unknown Analyst]

A couple of questions. Sir, we recently started a new facility for LCAT. So basically, we are shifting to a bigger facility now. If you can help us understand like when can we see the complete shift happening from the older facility to the newer one? And will any business be affected during this transition?

[Vikas Marwah, executive]

So currently, we have already migrated 100% from the earlier facility, which was a 30,000 square facility. 30,000 square feet to 225,000 square feet facility, the old plant has been vacated, which is at the vicinity of just 2 kilometers. And therefore, there is no further migration that is happening. We will be now going up on the capacity utilization over the next 3 months. So Pune is now operating out of one facility for LCAT and one facility out of Pantnagar.

[Operator]

Next question is from the line of Pritesh Chheda from Lucky Investments.

[Pritesh Chheda, analyst]

Sir, I missed that taxational part. So after this -- the amortization, which you've taken goodwill. What is the taxation that you would incur?

[Sanjay Mehta, executive]

It will come in the 25 -- I mean the 22 plus [ surcharge ] et cetera.

[Pritesh Chheda, analyst]

Okay. And the minority interest that we see. So IAC is 75% owned by us. That's where the minority is rising.

[Sanjay Mehta, executive]

Yes, 25% will be minority.

[Pritesh Chheda, analyst]

Okay. And can you share what is the net margins for IAC.

[Sanjay Mehta, executive]

IAC PAT is almost around, one minute.

[Pritesh Chheda, analyst]

For the 9-month, if you could share the PAT and the top line number.

[Anmol Jain, executive]

So the top line number was very clear. I think I mentioned that the top line of IAC for these 9 months is about INR 665 crores. In terms of the PAT margin is about double digits. Again, it's higher than about 10%. I think it's around 10.5%, 11% for 9 months.

[Operator]

[Operator Instructions] Next question is from the line of Dinesh Kulkarni from RDSD.

[Unknown Analyst]

My question is, I see we don't have a significant debt on our balance sheet, and it's fairly manageable and even the CapEx seems to be a normal range. Do we plan to increase our stake in any of the joint ventures or subsidiaries with the cash, which we expect to generate over the next 3, 4 years? That's my question.

[Anmol Jain, executive]

No, we are very comfortable with the current arrangement with all our joint venture partners. So we do not anticipate any increase in the shareholding between us and the joint venture partners. I think, the reason why there is no debt is because there is a surplus cash, the free cash, which the company's operations generate and that cash is [ redeployed] in terms of the CapEx. So there is no need for any external borrowings for now.

[Operator]

Next question is from the line of Pritesh Chheda from Lucky Investments.

[Pritesh Chheda, analyst]

Just a follow-up there. Will we see repayment of the borrowings in the next cycle?

[Sanjay Mehta, executive]

It will start from the next year, and it is a period of 4 to 5 years, we are anticipating. Though it is a 5-year term, but looking to the cash flow available, we will take decision that time.

[Pritesh Chheda, analyst]

Okay. And what would be your cash generation in 9 months, the operating cash flow?

[Anmol Jain, executive]

You're talking about IAC specifically? Are you talking about as a consolidated entity?

[Pritesh Chheda, analyst]

No. As a consolidated entity. So on a INR 300 crore EBITDA, what is the cash flow you would have generated.

[Anmol Jain, executive]

I mean it would defer entity to entity because INR 300 crore is a consolidated level. So -- we'll have to get back to you offline.

[Operator]

Next question is from the line of Amit Hiranandani from SMIFS Limited.

[Amit Hiranandani, analyst]

Sir, just on the gross debt side, if you can just let me know the gross debt including the working capital and the cash position.

[Sanjay Mehta, executive]

It is a gross debt, including working capital is around INR 600 crores, and we are having the bank balance of almost around INR 318 crores. Out of that gross debt, the long term is around INR 410 crores and the working capital is around [ $196 crore.]

[Amit Hiranandani, analyst]

Okay. Sir, the next question is on the Lumax Ancillary Limited. So you said the EBITDA margin is about single-digit, the revenue is about INR 150 crores annually, right? So quarter 4 would be effectively on a consolidated level, the EBITDA margin would little bit come down, right, because of this merger or acquisition of Lumax Ancillary?

[Anmol Jain, executive]

Well, again, there would be certain improvement on the other businesses as well. So I would not say because, again, on a quarter basis, it's just about INR 35 crores to INR 40 crores of revenue, which is not so significant for the consolidated entity. So the other businesses are expected to also show a positive momentum in quarter 4. So a lot of that would get offset and perform better. And that's why I said at the consolidated level, the margins would be able to sustain going forward as well from the current levels. So I do not anticipate LAL lower EBITDA margin to have any major impact on the consolidated revenues or profits.

[Amit Hiranandani, analyst]

Correct. Nice. And sir, I was just checking annual report. So we are paying a royalty to Lumax Industries Limited. So can you please help me in understanding this point, please?

[Sanjay Mehta, executive]

No, I think you have seen the -- we are not paying any royalty to Lumax Industries. We are paying service charges to Lumax Management Services and also to the Mannoh.

[Anmol Jain, executive]

So Lumax Industries, the one royalty angle we are paying is the royalty we pay for the supplies of Mahindra & Mahindra items to the aftermarket. So we have a very clear arrangement with Mahindra & Mahindra as an OEM. Usually, a lot of the OEMs prohibit us from selling in the open aftermarket by ourselves. But for Mahindra & Mahindra, we were able to make some arrangement that whatever revenues we garner from the aftermarket there would be a percentage royalty paid to Mahindra & Mahindra and since Mahindra & Mahindra lighting is handled by Lumax Industries. It is more of a Lumax Technology Space, Lumax Industries, and then Lumax Industries pays it to Mahindra & Mahindra directly. So that's the only nature of royalty, which is there between Lumax Technologies and Lumax Industries.

[Amit Hiranandani, analyst]

Very clear. Just last one question. So sir, on the emerging JVs, what we have Alps Alpine and et cetera. So with JVs can turn profitability faster and by when you can see this happening?

[Vikas Marwah, executive]

So the positive trend has started, in fact, from Q4 only of the current financial year. Lumax Ituran will be reporting positive EBITDA in Q4. For the next year, Lumax Alps Alpine and Lumax Ituran both will be profitable, and our endeavor will be to get Lumax Yokowo and Lumax JOPP also coming in with a double-digit EBITDA figure by FY '26. This is on the basis of the order book that we have currently in hand and the next 6 to 12 months for the other 2 joint ventures, there will still be the development time.

[Operator]

Ladies and gentlemen, that was the last question of the day. I now hand the conference over to management for closing comments.

[Anmol Jain, executive]

Well, I take this opportunity to thank everyone for joining into the call today. We will keep informing the investor community on a regular basis for updates on your company. I hope we have been able to address all your queries. For any further information, please get in touch with us or Strategic Growth Advisors, our Investor Relations advisers. Thank you once again, and have a good evening.

[Operator]

Thank you. On behalf of Lumax Auto Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.