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Minda Corporation Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '23 Earnings Conference Call of Minda Corporation hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Abhishek Jain from Dolat Capital. Thank you, and over to you, sir.
Thank you, [indiscernible]. Good evening, everyone. On behalf of Dolat Capital, we are pleased to welcome you to Minda Corporation's 4Q FY '23 Earning Call. We thank the management for providing us the opportunity.
From the management side, we have with us: Mr. Aakash Minda, Executive Director, Finance & Strategy, Mr. Neeraj Mahajan, Group President, Marketing; Mr. Vinod Raheja, Group CFO; Mr. Anshul Saxena, Group Head, Strategy & Mergers & Acquisitions; and Ms. Pushpa Mani, Lead Investor Relations.
Before we begin this, [indiscernible] statement. Some of the statements made in today's earnings call will be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties that may cause actual result to differ from the anticipated outcome.
Now we hand over the call to Mr. Aakash Minda for opening remarks, post which we'll have the Q&A session. Over to you, sir.
Am I audible?
Yes, sir, you are.
Okay, thank you. So good afternoon, everybody. Thank you, Abhishek and Dolat Capital, for holding the conference call for Minda Corporation. I would like to begin.
Good evening, everyone, and welcome to the Quarter 4 and Financial Year '23 Earnings Conference Call of Minda Corporation. On behalf of the company, I thank you all for joining us on this conference call and hope all your families are keeping safe and healthy.
In fiscal year 2023, the overall industry experienced double-digit growth across vehicle segments except our two-wheeler, where the growth has been sluggish due to rural demand and under pressure on the back of negative rural sentiments due to inflationary pressures, rising vehicle cost and increasing fuel prices.
Despite the same, Minda Corporation recorded another year of resilient and better-than-industry performance with revenue from operations of INR 4,300 crores, a growth of 45% year-on-year basis. EBITDA margin for the year improved by 83 basis points to 10.7%. We delivered double-digit EBITDA margin for 11 straight quarters. Normalized PAT for the year stood at INR 219 crores with a PAT margin of 5.1%.
The growth was driven by addition of new customers and products, premiumization across products, leading to increase in kit value and increasing business with existing and new customers. In line with the company's philosophy to reward its shareholders, the Board of Directors have declared a final dividend of 40% on the face value, that is INR 0.80 per equity share, taking the total dividend for the year to 60%, that is INR 1.20 per equity share.
Now I would like to take you all through the key developments during the year. The company entered into two strategic technology partnerships with Daesung Eltec from Korea for advanced driver assistance system and with LocoNav for telematics software solutions. These partnerships not only make us a complete solutions provider but also place us ahead of the technology curve.
Second, at Minda Corporation, we are continuously committed to drive innovation. The company has highest-ever quarterly patent signings of more than 20 patents across various business verticals, taking the total patent count to more than 250. Third, this year remained a marquee year for the two-wheeler marquee businesses, which continued to gain traction and drove more than 10% of the total two-wheeler [indiscernible] revenue with key customers, including all the leading names in ICE and EV [indiscernible] globally.
The company inaugurated a state-of-the-art plant in quarter 3 FY '23 and is planning to add other plants as per capacity additional requirements. These plants do not only be increasing our production capacity and keep us closer to the customer but are also well equipped with advanced machines backed by cutting-edge technology.
Next, in line with the company's focus on its offering in the electric vehicle space, we've added prominent new customers in the electric vehicle portfolio in domestic as well as export segment. In the financial year '23, EV order book accounts for more than 20% of the total order book. Our order book remains very strong, in line to achieve 20% to 25% year-on-year growth for the next 2 to 3 years.
In the financial year 2023, Minda Corporation generated a healthy lifetime order book of INR 7,800 crores, giving an annual revenue of more than INR 2,000 crores across segments and products. Out of this, 20% came from the EV industry and EV OEMs and [indiscernible] representing our various products growing acceptability and readiness for EV mobility going forward.
During the year, we made a financial investment of INR 400 crores in Pricol from open market, acquiring 15.7%. We have applied for CCI application for stake acquisition of up to 24.5% at this stage, in line with all governance and compliance requirements.
We continue to be very bullish on the instrument cluster business and [indiscernible] segment to grow. We are focused to solidify our market position by providing high-quality, innovative products and securing new business from our customers in our core products, including various products such as locksets, vehicle access, wiring harness, driver information systems, sensors, EV products as well as other products. Moreover, all our products are undergoing premiumization, resulting in enhanced content value.
Now I'll take you through the key highlights of the investor presentation. I request you to please refer to the presentation we have uploaded. I move to Slide 3, which is sharing about Spark Minda Group, Minda Corporation. At the group level, we are reporting about INR 5,000 crore company with 16,000 workforce, 34 plants and having more than 9 partnerships in the automotive space.
