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Minda Corporation Ltd
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Ladies and gentlemen, good day, and welcome to the Minda Corporation Limited Q3 FY '20 Results Conference Call, hosted by IndiaNivesh Shares and Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Aditya Pai from IandiaNivesh Shares and Securities. Thank you, and over to you, sir.
Thank you. Good evening. And on behalf of IndiaNivesh Shares and Securities Limited, I welcome you all for the Minda Corporation Q3 FY '20 Results Earnings Conference Call. I also take this opportunity to welcome the management team from Minda Corp.Today, we have with us Mr. Ashoka Minda, Chairman and Group CEO; Mr. R. Laxman, Executive Director and Group CFO; and Mr. [indiscernible], Investor Relations.We would start the call with a brief opening remarks from the management, followed by an interactive Q&A session.Before we start, I would like to add that some of the statements made today in discussion will be forward-looking in nature.At this point, I would request the management to make their opening remarks.
Thank you very much. I request Mr. Minda to make the opening remarks.
Thank you. Good afternoon, ladies and gentlemen. I welcome you all to the Quarter 3 Financial Year '20 Earnings Conference Call of Minda Corporation.As you all know, the slowdown in economic activities continues to impact auto industry. The industry continued to face volume challenge due to slow demand and destocking of BS-IV inventories.In quarter 3 financial year '20, the company reported revenues of INR 6,714 million, a decline of 12.7% year-on-year basis. The various austerity measures that we implemented from quarter 1 financial year '20 onwards have helped us to keep our cost structure consistent, and improved product mix resulted in increase in EBITDA margins. More detail will be given by R. Laxman on financials.Looking ahead, we believe the growth in auto sector to be back on recovery road post BS-VI implementation. This transition will provide necessary stabilization and address demand and inventory pressure.I'm also pleased to announce 2 new appointments in the senior leadership of Minda Corporation: Neeraj Mahajan has joined us as Group President Marketing; and Arvind Chandra as Chief Executive Officer of Business Vertical 1, that is Mechatronics. They bring over 2.5 decades of experience each with leading global and domestic players in the auto industry. They will strengthen our top management team.Now we shall begin the discussion of detailed financial overview and insight on operational performance. With this, I hand over to Mr. Laxman, our Group CFO.
Thank you, Mr. Minda, and good evening, ladies and gentlemen. Here is a warm welcome again for the Q3 2020 results of ours. We have uploaded our presentation on the website. And for those of you who are referring to the presentation, I shall refer to the page numbers when I am talking about a particular number.I directly go to Page #4, where on the left-hand side we have our summary or snapshot of our group, which is diversified product portfolio, global customers, strong manufacturing, advanced R&D leading the business for more than 6 decades and that is our strength.On the right-hand side, we have a revenue breakdown for 9 months. The good news is that this has been largely consistent over the period of many quarters. A majority of our business by geography comes from India, which is about 68%; Europe and North America constitutes about 27%; and South Asia is roughly about -- Southeast Asia is roughly about 5%.By end market, you'll see that passenger vehicles, which is about 28%, remains unchanged. 2-wheelers and 3-wheelers together contribute about 41%, commercial vehicles are at 20% and aftermarket roughly around 11%. All of these numbers remain unchanged as compared to what we shared in our previous quarter.By business verticals, the piechart between Mechatronics at 48%, Information & Connected Systems at 32% and Interiors & Plastics at 20%, again, remain unchanged. So overall, a diversified business broken up by geography, end market as well as business verticals.I now move to Slide #5, which gives a quick overview of the Indian automotive industry performance for 9 months as well as the third quarter. If you see on the top left-hand box, the 9-month number, you see that the auto industry overall has gone down by about 13.2%. However, the largest fall has been in commercial vehicles, which is at 26.8%, and the 2-wheelers have fallen by about 12.8%.On a mix from our side, the commercial vehicles and 2-wheelers constitute a significant part of our sales mix. So if you do a weighted average wherein my exposure in India to 2-wheeler is about 50% and commercial vehicle is close to 40%. You use a weighted average method for the industry fall, this would -- 13% would roughly translate to 18%, given our product mix.Of course, Q3 is more a continued reflection of the same full year trend. You will see that again, commercial vehicles is about 27% dip and the auto industry, in general, has gone down by 12.7%. The reasons for the fall are all evident to all of us. Just to reiterate, it is subdued economic environment, pretty low consumer sentiment, tightening of financial availability, and