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Lumax AutoTechnologies Ltd
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Ladies and gentlemen, good day, and welcome to the Lumax Auto Technologies Limited Q4 and 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 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.
Thank you. A very good afternoon, ladies and gentlemen. A very warm welcome to FY '21 earnings call of Lumax Auto Technologies Limited. I sincerely hope you all are safe and healthy amidst these challenging times. Along with me on this call, I have: Mr. Deepak Jain, Director; Mr. Vineet Sahni, Group CEO; Mr. Vikas Marwah, Lumax Technologies' CEO; Mr. Naval Khanna, Executive Director, Lumax Management Services; Mr. Sanjay Mehta, Director and Group CFO; Mr. Ashish Dubey, Lumax Technologies' CFO; Ms. Priyanka Sharma, Head, Corporate Communications; Mr. Ankit Thakral from the finance team; and SGA, our Investor Relations adviser. The results and presentation are uploaded on the stock exchange and company website. I hope everybody has had a chance to look at it. Then fiscal '21 started off with a fall. And by the time we were reaching towards the end of the year, the new year started off with new challenges. The second wave has affected many of our near ones and unfortunately taken away some of our loved ones, too. The second wave was different than the first one on three aspects. First, it affected the rural markets unlike the first wave. Number two, the demographics and the age group it attacked was much younger compared to the first one. And number three, it left behind fear, not just inconvenience. Transition towards normalcy is going to be a long-drawn process. But with good monsoons and hopefully no third wave anytime soon, I hope for a quick bounce-back. Let me take you through the performance of the auto industry. As for data published by SIAM, in the financial year FY 2021, there was a degrowth in production of all segments compared to the previous years, a degrowth of 11% for passenger vehicles; a degrowth of 13% for two-wheelers; a degrowth of 17% for commercial vehicles; and a massive degrowth of 46% for three-wheelers. Thereby, the total industry degrew by 14% during the year. Let me now take you through the performance of each business entity. The stand-alone entity caters to integrated plastic modules, aftermarket business, chassis, swing arm for two-wheelers, trailing arm for three-wheelers under the metallic business and two-wheeler lighting. The stand-alone entity has contributed 81% of the total consolidated revenues. Lumax Mannoh Allied Technologies, a 55% subsidiary that manufactures manual, AMT and automatic transmission gear shift systems and has a market leadership position, contributed 11% to the total consolidated revenues. Lumax Cornaglia Auto Technologies, a 50% subsidiary which manufactures air intake systems and urea tanks, commanding 100% share of business with Volkswagen and Tata Motors, contributed 7% of the total consolidated revenues. The subsidiary company has registered a growth of more than 50% year-on-year due to the start of manufacturing of urea tanks at the beginning of financial year 2021. This is despite the COVID pandemic year. 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 the company has been changed to Lumax Metallics Private Limited. The company is confident of increasing the revenues over the next few years with new programs, starting in FY '22, and a healthy order book. Lumax Ituran is a 50% joint venture with Ituran Telematics of Israel. 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. The company has secured a Letter of Intent from a global OEM, SOP of which is expected in FY '23. Lumax Jopp Allied Technologies is a 50% subsidiary, which is engaged in the design, development and production of gear shift towers, automated manual transition kits or gear sensors and forks. The production has started to pick up as per the OEM schedules. Lumax Yokowo Technologies is a new 50-50 joint venture with Yokowo Technologies Limited Japan to manufacture and supply antenna systems and other vehicle communication products to the Indian automotive industry. We expect to commence production in the later part of FY '23. The company was also bestowed on several awards during the year. One of the prestigious awards was that the company won the Platinum Award for best annual report from League of American Communications Professionals for excellence within its industry for the financial year 2019/'20. In FY '21, your company secured a healthy order book of over INR 400 crores of orders and achieved highest-ever quarterly revenue in quarter 4. As forecasted during the second quarter, we performed well in the second half of the year due to which the revenue for the full year is down by a near 3% as against industry degrowth of 14%. The year FY '22 has started with new curbs and most of the OEMs had shut their operations in the month of May, either voluntarily or due to lockdown imposed by state government. OEMs have also faced lower demand on account of partial functioning of dealerships. There has been shortages of critical items like industrial oxygen and semiconductors essential for production and manufacturing of vehicles. There has also been issues with logistics and disruptions in supply chain. However, demand is expected to rebound as restrictions are lifted. We are hopeful of a fast recovery with expectations of a good monsoon and all other positive macroeconomic factors. On the employee welfare and vaccination, I'm happy to say that we at Lumax have always believed people are our biggest assets and their health and safety are of utmost priority to us. Therefore, at the group level, we had set up quarantine centers at various plant locations fully equipped with oxygen concentrators, ambulance services and basic medical support, including a 24/7 doctor onboard. The COVID-19 vaccination drive was kickstarted in April 2021 at our facilities. Until date, total of 5 camps have been held and around almost 1,000 employees have been vaccinated, the intentful vaccination of our people and their families as soon as possible as a responsible corporate. 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 quarter 4 and 12 months of fiscal year 2021.
