Minda Corporation Ltd

NSE:MINDACORP

Earnings Call Transcript 2022-Q2

[Ashok Minda, Executive Chairman & Group CEO]

Thank you, Aakash. Good evening, everyone, and welcome to the Quarter 2 Financial Year '22 Earnings Conference Call of Minda Corporation. I would like to thank you all for joining us on this call here today, and hope you and your loved ones are staying safe and healthy.In the second quarter of financial year 2022, auto industry saw sequential pickup in demand with recent second wave of health pandemic, and the growth trend was visible in all the vehicle segment of bearing extent. I am pleased to report that we have delivered revenue from operation of INR 731 crores during the quarter. A robust sequential growth of 11.5% as against industry degrowth of minus 2.6%.EBITDA for the second quarter stood at INR 77.3 crores with double-digit EBITDA margin of 10.6% despite higher commodity price and indirect adverse impact of semiconductor shortage. Our performance is also reflected in the balance sheet position as our net debt improved to negative INR 42 crores and free cash flow generated in first half was INR 44.5 crores.In today's Board meeting, we also took the decision to increase our stake in Minda Stoneridge joint venture to 100% and also expand technical collaboration with our existing partner, Stoneridge INC. This acquisition is in line with our vision to grow in advanced technological products and enhance value of our stakeholders. Our focus is we don't write capital allocation and better utilization of funds. This consolidation will be value accretive as overall financial performance of Group will strengthen. We will continue to be in a technical collaboration with Stoneridge and also have flexibility to enter into new collaboration to Axis technology to offer better products and solutions to our customer.This will help the organization to Spark Minda: a, that consolidate the account of Minda Stoneridge line-by-line and the financial with help expected in the revenue and EBITDA of consolidated financial also; b, it will give us flexibility to enter into partnership or collaboration with other players for advanced technology in cluster and sensor along with the existing partners; c, the better utilization of funds and right capital allocation of the QIP money. And finally, it will give access to highly growing global market of cluster and sensors.For this, the more detail will be given by Aakash when he goes through the investor presentation. Moving forward, we believe [indiscernible] mobility is the future and in lined with our vision to offer system solutions and increase our EV portfolio. We have acquired 29.6% stake in company EVQ point from below. EVQ point is a pioneer in electric vehicle charging solution and the company has future ready products, strong technical expertise and good design engineering capabilities. This partnership will strengthen our EV supply equipment portfolio and strengthen Minda Corporation position as one-stop shop for comprehensive charging solutions.I am also pleased to share that we have proved lifetime order of INR 1,298 crores in this quarter, out of which INR 488 crores from EV players for both existing and new products. Looking ahead, we are consciously optimistic of industry growth as economy is recovering, but at the same time, challenges persists, such as summer supplier of semiconductor, which might impact production. However, we are confident in our ability and strong product offering to deliver sustainable profitable growth and create value for all shareholders.Lastly, I would like to wish you a happy Diwali. With this, I would now like to hand over the call to Mr. Aakash Minda, Executive Director, to discuss financial and operational performance of the company for the quarter. Over to you, Aakash.

[Aakash Minda]