we expect this specific factor to change over the next 3 to 4 months, given yesterday's RBI CRR change, which is making it cheaper and easier for banks to give loans against vehicles and homes. We see that as a big positive. Destocking of BS-VI -- or BS-IV vehicles has also contributed to this. So the last bullet, we see it more as temporary, and we hope to see changes during the first and second quarter of next financial year.Coming to our results on Page 6. On a consolidated basis, you'll see that we have a quarter 3 operating revenue of INR 671 crores, and this is a 12.7% fall as compared to the same quarter in the previous year. On a weighted average, overall, the industry for us fell by about 18%, and we are down to about 12.7%. Here, it is a mix of India and Europe. Specifically, India went down by about 10% and Europe went down by 17%. So on an average, we ended up showing 12.7%.In terms of EBITDA, there has been a significant improvement in our EBITDA margins as well as the quantum. So from INR 54 crores EBITDA during the same quarter previous year, we have moved to INR 76 crores EBITDA. This effectively is a good change from 7.1% to 11.3%. The roughly 420 basis points increase in EBITDA in this quarter has largely come from about -- if I break up this change as to where all the improvements have happened, you'll see that our Security Systems and Die Casting business has roughly contributed about 200 basis points.KTSN had a very tough quarter during FY '19 Q3, and some of that has been improved during FY '20 Q3. So that has contributed to an increase of 120 basis points. However, our Wiring Harness business, which has remained challenged in the -- particularly in the last quarter because of this huge change from BS-IV to BS-VI has seen a 50 basis point dip.If you look at these changes, overall, I would say, about 80 basis points is one-off in this 11.3% increase. However, company as a whole, the profitability has significantly improved. 3 main points I would like to say: one is the RMC initiative. You will see that on a stand-alone and consolidated basis, our RMC as percentage of sales has gone down. The control that we have established due to a tough year and austerity measures on fixed cost has significantly given results as well as a change in our mix of our product, wherein we did less amount of tooling sales and more amount of serial sales, which has contributed to some positive numbers. So this is the EBITDA numbers.Going to profit after tax. We have posted a INR 41 crore profit after tax, which is 6.1% to sales. And as opposed to the same quarter in the previous year, we did 5.7%. On a 9-month basis, we are posting INR 100 crores profit after tax, which is 4.7% as against INR 127 crores, which is 5.4%. Of course, this INR 127 crores includes one-off extraordinary income that we had in Q3 of last year, including the sale of our -- part sale of our stake in Minda Furukawa Electric.Happy to share that the company has also declared an interim dividend yesterday of 17.5%, which is effectively INR 0.35 per share of face value INR 2.Turning to next slide, Page #7, is more a graphic representation of the same. You'll see that the domestic industry volume fell by 13%, commercial vehicles fell by about 27% and 2-wheeler by 13%. We also had lower tooling sales in Minda KTSN. The EBITDA margin increase of 420 basis points is what is explained here. Again, going in reverse order, savings in raw material costs, our favorable product mix, reduction in our fixed cost in India, which is a big positive for us, and some lowering of losses in Minda KTSN.The other reason why the PAT has been impacted positively and negatively. The favorable impact has been because of high EBITDA margins as well as a lower tax rate. For example, our effective tax rate compared to 30.8%, as to what it was, has gone down to 25.8% on a stand-alone basis. The adverse impact on our profitability has been because of lower profits that has come from our joint ventures. Last year same time, we made about INR 21 crores from our joint venture in the 9 months. And this year, it's about INR 10.4 crores. Of course, we don't have any exceptional gain this month -- this quarter to show as against what we showed in the last quarter same year -- last year same quarter.Let me move to Slide #8, where we actually present our segment -- our business-wise breakup. We have split our business into 3. One is Mechatronics and Aftermarket. The reason for clubbing Aftermarket, because a majority of the products that we sell in the Aftermarket belongs to Mechatronics. The second vertical, which is Information & Connected Systems. And the third, which is Plastics & Interiors largely based out of Europe.The Mechatronics and Aftermarket has seen a revenue dip of 4.7%. This revenue dip has been arrested largely because the export business and the aftermarket business have shown a positive trend in the 9 months because of which the fall is that much cushioned.The EBITDA improvement particularly in this segment is because of raw material cost improvement as well as fixed cost reduction. And therefore, EBITDA has moved from 12.3% to 14.4%.Coming to the second business, which is Information & Connected Systems, 27% fall in the commercial vehicle industry has led to a significant