Going to the next page. It shares about Minda Corporation's global and domestic presence, which shows a strong foothold on the domestic segment across automotive regions in north, west and south as well as international operations of Vietnam, Indonesia and having an office in Japan.
Moving to the next slide of highlights of quarter 4 and full year performance. For the quarter 4 FY '23, the revenue growth for the quarter continues to outperform the industry performance; double-digit EBITDA margin for 11th straight quarter on a sequential basis; total [indiscernible] order book in the quarter stood at INR 2,000 crores with more than 11% export orders; highest-ever quarterly patent filing with more than 20 patients during this quarter. [indiscernible] marquee continued to gain traction with more than 10% of the total two-wheeler [indiscernible] revenue.
For the full year, Minda Corporation's revenue grew 45% year-on-year despite of challenging macro and microeconomic conditions. EBITDA margin improved by 83 basis points to 10.7% on a year-on-year basis. We won business across segments and EV, constituting almost 18% to 20% of the order wins. 32 patents filed within the year, total patents in the company now stands at 250-plus, science and technology partnerships for our new technology products.
Moving to the next slide, Slide 6, which shows the snapshot of consistent and sustainable market-leading profitable growth. On the top part, there is quarterly revenue, EBITDA and PAT. If I look at year-on-year, the revenue has grown by 13%. EBITDA has grown from INR 108 crores to INR 117 crores, 9%. And PAT, normalized PAT has grown from INR 54 crores to INR 56 crores, a growth by 4%.
If I look at the annual growth from INR 2,976 crores, the company has posted INR 4,300 crores, which is a 45% jump, and in EBITDA, from 9.9% to 10.7%, in absolute terms, INR 295 crores to INR 461 crores, which is a 57% jump. And PAT margins go from INR 137 crores to INR 219 crores, which is a 60% jump.
Moving to the next slide, Slide 7, which is the key business highlights and order wins across various products. Our new technology products of integrated vehicle assets continues to lead the market. We have won orders for EV die casting products for export as well as domestic OEMs; first time products on wiring harness for [indiscernible]; the new technology products in the commercial vehicle sector as well as two-wheeler segment; and the cluster division with the new technology of TFT and LED systems. [indiscernible] marquee business is starting production in FY '23.
Moving to the next slide, which is showing a snapshot of Minda Corporation. The total number of shareholders are, at the end of this year, about 90,000. The promoters hold 65% and other institutions are the remaining. On the left, we show the various customers and manufacturing facilities.
Moving to the next slide, on Slide 9, which shows the industry performance. Automotive sector grew quarter 4 year-on-year basis by 1%, almost flat. Two-wheelers degrew by 3%. On a year-on-year full year basis, automotive industry grew by 12.5%, two-wheelers by 9%, PV by 25%, three-wheelers by 12%, CV by 28%, tractors by 11.5%. Overall, demand continues to remain strong across segments despite of the various challenges on semiconductor and other macro concerns.
Moving to the next slide, which is the revenue breakdown by geography. India continues to remain the largest share with 84%, 85% in this year compared to last year. Europe and North America are about the same, 8% to 10%. And Southeast Asia are about 6% to 8%. By end market, the two- and three-wheeler segment continue to be about 44% to 45%. Passenger vehicle is about 14%. Commercial vehicles are about 25% to 30%. And aftermarket is about 12% to 15%. By business verticals, the mechatronics and aftermarket is about 48%. Information and connected systems, which is wiring, is about 36%. And cluster and sensors are about 16%.
Moving to the next slide, which is Slide 11. It shows from last year to this year, the vehicle access business continues to be about 26%; wiring harness is about 30%; clusters is about 12%; and DCD, or die casting, is about 17%; and others now 15%.
So we are still the market leader in two-wheel lockset and wiring harness, pioneer in keyless entry solutions business. Moving from mechanical cluster to incorporate latest technologies in TFT. The company is one of the key players in two-wheeler and CV segment, of late also gaining traction in PV segment. In die casting division, we focus on niche products, which are more margin-accretive.
Moving to Slide 11 on the order book status, as shown earlier, we have booked orders worth INR 1,700 crores this year, where replacement business is about INR 3,600 crores and lifetime new business is about INR 4,200 crores. And 20% of this is marked by EVs. More than INR 1,000 crores worth of export orders across various products and segments were booked during this year.
Moving to the next slide of the consolidated performance for the year. On quarter 4 year-on-year basis, the revenue grew from INR 948 crores to INR 1,075 crores, giving a year-on-year increase of 13.4%. EBITDA grew from INR 108 crores to INR 117 crores with Y-o-Y increase of 8.5%. And EBITDA margin went from 11.4% to 10.9% across various challenges. The PBT degrew from INR 72 crores to INR 67 crores. And the normalized PAT was INR 56 crores.