Thank you very much, Mr. Minda for your opening remarks. I would like to welcome all to the Quarter 3 presentation for the FY '22. I would like to refer to the presentation, which is also put on our website and also sent to the stock exchange. I will refer to Page 3 as a brief overview of Minda's operation in Spark Minda. We have about INR 3,200 crores of turnover, more than 16,000 people and have [ 3 ] plants and offices are in India and [indiscernible]. We have 7 partnerships, namely Stoneridge, VAST, Silca, INFAC, Furukawa, Ride Vision and EVQ point.I now move to the next slide, where I will be sharing the highlights for the quarter 2 FY '22. This is Page #4. So the first one is the earnings accretive increase of stake in Minda Stoneridge and expand technical collaboration with Stoneridge, acquiring 26% stake in EVQ point for strengthening battery charger range for green mobility. Revenue for the quarter continues to outperform the industry numbers. MCL has grown by 11.5% year-on-year as against the industry degrowth of minus 2.5%. Minda Corporation delivered double-digit EBITDA margin for the quarter, which has improved both sequentially and year-on-year basis. EBITDA margin came at 10.6%, which is 50 basis points higher Y-o-Y.Total lifetime order book in Quarter 2 FY '22 is INR 1,298 crores. We have also strengthened our EV order book with lifetime order in INR 488 crores in this quarter with most of the areas of share of business. We have received 9 programs from 8 different customers in EV. For most of these, the SOP will be in the next few quarters.I now move to the next slide, which is Slide 5, sharing about the acquisition stake of Minda Stoneridge and expanded technical collaboration with our partner. So Minda Corporation acquired balance 49% stake in our joint venture company, Minda Stoneridge. So currently, it is a joint venture, and it will be turning to the coldly owned subsidiary. The strategic rationale for this is that this will enable Minda Corporation to do line-by-line consolidation of the financials of Minda Stoneridge, better utilization of funds, cash and overall RMC credit, flexibility to enter into new and other partnerships and collaborations with other players for advanced technology in customer incentives, free access to growing global market of cluster incentives, continuation of -- in technical collaboration with Stoneridge. We would also like to share that this partnership has been developed over last many years and has been strengthened, and we are thankful to our partner Stoneridge. We continue the collaboration with Stoneridge for clusters and centers. And also Minda Corporation provides services to our joint venture through our technical center. Hence, we will be strengthening our partnership going forward.I would now like to move to the next slide, which is Slide #6. Before that, I would just like to share a quick about Minda Stoneridge. Minda Stoneridge is it's been a joint venture company. It is about a INR 400 crore company, having 1,300 people, having capacity of 10 million clusters annually and 21 million centers, 12 patent [indiscernible], 3 facilities, 2 in [indiscernible], and products are advanced technology products like 2-wheeler, 4-wheeler commercial genital clusters and sensors, such as speed sensors, temperature sensors and other sensors.I will now move to the next slide, which is Slide 6, where I would like to show on the table on the right side where the high financial numbers of Minda Corporations Limited as well as Minda Stoneridge Limited and consolidated numbers for the year FY '21, 31st March. So the revenue with MSIS by adding the INR 390 crores would be about INR 275 crores -- INR 2,757 crores, EBITDA would be about INR 262 crores. And EBITDA percentage, if you see that [ MSI ] has greater would be much value created to Minda corporation. That will also increase.I would like to highlight, gross debt Minda Stoneridge has no debt rather, it has positive cash of about INR 81 crores. Hence, increasing our ROC in the overall process. The total payout for this stake is about $21.5 million or INR 161 crores. I would again like to mention and highlight here that while the QIP money of about INR 500 crores is just. MSIS had about INR 81 crores. Overall, in the transaction, even after paying out through the partner, we will still have about INR 420 crores.I would now also like to highlight that the stake based on the FY '21 financial numbers have been watched at EV EBITDA of less than 6x, which is lower than the multiple of Minda Corporation.I move on to the next slide, which is Slide 7 to now highlight the strategic state of acquiring of strategic stake of 26% in EVQ point to strengthen Minda corporations EV portfolio. Again, I would like to say that this acquisition has been made through the wholly owned subsidiary of Spark Minda deal Mobility, [indiscernible] Private Limited and 26% has been taken in the EVQ point in Bangalore. EVQ point has future read products, good technical expertise and design engineer capabilities. The strategic rationale has been partnerships, strengthening of EV supply equipment portfolio onboard and outboard battery charges in the range of 250 watt to 6.6 gigawatts. Poster company's position as a one-stop shop compliance charging solution for fees, enhance customer sensitivity as dependency on China reduces. Minda Corporation's IoT offering will be bundled along with EVQ's power electronic strengthen to cater charging solution and swapping solutions. And still will be exclusive strategic investor in EVQ point.Our partnership with EVQ point will pass some time to market of EV chargers solutions and we also widened our portfolio. This will offer a jump-start solution for Minda Corporation in all the existing product offering of battery charges.I now move on to the next slide, which is highlights of the Quarter 2 and the industry performance. I'm referring to Page #9 of the presentation. Here, again, I