similar fall in the commercial vehicle share of ours in this business. And on an aggregate overall basis, this business has fallen in sales by 13.1% over a 9-month period.The EBITDA drop has not been that significant from a 9.9%. The division has managed to maintain an EBITDA of 9.2%. It will be pertinent to mention here that our dependence on commercial vehicles for this particular business is -- roughly was about 46% last year. So therefore, the fall in commercial vehicle sales has impacted this business.Coming to the last box, which is our Plastics & Interiors business. Our sales has gone down by 11.3% from INR 483 crores to INR 428 crores. The revenue has fallen largely because of lower tooling sales, and lowering of tooling sales has been a consistent phenomenon in KTSN. The EBITDA margin is low because of the challenges I have mentioned in the past in our European operations. We have a high fixed cost. We have a challenging inventory passover regime as well as we have extremely competitive pricing with respect to our customers.Effectively, I would say the EBITDA margin of this business is almost 0%. We do have a one-time gain because of certain compensation by the customer, and therefore, it is showing as 0.9%.Going to our next slide with respect to our order book. This is a business update on our Q3 FY '20. Mechatronics business, which is our first business vertical, there has been an increase in lifetime orders in Q3 to the extent of INR 870 crores. It's important to mention here that out of the INR 870 crores, a majority of that, which is INR 500 crores, has come from die casting export orders. And it's also important to mention that this INR 500 crores has come from our existing customers, and it is a transfer business. So to that extent, our time to go to start of production will be much lower than what would it be had we actually gone through a typical product life cycle.Very positive news with respect to bullet #2 -- sub-bullet #2 in this one, we have won a prestigious order for DC-DC converter for a leading 2-wheeler OEM. This is basically the electric vehicle of Bajaj. And this has been over and above the business that we won earlier in the locks and key business for the same product, which is Bajaj Chetak. I would like to add here that with this move and the move of winning this keyset (sic) [ Lockset ] lock business at Bajaj Chetak, this is a 1 classic case where, thanks to our R&D efforts over the last couple of years as well as a very integrated approach with the manufacturer, we have demonstrated that we can move from a part supplier to a system supplier. For example, for this particular product, we used to only give a lock and a key. Now we give electronic steering column lock, we give key fob, electronic control unit, seat actuators, glove box actuator opening mechanism and now the DC-DC converter. So effectively, it is growing more as a system supplier. Hope to do more of this going forward.Of course, we have also been awarded a new business globally in the passenger vehicle OEM, which is effectively the seat latch.On the second part, which is Information & Connected Systems, we have won a lifetime order in quarter 3 of INR 190 crores. The new business was the Speedometer for a leading 2-wheeler OEM, aggregating to about INR 40 crores. We also won electronic EFI Wiring Harness from 2 of the leading OEMs. This is part of the move from BS-IV to BS-VI, and therefore, this is what we always expected.The plastic interior business has again won some orders of worth INR 60 crores this year to supply center console to a leading domestic passenger vehicle OEM. This is a demonstration of our transition of technology that we have in Europe to convert that into profitable orders with Indian OEMs using our plastic expertise that is there in Germany. The effort has been on for a couple of years. For the last 2 to 3 quarters, we have been seeing much more robust traction and winning orders for this business.I've covered the export in my discussion in the first bullet itself. And that brings to an end the business update.On Page 10 in terms of our way forward in India as well as global in Europe, our opportunities and challenges remain the same, and we are totally focused on the response and outlook that we give for each of these businesses, including Mechatronics, information connected systems and plastic interior. We look forward to exports in aftermarket to enhance and give us that additional push so that we knew to deliver top line performance, which is superior to industry. Of course, that is with respect to the top line. With respect to the EBITDA and bottom line, we are endeavored really to continue to give superior performance by either cost control, raw material savings advantages, et cetera, and therefore, try and maintain our consistent double-digit EBITDA margins.That's all I have to present with respect to the business. We have, again, as usual, won a fair amount of awards in CSR as well as the recognition from OEMs, which I shall leave it for the audience to read at leisure.So thank you very much, gentlemen. That's a very quick summary of our financials, and I would now like to hand over the presentation to the conductor for question-and-answer session. We'll be more than happy to take your questions.