Good afternoon, everyone. Let me update on the operational and financial performance of the company. Integrated plastic modules contributed 28% to overall revenues; followed by aftermarket at 20%; chassis at 16%; lighting products at 12%; gear shifter at 11%; emission at 7%; and others at 6%. Two- and three-wheelers contributed 45% to overall revenues; aftermarket contributed 20%; passenger car at 18%; and CVs at 10%. The consolidated revenue stood at INR 388 crores for Q4 FY '21 as against INR 273 in Q4 FY '20, up by 42%. On a full year basis, company reported INR 1,108 crores revenue as against INR 1,141 crores in FY '20 or down by only 3%. The company reported consolidated EBITDA of INR 47 crores in Q4 against INR 21 crores in Q4 FY '20, up by 122%. For full year, EBITDA was at INR 114 crores as against INR 109 crores for FY '20, up by 5%. FY '20 EBITDA does not include our gain on sale of property amounting to INR 2.22 crores, which is a part of third quarter other income. EBITDA margin stands at 12% for Q4 as against 7.7% for Q4 FY '20. Margins improved on account of increased revenue coupled with cost-saving measures. For full year, FY '21 EBITDA margin stood at 10.3% as compared to 9.5% in FY '20, up by 80 basis points. Profit after tax and minority interest stood at INR 21 crores in Q4 against INR 6 crores in Q4 FY '20. And on an annual basis, FY '21 INR 47 crores as against INR 50 crores in FY '20. The CapEx during FY '20 was INR 65 crores, mainly on account of start of production of subsidiary company, Lumax FAE and urea tanks. The Board has declared final dividend of 150%, INR 3 per equity share, subject to approval of shareholders at the ensuing Annual General Meeting of the company. Now we open the floor to call for questions.
[Operator Instructions] The first question is from the line of Abhishek Jain from Dolat Capital.
Congrats for a strong set of performance. Sir, CV segment contribution has gone up to 10%. So just wanted to know, what is your medium-term target revenue from the CV segment? And which products could be a potential revenue driver for -- in CVs? There is a significant jump in revenue from Tata Motors as well. Is it because of the incremental revenue from the urea tanks business only?
Vikas, would you like to take that?
Yes, sir. So thank you for your question. You're right that due to the enhanced focus of the company on the commercial vehicle segment, the product development for the urea tank, which was on, got commercialized for SOP during the pandemic year and we supplied 97,000 urea tanks in spite of April-June being a washout. We are looking at an increased volume sale of about 1,30,000 urea tanks during the current year. We have also won the gear shift lever assembly orders from a couple of commercial vehicle OEMs, which will start picking up for production from Q3 of the current year. So these are the two flagship products we can say which will be now driving the enhanced focus on the commercial vehicle segment.
And what is the average -- sir, what is the average revenue from this urea tank per unit?
So on an average, we are supplying around a 10-liter capacity tank to the commercial vehicle customer right now. And the price ranges between INR 2,200 crore to INR 2,400 per tank. And the electronic content on this and the other is extra. So going ahead, your company would be trying to put more value addition into this particular segment to increase the per unit price.
So what is your revenue target for -- from the urea tank in FY '22?
The market size of urea tank is about INR 400 crores to INR 500 crores. And as I had mentioned earlier, the Phase 1 target would be to capture approximately a 10% to 15% part of that pie, thereby about INR 50 crores. For FY '22, I think we are pretty much in line with meeting that objective.
Okay. And sir, we have seen a significant jump in the air intake system business. So obviously, that is one from the significant jump in the urea tank revenue and the other is the oxygen sensor. So what was the revenue contribution from the oxygen sensor in FY '21 in air intake business?
They are two very different things. The oxygen sensor is a very different joint venture, which is with a Spanish company, Lumax FAE. I don't think there were any significant revenues made in FY '21 out of that joint venture. Even though we have that it applies to certain OEMs, but it is still at a very nascent and a small stage. For the air intake system, yes, there has been a significant growth both in terms of the air intake system by itself and, of course, the entry into the urea tank, which rests into the same joint venture of Lumax Cornaglia.
