Lumax Industries Limited (517206) Earnings Call Transcript & Summary

A very good morning to all our dear shareholders, our respected Board members, our statutory auditors, my colleagues from the Lumax family and all the stakeholders of the Lumax ecosystem. Firstly, I would advise the Company Secretary to confirm the presence of the quorum, please.

[Foreign Language] I confirm that the quorum is present.

Can you also please reconfirm that the recording is ongoing for the proceedings?

Yes sir.

Okay. Very good. As the Company Secretary confirms the presence of the requisite quorum, I call the meeting to order. We are extremely proud today to have amongst us in the virtual mode, our Chairman Emeritus, Sri D. K. Jain. To seek his blessings, I would like to first invite our Chairman Emeritus to give his welcome address. So may I request you to please address us.

Dear shareholders, a very warm welcome, and good morning to all of you. It gives me immense pleasure to welcome you all at the 41st Annual General Meeting of Lumax Industries Limited. And on behalf of the Board of Directors, I thank you all for joining us today. We have witnessed several hiccups in the last 2 years. And every aspect of our lives has been challenging. But despite it all, we are filled with immense pleasure on our ability to continue delivering our promises year-after-year. At Lumax Industries, the first and foremost thing that we ensured about the health and safety of our employees. We focused on preserving business continuing delivering on our commitments to our customers and communities. We have been proudly catering to our customers' needs, performing exceptionally while gaining interest for all of our stakeholders. I would also like to extend my warm welcome to all my Board members, the Lumax management team, the statutory auditors and all my shareholder friends. Thank you for your continued guidance and confidence in the management of the company. I will now hand over back to Deepak, Chairman and MD of the company, to carry forward the proceedings of the AGM.

Thank you very much. A very good morning to all of you again. I hope all of you and your families are safe and well. This is the 41st Annual General Meeting, and this has been conducted virtually through the audiovisual means. This is also the third AGM consecutively to be conducted through the AV means. This meeting has been convened and has been conducted in accordance with circulars issued by the MCA and SEBI, which allow the companies to conduct the AGM through videoconferencing or other audiovisual means. Your company has taken all the steps to ensure that all the shareholders are able to attend and vote at this AGM. Your company has also tied up with the NSDL to provide the facility for voting through remote e-voting and also for participation in this AGM through videoconferencing facility and e-voting during this AGM. This AGM can be viewed live by the members from remote locations by logging on to the e-voting website of NSDL. Now I would like to take this opportunity to introduce the members and the Board of Directors of the company who have joined this meeting. To begin with, I will introduce myself first, and then will request the other members to introduce themselves. Myself, Deepak Jain, Chairman and Managing Director of your company, have joined this AGM from Gurugram. I am also the Chairman of the Corporate Social Responsibility Committee and the Risk Management Committee and member of the Audit Committee and the Share Transfer/Stakeholder Relationship Committee of the Directors of the Company. Now I'll request all the Board members who have joined this AGM through the videoconferencing to introduce themselves. First, I would like to invite the executive directors to introduce themselves. I will request Sri Anmol Jain to introduce.

Good morning. I am Anmol Jain. I have joined this AGM from Gurugram. I am the Joint Managing Director on the Board of your company. I am also a member of the Corporate Social Responsibility Committee of the Directors. Thank you very much.

Thank you. Now I request Sri Vineet Sahni to introduce himself.

Good morning. I am Vineet Sahni, I am joining from Gurugram. I am CEO of Lumax Industries Limited. Thank you.

Thank you, Vineet. Now I'll request Sri Tadayoshi Aoki-san to introduce himself.

Good morning. I'm Tadayoshi Aoki. I have joined this AGM from Gurugram. I am Senior Executive Director on the Board of your company. I'm also a member of the Audit Committee and the Share Transfer/Stakeholder Relationship Committee of the Directors. Thank you very much.

Thank you, Aoki-san. Now, I'll request Sri Kenjiro Nakazono-san to introduce himself.