[Operator Instructions] We have the first question from the line of Pritesh Chheda from Lucky Investment Managers.
Sir, I was not able to understand your margin comments. So in stand-alone operations, you commented that the expansion is because of mix and fixed cost. And then you mentioned that there is some 80 basis point of one-off. Is that how you mentioned?
That is correct. So the 80 basis point one-off is largely from my overseas businesses. The stand-alone business has shown a positive 200 basis point increase in security and die casting, which most of it we expect to continue. Pritesh, so that is like that.
Yes. Yes. So in stand-alone 200 basis point -- out of 250 basis point, 200 basis point will continue?
Yes. Overall, we hope that to continue, yes.
Okay. My next question is, the BS-VI supply numbers, will we start seeing in quarter 4 in a big way? Or will -- it will actually be in the forthcoming quarter after that?
So we have now more clarity with respect to BS-VI and when these suppliers will start and how it will start impacting our revenue. With respect to quarter 3, the BS-VI supplies from us in Wiring Harness across 2-wheelers and for commercial vehicles has been marginal. I would put this number to a low single-digit percentage. However, in quarter 4, I expect this BS-VI transition and there were supplies from our end to be significant. So if you are to put a number, I would say that at least 60% of the Wiring Harness businesses that I used to supply will transition to BS-VI with respect to Q4.
Okay. Then lastly, on the order, Slide 9, how should we read this. So you have given lifetime orders and you have given order wins during the year. So I think most of this slide is to do with order wins during the year. This lifetime, what number of years should we divide this with to get our annual order inflow? That would be a much better way, annual or revenue addition possibility?
Yes. So we also grapple with the same problem, Pritesh. And to be very frank with you, typically, how we use this as a benchmark is, this is a mix of different vehicles, platforms and segments. Typically, a 4-wheeler or above has more than 4 to 5 years of platform life. And therefore, if I say a lifetime order is worth $100, effectively that will be split between 3 and 5 years on an average. And that's the benchmark one can use to say what is the value of this on an annualized basis, though it will not be a sequential number because there will be a ramp-up; initially it will be less. And by the time you peak, it's year 2, and then it remains steady till year 3 and year 4.
So let's say this number that you mentioned, INR 2,100 crores Mechatronics or, let's say, for that matter, INR 1,300 crores in information connected, I have to divide that by 5 years?
Roughly 4 to 5 years would be a fair assumption.
Okay. And lastly, I want to know why has the JV profit reduced from INR 21 crores to INR 10 crores?
Sure. So the JV profits, effectively, it is 3 businesses: one is Stoneridge, one is Minda Vast and the last is Furukawa. One significant reason for our change in profit is, in Furukawa, we earlier had a 51% share and now we have a 25% share. So therefore, that has caused a fair amount of reduction in the contribution to the consolidated numbers.Further to that, overall, there has been a challenge in the revenue growth in our other 2 joint ventures. And to that extent, there has been a dip in their contribution towards our pack.
For the first reason, how much would be the dip, which is Furukawa?
So the first is roughly about -- it should be about INR 3 crores.
Okay. Balance is to do with the decline in business itself with in those subsidiaries -- in those JVs?
That is correct.
Next question is from the line of Mayur Milak from IndiaNivesh Shares and Securities.We move to the next question from the line of Chirag Shah from Edelweiss.
Congrats for good set of numbers. My question is on -- yes, my first is a housekeeping question. Is there a regrouping of any numbers on netting off in revenue and raw material because versus the previous 2 quarter trends, there seems to be lower revenue and lower raw material also. So is there a regrouping that we have seen?
No, it is largely -- okay. First straight answer, there has been no significant regrouping. Second, the revenue actually has fallen. So to that extent, my RMC also appears to have fallen because it's totally variable, but no. To answer, no regrouping. It is all fall in volumes, Chirag.
Okay. And how do we look this raw material as a percentage to sale. It turns out to be very volatile on quarterly basis. Even if you look at the mix perspective also, while Die Casting was strong in Q2 sequentially, also we had a strong Die Casting sales there. So can you just explain what -- how this raw material ratio moves across the businesses? And how should we look at this number?