On a year-on-year on full year basis, the total revenue of INR 2,976 crores, it grew to INR 4,300 crores, a 45% jump. EBITDA has grown by 56.7% from INR 295 crores to INR 461 crores. For full year, EBITDA percentage has grown from 9.9% to 10.7%. Normalized PAT has increased from INR 137 crores to INR 219 crores, up by approximately 60% and 50 basis points.
On domestic front in quarter 4 and full year, industry grew by 1.7% and 12.5%, respectively while Minda Corporation grew at 13.4% and 25%. Exports are in line with the top line going forward. It continues to be driven by addition of new customers across geographies. The EBITDA margin was delivered in spite of the commodity prices showing rising trends and semiconductor supply chain easing out. Board of Directors has declared a final dividend of 40%, that is INR 0.80 per equity share, total dividend for the year of 60%, that is INR 1.20 per equity share.
Slide 14 on the consolidated leverage position compared year-on-year. Net worth of the company has increased to INR 1,591 crores. The long-term borrowings stand at INR 205 crores and the short-term borrowing is at INR 218 crores. Gross debt overall has gone from INR 291 crores to INR 515 crores. Overall, the net debt to net worth is at comfortable 0.25x. Capital employed at the group level is about INR 1,550 crores. ROCE has increased from 18.4% to 20.8%.
Moving to the next slide, which is Slide 15, on the business vertical performances. If I look at the business vertical, which is the mechatronics and aftermarket, on a quarter-on-quarter basis, sales has gone from INR 547 crores to INR 535 crores and EBITDA has gone from INR 13.8 crores to INR 15.9 crores. Revenue grew by 10% on a year-on-year basis due to increase in share of business premiumization against market growth of 1.7%. Margin declined due to stagnancy of exports, mainly due to geopolitical situation [indiscernible]. On a full year basis, on the right side, the division has performed INR 1,687 crores to INR 2,061 crores, from 12.3% EBITDA percentage to 13.5%.
In the information and connected systems, now consists of wiring harness and [indiscernible] sensors. On the revenue point, it has gone from INR 452 crores to INR 540 crores on a year-on-year basis and sequentially from INR 522 crores to INR 540 crores. The revenue was supported by demand in domestic market. Margins improved due to wiring harness margins continuously on the rising trend due to various factors, such as component localization. Minda Instruments, margins improved mainly due to semiconductor supply chain easing out and better operational efficiency. On the full year, the revenue stands at INR 2,249 crores with 8.2% EBITDA margin.
Moving to the next slide. It shows the journey of new alliances in the recent past. So this is just to share with you again that in the last -- in this financial year, we have signed two partnerships in ADAS solutions and telematic solutions to complete our technology edge and focus on offering products and system solutions to the customers.
Now moving to the strategic pillars on Slide 18. We continue to focus on enhancing the core. Innovation and technology continues to be the core in terms of our in-house R&D center and partnering of the global players. First, how we can enhance electric vehicle growth opportunities. And all the Minda Corporation products are EV-agnostic. Strengthening the passenger vehicle offerings with in-house as well as partnerships. Transforming and becoming a complete solution provider, focusing on cost leadership in manufacturing and thought leadership when it comes to technology. Premiumization and product innovation in all business segments continue to drive content per vehicle, and most important, deliver better-than-industry growth and continue improve margin profile.
Moving to the next slide on the engineering capability. We have now more than 250 patents. More than 2% continues to be the R&D spend and the following year will be continuing to increase further. And we have more than 500 [indiscernible] all across various technology and products.
Moving to the next slide on the electric vehicle opportunity. This is just showing the various products that we offer in the two-wheeler segment, various old and new customers that we continue to add and the potential kit value going from INR 4,000 to about INR 20,000 in our legacy and products that we are already manufacturing and supply as well as under development.
Moving on to the next slide is the value proposition of Minda Corporation. So just in the interest of time, I will skip this. But the intent and the focus continues to be on how we can perform sustainable and grow year-on-year and quarter-on-quarter, delivering our customers and focusing on innovation and technology.
Last not the least is our immense focus on the ESG framework and how to become carbon-neutral in the next years. Minda Corporation has also won various awards from our customers and across various social responsibility campaigns that have been conducted across the -- in India but not only -- not only in India but across the world.
With this, I would like to conclude my presentation. And now I would like to open the floor for any questions. Thank you.
[Operator Instructions] The first question is from the line of Abhishek Jain from Dolat Capital.
First of all, congrats for a strong set of numbers in this tough time. My first question is related to the information and connected systems business. So how do you see the growth going ahead in the wiring harness business? And what kind of the margin guidance you have in this business?