would like to share on the left side of the presentation, the green customers are our electric vehicle mobility customers. Of course, along with the incumbent players, which are large 2-wheeler manufacturers. If I look at the revenue breakdown of H1 FY '22, I would like to again highlight that India continues to be our dominant and focus market. Of course, by end market, 2-wheelers continue to be about 50% of our focus on revenue followed by commercial vehicles and passenger cars and of course, aftermarket [indiscernible]. By business vertical, mechatronics and aftermarket continued to be about 55% to 59% and information and connected systems, which is [indiscernible] and clusters at about 40% to 42%.I would now move to the next slide, sharing about the industry performance. As you see in the H1 FY '22 year-on-year growth, the industry has grown by 25.6%. But if I look at Quarter 2 itself in year-on-year, the industry has fallen down by 2.6%. If I focus on the Quarter 2, attracted has grown. Our commercial vehicle has started picking up. Three-wheelers have also grown. CV has slightly been grown, but 2-wheelers has declined. We continue to monitor the situation of input costs in semiconductor [indiscernible] stated by the auto industry while other global issues are there.I now move to the next slide, which is sharing the consolidated performance of Quarter 2 and H1 FY '22. For the Quarter 2 FY '22, as an operating revenue, Minda Corporation has achieved INR 731 crores. EBITDA margin at 10.6% at INR 77 crores. PBT At 7.1% at INR 52.7 crores and PAT at 5.3%, which is INR 39.1 crores. As on a year-on-year basis, our operating revenue has grown by 11%. EBITDA margin has grown by 16%, and PAT has grown by 51%. If I look at our H1 numbers, we have been able to do a revenue of INR 1,289 crores with a margin of 8.4% and PBT of 4.7%, and PAT of 3.5%.EBITDA margin stands at 10.6% as delivered double-digit margin despite higher commodity prices and adverse impact of semiconductor shortages in directly impacting Minda Corporation. We have been supported by good growth of aftermarket business, which has grown by 19% year-on-year and 111% quarter-on-quarter. Our export revenue was at INR 73 crores, which has grown by 15% year-on-year, but has degrown by 23% due to the less intake by our export customers due to the global shortage of semiconductor issues. Profit from JV companies was, the Minda Stoneridge was INR 6.8 crores, Minda VAST was about [indiscernible] and [indiscernible] was negative INR 4.3 crores.I now move to the next slide sharing the business vertical performances on referring Slide 12. If I look at the Mechatronics and Aftermarket division, we posted about INR 431 crores worth of sales at 14.1% EBITDA margin. The EBITDA margin was favorable impact of higher aftermarket and various cost-cutting measures across divisions, adversely impacted by higher raw materials like aluminum. Information and Connected System, we did a INR 300 crore revenue in the quarter with bouncing back at 7% EBITDA margins. The EBITDA margin had a favorable product mix slight improvement in labor productivity and tight control on fixed costs and stable copper prices supporting the EBITDA margins. Information and Connected Systems grew by 4.8% due to growth in CV segment, which grew by 25% year-on-year, where [indiscernible]. We were on track to achieve higher single EBITDA numbers for our Wiring Harness division. By end of this year, our endeavor is to take it close to double-digit numbers. I now move to the next slide, which is Slide #13. I would like to highlight here that CRISIL has upgraded the short-term rating to the highest match. That is crystal A1+, whereas our long-term outlook has been proved from stable to positive for A+ category. Despite challenging H1 FY '22, the company's net debt position has improved.I will now move to the next slide, referring to the business performance in terms of order win, referring to Slide 14. And in the Quarter 2 FY '22, we have been able to do an order book of INR 1,298 crores, out of which INR 103 crores have been export and about INR 488 crores is from the EV players. If I look at INR 959 crores in the new orders and INR 339 crores is for the replacement parts. If I look at the Mechatronics division, about INR 811 crores have been 27% has been replacement and 73% has been new produces, primarily focusing on [indiscernible] solutions. And total YTD has been about INR 1,315 crores. If I look at the information and the Connected System, Total order book is 237 in Quarter 2, where 50% is replacement and 50% is. Most of this is coming from the wiring harness division. In the plastics and interiors focusing on 4-wheelers and lifetime, we have been able to book lifetime orders of INR 78 crores in Quarter 2, 100% of orders being new orders. In the others, we have booked orders were INR 172 crores, which is again on the EV product and the new electronic products that we are talking about. If I look at the YTD H1 for financial year FY '22, we are able to do an order book of INR 2,580 crores, out of which INR 15 -- INR 153 crores come from export and INR 725 crores come from EV players and overall new business is seen INR 750 crores and replacement is INR 834 crores.I will now move to the last part of the presentation, which is the award of the CSR activities. Minda Corporation continues to win orders from our customers and with various initiatives on account of operations, quality, delivery, and we are very thankful for our customers to offer such technology, offer such awards in [indiscernible] competitions. With our corporate social responsibility, we continue to offer various eye checking camps as well as the vaccination camps fall across our plants.With this, I would like to conclude my presentation, and thank you very much. I would like to now open the forum for any questions. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Nitin Arora from Axis Mutual Fund.