Yes. See, I am impacted on raw material by a couple of things. One is, of course, the plain apple-to-apple comparison of RMC to sales. Second is effectively the change in tooling sales that happen in my European operations. That is pretty volatile. And that is completely determined by my customer in terms of when he decides to pick it up and when it gets recognized as revenue. The third and the most important point is that when my commercial vehicle volumes fall significantly compared to 2-wheeler volume, that also impacts my RMC. When I have that lower commercial vehicle volume and the rising die casting business volume, it ends up setting off each other, and therefore, it appears inconsistent on a quarter-on-quarter basis. But these are the 2, 3 critical reasons why my raw material cost to sales on a consolidated basis doesn't yo-yo. However, when I did the breakup with respect to the RMC cost in stand-alone, et cetera, you will see that there is actually a reduction of a fair amount of savings in RMC, which I can contribute easily more than 100 basis points with respect to RMC improvement, either better sourcing or better negotiation, et cetera, because we have gone through a very tough austerity measure this year.
So when EV sales fall, it has a positive impact on the ratio? Or it does have negative impact on ratio?
It should have a slightly negative impact on the ratio and also a negative impact on my EBITDA.
Okay. This is one -- and second question was, you made a comment that from a part supplier, you are becoming a system supplier at least for the newer projects like electric vehicles. Why -- when can we see this kind of transition in the existing projects, like in locks and keys itself, the traditional locks and key business, can we see this kind of transition also over there? Or how should we look at that?
I'll tell you, it's always easier to do this when you are the new entrant and you are showing new products and new technologies. It is always difficult to do this when you are trying to dislocate an entrenched part supplier and you becoming a system supplier because then the name of the game becomes price reduction. We are so focused on our margins that we don't want to tom-tom ourselves to be a system supplier at the cost of margins. It becomes easier when I am going with a new product. Therefore, for example, in this particular example, I used to supply locksets traditionally at INR 500, INR 600 a piece. Now because I'm a system supplier, my whole kit value has gone up to more than INR 5,500. So that is the change that we can more easily perceive and achieve. In terms of your question of whether how long will it take to do this in entrenched products, my answer frankly to is difficult. And if you put a time line, I would say, maybe 3 years plus.
And does it also mean that you need to innovate some -- add more products to your portfolio and then you can really try to be an entrenched system supplier?
Yes, I would like to say that the innovation may be a very heavy word, at least I need to ensure that it's not an apple-to-apple comparison. Instead of an apple, if I can give them a slightly bit of a fruit salad where it becomes more perceived value and less comparable, that is when I'll be able to negotiate on margins.
And one last clarification, in case if you can indicate that -- you have been indicating directionally that when the BS-VI transition happened, our value content will jump significantly, but our margin will see a reasonable decline. Is it possible to indicate what kind of decline it could be? I understand that you will still make more money on absolute basis. But is it possible to indicate -- give an indication what kind of impact in the near term can we expect because it shouldn't turn out to be a big disappointing kind of a number?
So we have maintained that, and this impact of this volume increase is roughly a little under 1/3 of my business. So 1/3 of my business should effectively give me a EBITDA margin dip on a temporary basis, temporarily defined as a year or so of about 1%.
And that is, the reason is because of the import content is much higher, and it will take little longer time to localize those components.
Yes. So the faster we localize, the faster we can come back to the EBITDA margins that we used to show earlier in our Wiring Harness business, which is double digit. However, our quick internal estimate is 1 year, 1.5 years.
The next question is from the line of Pankaj Bobade from Axis Securities.
I just wanted to take further the question asked by last participant, regarding the impact of BS-VI on the wire harnesses. So you mentioned that 60% of our wire harnesses would be in transition phase -- transitioned. So I wanted to know, sir, what exactly did you mean by that? And going forward, with this -- around 1/3 of our total revenues coming from this segment, how would it impact our overall sales mix?
So I'll answer your question on the 60% first. We expect 60% to go to BS-VI in Q4 because there will still be a stale demand for BS-IV products, which will be probably available at a value proposition which the customer may -- would like to take and choose and is also available at the OEMs showrooms. So therefore, that's the reason for 60-40. Because from February onwards, the percentage is very high. January, it was more towards BS-IV.