Good morning. I'm Kenjiro Nakazono. I have joined this AGM from Gurugram. I am Executive Director on the Board of your company. Thank you.

Thank you very much, Nakazono-san. I will now request and invite the independent directors of the Board to introduce themselves. I will start with Sri Gandhi to introduce himself.

[Foreign Language] My name is Avinash Prakash Gandhi. I am the Independent Director on the Board of Lumax Industries. I'm the Chairperson of the Audit Committee. I'm also a member of the Nomination and Remuneration Committee, Corporate Social Responsibility and also Risk Management Committee. Thank you.

Thank you very much. May I request Sri Rattan Kapur to introduce himself, please.

Good morning, everybody. I am Rattan Kapur. And I have joined this AGM from Gurugram. I am an Independent Director on the Board of your company. And I'm also the Chairman of Nomination and Remuneration Committee and I am also a member of the Audit Committee of the Directors of the Company. Thank you very much.

Thank you, sir. Now I request Sri Rajeev Kapoor to introduce himself.

Good morning, everyone. I'm Rajeev Kapoor. I have joined this AGM from Faridabad. I'm an Independent Director on the Board of your company, and I'm also a member of Audit Committee of Directors of your company. Thank you.

Thank you, Rajeevji. Now may I also request Sri Vikrampati Singhania to introduce himself.

[indiscernible] good morning. I am Vikrampati Singhania, I have joined the AGM from New Delhi. I am honored to be an Independent Director on the Board of your company.

Thank you, Vikramji. I will now request Smt. Ritika Modi, who is specially joining this company from overseas. May I request her to introduce herself, please.

Morning. I'm Ritika Modi. I have joined this meeting from France. I am an Independent Director on the Board of your company. Thank you.

Thank you very much, Ritikaji. We are missing today Sri Dhiraj Gupta's appointment in the 36th AGM of the company held on 22nd July 2017. Pursuant to the provisions of the Section 139(2 )of the Companies Act 2013, read with the applicable rules framed thereunder, the tenure of 5 years of Messrs. BSR Associates expires at the conclusion of this AGM. I, on behalf of the entire Board of Directors, would like to convey a sincere appreciation to BSR & Associate LLP for the support and guidance during the tenure. The Board of Directors, based on the recommendation of the Audit Committee, proposed the appointment of Messrs. S.R. Batliboi & Co. LLP, Chartered Accountants as the statutory auditors of the company in place of BSR & Associates LLP for a term of 5 consecutive years from the conclusion of this AGM up to the conclusion of the 46th AGM for the consideration and approval of the shareholders in this AGM. I would also like to welcome Sri Manish Gupta, Practice Company Secretary, who has given the secretarial audit report for the financial year ended 31st March 2022, and is also acting as a scrutinizer for e-voting at this AGM. From the Lumax management team, I would like to welcome all the management members. Sri Naval Khanna, Group Taxation Head; Sri Sanjay Mehta, Group CFO; Sri Raajesh Kumar Gupta, Group Company Secretary; Sri Shruti Kant Rustagi, CFO; [indiscernible] Group CHRO; Sri Pankaj Mahendru, Company Secretary; Sri Ankit Thakral, Corporate Finance; and Smt. Priyanka Sharma, Head of Corporate Communications, and all the other members of the management team. I will now proceed with the agenda for this AGM. The notice convening the AGM, the report of the Board of Directors with the relevant annexures, along with the audited financial statements for the financial year ended 31st March 2022 was circulated to the members of the company in compliance with the relevant circulars of MCA and SEBI. And with your permission, I hereby taken them as read. Since this AGM has been conducted through the AV means, the requirement of the appointment of proxy and related compliances are not applicable. The company has received 4 representations under the Section 113 of the Companies Act 2013, including Lumax and Stanley affiliates covering 45,023,766 shares. As required under the act, the Register of Contracts, the Register of Members, and the Register of directors, and key managerial personnel and their shareholding are open for inspection on the e-voting portal of NSDL. The auditor's report of the audited annual financial statements of the company for the financial year ended 31st March 2022 does not contain any qualification, observations, comments on financial transaction or matters which have any adverse impact on the functioning of the company. Therefore, the same is not required to be read at this AGM in compliance of Section 145 of the act. Now I will ask Mr. Pankaj Mahendru, Company Secretary, to brief you about the e-voting procedure. Pankaj, please go ahead.