Yes, Abhishek, wiring harness continues to be the [indiscernible]. If you see the latest trends from BS-IV to BS-VI and BS segment that is selling concurrent [indiscernible] electric vehicle mobility, more and more premiumization happening in the car. The content of the wiring harness is to go forward and even more. It depends on the segments as well as on the ICE or EV type of a vehicle. But technically, again I would not be able to give you a number on the particular growth.
But it is going to be in line or even better than the industry growth, having more and more content per vehicle, such as connected systems in the electrical vehicle mobility and others. On the margin front, we do not give future guidance. But again, our endeavor is to continue to improve the performance on the wiring harness due to the various initiatives that we have been continuously taking on manpower productivity, component localization, strengthening our plants and production process.
So as the semiconductor prices is going down, can we see a double-digit margin in this business, wiring harness business?
So semiconductor is more related to our electronics business, which comes to the clusters and sensors and now the keyless solutions and the electric vehicle mobility. In wiring harness, yes, there are some semiconductors, depending on the end application and the products. But wiring harness is not too much invested when it comes to the semiconductors. It is the other product lines where we have more [indiscernible].
Okay, sir. And in wiring harness business, how was the rates in FY '23, two-wheelers, CVs and the passenger vehicles and [indiscernible]?
So largely, it remains in line with the group overall segmentation. So about 50% comes from the two-wheelers, about 25% to 30% comes from the commercial vehicles and the remaining comes from off-road and other segments.
[Operator Instructions] The next question is from the line of Radha from B&K Securities.
Sir, my question was on the mechatronics division. So with respect to the locksets, I wanted to understand what is your share of business with top customers like Bajaj, HMSI, TVS, Hero, Suzuki?
So ma'am, I will not be able to share the exact numbers. That is the confidential information. But largely wherever and whichever product Minda Corporation works in, either with the customer or in the segment, we are one of the leaders, having more than 30% or 35% share of business across segments. In the two-wheeler lockset, which is higher, we have more than about 30%, if I may share. All customer segment level, it may vary from different customer to customer.
Understood, sir. But could you tell us where the share of business is higher, from which customers and from which it would be lower? Like maybe higher from Bajaj and lower from TVS. Is that the case?
Ma'am, I think you are putting a question in just another way. As I told you, the industry is more than 40%. I will not be able to give you a breakup due to confidentiality with our customers on the customer breakup.
Okay, sir. No worries. Sir, that Honda Activa, the new scooter launched by HMSI. So I believe they have a different kind of lockset. I'm not sure whether we can call it smart locks, but maybe an advanced lock system. So are we supplying that product to them?
Ma'am, as I said, I cannot disclose a particular customer name for the products. But yes, Honda is one of our customers for the keyless solutions.
Okay, sir. So then from the industry perspective, I believe in your opening remarks, you mentioned that 10% of the revenue is from smart locks. And in the industry you are talking about, I mean, what is the penetration of smart lock in the industry today? And how do you see it in the next 3 to 4 years?
Ma'am, currently, the industry in India is about 5% to 7% in the penetration of the smart access solutions. Of course, with exports and the large premium bikes and the EVs coming in, the penetration is much higher compared to the lower-end segments and the commuter bikes.
5% to 7%? So that is including the [indiscernible]?
Yes, that is right. For the two-wheelers, I mean, the next mid-term to long term, this definitely will be increasing from two perspectives. One, when the premiumization across verticals is happening, customer demand is focusing more on personalization and convenience and comfort moving from high end to the lower end of these vehicles. And of course, the export market continues to grow as well.
Sir, how much do you see this 5% to 7% in the next few years?
Ma'am, it depends again -- but technically, we can say in the next mid-term to long term, about 30% to 40% should be the target that we have in mind.
Sir, any models that you can name, which are having 5% to 7%, I mean, which we can call as smart locks. You may not be supplying to them, I'm not asking about your supplies. But I mean, what are the models that are currently using smart locks in the two-wheeler industry in the Indian market?
For example, there's Ola Electric, there is Hero VIDA. There are some TVS products. There are Bajaj Chetak. So we have some of the models.
Okay. Sir, Bajaj Chetak will call that as a smart lock, wouldn't they? The button and -- they have that button system -- okay, understood, sir. And sir, what would be the price difference you said between normal locks versus smart locks?
Ma'am, a normal lockset is about INR 300 to INR 400. And the smart lock, where the locks are keyless ignition, can depend on the various configurations. But the average rate price is about INR 2,000 to INR 3,000.
Okay, sir. And sir, lastly, what would be your maintenance CapEx per year?
Ma'am, typically, our depreciation is about 4% to 5%. And typically speaking about maintaining for regular CapEx is typically about 1%.
Maintenance CapEx, 1%.
Yes. Maintenance and other regular CapEx, not particularly maintenance CapEx.
Sir, 1% of what?
The revenue, ma'am.
The next question is from the line of Dhananjay Kumar Mishra.