So in January, it was -- 60% was BS-VI and 40% was BS-IV, right?
No, no. I'm talking about my Q4, 60% should move to BS-VI.
Okay, okay. Got it. That would be high-value items relatively as compared to their predecessors.
That is correct. Absolutely.
So overall, our, say, net sales will increase, but margins would be a bit under pressure, right?
Absolutely right.
Okay. And way forward means Q1 onwards?
So Q1 onwards, it will be fully BS-VI. However, we do not know the exact, what shall we say, demand change that will come. There have been various predictions in terms of where the volumes will go. But as far as our production is concerned, it will all be BS-VI.
Right. But as far as margins are concerned, as you mentioned in an answer to earlier participant that the absolute number would be high, but margins would be taking a slight beating?
That is correct.
So in value terms, if the -- a wire harness of same value of BS-IV would be valued at how many multiples as far as BS-VI is concerned?
See, working that we did on a rough basis some time ago with respect to 2-wheelers was our -- because there have been cost controls and rationalizations even by OEMs when it came to the downturn as to how more efficiently and effectively can we transition at a lower cost. So today's numbers indicate that roughly the change in values with respect to a wiring harness product for 2-wheelers is between 2.2 to 2.4x.
So a wire harness worth INR 100 would now be -- for BS-IV vehicle would be costing us INR 200 to INR 240?
That is correct.
Next question is from the line of Dipan Mehta from Elixir Equities.
Laxman, congratulations to the entire team on great set of numbers. So what -- first, you mentioned that Furukawa, you went from 51% to 25%. So what are the reasons for that? And did we get any compensation for that?
Yes, Dipan, and thank you for your comments. Furukawa just to spend a minute on this, Dipan. We had challenges in this business over the last many years. And then we eventually managed to change it from a negative EBITDA company to a positive EBITDA and a neutral PAT company last year. But we realized that, strategically, it makes more sense for the Japanese to be in total control so that they can contribute, add value and share more in terms of technology, in terms of relationship, et cetera, to make this company more profitable. So we consciously chose to take a smaller share of a growing pie than to stick to a half of a size of a cake that is not growing.So therefore, including earlier one of the biggest challenges was import content was very high. And for localization, you had to have the Japanese participation as well as the Indian OEM participation. So based on all of this, we took a conscious call to sell 25% -- to get diluted from 51% to 25%, and we sold our stake at a marginal profit and effectively made about INR 17.5 crore profit in this last -- in Q3 FY '19. We still continue to hold 25% of stake in this company. We have positive relationships, and we continue to hold on both seats. And of course, our name continues to be there in the company.
Okay. My second question is regarding, if you can give us a road map or outlook for new products or new relationships which you are working on? And how is that looking on a medium-term basis, like 2-, 3-year basis?
Yes. See, first point is being in this business for many decades, they are deeply penetrated into every OEM that you can think of in India. However, the current resolve and focus is on trying to see how I can grow deeply and more profitably in each of these OEMs and start slightly defocusing on the businesses that give me contributions or margins less than my benchmark. So in terms of customers, my key point is like we are trying to deepen our penetration, increase our SOB, which is share of business, rather than saying we'll go for new customers.Now when it comes to within the customers, we're definitely focusing more on new product segments. Electric vehicle in-road is a very, very strong example of how we can move from being a traditional manufacturer to supplying for electric vehicles. However, that's not only thing. We are -- and we have shared this before that we are going very actively on the premiumization with respect to our products with our OEMs. For example, a passive-entry, passive-start product in a 2-wheeler starting ignition system is something that we have been successfully working with OEMs. However, due to the BS-VI and the challenges of the industry, that ramp-up or that launch has been a little postponed. But our engagement continues to remain high, Dipan.
The next question is from the line of Dhananjay Mishra from Sunidhi Securities.
Sir, you mentioned this aftermarket and Die Casting export has a positive impact on growth. So what was the quantum of aftermarket and Die Casting export and overall export in Q3 as well as last year? I mean what kind of growth we have seen?
So our overall exports in 9 months in, I would say, has grown about 20%. So that is what has given us the positive traction, Dhananjay. Our aftermarket growth has been more subdued. It has been positive single digits, but it is not to the extent of, say, 8% or 10%, et cetera, though it has been positive. So when my whole business is at a 12% negative, a 20% growth in exports and a 2% to 3% growth in aftermarket for the time being is definitely a positive for me.