Thank you, sir. Good morning to all. The remote e-voting for the shareholders was open from Tuesday, 19th of July 2022, 9 AM, to Thursday, 21st of July 2022, (05:00 P.M.). The members who have not cast their votes through remote e-voting can now cast their votes as the voting is open till this AGM is concluded. Mr. Manish Gupta, Practicing Company Secretary, has been appointed as a scrutinizer for the e-voting process. All the shareholders who have joined this meeting have been placed on mute by default to ensure smooth functioning and transmission of the meetings -- meeting proceedings. During the question-and-answer session, Chairman sir shall announce the name of the speakers who have registered themselves as speakers of this meeting. The lines of the respective speaker shareholders shall be unmuted by the moderator when their name is called out by the Chairman sir. Now I would like to apprise the members with the flow of AGM. Firstly, Chairman, sir, will address the shareholders. Thereafter, we will move all the resolutions as set out in the AGM notice, and the same be voted. Thereafter, Chairman sir will invite the shareholders who have registered themselves to be speak at this AGM. The shareholders can cast their vote during the course of the meeting. The combined results of the remote e-voting and the voting during the AGM, along with the scrutinizer report will be announced and will be made available on the website of the company and on the website of NSDL, along with the website of the stock exchanges. Now I invite Chairman sir to address the shareholders.