Congratulations on a decent set of numbers. Sir, just wanted to understand in the EV segment, this kit value, which you have mentioned. So from traditionalized vehicle, then we are close to -- I mean, we can provide the kit value up to close to INR 8,000 to INR 10,000. So have we reached this kit value for any of the customer as of now or where we are in terms of kit value with a particular customer?
So as I mentioned, this is the potential maximum kit value that we can offer. Currently, if I say that we are offering somewhere between INR 10,000 to INR 12,000 is what we have currently reached and which is under mass production.
Can you repeat? I didn't get the numbers.
INR 10,000 to INR 12,000.
And that is a potential we can -- but are we -- have we got order from any customer to get this much kit value for a particular model?
Yes, we have. I cannot name the customer...
No, I was just asking, I mean, whether we -- because you have increased this mechatronic, we have increased our -- this thing by INR 2,000 to INR 3,000. And then in information and connected systems, we have increased to INR 2,000. So we can provide INR 8,000 to INR 10,000 kind of products for EV. So that's what I ask. And in terms of just for the earlier cost, what was the total CapEx put together in FY '23 and whether it be maintenance or new CapEx? Or what is your plan, if you can give for FY '24 as well?
So for the last year or the full year FY '23, it's INR 250 crores.
Okay. And breakup you can give, specifically in which segment we have?
So breakup is generally, if I may say, is about 2% to 2.5% growth in the [indiscernible] and R&D; about 1% to 1.5% growth in the [indiscernible] and maintenance CapEx; about 1% to 2% growth in our plant upgradation or new plants or other such things. So this is the breakup of the, more or less, 45% of the CapEx.
So for growth, we don't need to increase capacity for a particular plant capacity. This is regular maintenance and [indiscernible] will do -- will take care of growth for next 2, 3 years?
So different plants and different product lines have different capacity utilizations. So mechatronic business vertical, one in the keyless solution or in the [indiscernible], have about 55% to 60%. In the wiring harness, again we are about 58% or 60% capacity utilization, in [indiscernible] about 80% and [indiscernible] currently is only about low 25% to 30%.
But this is just some of the numbers that I'm giving you as we're coming off with the new plants, new low-cost automation as well as we focus on, with current infrastructure, how we can increase our revenues and having flexible lines and other such innovative ideas on how we can sweat our assets more and create more and more revenue profitability.
Okay. And lastly, one question with this die casting, if you could give the quarterly revenue number for die casting and for the full year also, how it has grown.
Yes. For the quarter 4, for the die casting, INR 185 crores. For the full year, for the die casting, about INR 730 crores. On a full year basis from -- in FY '20, it was INR 522 crores. So on a full year basis, it has grown about 40%.
Okay. But just one more question with the investment to Pricol. So we have shown intent to increase our stake in the company. So have we -- are we also in talks with them, I mean, any advanced talk is happening or you're just stated the Board approval?
Pricol financial investment [indiscernible]. And we have applied for CCI full governance and compliance. So that's where it basically stands as of now.
[Operator Instructions] The next question is from the line of [ Mihir Desai ] from Pendulum Investments.
Sir, I had two questions on the macro front. So I just wanted to check with you, how has the global market landscape impacted your company's performance?
So besides India, if you look at various reports, like the next 10 years are India [indiscernible] and the various concerns of vertical issues, [indiscernible] et cetera, of course, the other markets are under pressure, whether it's America or Europe or other such countries. So coming to Minda Corporation, definitely exports for this particular quarter are under pressure. But our interest and focus is always to be getting new orders. So even when there is a pressure from the export market, we try to outperform them.
Sure, sir. Sir, also, I just wanted to check what are the steps that we are taking to address the supply chain challenges and disruptions?
So there are various activities or actions and strategies are in place. First off, commodity inflation or [indiscernible], we are back to that [indiscernible] into our customers. And we have strategy, strategizing with our suppliers [indiscernible] in terms of time and amount. That's number one. Number two, of course, there are various strategies when China Plus One or [indiscernible] that are happening. So we are looking at localization of our components to our various suppliers and supply partners.
As an organization, now we are heavily working on various important topics such as the quality, cost and competitiveness with our business partners. So as a group, we want to take up our supplier partners the way our OEMs have taken and grown up over the years. That's our strategy so that we grow with us to support the next generation of technologies and the requirements that are there from a financial perspective, financial health perspective, quality, operations and, of course, also plant perspective, including ESG as well.
Sure, sir. Sir, also, I just wanted to check, what is the progress on ongoing research and development initiatives?
Sorry, my friend, I think it's a general question. But as I said that we continue to focus on our own core products and areas and technology. The idea is that how we can focus on the case or pace which is connected, autonomous, shared [indiscernible] and electrification. So all these products are going to the finalization route and using the comfort, convenience and individualization and personalization. So we are now focusing on how all our products can be moved and can be shaped with these requirements entrenched.