[Nitin Arora, Equity Research Analyst]

The first question is on the results. We saw a gross margin for the company in this side of environment actually expanding. Just wanted to know the reason for it. Bit more of localization content, which is increasing for you because in the last 3 years, annual reports, we've been reading like you're focusing a lot on the content. I mean, is that the right way? Maybe that's my first question.

[Aakash Minda]

Sure. Thank you for that. The primary reason has been product mix. As I said, the commercial vehicle sales have been increasing. And of course, our aftermarket sales have also gone up in this quarter. These are the main reasons for our gross margin increase. Of course, the copper prices have been stable. But other commodities such as aluminum and zinc continue to rise.

[Nitin Arora, Equity Research Analyst]

And second, on the strong order intake again in the second quarter, especially from the EV part. Can you throw some light? Is it more of a bigger client addition which has got these orders? Or is orders at existing has been spread throughout the client and which product? Is it more of the premium lock-in set, which is going into because you also sell the electrical scaling call and in the part of the smart key or with more of the solution, the total solution, the actuator, die casting? If you can throw some light on the quality of work which you are getting? And when we should start seeing this in the revenue part, if you can throw some light? I'm trying to ask this question more from when your OEMs from where you taking the order will actually because there's a lot of supply chain issues what we keep for and the backlog are rising from. So from that perspective, I am asking, one is what kind of products you are getting more into penetration into the electric? And when do you think you start executing on the revenue side, these orders?

[Aakash Minda]

Sure. So I would like to share that this is all across our divisions and includes new OEMs as well as incumbent to wider EV volumes. So these are -- of course, there are products which are of [indiscernible], battery chargers, wiring harnesses, locksets, telematics. So they are spread across various customers. So the orders that will come into start-up production will be about 3 to 4 quarters from now. However, I would like to caution is the -- it all depends on the uptick of the EV mobility going forward. So definitely, while the EV is the future and the EV is going to be increasing year-on-year and quarter-on-quarter, our endeavor is to win more and more order book and as when the EV uptake will happen, it will start to reflect in our order book. But this is all across our products. Again, if I talk about the [indiscernible] entry, it is as a complete product and even in small parts. So ESGS complete thought, complete solution as a whole to also incumbent players. We are -- our aim is to win all RFQs that come across our door.

[Nitin Arora, Equity Research Analyst]

That's helpful, Aakash. This last question, don't you stated in your presentation about the reason for acquiring Stoneridge, on this stake. Just on 1 statement, which you said that we acquired this stake because we launched a focus on high technology area in terms of cluster and centers. Do strongly from the JV, what stops you from what going ahead? Was there some compulsion for was focusing more on EVs. You cannot go ahead with the 2-wheelers and other areas. If you can clarify on that point, it would be helpful. And also in context of post this acquisition, is the revenue run rate or the revenue growth [indiscernible] will be taken. I understand the point of ROE eritoran the accretion. But will this really change dramatically. That's why Stoneridge has been leading and something you look at a higher revenue run rate company, you can throw some light on that? That's my last question.

[Aakash Minda]

Sure. Thank you. I would first like to share that Stoneridge is not leading. Stoneridge continues to be a strong partner to Minda Corporation, and we continue to have technical collaboration with them. And further, as I mentioned, we are strengthening our collaboration by entering into new products such as ETP sensors, which will be in the market soon in terms of localization and technology. That's one.Number two, of course, as I mentioned that Stoneridge is -- and we are firstly thankful to Stoneridge for many years of partnerships and holding us and making this company successful. I would again like to mention here that while the reason for acquisition of this is in line with our vision to grow within advanced technology and products. This will -- while this is just a financial transaction, you can say. We continue to be in partnership. Also, we are now open and flexible to look at further partnerships and collaborations, which are now required by the Indian industry and even others, which Minda Corporation cannot. So these are the important reasons why we would like to consolidate Minda Stoneridge. We even have collaboration with our partners, also look at other collaborations, of course, focus on commercial vehicles, two-wheelers and passengers.

[Operator]

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

[Pritesh Chheda, Analyst]

Sir, Stoneridge was earlier Jamie consolidation now to be line by line. Is that the case?

[Aakash Minda]

That's right.

[Pritesh Chheda, Analyst]

Okay. So whatever is reflected in the presentation starts coming on the main P&L from whenever the merger happens?

[Aakash Minda]

Absolutely.

[Pritesh Chheda, Analyst]

Okay. My second question is, what is the aftermarket growth rate for us in quarter 2 and H1? And what is the contribution to the revenue now from aftermarket?

[Aakash Minda]

So aftermarket continues to drive the growth in our divisions. Currently, it is growth at about 19%. And quarter-on-quarter, it has grown by 111%. Just like other businesses, aftermarket is also one of our endeavors to grow better than the industry. And our endeavor is to take this business to a set of about 15% to 20% in the next 3 to 5 years. We are taking various steps to recover the losses in Quarter 1 and subsequent quarters. A couple of factors that we will help us grow our again, focused approach at the target market for demand generation. Maintained good connect with primary, secondry, and territory markets, introduction of high potential parts through product rate extension. Recently, we launched, for example, the lubricants in earlier this year. And of course, this will continue to add on more products. And this contribution, basically, this gives us contribution at the business vertical levels.

[Pritesh Chheda, Analyst]

Wasn't what it is as a percentage of our revenue now aftermarket as a percentage of order?

[Aakash Minda]

So currently, it's about [ 2% to 3% ].

