Lumax AutoTechnologies Ltd
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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 '22 Earnings Conference Call.
This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anmol Jain, Managing Director, Lumax Auto Technologies Limited. Thank you, and over to you, Mr. Jain.
Thank you. Good morning, ladies and gentlemen. A very warm welcome to FY 2022 Earnings Call of Lumax Auto Technologies Limited. I hope you all are safe and healthy.
Along with me on this call, I have Mr. Vineet Sahni, Lumax Group CEO; Mr. Sanjay Mehta, Director and Group CFO; Mr. Vikas Marwah, CEO; and Mr. Naval Khanna, Director Lumax Management Services; Mr. Ashish Dubey, CFO; Mr. Ankit Thakral from Corporate Finance; Ms. Priyanka Sharma from Corporate Communications; and SGA, our Investor Relations adviser.
The results and presentations are uploaded on the stock exchanges and company website. I do hope everybody has had a chance to look at it.
Moving on to key industry highlights. I think as we all know, the financial year passed by had been very challenging. From COVID related curves to supply chain and chip shortage issues, the automotive industry was disrupted badly. The prices of key commodities have also risen exponentially since 2020. Continuous price hikes by OEMs to recover these input cost escalation has led to India's auto market at a decade low, impacting demand adversely.
Lumax Auto Technologies had witnessed tremendous growth amidst all these challenges in FY '22. We have been able to post our highest ever revenue and profitability in the financial year '21/'22. As per data published by CM, overall industry production witnessed a growth of only 1% in FY '22 from the previous year. Despite some recovery from a low base, sales of all 4 segments of the auto industry are even below the 2018/'19 levels. Passenger vehicles, commercial vehicles and three wheelers have witnessed a growth compared to a low base of the industry in 2021. But the two wheeler segment declined by 3% from the previous year. We're delighted to share with you that the company's application along with its various joint venture partners for the PLI scheme has been approved by the government of India. Tremendous growth opportunities exist for each of the product lines and we will be aggressively working on all the products approved under the PLI scheme to meet our strategic objectives.
Let me update you through the performance of these business entity. The standalone entity caters to Integrated Plastic Modules, Aftermarket business, Chassis and Swing Arm out for two wheelers, [indiscernible] the two wheelers under the Metallics business and two wheeler Lighting. The standalone entity has contributed 77% of the total consolidated revenues for FY '22.
Lumax Mannoh Allied Technologies, the 55% subsidiary, which manufactures manual, AMT and automatic gear shift systems and has the market leadership position, contributed 13% to the total consolidated revenues. The company has successfully started export of Made in India automatic gear shifters for a global platform during the current financial year. Going ahead, we are working closely with our JV partner for a wider outreach globally.
Lumax Cornaglia Auto Technologies, the 50% subsidiary, manufacturing Air Intake Systems and urea tanks commanding 100% share of business with Volkswagen and Tata Motors contributed 7% to the consolidated revenues. The company has received business nomination for a plastic fuel tank from one of the major OEMs, the SOP of which is expected in Q4 of FY '23.
Lumax Metallics Private Limited, the 100% subsidiary, manufacturing seat frames contributed 3% to the total consolidated revenues. Subsequent to the quarter on 3rd May 2022, the subsidiary company has filed the draft scheme of merger with NCLT of this 100% subsidiary, Lumax Metallics Private Limited with the parent company for efficient utilization and synergy of resources. The appointed date of merger will be April 1, 2022, subject to necessary regulatory approvals.
On Lumax FAE Technologies, the company has received LOI from 2 major OEMs for oxygen sensors, SOP of which is expected in FY '23. The annual revenues of these LOIs would be more than INR 100 crores annually at the peak volumes. The company is currently engaged in the development and validation of these sensors.
Lumax Jopp Allied Technologies is a 50% subsidiary engaged in the design, development and manufacturing of gearshift towers, automated manual transmission kits, all gear sensors and floors. The production has started to pick up as per the OEM schedules. The company is also close to securing firm order for the actuators from certain major OEMs, the first by a local company in India.
Lumax Ituran is a 50% joint venture with Ituran Telematics of Israel. From January 1, 2022, the joint venture company has become a subsidiary of the company in accordance within the Ind AS 110 consolidated financial statement. Accordingly, its revenue and profitability is included in the consolidated financials from the current quarter.
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 has started its commercial production at Gurugram, Haryana in the current financial year from December 1, 2021. The actual revenue in the current financial year is INR 10 crores.