So we are going to -- and we are making all our products into electronics and adding with our own design tender for how we can focus on personalization services and differentiate on that aspect. We continue to also have run multiple new R&D and innovation products and projects, which are pretty advanced, not in India [indiscernible], which are under the incubation phase or are in the R&D phase for various technologies in our own product line and how we can look at into new technology and new partnerships perspective.
On the electric vehicle space as well, on electric vehicle mobility, we continue to add products in-house as well as some partners, two technology partners that [indiscernible] on the product capability. Also, as a [indiscernible] organization from our R&D tender, we are working on finding more and more number of patents and how to improve the design quality within automotive and coming up with new trends and technology that you will see in the new vehicles [indiscernible].
Sure, sir. Sir, lastly, one broad question, which I wanted to ask you is that, sir, as an investor, say, currently 5 years down the line, what would be the strategy of a company and from current where we are? How do you look at the company, say, 5 years down the line, sir?
So at a very large level, we would like to move from components to complete system solutions provider. All the product lines and the domain, what we are doing is we would like to develop our different technologies and complete system solution offering with respect to the three or four product lines and the product domain with [indiscernible]. We're currently running many products, and how we will be consolidating and integrating them to offer a system solution.
From that perspective, also having the downstream in terms of our operational excellence and becoming a cost leadership in that respect. And of course, all the value chain, when it comes to the people and development partners. On the numbers front, of course, we would like to move ahead of the market. If the market is going flat, we would like to be higher by about 10% to 15% and which we have consistently showed over the last 3 years. And also in the remarks, I also mentioned that I would like to -- we would like to have an organization committed to grow above 20% to 25% year-on-year at Minda Corporation. Most importantly, it has to be a sustainable and a growth journey quarter-on-quarter.
The next question is from the line of [ Harish Shah ] from HS Investments.
So this is basically with regards to how do you see operational efficiency kicking in? Are we taking any digital transformation initiative? And the second question is with respect to our international -- expanding our international footprint, if you can provide any steps that we have taken for that?
Yes. So again, we are into the manufacturing business and automotive. So definitely, operational excellence is the most important project for us. And especially with the ongoing setups and technology changes and the customer demand, we have to fall much faster in line.
For those initiatives, we are, firstly, setting up and providing our state-of-art plants and improving end-to-end traceability, low-cost automation, robotics, business excellence, IoT and all such digital control in the process. And we are partnering up, and already we have partnered up with various external companies to strengthen this. And also, we have a very strong internal team to continue on the group business excellence, what we call. Sorry, can you maybe repeat the second question, please?
Sir, my second question was with regards to strengthening our international and global presence. If you can just provide any update, any direction towards that aspect.
Yes. So of course, we are to core to that. We are finally in India. And India is what we are focusing on how we can, firstly, increase the exports content and products from India to all over the world, looking at the various good opportunities that are coming across the Indian continent. That's number one. We do not have plans to acquire any companies which are having large operation based overseas. So our focus remains on how we can be in India and our [indiscernible] exports and have a larger share of revenue from the export businesses in the next years to come.
Okay. And my last question is with regards to our mechatronics division. How do you see the margin panning up in the coming quarters?
So the mechatronics division in our presentation also we had showed at about 13% to 14% EBITDA. While, of course, we want to grow this and we will see in upcoming quarters and there will be increase in the content electronics, et cetera, first and most important is to stabilize this. And then we will continue to improve it year-on-year. We're changing technology, we need to first utilize our capacities, get adjusted to the new volumes and the customer demand, deliver most importantly and then focus on how growing year-on-year.
The next question is from Saral Seth from Indsec Securities & Finance Ltd.
Sir, my question pertains to how do we plan to increase our content per vehicle from here going ahead over the next 2 to 3 years across segments? Because we are seeing decent premiumization, which is happening across the board. So do we still feel that there is room for further penetration in our products to increase content per vehicle?
Yes, absolutely, it is not even the beginning, if I may say, Saral. As you see the [ white ] cars, et cetera, are all [indiscernible] premiumization. And if I speak about our products for vehicle access, so from a traditional [indiscernible], as I mentioned earlier, we're now moving to keyless solutions. And this is only the 5% to 7% penetration as of now. Going forward, of course, it is only going to increase.
When it comes to the wiring harness content and leading kit value, as I had mentioned earlier as well, the number of connection systems, high-voltage cables, higher, more complex wiring harnesses are definitely going to lead -- to increase in the content per vehicle. In the instrument [indiscernible], analog customers are moving to digital and DSD clusters with more personalization and the confidence [indiscernible], which is more for dashboard or [indiscernible] or more driver information system and connected.