Okay. And sir, in oxygen sensor, you booked the revenue in the other parts or in this segment, actually?
Vikas, can you take that?
In others, we have booked in others because of [indiscernible], others.
And the quantum is quite low in FY '21?
Yes.
Okay, sir. And FY '21 growth in aftermarket business was quite strong. Given the long-term impact in first quarter FY '22 and a high base, are we able to surpass the last year number, sir, in aftermarket business?
So definitely, aftermarket for the full year, despite a quarter 1 washout, we have pretty much been able to grow by 4% on a year-on-year basis. However, in quarter 4, we grew by almost 60%. So we also achieved peak revenues per month in quarter 4. And if I were to annualize the quarter 4 revenue, then we would be definitely on track in our mid-term goal to double the aftermarket revenue. So we would be on track with that. But we do expect a strong recovery once the lockdowns are lifted. And we should come back on track to deliver the aftermarket business, where we intend to move in our long-term strategy.
Okay. So sir, and there is a very significant opportunity you are looking in the plastic molded parts, especially in the four-wheeler side. You have also won new business on the Maruti as well. So what would be the incremental revenue you are looking in FY '22 from four-wheeler plastic parts?
What is the incremental revenue, Vikas, if you want to throw some light on that, on the plastics four-wheelers?
So the incremental revenue on the plastic four-wheeler parts would be a double-digit kind of a figure, which would come mainly from the new entry into the Maruti businesses. The full value revenue would be realized only in FY '23. But happy to inform you that we have commenced setting up of the plant at Bangalore, which would be now catering into this particular business.
And what is the CapEx and asset turnover at that plant?
The total CapEx outlay for FY '22 would be just approximately INR 100 crores at a consolidated level. And for the -- when Vikas mentioned, for the Bangalore plant, it was actually not a greenfield site, it is a brownfield expansion of our current facility. So we do not expect more than maybe about INR 15 crores to INR 20 crores going out of the INR 100 crores on expanding for the plastics four-wheeler business.
Okay. And what revenue we are targeting from FY '23 from this plant?
The incremental revenue from the plastic four-wheeler business over -- as Vikas mentioned, in FY '23 would be the peak. But to give you a flavor, we should be looking at upwards of anywhere around INR 40 crores to INR 50 crores of incremental revenue from the four-wheeler plastics in FY '22.
Okay. The last question from my side, on the sheet metal part, there is a significant ramp-up and quarterly run rate has gone up to the INR 66 crores. Is it because of the increasing share of the business from existing clients? Or have you added some new clients in this segment?
We have constantly said that we will try to improve our wallet share in all our existing businesses. And that is exactly what has happened. We have been able to penetrate deeper into our customer, Bajaj Auto, for the fabrication metallic business. And we are now catering to both the export model as well as now the premium bikes of KTM model. So that has been the result of increasing in our market share or wallet share in Bajaj Auto, which has led to this significant growth in revenue.
So Bajaj Auto is the only client in the sheet metal part or there are other clients as well?
Bajaj is right now the single largest customer for the metallic business of the company.
Next question is from the line of Pritesh Chheda from Lucky Investment Managers.
Sir, if you could give some color on the new order wins, which you mentioned at about INR 400 crores for FY '21. Is that correct? And how much of that new order win is executable in '22? And how much of it is then -- will get ramped up to what number?
So I will start off and maybe Vikas could supplement later. So the total order book, approximately of INR 400 crores, which I mentioned, nearly close to about INR 120 crores to INR 150 crores of this would be coming in FY '22 and the balance would come in FY '23 and some of it might even get split out to '24. Out of the total INR 400 crores, roughly about INR 100 crores or about 25% is a replacement business and almost 75% is a new business, which we will add to the incremental revenue.
Okay. And if you could give on the new business wins, you -- what new business wins have you got? Any major ones if you could share?
Vikas?
So in terms of the new business, as Mr. Jain indicated our total figure, the bulk of the new wins has come in the Lumax Mannoh Auto Technologies business for the gear shifters, where we have got the orders for -- the orders to be served out of Bangalore, which will be again a new greenfield investment. And the commencement of the production of this plant is beginning this year. That would be one big business that will be coming. Besides that, the AMT business wins that Tata has got further strengthened with the expansion of the platform. And as you may be aware, we informed in the last earnings call that the successful launch of AMT gear shifters with Tata Motors has commenced. Also, we have won several new programs with Mahindra again in the gear shifter business. Coming to the other businesses, of course, as Mr. Jain mentioned, we have increased our share of wallet with the metallic business with the first production of the frames for motorcycles now coming from Pune. We were always at Aurangabad. We have started the commercial production at Pune now. And we have also won the orders again from PSA this year for the emission business for air intake systems. And about INR 150 crores of incremental revenue is expected to be added in all these businesses put together in FY '22 as we look at it.