[Pritesh Chheda, Analyst]

Okay. My other question is on the bridge between the industry volume decline and corresponding revenue growth for us. So is it fair to assume that bulk of the divergence is because of the CV growth and also because of the content in the wiring harness part of the 2-wheeler or whether any other reasons?

[Aakash Minda]

So it is not content per vehicle in wiring harness, for say, it is the uptake of CV commercial vehicles, but that has happened particularly in the wiring. But of course, as an overall, it is -- as we've been driving hard for exports aftermarket as well as demonization of our products has now started to continue.

[Pritesh Chheda, Analyst]

Okay. And my last question is, sir, we had new order wins last year, and we have an equally great those new order wins in the first half of this year. Now based on this, what is the incremental revenue from these new order wins because you tend to give lifetime on us. So what is the incremental revenue that we can expect from these orders in FY '23 and FY '22 over and above, obviously, there is an industry volume growth, but there's additional growth. So what is the execution number for '22 and '23 annual execution number?

[Aakash Minda]

Our endeavor is to grow better than the industry. If the industry is going flat, we move to a target to move towards 10% and higher. So all our order wins that are being done in the last 6 months and even before that, they will start to probably reflect in the next 12 to 18 months or beyond because in a vehicle that we can is about 24 months from the order book. So of course, I will not be able to give numbers so far because the average lifetime order book can be divided into -- by 4 or 5 years to get the average additional sales that we will get on our existing products.

[Pritesh Chheda, Analyst]

So based on what wins we got last year and what wins we got in the first half. It hit a INR 300-odd crore incremental sale out of this. It's not the number [indiscernible].

[Aakash Minda]

That's right. Because...

[Pritesh Chheda, Analyst]

You had a INR 2,500 crores is, I think, last year also.

[Aakash Minda]

That's right. Yes.

[Operator]

The next question is from the line of Ronak from Systematics.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Firstly, Congrats on the Stoneridge acquisition of the balance sheet greater deployment of cash, especially given how the new centers should pick up. So quickly, I mean, we are not such service business. So if you can just overall size of the business right now, what ended are we knocking in? And how is the breakup between clusters and sensors, how the product may or the customer mix being in terms of passenger rate. If you can give us some rundown on that? And also on the future sensor business because we had decent amount in the DRT and IT sensors as where to 2 sensors is there anything happening on that and that side as well?

[Aakash Minda]

Yes. Sure, Ronak. Firstly, a pleasure to hear from you always. Thanks very much for that question. Again, on the -- would you like to hear the full year numbers or H1 numbers?

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

H1, full year number, I think last year, you have highlighted here, but what will the first half numbers was the run rate we are knocking in? So the Quarter 2 numbers will be even better.

[Aakash Minda]

Okay. So as the H2 numbers for Minda Stoneridge, we've been able to do about INR 223 crores and against the full year of INR 389. So we have done about INR 23 crores. But talk about the EBITDA numbers for the H1, we are at about 10.2%. And if I talk about the PBT numbers, we're at about 7% and the PAT numbers are at about 5%. Again, gross debt is 0 in terms of Minda Stoneridge cash is INR 81 crores. And ROCE is, of course, 26.7%. If I speak about the various market share that we have in the product sensors and clusters. We are commanding the market share in whichever segments and chosen areas that we are in. And of course, I will not be able to give you the breakup of the clusters and sensors, but it is more or less about dominated by clusters. It is about 60% and the rest is sensors.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Sure. And in terms of commercial vehicle, packager vehicle mix, this would be more commercial it, I guess?

[Aakash Minda]

Yes.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Sure. Okay. So that should imply. Perfect. And more on the sensors piece. We had one out of the sensor business and suit sensors when the RD norms kick in. So how big the order wins on that part of the business?

[Aakash Minda]

Yes. So Ronak, when we -- okay, we are into various sensors of speed sensors, temperature sensors, site and function sensors, we are working internally also on various new types of sensors like PPMS and patent et cetera. So I will not be able to share you the current order wins for each of these product lines, but a lot of development is going on in-house along with our partner also, for example, Stoneridge supporting us in [indiscernible] sensors in the localization in providing technology for which we already have all now so that can help us.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Okay. Great. Second question on the wiring harness, we are seeing now improvement in EBITDA margin. So from the current 7%, how was the trajectory to double-digit margin play out? If you can help us guide on that? The commodities, like you said, are stabilizing. Can you chalk out the plan on how this 7% can reach up to the 3 years double-digit margin?

[Aakash Minda]

Yes Ronak. There are a couple of initiatives that we have taken in the past and hopefully, they should be giving us results soon. So of course, commercial vehicle update is one. Second is the localization of our components. And third is in terms of productivity when it comes to labor. And the fourth is, first, raw material if copper attends to stable or go lower, it will definitely help us.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Okay. And is there an under recovery on copper price here as of first half?