So this is how the clusters are now moving, which all of us would like to get connected to our phone and others. That is again a very less penetration. And all these technologies are into the only high-end vehicles, whether in two-wheelers or four-wheelers. And slowly, they will [indiscernible]. They will come into the low-cost commuter segments, which is where the volume lies across India. Other product lines that we're also continuously adding is again in terms of sensors, increasing the portfolio.
In [indiscernible], we've added many products such as ADAS, Shark Fin Antenna, [indiscernible] handles and other various technologies. Particularly, in the EV space and electronics of telematics and [indiscernible] transportation, there is a vast array of products, which are now moving from a traditional car or a two-wheeler to a high-end connected, personalized and advanced vehicles. So this is how the penetration will increase and more and more kit value from that operation will increase.
Right, sir, that was very detailed answer. Sir, my second question is on the aluminum die casting. How do you see the business shaping up over the next 2 to 3 years? We have done well to ramp up this business. But do you see any competition in this business? Or do you feel that there is enough room for growth?
There is definitely a lot of opportunity when it comes to the lightweighting aspect. Because when more and more electric vehicle mobility is coming in and the world is speaking about emission systems and the other such things, which is where the aluminum casting or the die casting comes in. And as I would like to again share, Minda Corporation die casting division has a 40% year-on-year growth in this last year and more and more exports coming in.
So definitely, there is room for growth. We would like to continue to focus on our domestic as well as export market. We have a strong team with a good amount of -- an excellent amount of technology to cater to the need. We are well placed in the next 4 to 5 years with respect to any technology that is needed in the lightweighting solutions.
And sir, this aluminum die casting, how much would be domestic and how much would be export, sir, if you can share that number?
So technically, you may say about 60% is domestic and about 40% -- 35% to 40% is exports.
And would it be fair to assume, sir, that the margins in this business are higher than the blended margin, sir?
Yes, of course. But I would like to also highlight that the CapEx and the below EBITDA number just in terms of depreciation are also higher in this business compared to others because it is a highly capital-intensive business.
And sir, any new product launches, which we are doing in aluminum die casting wherein we can gain market share or take new orders?
Yes. The focus is definitely on electric vehicle mobility. There are various players under many opportunities that are coming in again from the motors or [indiscernible] housing or other converter businesses. So there are various product lines that we are working on for the EV die casting purpose.
And sir, my final question, if I can squeeze in, sir, what is the -- I mean, there were questions about margin trajectory. But I would like to understand what are the levers for margins going ahead? Is it like sustained cost optimization? Or is it raw material tailwinds? Or is it better realization-led operational efficiency which could come in, sir?
So I think you answered all your questions you had asked. But it's the mix of all. And again, while there are pressures from the raw material, wage increase to various states like we have seen all across, the margin definitely continue to be under pressure. But as an organization, our focus is on how to gain cost and leadership in the manufacturing from in-house all the way to our suppliers.
So definitely, the indication with our partners, how we can focus on increasing productivity and manpower productivity improvement, more and more dependent on automation and robots is something that what we will be looking at in the future. As well as the products that we are going to be working on and are working on, of course, we'll be needing much more automation rather than manual lifting, which will be reducing the manpower dependency and increasing the quality as well as productivity and efficiency and profitability.
The next question is from the line of Radha from B&K Securities.
Sir, my question is on the aluminum die casting side. So just wanted to understand, I believe that as we move on from aluminum to zinc and to magnesium, so I mean, the value content or the product improves. So is there a margin difference if we are providing aluminum die-casted products versus zinc and magnesium die-casted products? And what would that be?
Very challenging question. But again, we are primarily into aluminum casting. We are not into magnesium casting. Of course, there are more pros than cons when it comes to the technology per se. But more importantly, the application of each of the zinc or aluminum or magnesium casting plays an important effect. Honestly, I cannot comment on the profit margin across all three.
Okay, sir. And sir, I mean, if we see the magnesium die-casted product, I mean, is the industry -- or do you believe the industry can slowly start moving to the magnesium die-casted products at least in the premium vehicle? And this year, what is the penetration now? And I mean, if the industry moves towards it, will it start with the passenger vehicles and [indiscernible]?
Magnesium casting is a very critical process. And it is very safety-critical if I may say, compared to zinc or aluminum, by the nature of it. So there are not too many players in India who do that. But yes, as a technology, it does exist. But immediately, the application needs to be evaluated and tested, which will take many years to come, in my opinion, [indiscernible]
And lastly, out of the components that we make in the aluminum die-casted products, I mean, what percentage of that would be -- would we be making for products that are in Indian subcomponents or transmission subcomponents and components that will not be required in the EV engine? And what would be our strategy to -- when the industry replaces those products, what would be our strategy to cover that part of the revenue?
So firstly, again these are both types of products that we make for either ICE engine or electric, then there are EV batteries are motor-related. And then there are products which are EV-agnostic or Indian-agnostic, which is [indiscernible]. So there's a variety of mix and across segments. Export is also again on the IC engine side as well, which is also growing. But we are very clearly launching new EV die casting products, which will not hamper our IC engine product in the casting step.