I'm happy to share some details on the new launches made during the quarter, having your company's products. The company launched the gear shifter for the new Baleno of Maruti Suzuki and the Nexon model of Tata Motors under the passenger vehicle category.
Whilst the challenges and volatility shall continue, we are confident on weathering through them with our innovation, agility and diversity of products and locations.
Now I would like to hand it over to Mr. Sanjay Mehta, Director and Group CFO, to update you on the operational and financial performance of the company.
Good morning, everyone. Let me brief on the operation and financial performance. For FY '22, Integrated Plastic Modules contributed 24% of overall revenue, followed by Aftermarket at 19%, Chassis at 18%, Gear Shifter 13%, Lighting Products at 11%, Emission products at 7% and Others at 8%. 2- and three wheelers contributed 43% to overall revenue, Passenger Cars at 20%, Aftermarket at 19% and CVs at 9%.
The consolidated revenue stood at INR 417 crores for Q4 as against INR 388 crores last year Q4, up by 7% against industry downfall of 16% which is due to increased sales in almost all the OEMs coupled with growth in Aftermarket division. For 12 months FY '22, the company reported revenue of INR 1,508 crores, which is a historic high against INR 1,108 crores during the same period last year FY of 36%. The company reported consolidated EBITDA of INR 164 crores in FY '22, which is again the historic high as against INR 114 crores in last year. The EBITDA margin for FY '22 stood at 10.8% as against 10.3% in FY '21, up by 50 bps.
Profit after tax and after minority interest stood at INR 69 crores as against INR 47 crores in FY '21. The CapEx incurred during FY '22 INR is 68 crores, including INR 20 crores on account of right to use asset. The actual CapEx, therefore -- actual outlay is INR 48 crores during the FY '22. The Board of taxes have recommended a dividend of 175%, i.e. INR 3.50 per equity share subject to approval of shareholders in the ensuing Annual General Meeting of the company.
Now we open the floor for the questions.
[Operator Instructions] Our first question is from the line of Abhishek Jain from Dolat Capital.
Congrats on a strong set of performance. Sir, in the Gear Shifter business, we have seen impressive growth in FY '22. So how is the manual versus AT and AMT mix? And you won new business for the Baleno and the Nexon in this quarter. So how much incremental revenue do you see from these new orders?
So thank you very much. The Gear Shifter business did post a very good set of growth in the FY '22. In terms of your question on manual to automatic, 67% to 70% would have been the manual transmission and about close to 30% to 35% would be the contribution by both automatic as well as AMT. And I think the ratio in FY '23 would probably tilt a bit more towards the automatic. So it probably would end up by about 60%, 65% manual and the remaining in automatic and AMT. Specifically to what is the contribution of the Baleno and Nexon, I would request Vikas, if you could throw some light on that, please.
Yes. So Abhishek, going ahead on a full year volume, there will be an incremental about 7% impact on the total revenue from the base figure that we see today that would be incremental because of these 2 high-selling models. And then going ahead, we are also expecting more horizontal deployment of these particular models. So therefore, they are very strategic wins for your company to be in.
So how much is the share of the business from these 2 models?
So as I mentioned, it could be about -- it could total -- about 16% would be the contribution that would be coming from the total Gear Shifter sales in a full year volume for these 2 models.
I'm talking about the...
To give you a number about maybe close to INR 30 odd crores would be -- should be the annual value of the INR 32 crores -- INR 35 crores, which is about 15% of the total Gear Shifter business today.
Sir, I'm asking about this share of the business in the Baleno and the Nexon in the Gear Shifter business. And who are the other competitors you have?
We would be single source. Vikas?
Yes, we are single source.
So who are supplying gear to this company?
We had a competitor who had a marginal share of about 15% as an alternate source. We cannot name the other players. So he had a 15% share, but your company has now been trusted with 100% share on these models.
Okay. And sir, in a plastic molded part, you have also forayed into the supply of the -- into four wheelers side also. So just wanted to know how much contribution in FY '22 from the four wheelers dealers? And how much incremental revenue are we looking from this business, especially for the four wheelers?
So approximately 10% of the plastics business in FY '22 came from four wheelers, 90% largely was still in two wheelers. And in terms of going forward growth, I would say that we would be expanding at least by close to 40% to 50% of the four wheeler plastic business within the overall plastics business.