[Aakash Minda]

Not in the first half, but in Quarter 2.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Okay. And right, that would come in Q3?

[Aakash Minda]

Sure.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

And the final question on the EV orders, and I mean, so if you can -- maybe if you can highlight that separately, how is the total order -- EV orders in this year or last year took together now. And did I hear you correctly paying back most of these orders would start creating executed in the next 3 to 4 quarters, it pushed mainly from FY '23 onwards. Is that correct?

[Aakash Minda]

Yes. You can see FY '23 and beyond. And again, I would like to highlight that while our endeavor is to win the RFPs and products, but it really would like to force on the uptake of the EV industry itself. So we'd just really like to caution that as well, while we are definitely proud of winning these orders, but it all depends how the EV industry is up.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

But I mean, put together, we have around INR 70-odd crores order in as of the current year. And what would be the number from last year as cost like around INR 1,000 crores of order in or?

[Aakash Minda]

No. We are, I would say, close to that. But soon, we should be able to cross that openly.

[Operator]

[Operator Instructions] The next question is from the line of Chirag Shah from Edelweiss.

[Chirag Shah, Research Analyst]

Sir, first question is on Stoneridge. So Stoneridge revenue has been stagnating over last few years. So one, what will change the revenue growth trajectory and by when should we expect that sale? See, apart from the volume recovery that will happen, what will change your revenue growth in Stoneridge?

[Aakash Minda]

So thank you again for that question. Primarily clusters will go through a premiumization route because of the megatrend and regulation. Megatrends and regulations that are coming. So moving from digital analog clusters to now TFT clusters or digital clusters will drive the growth piece. So we should hopefully start seeing them in about, I mean, a couple of quarters here once the order book starts taking it.

[Chirag Shah, Research Analyst]

Okay. This is helpful. But I was also referring to the cost to acquire the stake, how will the business outlook change over here? Because this benefit would have happened even if the JV would be existing, right? And [indiscernible], so what incremental you would be doing, which the JV arrangement was not able to focus on?

[Aakash Minda]

So again, as I mentioned, this is a financial transaction, right? All the technological partnership, the technical engineering et cetera, all continues. So while we will have better synergies, we will have better control, we would be running this company now really and to offer our customers, we can now explore and have flexibility to get more partners and collaborations on this front. So that is something that we can -- will help us. Of course, as I mentioned, it will help us as a line-by-line consolidation in the company. So we can take it more of a financial transaction and all the technology continues.

[Chirag Shah, Research Analyst]

Just a housekeeping so when do we expect this approval to come in place? So time line wise, it will take 12 months or it could be a shorter time duration?

[Aakash Minda]

This is our 2 to 3 months.

[Chirag Shah, Research Analyst]

2 to 3 months. It will be effective from? From the date of October, it will be effective from [indiscernible]. So where is it be effective from if I concern.

[Aakash Minda]

So from the date of approval, which should be about 2 to 3 months.

[Chirag Shah, Research Analyst]

Okay. Okay. And lastly, so a follow-up question on the order win we expect the new order wins that we had last year. Is it possible to indicate what is the kind of downward revision in the lifetime orders given the slowdown? Because generally, what happens is, you give out a lifetime order win and then there could be some downward revisions in your estimate that could be happening either because of industry-specific issues or model-specific issues? If you can just tell us what has been your experience on that side and on the downward revision. So once you estimate a model revenue or lifetime revenue, how much it moves downward or as an upward on the board side?

[Aakash Minda]

So we do, of course, quantitative analysis, of course, with the order wins as well as the current orders. But again, the market is so volatile right now with the various challenges. Again, semiconductors and other things. The intake of the customers are challenged. While we again export orders, even domestics, like we have seen our customers having huge inventory pile-ups and the [ pectin ] season has also not been that great but due to the various retailing challenges. So the next few quarters and also the years look to be quite cautiously optimistic, I would say. So we have to do a wait and watch game. And whilst we do a lot of sensitivity, we do a lot of simulations. It is really hard to comment and commit. But again, our endeavor is to located to all our customers in whatever they are asking us for and support them in exports or domestic. But yes, the next quarter and the one after that until and unless the semiconductors are resolved, the sensitivity will continue be towards on the negative side.

[Chirag Shah, Research Analyst]

And lastly, on the die casting business. So any update on that in terms of further traction because we have received a reasonable price? Any update on that from here on, how do we look at the growth for the die casting business? We were on a stellar growth pace over the last few years.