So you mentioned for Mannoh, there is a bulk of business from Mannoh. So there is CV gear shifters, Tata Motors CV gear shifters and Mahindra CV gear shifters, right?
That's right. And along with that, Lumax Jopp, which come into our mechatronics domain. For that also, the new business wins for control housing product, which is the new product that was introduced during the FY '21, so that also with Mahindra being the flagship customer, this new business will be now adding on to the revenue.
And INR 120 crores of additional revenues that the MD mentioned was basically incremental, right? This is not -- this did not include any replacement business?
So out of the total order wins of about INR 400 crores, about INR 150 crores worth of the business will be added to the top line in FY '22 as per the current projections.
But sir, that INR 400 crore includes 25% replacement, right? That INR 150 crores now you're mentioning is incremental or that also includes replacements?
That includes some bit of replacement also because a couple of programs are coming to an end of program, end of life. So roughly, you can say about INR 122 crores would be the incremental new business contribution from the new business wins.
Okay. And so considering this new business, which is actually about roughly 10% of our FY '21 top line, incremental coming from new business, what is our type of top line growth that you would hazard to guess in FY '22 for yourself?
So right now, we are looking at -- I mean, if the industry were to bounce back -- and again, we have maybe had some shortfalls in the first quarter itself. But we would be looking at anywhere between a 25% to 30% or upwards revenue growth over FY '21 in FY '22.
Okay. And on the margin side, we were earlier mentioning that we will do double digit. What we see at exit quarter is a much higher number. Is exit quarter a reference number for the margin or the annual number is the reference of the margin?
Well, I would say that the annual number, we would like to maintain that in FY '22. The fourth quarter, of course, has been a higher number because of several reasons of cost savings and a much higher revenue base as well. I do not anticipate a similar revenue base to continue in the corresponding quarters equally. So there would be some certain inflationary costs would also come in. But I would say that the intent would be to take the base of FY '21 EBITDA margin, and we would definitely do our best to further expand on that with the incremental revenue growth in FY '22.
[Operator Instructions] The next question is from the line of Atul Kothari from Progwell Securities.
Sir, I have a couple of questions. So first of all, I would like to know if you maybe faced any logistic-related issues due to lockdown in the months of April and May?
You're talking about logistics issues. Can you be more specific in terms of our inflow of parts or our outflow to our OEMs?
Yes, sorry, sir. So how much business you lost due to the second wave of COVID? What was the impact -- overall impact on our business, sir?
It's still premature to determine. But I think we would have had maybe 15% to 20% shortfall than what we had forecasted in quarter 1.
Okay. And sir, are we likely to recover the same going ahead, sir?
It's too premature. I would only say that one of the OEMs so far has revised their annual forecast or annual outlook for FY '22. So we do remain hopeful that most of the OEMs had advanced their June shutdowns in the month of May. So we are hopeful that in the month of June, we would actually fare on better revenue than what was anticipated. And yes, likely to recover most of this deficit in the corresponding 3 quarters, this would be our thought. Of course, with a disclaimer that I hope there is no third wave and the momentum continues to be on the positive quarter.
Okay, sir. So what is the raw material recovery like in our case? So do we expect higher cost due to the increase in commodity prices?
So our raw material usually is compensated by our OEMs, the escalations in the raw material. However, depending on OEM, the policy is usually on a 1 to 2 quarter lag basis. So we, of course, have to do the subsequent increases to our suppliers on a real-time basis. But then the corresponding effect of that comes in approximately 3 to 4 months later into our books of accounts. And that is just the way the policies are structured with our OEMs on the raw material compensation.
Okay, sir. Sir, and you said that we normally take 1 to 2 quarters, there is a lag period of 1 to 2 quarters. So will there be a provision impact on our -- or adverse impact on our margins in this quarter or in FY '22?
Deepak Jain here. Let me just say this. I think the Q1, I think we would not be able to give you a very firm outlook. I think it's -- the markets are volatile as you know very well. There is obviously a lot of effort which the company is making to ensure that we are able to sustain our margins. May month, as Anmol has mentioned already, was impacted due to COVID. I think we are better positioned to comment about that when we are doing the call for the quarter 1, okay?