So what is the current opportunity size? And what kind of the revenue are we targeting from in next 2 to 3 years from the four wheeler side? Because this space is quite big and you're a Tier 1 supplier to the Maruti and you were talking about that you're also talking with Hyundai and Kia. So just wanted to understand the revenue potential from this business.
So to give you a feel, I think I've always said our strategic objective is to, number one, diversify from two wheeler plastics to four wheeler, and as you have seen that over the last 2 to 2.5 years, we've made some inroads into both Maruti as well as Hyundai, Kia. And today, we have about 10% of the total plastics by coming from the four wheeler category.
Going forward, I think our strategy remains unchanged. We want to go up from a parts supplier to more of a system and a module supplier, at least for the four wheeler product. And also move towards more kinematic products. So with those shifts, I mean, there are deep discussions already being engaged with the OEMs. But they do take time to fructify and convert into order book. So I would say that over a sense of 2 to 3 years, we would have a significant growth in the plastics to the overall group growth. And like I've always said, inorganic opportunities also exist in the plastics space, which the company is also dwelling upon and considering.
So how much investment you have done in the four wheeler plastics molded part? And if you are looking for some inorganic opportunity, so what investment you are looking in that particular business?
It would depend on the opportunity. As I said, the opportunities in the inorganic space would be more strategic in nature. I would not be able to give you any details in terms of numbers or investments yet. However, earlier question of yours, I mean, in terms of the growth, as I already mentioned, that the four wheeler pie from 10% going forward in the next year or 2 years should at least contribute to 15% of the plastic total pie. So there would be a higher growth in a percentage terms of the four wheeler business of plastics compared to the four wheeler business.
Okay. Sir, my next question is the seat metals business, which has seen a very impressive growth in FY '22. So just wanted to know what is the contribution from the seat frame business? And you have own several business in this particular area. So how is this business going to be, especially for the seat frame business?
So the business of the metallic, the fabrication, which has grown by almost 50% on a year-on-year basis is largely driven by the two wheeler, Chassis and Swing Arm business and it does not have a growth of the seat frame business. As I mentioned earlier, we had been able to go deeper into our wallet share with our major OEM, which is Bajaj Auto. We have also risen up from the entry level export by category to the premium KTM bikes, where the contribution per vehicle is also much, much higher.
So those are all factors which have led to these impressive numbers in terms of the year on year growth. Going forward, we do expect that this business will also post growth, which would be better than the Bajaj Auto's own growth plans. Because, as I said, we will be getting deeper into the wallet share. So we are not just dependent on the organic volumes growth year on year, but also gaining some traction in terms of our share of business with Bajaj overall as a pie.
But sir, in the last quarter, you had mentioned that you have won several business from the seat frame and especially you won the business from the XUV700. So just, it is very surprising that seat frame business is quite low right now.
So the seat frame orders are absolutely right. They are still secured but they have yet not been productionized. There have been some delays on these model launches. But we do expect that in FY '23, the seat frame business also compared to FY '22 would be much higher, at least by close to maybe about 30%, 40%, 50% on a year on year basis.
Okay. Sir, my last question is related with this air intake business. So that has seen impressive growth because of the adding new products, urea tank. And quarterly then that debt has gone up to INR 30 crores. So how is the outlook ahead? What kind of the revenue you are targeting for next 2 years?
So let me give you a very different perspective, Abhishek. I think if I look at my order book as a company, currently, I'm holding an order book of close to INR 600 crores. And out of the INR 600 crores pie, almost INR 350 crores is new orders and the remaining is the replacement order.
Answering specifically to the emission part or the air intake system part. Out of this INR 600 crores, almost 10% or INR 60 crores is related to this business which includes not just the plastic fuel tanks, which I made an opening remarks about, but also certain customer expansions on our existing products. So we do expect that we will be growing across our product lines and divisions in the coming year as well with strong order book.
So your quarterly run rate is around INR 30 crores. So going ahead, what would be the quarterly run rate? As you mentioned that there is only INR 60 crores new orders that you have.
So going forward, the run rate -- we're specifically talking about the Emission business, right?
Yes, Emission business.
Yes. So the quarterly run rate would be probably about the same which would be close to between INR 10 crores to INR 12 crores per month.
Okay. So we won't see the more than 20% growth in the coming years because that per month number...
There is still a lot of volatility. If you guarantee me that there will be 20% more production because of chip availability, I can tell you that yes, we will probably do 20% more. But given the fact that there is a lot of uncertainty, I think the good part to see is that there is a strong order book, which the company enjoys across product lines. And as that is possible when the OEMs do churn out these numbers, we are single source on most platforms. So we will get this growth to the company as well.