The next question is from the line of [ Monika Arora ] from Sharegiants Wealth Advisors. As there is no response, we will move to the next question. And the next question is from the line of [ Rajesh Kumar ] from Reliance Wealth.
My first question is on the working capital. How do you see in future your working capital days to evolve? What are the company's status on that?
So the challenge in the automotive industry is definitely continuously increasing the working capital. Like one of the key messages that we also monitor and working towards that. And hence, as I mentioned, one of the important factors in that is our suppliers or our creditor partners. This is where we are working with them on how we can strategize to decrease our inventory days as well as their payment term results. And there are, of course, MSME norms with the government has [indiscernible] and all. So this is one asset that we're working on across various segments.
Number two is, of course, on our working -- work-in-progress inventory and [indiscernible] inventory that we look at. So it definitely is an important aspect with more and more imports due to the electronics now coming in and the customers mandating and requiring us to have a high number of lead time items in our inventory. That is where the [indiscernible] number of days go up.
When it comes to the customer aspect of it, definitely, there are sector norms. Customers are good paymasters and are traditional ones, there is no issue in that. But yes, where in some cases, we manage them appropriately if in case. But we are constantly reaching out to them on how to reduce our [indiscernible] days on that aspect. So of course, if you see, yes, our working capital days has gone up from 30 to 40. But we are working on these fronts, as I mentioned, to come down significantly.
Sir, my next question is on -- we have entered into two strategic partnerships in FY '23. Can you help us in giving some color how this has panned out so far and their potential impact on the business going ahead?
So when it comes to the Daesung Eltec, it's concentrated on the ADAS solutions. So this is a company from Korea. And what we are here targeting now we basically have zero application in India from that point. So currently, our team is working with our Korean counterpart on the application for the Indian environment as well as the Indian customer usage. That's what we are continuously working on. Because the products that they have developed are for international usage. That's one.
On the second side, of course, we are working on the customers and demonstrating our samples, putting onto their vehicles to get more and more interest into that front. When it comes to the telematics, LocoNav company. And Minda Corporation-- is offering the hardware and LocoNav is offering the cloud and the software solution to that. So as a joint system solution offering, we are working with various partners or with the customers to offer them a complete solution on this aspect. So of course, our products are in the market, which is on the vehicles, whether in EV or in IC engine across segments.
Sir, my next question is how about your targets for the strategic partners and especially post Pricol? How will you be able to finance it?
So again, this is a financial investment. So we will see when the opportunity comes what will be done and what can be done. But of course, we are much more confident on our performance and our balance sheet than ever. With the way we've already said before is that you can see the numbers and the next year targets are also much, much higher for us than the other organizations have committed to deliver more and more free cash flow. So you will see when the opportunity comes, whether it is any and all JVs or ELAs or M&As. And we will evaluate them at the right course of action.
But as an organization, we are focusing on bringing in new partners through JVs and ELAs for completing our system solutions and offering advanced technologies. And we will come back to the market and to you whenever there are developments, which will be soon. Of course, when it comes to M&As, we are open to all opportunities that come our way. We have the full bandwidth and have developed the management capability to grow further through M&A. But yes, we are very clear on what we are not going to do. We are not looking at any companies which are outside India and are also in the product range or product lines of Minda Corporation, which are the domains that we are already working. So there are some clear norms that we have set up for M&A as well as technology systems and partnerships.
Sir, on ROCE, what is the level you are targeting in the long run? And what are the strategic levers or your strategies to achieve this thing?
So our ROCE is again currently moved from -- if you see over the last few years, we have gone from 15% to 20% this year in the last 3 years only. And if you look at the [ FATR ] of the organization, we are somewhere on the 4.2 to 4.5x. And this year, we have done about 5.4x. So with the [indiscernible] of products and our product line strategy, this is how we continue to invest in the products, which are going to continue to give us high ROCE numbers. And this is a key parameter in the metric before any capital allocation that we do for any new project or even a new partnership or a plant.
As there are no further questions, I would now like to hand the conference over to Mr. Aakash Minda for closing comments.
So thank you very much. Going forward in FY '24, we are very confident of doing better than the industry or performing the industry with our own capabilities and technologies and customer engagement. We continue to focus on delivering numbers and performance on a consistent and sustainable basis. And we are developing our ability to navigate the market challenges by relentlessly focusing on new products, R&D, innovation and strategic tie-ups to cater to the evolving demand of the automotive space.
Our strategic approach will remain on fortifying our core products and expanding our products and customer base both by attracting new clients and deepening our relationships with existing ones. We are fully poised and confident of margin-accretive growth in the next years to come. Thank you for your support.
Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.