Okay. So 9-month is 20% growth in exports. What is the absolute amount in export?
Give me a minute, I'll come back to you.
This is -- I mean in percentage term, it is about how much of domestic business?
About 100 -- I would say, about INR 162 crores would be my actual number for 9 months.
INR 162 crores. And negative would be die casting, right?
No -- yes, largely die casting, but also there is a good mix with exports of our security systems also.
Okay. Okay. And sir, what is the absolute number for Wiring Harness, if you can share that for Q3 as well as 9-month?
You are talking about sales or exports?
Sales -- overall sales.
Yes. So my absolute number of wiring harness sales in Information & Connected Systems, on Slide #8, is we moved down from INR 771 crores to INR 670 crores, Dhananjay.
Okay. So I was also asking export wiring harness total number?
Marginal.
Okay. Okay. And sir, what is your CapEx plan, if you have any right now?
So our CapEx plan in the current year is a little upward of INR 150 crores. That is in line, and we will be achieving that. The larger thrust on investments is because of the transition from BS-IV to BS-VI.
Okay. So we already invested how much out of that?
We would have invested about -- a little more than half out of that.
The next question is from the line of Srijan Sinha from Future Generali.
Yes. Sir, can you help me with the gross debt and the cash levels?
Yes, of course. So we typically declare our gross debt in cash on a half yearly basis. But I can tell you that currently on -- as on 31st December, my gross debt is about INR 528 crores. I have cash and cash equivalent of about INR 437 crores. So my net debt is almost negligible. And therefore, my net debt-to-equity is about 0.07. These are all rough numbers, internal assessments. Obviously, our balance sheet doesn't get reviewed or audited in the 9-month, and we'll come up with some numbers in March '20.
Sir, any plans for the inorganic expansion?
I wish I could have announced an inorganic acquisition. There are lot of irons in the fire, Srijan; however, the challenge that we are facing is the right value and to ensure that we are able to integrate and take synergies out of it. We are very clear that our stated intention is we will do an acquisition for technology or for something that we don't have in our stated verticals and businesses that we are already present in. We will not do an acquisition just to gain turnover or to go to a new geography. Having these boundary conditions in mind, we are looking at, at least probably half a dozen acquisitions today. Unfortunately, there's nothing that we can present to the Board currently saying that this has gone into an advanced stage. Having said that, yes, there is a strong urge for us to also present inorganic growth so that we are able to supplement that substantially with a slightly tepid domestic business.
Okay, sir, fair enough. And sir, you mentioned that in the 2-wheeler wiring harness business, your BS-IV to BS-VI transition implies a 2.2x to 2.4x revenue per vehicle increase. What would be the same number for the commercial vehicle?
For commercial vehicles, it's most subdued, it's about 25%, Srijan.
Okay. If you could help me understand what is it that is leading to such an increase in the content per vehicle in the 2-wheeler space?
So effectively, the 2-wheelers are moving from carburetor-led engine towards electronic fuel injection. When you are doing that change, then the wiring harnesses also have to keep up with the same amount of change. For example, the connectors move from normal connectors to waterproof connectors, you have slightly more complicated plastic parts, the more number of [ pigtails ] and connection systems change. So overall, it is a slightly advanced wiring harness product that goes in.
Okay, fair enough. And sir, just final question. Some of the 2-wheeler OEMs, they have moved from a carburetor to something called an e-carburetor kind of engine, and they have not moved to an electronic fuel injection setup. So how does that change the wiring harness consumption in a -- in the 2-wheeler?
So point #1 is even this change of those people who are moving some carburetor to e-carburetor instead of moving to a full-fledged EFI is a temporary phenomenon. We expect them also to change quickly, maybe over a matter of maximum 2 years.
Okay. And how does the consumption of the wiring harness change between an e-carburetor and a full-fledged...
The impact there is -- I mean the jump there will not even be probably 50%.
You mean that from carburetor to e-carburetor, it will be 1.5x?
1.5x to 1.6x.
Okay. Fair enough. And -- yes, any sense what proportion of your clients are moving to an e-carburetor?
Percentage-wise, I don't have a number by heart. It's one customer who is going to partly carburetor, because on an expanded 2.2x of wiring harness, I would expect that to be a small percentage.