Our next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.
My question pertains to the PLI benefit which we have got. So can you throw light on what products do we plan to make under this incentive?
So thank you. So just to give you an overall feel, out of all the products which the government has approved, 5 of our joint ventures fall under this category. Under Lumax Mannoh, we have the automatic transmission, the CVT, the DCT. In the Lumax Cornaglia, we have the urea tanks. We have the oxygen sensors in the Lumax FAE. We have the telematics and ADAS systems under Lumax Ituran. And we also have the angle [ imported ] or something called the steering angle sensor, which is one of the key products under Lumax Alps Alpine.
So there are a bunch of basket of products which are approved under the AAD list. And in terms of investments, I think we will be going forward to making the necessary investments. We already have made certain investments in FY '22 and we will further expand these investments in FY '23 according to the government guidelines to extract the maximum benefit out of the localization as well as getting the benefits from the government in the subsequent years.
Okay. Okay. So this -- I mean, this would not include electric vehicle devices and components except for what you mentioned in terms of steering angle sensor.
The steering angle sensor is a part which goes inside the steering. It is EV agnostic. It is not specific to the EV. It is there in the current range of vehicles as well. But as a product, it is something which has been added to the list.
Okay. Okay. Got it. Second question pertains to like the long-term view on the business. So FY '22, we ended with about INR 1,500 crores revenues. And based on the order book which we have, plus the visibility on the new products, based on the recent JVs and LOI on hand, how do you see this INR 1,500 crores shaping up over the next 3 years based on the visibility we have?
I think we have always maintained that our first endeavor is to grow faster than the industry. And I think in this particular current year FY '22, we are very fortunate that despite all the volatilities and challenges, we were able to post a 36% growth in terms of our revenue.
I think, obviously, this was also on a lower pace, which was there in FY '21. I think in FY '23, I would say that we will continue the growth momentum because of the order book and because of these LOIs at hand. But obviously, because of the base has gone up, I would probably say somewhere close to 20% should be our outlook in terms of the growth in the top line.
Hopefully, there are no sudden surprises because there are geopolitical actions going on. There are chip shortages which are still going on, supply chain disruption. So if all are still in control, as we've seen in the last couple of months, I think that would be my outlook for the next year.
In terms of giving you a 2- to 3-year horizon, I would probably say that we do expect to continue this growth which we are talking about at 20% or so on an annualized basis despite the higher base. So I would say that if all goes well, the auto industry bounces back to '18, '19 levels, surely, we will be able to grow at a CAGR of maybe 15% to 20% on a year on year basis.
Got it. Got it. And second and last question would be with respect to our current capacity. So broadly, I mean, across key segments, what would be our utilization for FY '22? And at the broader company level, from the current investments which we have already made with respect to capacities and product capabilities, what kind of revenues can we generate without material investments from here on?
So in terms of capacity utilization, it usually differs from across product lines. But on an average, I would say that we would be hovering between 75% to 80% across all our product lines. There would be some specific specialized products where we would be probably as high as 90%. And obviously, there would be certain which are very low like the oxygen sensor, which has not really started in mass production. So we are sitting on ideal capacities with respect to certain joint ventures and certain specific products as well.
But I think it's a very difficult answer to give in terms of how much incremental revenue we can get from an existing capacity utilization. Because, as I said, something like oxygen sensor, where we have an LOI of more than INR 100 crores annually at peak volumes, we have those capacities already in place. So that would probably come with almost negligible additional investment. And the company still will invest in FY '23 in terms of getting into new products, like I mentioned, plastic fuel tanks. I also talked about getting into further deepening the wallet share of Bajaj Auto with maybe some new frame business. And also the telematics, which will see the production -- or mass production start of one of the key order wins which we had last year. So all this would entail CapEx but nothing significant. And I think the 20% forecast, which I mentioned would be done with almost decent CapEx close to maybe about INR 70 crores to INR 75 crores in FY '23.
[Operator Instructions] The next question is from the line of Harshil Shah from Anvil Research.
Okay, my question is related to Aftermarket. So can we -- so Aftermarket, can it be like around -- you've reported around INR 280 crores, INR 290 crores of turnover, right, sir, for this year?
That's correct. We reported, I believe, INR 293 crores.
INR 293 crores. Sir, are we planning to introduce new products?