[Aakash Minda]

Yes. So again, our endeavor is to grow the die casting business. We've been looking at exports. But as I mentioned, our overall global order intake is less and inventory is being tied up at the customers due to the non supply or the shortages of semiconductors. So definitely, we are winning orders like we showed in the exports and domestic customers are also giving us orders. So as I mentioned, we would like to grow this division somewhere again north of 10% to 12%.

[Operator]

The next question is from the line of Mayur Milak from AM Securities.

[Unknown Analyst]

Just trying to understand, you mentioned the wiring arrest margins are low and possibly should move up as BCB uptick happens. But just trying to understand is that -- is it that you move higher or different margins in different segments?

[Aakash Minda]

Yes, definitely.

[Unknown Analyst]

All right. So will that also explain that why a player like assume possibly make much, much better margin in the EV wiring harness because it is more segment-driven rather than an overall part of the vehicle?

[Aakash Minda]

Sorry, I can't comment on any other company.

[Ashok Minda, Executive Chairman & Group CEO]

No, let me go, Aakash. First is the localization is very, very important. And we are giving very much focus that can improve our margin for this. Secondly, come back to that arrangement with -- or investing in the copper for the copper already we have with the customer. But other than the copper the commodity price has also increased substantially. So that we are also -- and earlier, it was not increased so that only back-to-back arrangement with the copper was there. But now we are in the process how to get this back to back arrangements for all the commodities, not only for the copper. So that will increase gradually some margin and EBITA margin that is what we have to..

[Unknown Analyst]

Okay. That sounds very interesting. So your suggestion is that you will gradually have a complete RM pass on, whether it is a rise or a drop. So it should not impact our long-term margins as such because maybe it comes with a quarter lag year and there, but long-term margin should be pretty much intact for this segment.

[Ashok Minda, Executive Chairman & Group CEO]

[indiscernible] we never used to do that back to that, but now we are starting there. That will not impact our margin. Yes, you are right.

[Unknown Analyst]

And just coming to your capacity. So are we sitting on good capacities as you, let's say, if the industry were to surprise in the CV segment by, let's say, 25%, 30% kind of volume, would we be sitting on enough capacity to get it to all of it or then there is a chance that we might lose some of that because of nonavailability of capacity?

[Ashok Minda, Executive Chairman & Group CEO]

So at this moment when the, there was a time when the pandemic was there. So we were very clear when the production is going to start. But now with the semiconductor, sometimes we have to run 2 shifts, 3 shifts. And sometime when the customer is not having semiconductor, we have to treat IDM. So it is the present situation. But nevertheless, we don't see that the capacity expansion is did whatever the regular CapEx, what we have planned, we will manage all those capacity increase within that cash outflow.

[Unknown Analyst]

Okay. Great. And just one question on the EV side. So you had the presentation and the chat that you are entering into the BMS and a lot of other parts on the EV front. And it said that it is in the development process. So just trying to understand the order book that you've won, would that include these parts that you are working on? Or it is for parts that you've already established yourself as a player and then it gets executed as and when the industry is on the rise?

[Aakash Minda]

So Mayur, I'll take that question. It's both. It's spread across all our divisions and is spread across all the products. So again, as I mentioned, it's wiring harnesses, battery chargers, locksets, clusters, sensors, release products.

[Unknown Analyst]

No, I was just specifically wanting to understand something that is WIP from a product perspective. So will the order book also have an order amount for that WIP product? Or this will be for whatever we are sitting on as a ready house? Just trying to understand that.

[Aakash Minda]

Of course, there are products which are WIP as for example, chargers, PCB converters. So there are, again, products for maybe some range of products in electric charges or CBC. And then there are some Wassa, higher range of the sale product. So yes, there are various products in WIP.

[Operator]

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

[Abhishek Kumar Jain, Vice President of Research]

Sir, how much increase in content per vehicle improve wheeler business particularly in EV versus IT lease. And how is the change in sand concentration for the popular business was winning business on the new whole year? We'll see a significant decline in the [ Badlar ] the contribution because of the new orders from the EV?

[Aakash Minda]

Sorry, Abhishek, your voice was not clear. I ask you to repeat the question, please?

[Abhishek Kumar Jain, Vice President of Research]

Sir, I was asking that how much increase in content per vehicle in EV process, ICE for your 2-wheeler business? And how is the change in the client concentration for the 2-wheeler business? What's being this business, especially for the EV?

[Aakash Minda]

So currently, our offering in the ICE vision is come at about 4,000 to 6,000. And going forward, we are looking at ICE as an EV offering to INR 16,000 to INR 18,000 fit value. I speak about the customers. If I understood the question correctly, we are supplying a mining orders from both incumbent players and large tubular manufacturers as well as new players or start-ups, even large startups, mature start-ups and medium start-ups.