Thank you, Pankaj. Dear shareholders, good morning once again. At Lumax, we are prepared to make the most of the opportunities coming our way as we foster a growth road map. During the entire year, the world economy in general and the automotive industry in particular has been facing challenges on account of 6 Cs: COVID-19, commodity prices, container shortages, chip shortages, conflict and the China lockdown. But today, the AGM theme is positive on 3 Cs: capable, credible, and confident, which Lumax has become more of post the COVID-era. As the world continues reeling under the above challenges, the current ongoing Russia-Ukraine conflict has added to the still recovering global economy on an unstable bump. The global supply chain disruptions, rising energy prices and food shortages are some of the immediate effects of this war. Despite this industry's instability, Lumax Industries has outperformed the industry. During the year, the company also carried out CapEx of approximately INR 105 crores and successfully commenced production of electronic facility at Bawal and Haryana and Plant 2 at Sanand in Gujarat. As a company, we are continuously putting efforts and delivering premium products to our customers even amid a very challenging external environment. We thank you for your presence today, which is indeed a testimony of your support for the company and reiterates our purpose to deliver pride and progress with positivity. I will now briefly update on the economy. The real GDP growth of 9.5% estimated for financial year '21, '22 is likely to be realized, provided the economy's full recovery with a real GDP level of FY '19,'20. Overall, the economic activity remained resilient and amid the third wave also as India marched towards steady progress amid the virus-constraints. This is reflected in the robust performance, such as power consumption, PMI manufacturing, exports, e-way bill generation and GST collections. Rapid pace of vaccination further bolstered confidence. The union budget of FY '22, '23 indicates commitments towards asset creation in public infrastructure development, which will invigorate the virtuous cycle of investment and crowd in private placement with large multiplier effects augmenting well in inclusive and sustainable growth. The demand revival thereon will facilitate the private sector stepping in with investments to augment production to meet the rising demand. And barring the external shocks, the inflation remains the major global economic risk, which we can have an adverse impact on increase of interest rates and also the foreign exchange rupee to dollar volatility and other geopolitical disruptions. In the Indian automotive space, the various lockdowns imposed by the Indian government in the early half of '21 affected us significantly. However, it has also recorded a robust comeback in June '21 with the rural and urban demand there, there was an increase in domestic dispatches across all vehicle segments, including passenger vehicles, 2-wheelers, tractors and commercial vehicles. The Indian Component Industry in tandem stood at USD 46 billion in FY 2021 and is anticipated to grow to USD 200 billion by the year FY '25, '26. This growth is attributed to an increased localization of the OEM components in the country. The government's PLI scheme of INR 25,938 crores for the automotive and the auto component industry will boost the growth also for our industry. The changing dynamic business environment, changing demands like the EVs, hybrids are also bringing in new verticals and opportunities for the auto-component manufacturers. While EV charging stations in the country stands at 1,800, the country is also expected to require 400,000 charging stations for about 2 million EVs by '26, '27, thereby creating opportunities for other allied industry. As one of the key components in the automotive vehicles, lighting is amongst the most crucial elements for ensuring automotive safety. Premium quality lighting on the vehicle is beneficial for increasing visibility in dark, bad weather conditions, and also reducing the probability of road accidents significantly. With the Regulatory Authorities spreading awareness on safe driving through various initiative, the automotive lighting is an important factor, which is gaining traction. The Indian automotive lighting industry offers a wide range of products, such as the head lights, rear lights, accessory lights, fog lights, emergency warning lights, off-road lights. And also, the styling in the contemporary vehicles is actually changing the conventional lighting to LEDs. The automotive safety measures and the automotive lighting systems go hand-in-hand, both for interior and exterior of the vehicles on road safety as well as aesthetics. The Indian automotive lighting industry witnessed significant growth on account of the increased automotive sales and economic growth and also was additionally triggered by the rising population, vehicle safety concerns, and also the regulatory framework, which the government is pushing towards the safety agenda. During the year under review, the company recorded a sales turnover of INR 1,751 crores, registering a growth of 23% from the last financial year, whereas the consolidated profit before tax after exceptional items and share in profit of associate and profit after tax for the period stood at INR 52.82 crore and INR 40.72 crores, respectively, registering a growth of 60% and 124%, respectively. During the year, the company has also made an investment of around INR 48 crores on upgradation of its R&D facilities. Your company continues to demonstrate the consistency in paying dividend. Your Board has therefore recommended a dividend of INR 13.5 per equity share. That is 135% of the face value of equity share for the financial year '21, '22. I trust you will find this satisfactory and accord your approval. As a responsible corporate, Lumax believes that the profits of business must percolate to the society at large. Societal responsibility is an integral part of sustainable business. As part of the CSR, Lumax Industries continued to allocate 2% of the profits of CSR for the purposes it has taken and under several initiatives through Lumax Charitable Foundation, the CSR arm of Lumax DK Jain Group, focusing on the developmental work in the field of education and health care for marginalized and poor students, girl child, juvenile health, cancer screening and infrastructure development in the areas -- near the company's plants. Lumax will also continue to work on environment, social and governance, the ESG aspects. And I'm pleased to announce that the 21% of the total energy consumption of the group is derived from renewable sources, hereby reducing the carbon emissions and helping the environment. Additionally, the waste generation is being prevented through our 3R policy of reduce, reuse and recycle. The company also strives to identify business risks and also implement risks to control the measures thereon. The company conducts risk management activities aiming at minimizing the impact of any damage that might materialize. The company has also constituted a committee of directors and executives to especially look into the risk management framework, identify the critical risk and also devising measures to control and mitigate the same. I am pleased to say that despite the dynamic economic situation and also the Corona impact on health, our employee relationships really remained very cordial across all locations during the year under review. I sincerely appreciate the passionate efforts and contributions put in by employees at all levels to ensure business continuity in this very volatile times. I would also like to place on record our acknowledgment for the support extended to your company by its collaborators, Stanley Electric of Japan. We would also like to express our gratitude to esteemed customers who continue to repose trust in your company. And would also like to place on record sincere appreciations to our suppliers, the government officials, media, bankers for their continued support. I would like to thank you all, our dear stakeholders, for your very patient listening and hearing and continuing to support the Lumax Industries to chart out its right part of growth. Now I turn the official business of this meeting. And I request Mr. Pankaj Mahendru to brief on the resolutions forming part of the notice of the AGM.