So I think I have always maintained Aftermarket and I've been maintaining the same stance, Mr. Shah, for the last 2 to 3 years. I think our endeavor in the Aftermarket is that we want to leverage the strong brand goodwill, which Lumax enjoys, and we want to almost double our Aftermarket revenues. This was the guidance I had given over the next 3 to 4 years, almost 2 years ago. And I think we have grown handsomely in the current financial year as result. We've grown by almost 35%.
I think going forward, I do believe that we will be able to continuously grow at about -- between 25%, 30-odd percent by adding new products. And not just by adding new products in the current category, but also further expanding our product range into new categories. So yes, there are certain products which are under review. And in FY '23, we would be launching certain new products as well.
All right. And sir, one more thing. So if we look at Aftermarket from a standalone business, I'm assuming your Aftermarket is around 14%, 15% kind of margin business. So if you remove Aftermarket, the standalone margin stands around 5.5%, 6%.
Well, that is not necessarily true because I have other standalone -- other businesses like the fabrication, the Chassis business, also the plastic module business, which also operates in double digits. So while, yes, your observation is correct that the Aftermarket would be at a higher EBITDA than the other OEM businesses, but it would not dramatically fall if we were to carve out Aftermarket.
Correct, sir. What do you see our margins -- standalone margins will go to, because it's softening commodity price scenario now?
Well, I think I would look at it differently. I think despite all the commodity price challenges, et cetera, we've been able to weather the storm and expand our margins. And we do not foresee, and if you even look at the raw material consumption, it has been pretty much in line with the previous year. There has not been a significant increase there. I think the raw material escalations are largely brought back into the company from the OEMs. But yes, there is a lag of about 3 to 6 months in certain cases. But I don't see any reason why the cost escalation specifically on the input cost would have impact on the standalone entity margins.
Okay, sir. Because we see our subsidiaries are doing phenomenal job and they are doing around more than 15% margins. If we remove the consolidated from standalone, your subsidiaries are doing really well. So only my concern was like can this margin -- my concern is, can this margin go from 12% to 13% with time?
Well, I think our endeavor has always been to get to teenage margins. So yes, our endeavor is to get an EBITDA margin of close to 13% in the near term. I think if you look at the margin expansion, the margins have expanded over the last 4 quarters. And I think we would like to consistently mid teens. At least going forward with all these escalations and all, at least above 11% should be my expectation to be maintained even in the coming year.
Correct, sir. And sir, one more thing. What is the total value of exports in a total turnover and from Lumax Mannoh, particularly?
So the total value of exports in FY '22 stood at about close to INR 22 crores out of which, Lumax Mannoh was about 20% of that.
20% of that. Okay, sir. And what is the potential of the plastic tanks businesses in Lumax Cornaglia?
So Vikas, you want to take that? What is the market opportunity of the plastic fuel tanks?
Yes. So the plastic fuel tanks will come into commercial production from April '23. It's a very highly advanced plastic technology products. So the product development time and the machine ordering takes about 9 to 12 months of lead time. We have been entrusted with 2 highest selling volume models of a major, major commercial OEM. And the first year volumes, the value contribution would suffice to around INR 20 crores to INR 24 crores, expecting a good commercial year FY '24. And going ahead, there are 6 more models which are lined up. So potentially with this particular OEM alone, the incremental contribution in terms of revenue to Lumax Cornaglia could be anywhere around INR 50 crores. So therefore, it's a very, very strategic and an important entry.
And again, high margin business was better than the standalone business.
Yes. So if you see all the new product introductions that have happened since 2020, be it in terms of the urea tanks or the new DCT gear shifters and Lumax Mannoh, now this plastic fuel tank everything is being targeted upwards of 13% EBITDA.
Okay, sir. And sir, my last question is on the debt side, sir. What is the net debt? And what is the cash on book, sir? Gross debt, cash on book and net debt?
So in fact, we have net debt 0 and I'm having the surplus of around INR 83 crores. If you take the debt of the corporate, then and I'm having INR 125 crores of that out of that INR 16 crores is the long term and balance is for working capital.
Our next question is from the line of Resham Jain from DSP Investment Managers.
Yes. So I have a couple of questions. So first is the PLI, which you have talked about, this INR 75 crores of CapEx for FY '23. Does it include PLI related CapEx as well?
Yes, it does.
How much is that amount, PLI related CapEx?
So in FY '22, the company already incurred about INR 17 crores of CapEx, which was towards PLI. And I believe that in FY '23, out of the INR 76 crores, we would probably be incurring close to about INR 25 crores, which would be about towards the PLI.