And sir, how has been the demand from the rural area for us in Q4 and especially again in the first 2 months of Q1 FY '22, April and May?
Yes. It's very difficult because we are a B2B. We do not track the end user behavior in terms of whether the retail sales are being done in the rural or urban. But based on models which we are catering to, I would say that there has been yet in the two-wheeler space a certain dip in the demand of entry-level bikes. But the exports and the premium bikes in the two-wheeler space has still maintained its momentum. And in the passenger car space, it has been a mixed bag. But overall, I think there has not been much of an impact on the passenger car for any specific rural reasons.
The next question is from the line of Resham Jain from DSP Investment Managers.
Yes. So I have two questions. So first is on the aftermarket business, where you did extremely well. Within aftermarket, you sell like a full bouquet of products. So any specific range of products or any segment within aftermarket where you focus and that helped this growth? And going forward, what will be the strategy with it?
So Vineet, would you like to add on the aftermarket strategy?
Yes, sure. So in aftermarket, we have taken a three-pronged strategy, I would say. One is we were very strong in lighting, but our two-wheeler market share was less. So we created a product development cell or a team, and we launched several products in a couple of -- last couple of years, which increased our market share in aftermarket. So that is on the two-wheeler lighting part of it. On the second, we have launched other products as, for example, recently, we launched the wipers under the brand of Lumax. And that is adding on to the revenue. And third, Mahindra products, which were not going to the market earlier. So we have now agreement with our customers, and we are able to push these products as OE products in aftermarket, which has helped us to increase the revenue. So overall, the picture for aftermarket looks very optimistic in the future.
And I'll just add to that, that apart from the product development, we are also constantly focusing on getting into new product lines and trying to further our market share in our current product line. So there has been some traction in FY '21. But because of the volatility in the lockdowns and regional-wise aftermarket business, we do expect that in FY '22, we should fare better on those fronts as well.
Okay. Got it. So this second strategy in a way which has helped you is some of the two-wheeler companies, which you work with, has a good export proportion. And despite domestic market getting impacted, that business actually did pretty well. But that is indirect exports. I wanted to just understand, are we looking for any direct exports as well as a strategy because some of the products which we might be manufacturing, we can do exports of that and can derisk any of our verticals? So just on the direct export side, any strategy?
I believe this is right. I don't -- see, we have taken a strategy in aftermarket at this moment to promote the exports in the aftermarket business. And we are focusing on that and we have started seeing traction. But for the OEM at this moment, we have to work out on the buyback arrangement because in almost all product lines, we have global partners. So there, the market is divided, like we are focusing on India and they are focusing on other than India. But we are working on buyback arrangements in the future, which will help us in increasing exports. So this strategy is under discussion.
Okay. Got it. And sir, as a last question, sorry, is on our medium- to long-term margin guidance. Obviously, the current situation, where raw material prices have increased and all. But what will be your medium to like, let's say, 3 to 5 years kind of margin trajectory, which you want to achieve? Any ballpark number that you can give, that would be helpful.
I think I've said that in the past that our endeavor is to enter the same EBITDA margin, upwards of 13%. I think we are inching towards that. If you look at quarter 3 performance or even quarter 4 performance standalone, it was hovering around the 12% mark. Of course, for the full year, we've just been over the double digit. But I think going forward, with the incremental revenue growth and as the strategy plays out, we definitely feel that getting to 13% would be the first milestone. And then to sustain it and further grow it would be something which we would look at, at that point of time. But right now, the endeavor would be to go from a 10-plus percent to near 13% in the mid-term.
The next question is from the line of Saket Kapoor from Kapoor & Co.
Sir, if I could just sum up from your earlier conversion, I joined a bit late. You are expecting a 20% to 25% revenue growth, depending upon the road map given by the OEMs for this year. And there is a very likelihood of an improvement in margins because of our greater penetration towards the aftermarket products business. Is this correct, sir?
So that is correct. The overall consolidated revenue growth, yes, we do anticipate a growth of 20%, 25% or more. But the aftermarket is just one of the business avenues which will contribute to this growth. As I had mentioned earlier, we have a very healthy order book across our businesses, which will get into SOP and in the revenue stream in FY '22. So almost all of our businesses will be contributing towards this growth of 20% to 25% to 30% in FY '22.
Sir, how has this nonavailability of semiconductor play? And how have we made sure that this is not acting as a hindrance for our growth plans going forward?
Vikas, would you want to take that?