The next question is from the line of Mayur Milak from IndiaNivesh Shares and Securities.
Just need a couple of data points as to, in the 2-wheelers, we are at about 40% of our business, right?
Yes.
And what could be our key customer -- as in who would be your largest customers into this segment?
In 2-wheelers, the largest would be Bajaj, TVS, Honda. These will be the 3 big ones.
All right. And could you just, if possible, even highlight what would be our share of business with the top 3 guys?
Yes. In Bajaj, it's fairly...
Yes. It basically depends on the product category to product category, like in security system in Bajaj, we are maybe 90% and wiring harness is 50%. So something different product has a different market share with the different OEMs, different 2-wheelers manufacturer.
Suffice to say, we are significant players in all the 3. It's not -- we don't have a small share, and therefore, we are trying to move. Beyond that, it will not be appropriate to share numbers also. Thank you, Mayur.
Right. And coming to the CV segment, so I understand that most of the other guys have actually reported a 40%, 50% kind of decline into volumes because of the OE slowdown. Have we also faced a similar impact?
Sorry, can you say that again?
So on the CV side, commercial vehicle side, we -- quarterly OE sales were down about 35%, 40% and other OE suppliers have reported a similar 40%, 45% kind of decline. Have you also seen a similar volume decline?
Yes. So our -- in fact, our entire second business vertical, that is the Information & Connected Systems, has got impacted because of our lower sales in the commercial vehicles. We sell by close to 27%.
Right. But I'm just trying to understand that have any of these guys also started producing BS-VI vehicles?
So BS-VI has gradually started.
Yes, because all I'm trying to -- yes, so what I'm basically trying to ask you is that so there will be a decline in volume, but typically, for the kind of proportion to the manufacturer for BS-VI, the value that the company would have made would have been higher by 25%, as you said, right? So overall...
Okay. I get it. I get your question, Mayur, now I get it right. See, overall, in Q3, the dip in my value is effectively a real dip. It is not compensated in any significant manner by increase in BS-VI ticket size. So that's been the case. That will happen in quarter 4, wherein -- where about 60% of my products move to BS-VI, then the jump in value will be higher, and the dip in volume will get partially masked because of the higher value of this. But that has not happened in Q4 -- Q3 in a significant manner.
Next question is from the line of [ Ms. Joglekar from Trivikram Consultants ].
Congrats on great set of numbers. Sir, my question is regarding the Interior & Plastics business margins that we have reported in this quarter. So the sequential improvement, can you quantify this? And I think, I missed the number.
So in the Plastics & Interiors business, our EBITDA margin continues to remain low, it is 0.9%. But I'm also clarifying that on this turnover is INR 428 crores, this 0.9% EBITDA margin for the 9 months is also because of certain onetime compensations I have received from customer. Effectively, the interior plastic business or KTSN in Europe continues to remain challenged. And our actions on cost control, fixed cost reduction, going out to the customer and seeking price increases as well as returning some of the low profitable businesses is still work in progress, and it is yet to translate into financial numbers, though we have made significant progress on the ground.
Okay. So this impact is primarily a part of the 3Q numbers, right?
That is correct.
The next question is from the line of Aditya Pai from IndiaNivesh Shares and Securities.
I'd like to ask is, as we move to BS-VI, would we see an impact on the input costs coming -- going any higher? And if so, do we have any arrangement to then pass on this input cost and maintain gross margins or EBITDA margins for that [indiscernible]?
So the primary reason -- one of the primary reasons why my EBITDA margin is falling is because the inputs -- a significant part of the inputs will be imported. And there will be a price, which have to pay higher in these imported components. So therefore, probably the 1% dip in EBITDA margin we spoke about is largely because of change in input cost. And we hope to change that over a year's time because of higher localization.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for their closing comments.
Thank you very much. And ladies and gentlemen, thank you for your time, and thank you for your interest in Minda Corporation. We are more than happy to clarify any questions you may have. You can write to me or my department by e-mail. And we are also only a phone call away. And we expect to continue to do hard work during these challenging times and maintain our numbers in bottom line. Thank you very much for your time and your interest. Good evening to you.
Thank you very much, members of the management. Ladies and gentlemen, on behalf of IndiaNivesh Shares and Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.