And PLI typically, for a given CapEx, the revenue is also like in a way, prefixed how much revenue you need to do. So with this PLI CapEx, how much incremental revenue can happen through PLI?
So recently, I think PLI, we have to maintain 10% of the increase in the revenue of this AI product of AT. So we have calculated I think in the beginning, it maybe the lesser. But way forward and the total incentive what we are getting on the basis of [indiscernible] is almost around [ 200 ] at INR 30 crores to INR 40 crores.
Okay. Understood. Understood. Okay. Great.
So on localization content, which we need to ensure through these investments, we achieved that localization content in order to avail that benefit.
Our next question is from the line of Riya Verma from Oracle Securities.
I have 3 questions. Firstly, can you give us an outlook on the second [ quarter ] revenue opportunity going forward based on our interactions with OEMs? Do we see improved traction in any particular segment?
So giving an outlook based on our OEM trends, I think first and foremost, the shift across model mix is constant in two wheelers as well as passenger cars, which means that the entry level models are not faring well. And the mid to premium models are doing much, much better and the demand for those are way more than the entry level. I don't want to get into the reasons for that, but that's just the sense which we are seeing across both two wheelers as well as four wheelers.
In terms of four wheelers, the demand is still strong and maintained strong. There are definitely supply issues with respect to the chip shortages. And that's the reason the inventory is still dried up. So whatever is produced in the factory is pretty much sent out the door of the dealerships. There is very minimal inventory in the pipeline, which is a good sign. So I do feel that four wheelers will still post some good growth in FY '23 despite the volatilities, which are going to continue with respect to geopolitical availability of certain natural resources or the chips, et cetera.
In terms of two wheeler, I think overall, as an industry, it would still be challenging given the fact that a significant pie of the overall two wheeler market is still in the commuter, in the entry level segment. So given that demand is not really strong, I would say the two wheeler would be a challenge overall. But there would be certain OEMs, which would definitely fare better than the other based on their let's say, dependability on certain segments or dependability of the mass market and India as a whole.
Okay. And how are you seeing the evolution of EV industry in near future? Are we seeing enhanced demand will ease and in turn demand for our product [indiscernible]?
So it's a very good question and it's something which is constantly evolving. So I would say as follows that if we look at the EV segment, obviously, passenger vehicles will still be a distant future to becoming a strong penetration of EV. Of course, Tata Motors is one OEM which has taken a lead and is growing very aggressively. But I think the other OEMs, it will still be a while until EV becomes a sizable pie of the market as far as passenger vehicle goes.
There would be a faster adoption of EV into the two wheeler story. And I think that is all something which we are very clearly seeing. But of course, this is still limited to the scooter segment. And again, right now, we are looking at only the mid to high speed segment, which is the registered segment and the organized segment. I think there is a shift. But I think I would still wait for the legacy players like the Heroes and the Bajajes of the world. I think they are also -- they have no choice, but to get into this space. But I think only then the market will really start to shift towards EV in terms of the volumes. But clearly, the year-on-year percentage increase on EV is far more than the ICE engine, purely because of a low base.
In terms of the company, I think the company is quite excited about the opportunities which EV throws at the company. Most of our products are EV agnostic, which means that we do not have a threat once the industry is moving towards EV gradually. But as I mentioned earlier, I think the company is also very strongly in pursuit of certain opportunities, which are EV critical. So the company does want to get into the EV space in products which are specific to EV across two wheelers or three wheelers as well as maybe passenger cars. Currently, the company is still undergoing a deep feasibility study in terms of what should be our strategy towards the EV critical products.
[Operator Instructions] We'll take the next question from the line of Abhishek Jain from Dolat Capital.
Sir, there are a couple of questions from this quarter numbers. Employee expenses have gone down quarter on quarter. What is the reason? Is there any one offs?
Employee expenses. If I look at my total manpower cost as a percentage, it has dropped in FY '22 to under 11%. So is there a specific question you're looking at for the quarter or for the full year? Because even if you look at the quarter 4, specifically, my total manpower cost is pretty much the same. And as a percentage to sale, it has dropped because of the incremental revenue growth.
So employee expenses have gone down from INR 43 crores to INR 40 crores in Q4, quarter on quarter basis?
That's correct, yes. Because there were certain expenses toward the staff that incurred on account of Diwali festival and mainly of the reason of that.