Yes, sir. So in terms of the products that are currently supplied by Lumax Auto Technologies, the electronic content is on the rise, especially with the introduction of the AMT gear shifters and now getting into dual clutch transmission assemblies and also then going ahead in the future with the Ituran product that would be supplied to a major global OEM. So the semiconductors, currently while in FY '21 have not been a showstopper to that extent, but we started sensing right from Q2 of last year that there would be issues coming in terms of procurement and pricing for which we actively engage with the OEMs. The OEMs are currently supporting the sourcing of the semiconductors as well. Also, we are also doing a lot of -- we are building on the synergy of the group as a whole, where Lumax Industries Limited has a large electronic division. And they have a joint venture partner with Stanley and they have sourcing and buying offices in Taiwan and other parts of the world. So we are leveraging upon that to ensure that there is a seamless supply of these critical components going ahead. And at Lumax Auto Technologies for FY '22, we do not see a challenge in terms of the semiconductor sourcing. We are equipped for that.
And we are derisking it at a group level. We do not anticipate any major setbacks because of semiconductor, at least on the supply side. Of course, on the OEM demand side, if there are any setbacks, those are beyond our control.
Sir, if we take the H2, how has the utilization levels played out so far for quarter 3 and quarter 4 comparative for the utilization level as a whole or on a blended basis?
It's a very -- I'm assuming the utilization, you're talking about capacity utilization?
Yes, sir.
So it's kind of a difficult mix because we have a very diverse product portfolio as well as a customer portfolio. But to give you a very generic, our capacity utilization in quarter 3 and quarter 4, where we clocked the highest quarterly revenue, has been anywhere between upwards of 80% or so for certain products. And that's why there are further brownfield and greenfield expansions and investments planned. However, there are still the recent joint venture, some of them, which has really -- which are really sitting on idle capacities. And we will -- we have enough to scale up those joint ventures to a mature level. So to that aspect, we also would have businesses which would be sitting on maybe 80% idle capacity. So it's a mix.
Right, sir. And last part, on the bookkeeping part, sir, we see that in the asset category, noncurrent asset, there has been an increase in the investment from INR 50 crores to INR 90 crores as well as under the current asset also, the same has gone up from INR 11 crores to INR 40 crores. So yes, sir, if you could explain, sir, what these investments are into and how are we going to benefit from that.
Sanjay, Ashish?
Yes. So investments we have are investments in Lumax Industries. And also in our Lumax Ancillary Limited. And every year, whatever the market price is there, accordingly, it will be restricted. So that is the reason of the increase in the investments.
Okay, sir. Both noncurrent as well as current assets?
No, under that -- it's only noncurrent investments. And under the current investments, there has been increase in basically the mutual fund amount. Correspondingly, there is a decrease in the current account balance as compared to the previous year. So we have just basically used our current account balance and put it into the mutual funds.
Right. Lastly, sir, on the dividend distribution policy, sir, have we articulated, and please correct me if the same has been done for us, but as has been the requirement from SEBI now also like that the corporates can -- are required to come up with their dividend distribution policy. So are we looking into it? Or are we -- have you been doing anything on that front?
We have a very clear dividend policy, which states that we must maintain a minimum dividend payout of 35% or 1/3 of the dividends must be distributed to the investors. That is very clearly the policy. And we are happy that we have been able to maintain that even in the most difficult times in the previous years.
[Operator Instructions] The next question is from the line of Apurva Mehta from AM Investments.
Sir, congratulations on a good set of numbers. I just wanted to ask you about long term, 3 years down the line, where do we see our company to maybe on the turnover side, on the margin side, kind of things? And also, can you describe in detail what will be the role of our different subsidiaries to that growth? So we can continue where we stand up to 3 years. Where do you see these companies go? I know it's very difficult. But broadly speaking, where do you see our companies to reach in the next 3 years?
Thank you very much. So I'll give you two senses of this. So number one, if you look at the revenue, I have always said that for Lumax Technologies, our constant endeavor is because of a diverse product, partnership and customer base, we definitely would like to constantly fare better than the industry. And I'm happy that even in FY '21, you see that. And even if you look at the last 3 years, FY '19, '20 and '21, while the industry has degrown by almost, let's say, 30%, Lumax Auto Technologies as a company has only degrown by 7% in the last 3 years. So that also speaks volumes of our inherent capability and positivity. I think going forward, I would say that we will do better than the industry. Whatever CAGR the industry grows at, we would definitely be far, far better than that. If you look at our joint ventures and our subsidiaries, right now, they consume about 20% of the consolidated revenues. I think the guidance I have given earlier, some of these joint ventures are yet to scale up and hit the maturity level. So I would say over the next 3 to 5 years' horizon, the joint venture subsidiary should contribute about 1/3 of the consolidated revenue. So maybe about 30%, 35% of the revenue should come from the JV subsidiaries and the balance would come from the stand-alone entity. Giving you an outlook on the revenue would be very, very difficult. But as I said, I mean, if the industry grows in double digits over the next few years, let's say, 10% to 12% we would expect to grow at least 15% to 18% also on a year-on-year basis. So having said that, if I arithmetically calculate that from a current revenue base of INR 1,100-odd crores, over the next 3 to 4 years, you should look at inching closer towards the INR 1,800 crores, INR 2,000 crores mark.