[Abhishek Kumar Jain, Vice President of Research]

So you had a strong contribution from the Bajaj Auto earlier. So you have won the new business from the new OEMs essentially from the Ola and other peers. So can you see a significant decline of the dark contribution in Obalon revenue?

[Aakash Minda]

So I will not be able to comment particularly on a customer. Again, there are various customers who are giving us orders. We feed all customers as paramount for us. Bajaj will continue to be a very good customer. Ola is also as a customer to us as well as the other big OEMs as well. So all customers are having faith in us and we listen to global.

[Abhishek Kumar Jain, Vice President of Research]

Okay. And next question is related with this aluminum die casting business. So I just wanted to know what is the current capacity like you said? And how much CapEx you are looking for this business?

[Aakash Minda]

So current capacity utilization of our die casting facilities are about 74%.

[Abhishek Kumar Jain, Vice President of Research]

And what would be the peak revenue from this?

[Aakash Minda]

The peak revenue from this should be about INR 500 crores to INR 550 crores.

[Abhishek Kumar Jain, Vice President of Research]

And what probably you will be able to accelerate in FY '23?

[Aakash Minda]

Right? I have to get back to you with all the numbers on future numbers. But as I mentioned, we would like to grow this business. We are going to further expand capacity when we get further orders from our customers. So definitely, there is capacity right now in this current setup. So yes, hopeful to achieve those in the next few months and years when they expand more.

[Abhishek Kumar Jain, Vice President of Research]

Aluminum die casting or what is the proportion of this export versus domestic?

[Aakash Minda]

So about 30% is export. 70% is domestic.

[Operator]

The next question is from the line of Jehan Bhadha from Nirmal Bang.

[Jehan Kersi Bhadha, Assistant Vice President and Research Analyst]

Sir, if I look at the -- at industry level, the sales are still at probably 1% whereas the order booking, which we are doing is almost to the tune of 35% to 40% of total order inflows. So if you can explain why such a big gap is there?

[Aakash Minda]

Can we explain that question, is it better, please?

[Jehan Kersi Bhadha, Assistant Vice President and Research Analyst]

Yes. So if I look at the order inflow for your company, it is almost 35% to 40% is from the EV side, right? Whereas at the industry level, I mean, still, if you look at the sales, EV sales as a mix will be nearly 1%, 2%, right? So why is such a big difference in your order booking and?

[Aakash Minda]

No, it is not that, again, all our customers, whether it's EV or ICE -- of course, the products that we are working on and we have worked on have again better penetration in EV vehicles, whether you stay cluster or the kit value that I mentioned to you. And all our customers are working on EV product lines as well. So it is, I would say, probably a quarter or 2 that the pie, it looks to be skewed, maybe from EV. But definitely, I see it will continues to give us a lot of business as well. Like all segments and Bikash, maybe you would like to add something on that?

[Bikash Dugar, Lead of Investor Relations]

Yes. So Jehan, 2 more things. If you look at Vinda portation nearly 50% of our revenue comes from 2-wheelers where EV is taking the [indiscernible]. That is one point. That's why our orders are from EV is more as compared to the industry. Second is as Aakash mentioned, that the kit value in ICE was INR 4,000, where the kit value in EV is around 4x of that, so around INR 16,000 even if the penetration in the market is 5%, my revenue from EV will be 20% because the kit value increases.

[Jehan Kersi Bhadha, Assistant Vice President and Research Analyst]

Got it. Got it. Okay. And also from the company's perspective, let's say, a couple of years down the line or maybe 4 years down the line, what could be the 2-wheeler -- I mean, the EV penetration in the 2-wheeler industry? Where can we reach?

[Ashok Minda, Executive Chairman & Group CEO]

Yes. This is Ashok Minda. This is a very, very difficult question. But our perception is that maybe 4, 5 years later, the total percentage will be the easy percentage across the segment, which will not be more than 50% to 20% because ICE is also going to increase. So this is our perception. And because the cost is also the important factor of the EV and the infrastructure is also important factor. So this is our perception, but we do not know that how -- but definitely, yes, the 2-wheeler and 3-wheeler is going to -- it is going to happen very, very fast.

[Operator]

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Jay Kale for closing comments.

[Unknown Executive]

Yes. Thank you. Thank you, participants for participating and wish you a very happy Diwali. Thank you, sir. Thank you, Minda Corp team for taking this call. Thank you and all the best.

[Aakash Minda]

Thank you. Thank you so much Jay. Thanks a lot and wishing everybody a very, very happy Diwali. Thanks a lot. Thank you.

[Ashok Minda, Executive Chairman & Group CEO]

Thank you, everyone. Happy Diwali, everyone.

[Operator]

Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.