I would say one of the items we have shown is that extraordinary expense in Q4 related to the separation of that. So I think one-off item is that only, which is not included, I mean separately shown in the results.
Okay. So that means that quarterly then it would be the INR 43 crores to INR 44 crores for FY '23?
So in FY '23, I think how I would look at it, Abhishek, is that in terms of our manpower cost as a percentage to sales would largely remain similar which means that, obviously, there will be certain inflationary costs, which will rise on a year over year basis in terms of appraisals and unit agreements, et cetera. But largely, the incremental revenue growth should be able to offset most of it.
Okay. So we won't be able to get the benefit of the operating business in FY '23 because of the increase in the constant employees expenses.
But that is a constant thing. I would not say that we will not be able to get benefit. I think despite a 36% growth on a year on year basis, which entails a huge amount of resources in terms of volume growth, in terms of engineering growth, still our manpower process as a percentage of sales has won over the year on year. So I would say that there is obviously always a constant endeavor to improve our efficiencies at the manufacturing plant in order to get more per head.
Okay. And sir, during this quarter, we have seen a sharp jump in the depreciation. So how much capitalization of assets happened in this quarter?
So out of the around INR 50 crores capitalization, most of the capitalization has happened in Q4, that is around INR 30 crores to INR 35 crores. And another reason for the increase in depreciation in particular quarters, there was a certain change in life of some of the assets in one of the JV company, which is as per the technical assessment and advised by the statutory auditor.
Okay, sir. So that will be the one-off sort of thing.
Yes, that will be the one-off amounting to around INR 70 lakhs.
Okay, sir. And sir, in this quarter, also contribution from the Lumax Industries has gone up. Is it for Aftermarket business only?
So yes, absolutely. Aftermarket has posted a strong growth compared to Q3 to Q4. So again, this is significantly because of the lighting because lighting is what is applied to the Aftermarket.
Okay. Sir, a few quarters ago, you had closed your business for the sensors. So are you looking to start that business again?
I'm sorry, I didn't understand which sensor business did we close?
So elastic parts business, PID for and you are applying to the Lumax Industries, now Lumax Industries has started its own captive supply. So I was talking about that part.
So we didn't close that business, I think I explained at that time. That was a strategic call driven by our customers, where electronics was becoming more and more important in the whole lighting by the product. And that's why because at the request of our customers, we did accept that request and we made it as a backward integration in the other company. And that's why it was sold to that company at the market value.
With respect to your question, whether we will continue, I think the bigger question is, Abhishek, that we will continue to develop whatever technological capabilities are needed to advance our products into the OEMs for our current set of products as well as new set of products. So even if that means that we will have to further expand our electronics footprint for this company, then we will do so. And I think we've already seen certain things on the Lumax Mannoh joint venture, where we are getting into EV gear shifters, we are getting into automatic gear shifters, which also have a higher electronic content. So to answer your question, I think it is complementing within the group. And wherever the need is, we will definitely go and do that as a part of backward integration.
Okay, sir. And sir, my last question is related with the EV segment. So which all products are you looking to introduce to tap the growth of EV, especially the -- are you supplying anything to the Chetak?
So we are not supplying anything on the current Chetak, but we are in discussions for -- with many OEMs, not just 1 OEM, for producing and developing our products for their future EV requirements, both in two wheelers as well as in four wheelers.
So are you looking some inorganic opportunities on that side, sir?
Not in the EV space. We are looking at organic opportunities in the EV space. But inorganic space for other businesses, we are surely pursuing opportunities inorganically.
So sir, can you throw some more light on which products you are going to add in that side?
I didn't understand your question.
So which products are you going to start supply in the EV segment and you are working on the R&D side?
Abhishek, as I mentioned, the EV-critical products are yet under feasibility. We still have not finalized which products, which are EV critical would we want to enter. The engagement which we have currently with the OEMs are for our existing products, which are EV agnostic, which means that they do not have a threat on EVs, but they have further opportunities for EV. So that are the products which are currently under discussion. But specific to EV, we are still in the process of making our strategy, which is clear. And I hope that by end of this fiscal year, we should be able to announce certain strategic moves on the EV part.
[Operator Instructions] The next question is from the line of Pritesh Chheda from Lucky Investments.
Sir, I joined a bit late. I don't know if it was asked, but some total based on your assessment for the visibility that you have in terms of some of the OEMs plus whatever new product-addition-led growth that would come in, what kind of top line growth do you see in FY '23?