But if you calculate this year only, your guidance is about 20% to 30%. And if we take the upper side, 30%, we will be close to INR 40 crores, INR 50 crores.
We will just come back to where we were in approximate FY '19 levels. But having said that, then, of course, to sustain a 25%, 30% growth at an industry level would, of course, not be sustainable. This would be 1 specific year to come back after the COVID bounce-back. I would say that after that, the industry would normalize on a regular double-digit 10% to 12% growth rate. So having said that, as I said, if we are looking at a INR 40 crores, INR 50 crores revenue in FY '22, and thereafter, you grow at a 15% of the CAGR, then you could look at upwards of INR 2,000 crores in the 3 years' time frame.
And margins will be definitely towards the teens, [indiscernible]?
I think we have constantly shown that over the last 3, 4, 5 years, our margins have consistently inched towards the north side. And slowly but surely, it's moved to the double digits, sustained the double digits. And as I said, moving forward, we would not just sustain it at the current level, but we would further expand our margins towards the [ teenage ] EBITDA level. That would be our first endeavor.
And on the -- the world is moving towards EV. And definitely, we would be also looking towards that. Any sense of what we are trying to do, where everybody is now trying to get some of the other products towards the EV product side? Any sense that we are -- what we are trying to do or what we will be trying to do and the new developments, what we are trying to do towards that?
Vikas, will you get that, please?
So currently, if you see the composition of our products, a lot of those products are forever going to be there, irrespective of the internal combustion engine or the EV or even the hybrid. And I'm referring to largely the sheet metal components there, which would definitely remain there. On the plastics side, with the very slightest of the modifications, we are already there and we hope to remain in all the future models, even of the current OEMs. When we come to the gear shifters, of course, in the gear shifter, the manual transmission and everything would -- definitely would be then going out. But we don't see it happening on the four-wheeler segment, at least for the next 5 years to 7 years kind of a time frame. So we are not yet contemplating to join the bandwagon in terms of the family of products that you hear in terms of motors and controllers and everything because the market has actually not reached a critical mass there and is not expected to reach even in the next 3 to 4 years. However, we continue to work very aggressively on the total EV space and the connected vehicle space because it's an entire ecosystem of the CASE technology. So the recent joint venture that you're seeing, whether with Yokowo or with the futuristic telematics products where we have won a major business with a global OEM, so these are all towards the futuristic products. Specifically zeroing down to EV products, we currently have not stepped the gear there. That's a fact.
And probably just to add to that, I think the three key domains which this company operates in, into the OEM space are plastics, electronics and mechatronics. And I'm talking for the future point of view. Yes, we do have a strong presence in metallics as well. But going forward, I have always said that plastic, electronics and mechatronics would be also growth drivers. And all these three fit in quite well with the whole EV transformation. In the EV transformation, all these three play a very vital role and have more opportunities than being at risk of being eliminated.
And you see in the gear shifter business -- in our gear shifter business, we have near 100% market share today on whatever EVs that are getting sold, either through Mahindra or whatever is coming through Tata. And even going ahead, we are also very aggressively now engaged with the commercial vehicle manufacturers on those platforms. So on the automatic gear shifter train, yes, we are definitely there much ahead of the curve and much before the other companies had started.
And on the acquisition front, wherein you are strongly looking at acquisition of some of the assets which you would like to enter. Any update on that?
We are constantly engaged with opportunities in the inorganic space. However, nothing which right now is worth mentioning. But as we progress on any of those opportunities, I will surely make the announcements in due course.
And any new JVs in pipeline, which you maybe announcing later on, but any pipeline of JVs you are looking at?
Yes. We are constantly looking out for strategic good partnerships for the Indian market to service our customers better. So yes, there are some JVs under discussion. But as and when they reach a mature stage, we would be happy to share the details with you.
[Operator Instructions] The next question is from the line of Abhishek Jain from Dolat Capital.
Sir, effective tax rate was quite high in FY '21, it was around [ 43% ]. So what tax rate can we assume in FY '22 and FY '23? And what is the reason of this high tax rate, sir?