So yes, I gave this guidance earlier, and I will take that in 2 parts. I think FY '22 was a phenomenal growth of 36%. This was basically on also a lower base, which was there in FY '21. Obviously, FY '23, we're not looking at similar numbers, but I still do expect maybe if the uncertainty and the volatility is to continue, I would probably give an outlook of, give or take, 20% of FY '20 -- in FY '23 over FY '22 in terms of top line growth. In terms of margins, as I said, we will probably maintain our FY '22 margins or probably even expand them to beyond 11% for the full year.
In terms of the revenue, we also have a very strong order book of close to INR 600 crores, which the company enjoys. Almost close to INR 350 crores out of this INR 600 crores is new business, which is not a replacement business, which means that there is a strong upside on the total revenue pie. Part of this will come into FY '23 and part of this may come in FY '24.
Okay. So which means there are 3-digit PAT figure for us post minority is more likely now 2 years from now, so let's see in FY '24.
3 digit?
PAT figure post minority.
3-digit PAT figure post minority. Well, I would say, surely, there has been a significant for the full year I think. I would not be surprised that in the next -- yes, maybe about 1 to 2 years, we should probably start reporting a 3-digit and this is given the [indiscernible] that we are talking about completely organic growth.
Our next question is from the line of Harshil Shah from Anvil Research.
Sir, it's just an observation. So we believe buyback is low tax efficient, we are distributing profits, sir. I mean it will also reduce equity over a period of time. And it's taxable at 42% in the hands of shareholders, us and the promoters as well. So you can think about it, just a suggestion. And also, can you give us a broad industry outlook, two wheeler, four wheeler, EV, how do you see things now?
So I'll give you the industry outlook. And maybe I can request Mr. Khanna to give you some light later on the whole talk about equity, or Mr. Sanjay Mehta.
So in terms of the two wheeler outlook and the passenger car outlook, as I mentioned earlier, I think we're first seeing a fundamental shift, which is more people buying mid- to premium-level models, which is happening in two wheelers as well as in the passenger car segment. But in terms of the overall demand, I think passenger vehicle segment is still buoyant. There aren't much inventory in the pipeline. So because of the semiconductor shortages and also the new launches, I think there is a strong demand in the market. And whatever is produced by the OEMs is readily going out the doors of the dealerships. So that's a good problem to have. And I don't expect any reason why in FY '23 most of the OEMs should be reporting a good set of numbers in terms of their overall growth in revenue and vehicle numbers.
In terms of two wheeler, slightly there is a different approach. I think the overall market, because it is highly focused on the commuter segment, that demand itself is weak. Which means that overall industry, overall segment as such will probably be not growing significantly. We probably expect maybe some single digit growth. This is my personal take on it. But within the two wheeler segment, certain OEMs will definitely grow much more better because strategically, they are separately placed in terms of their dependability on the commuter segment or dependability on the motorcycle segment or dependability on India as a country. So certain OEMs will fare better, but I think the sentiment overall in the two wheeler industry is still weaker. Passenger car is very strong.
And I think commercial vehicle, I'll just add, has definitely seen an uptick. And we are seeing volumes coming back. I think partly it's also to do with the huge government push on infrastructure spending. Commercial vehicle is directly related to that. So that's my take on the industry outlook. And what was your other question?
Sir, only the buyback -- just suggestion to you. Being the promotor -- profit that we distribute through by way of dividend is taxable at the rate of 40%, 42% in the hands of investors, depending on your tax class, basically. So if we do buyback, we'll be paying only the 10% long term capital gain tax. So just a suggestion, you can just have a look at it.
Are you saying -- this is Naval Khanna here. Are you saying buyback for the promoters?
No, no, not. So we are distributing INR 3.5, you have given INR 3.5 dividend, right?
Correct, correct.
Instead of giving dividends like 7 crores, INR 6.8 crores shares, INR 7 crores shares in INR 2, INR 3, INR 25 crores, INR 26 crores is the total payout. We can do tender offer. And everyone can participate even the promoters and the shareholders. So that is a little bit an efficient way of distributing the profit.
Okay, we will examine this. Definitely, we will examine.
We will pay only the long term capital gain tax, that too, we will have the grandfathering benefit, sir.
Okay. We will examine this. Thanks for the suggestion.
Yes, thank you. Thank you for that.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference back to Mr. Anmol Jain for closing comments.
I would like to thank you all for joining into the call. I really 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 queries. Thank you. Stay safe and stay healthy.
Thank you, members of the management. 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.