So effective rate is 25.9%.
25%. And what tax rate can you assume in FY '22 to '23?
[indiscernible]
That will be the same?
Yes. I mean, like in future, [indiscernible]
Okay. And sir, what is the CapEx plan for this FY '22 and FY '23?
So for now, we only have an FY '22 guidance, as I mentioned earlier. It is a little less than INR 100 crores, which would go in FY '22. And in FY '21, we did approximately INR 60 crores, INR 65 crores.
Okay. And most of the CapEx would be towards this plastic molded part plant and the new capacity additions like...
I think I said across all our businesses, ranging from the plastics four-wheelers to also the gear shifter systems to also the metallics business to also the new joint ventures. Basically, it is in line to service the INR 400 crore-plus order book and certain strategic investments going forward, which will help navigate the company over the next 2 to 3 years.
So until that, what is your total investment in JVs?
So the total gross block in the JVs is approximately INR 200 crores as of March 1.
INR 200 crores. And the net, the net block, sir?
Ashish, would you have figure on the net block?
So the net block almost INR 180 crores.
INR 180 crores. And what part you are earning from these JVs until FY '21?
The minority interest, I think on that one [indiscernible]
So the minority interest is around INR 4 crores basically for the financial year '21, which has been consolidated in Lumax Auto Technologies' finances. So considering it basically around 50%. So the overall PAT for the JV would be somewhere closer to around INR 8 crores.
INR 8 crores. And return on capital employed, what you are generating from the JVs and what is your target ahead?
So in fact, our target is about 20%. But different JVs have a different return on capital. If I may say it, I mean, the Lumax Mannoh, the growth would be almost around -- above [ 20% ] and [ kept also ] increasing. So it depends, different JVs have a different growth.
Okay, sir. Sir, my last question is related with these industry numbers. Although the first half FY '22 industry numbers expected to be weak, can we expect Lumax Auto to outperform because of the better volume of the Bajaj Auto?
I think I mentioned that our constant endeavor is to outperform the industry numbers. And I think the track record has proved it otherwise. I gave the example of our last 3 years' growth or degrowth of 7% versus the industry degrowth of 30%, so not just Bajaj Auto. But I think we have a healthy segment-wise mix and also with a large contribution coming in from the aftermarket. I think we've been able to fare much better than the industry, and we continue to hope to do so in the coming times as well.
The next question is from the line of Nirmal Bari from Sameeksha Capital.
My first question is on the EBIT margin guidance target that we are looking at 13%. So firstly, in the current year, in the last 3 quarters, we have been doing double-digit EBITDA margin. So what were the cost-saving measures that were employed? And how much of this cost saving is permanent and how much of it would wear off as we go into the next year and things normalize? So that would -- that is the first part. And secondly, when we say that we would be moving from this to, say, 13% over the next 3, 4 years, what are the additional cost-saving measures are we looking at? Or is it just economies of scale that would give us that margin?
So there are two, three points I want to make. I think, number one, the cost-saving measures which we did, of course, there are certain costs like salary, voluntary salary reduction in the sector, which happened in FY '21. Of course, those have been put back into the company and those would not be going forward. However, things like on a hybrid model of work from home or let's see it continues, there are certain fixed costs and travel costs, which has reduced. And we expect those cost-saving measures to continue even through FY '22 and perhaps onwards. So that is giving you a sense. I cannot quantify how much of cost savings has been -- will be sustainable and how much has been reversed. But to give you a sense, I definitely feel a significant part of the cost-saving measures will continue. Going forward, the climb from the current double digit to a 13% is not just out of cost savings, but it's a combination of multiple things. It's a combination of incremental revenue. It's a combination of technological shift, and hence a better contribution per vehicle. It's a combination of certain product mix. So there are multiple aspects, a greater revenue pie of the aftermarket as well, which traditionally has had better margins than the OEM [indiscernible]. So it will be a combination of all these effects, and not this purely on account of cost-saving measures. Of course, in the auto industry, and we at Lumax, constantly believe in cost savings. And we, of course, keep evaluating where and how we can save costs for the company.
As there are no further questions, I would now like to hand the conference over to Mr. Anmol Jain for closing comments.
Well, I would like to thank you all for joining into the call. I hope that we were able to answer all your questions. If there are any further queries, you may please get in touch with us or SGA. We will be happy to address all your questions and queries. Thank you again. Stay safe, stay healthy, and God bless us all.
Thank you. Ladies and gentlemen, on behalf of Lumax Auto Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.