Thank you, sir. There are, in total, 6 agenda items in the AGM notice. Since the notice of the AGM has already been circulated to the members and the resolutions have been put to vote through remote e-voting, I am picking the resolutions as read. The resolutions are not required to be proposed [indiscernible]. For the benefit of the members attending this meeting, I would like to provide a brief contents of the items contained in the AGM notice. Item #1, to receive, consider and adopt the audited standalone financial statements of the company for the financial year ended 31st of March 2022, together with the report of the Board of Directors and, Auditors thereon; and the audited consolidated financial statements of the company for the financial year ended 31st of March '22 and the report of auditors thereon. Item #2, to declare dividend of INR 13.5 per equity share as recommended by the Board of Directors for financial year ended 31st of March '22. Item #3, to appoint a Director in place of Mr. Vineet Sahni, who retires by rotation and is eligible, offers himself for reappointment. Item #4, be to appoint a Director in place of Mr. Kenjiro Nakazono, who retires by rotation and being eligible offers himself for reappointment. Item #5 to appoint Messrs. S.R. Batliboi & Co. LLP, Chartered Accountants, as the statutory auditors of the company, to hold office for a period of 5 years from the conclusion of 41st AGM up to the conclusion of 46th AGM and to fix their remuneration. Item #6, to ratify the remuneration payable to the Cost Auditors for the financial year '22, '23. Now I hand over the proceedings to Chairman sir.

Thank you, Pankaj.

Since all the 6 agenda items have been placed. I would now like to invite the members who have registered themselves as speakers as per the list placed before me. I will call out the name of the speakers. But in the interest of all the members, may I request all the speakers to keep the questions in brief and avoid the repetition. My urge is to make this virtual meeting as effective and efficient as possible. I will now -- I will answer all the speakers' questions after they have raised the queries. Now let me start in the sequence. May I now first invite Sri Yashpal Chopra to kindly address.

Sir, I'm Yashpal Chopra calling from Delhi. Actually, our AGM is that as 41st AGM and I am the person who is with this D.K. Jain group for the last 44 years, even before the birth of Lumax industry, it was laser lamps, and I was a shareholder of that company. So I have got a great, great respect for our Chairman Emeritus, Mr. D.K. Jain. And he had laid down a strong, strong foundation of this company and the fundamentals on which he was running the company. Those have been cherished and those have been followed by your new young generation. So I'm proud of that, that he has followed the strategies -- strong strategies, strategies of integrity, transparency, investor friendliness and all that. And because of that, the company has just given a grand performance just for a period of in the last year, for the period of 9 months only, because the first 3 months were impacted by those COVID people and COVID bad time, horrible time. And virtually, the year was hardly for 9 months. And still, our company made a grand progress in revenue, PBT, PAT, ROCE, EPS. And being investor-friendly, they had declared a dividend of INR 13.5 per share. That is a very, very big thing. And I believe in the share price in the stock market. And the company made a very, very high price of around 1,657 -- INR 136.35. That was a big achievement for the company. And so as a company is earning laurels, the company -- I wish that they maintain that thing. And because now the current year is definitely far, far better than the last year. And I hope that our current year performance will be definitely far better. For all those things, I congratulate our management, Mr. D.K. Jain, Mr. Anmol Jain, and the eminent professionals along with him. So that is very, very nice. But I have got is 2 simple queries. The first query is that company, I request our Chairman to consider with his Board for the issue of bonus because that is overdue and the shareholders, they are expecting that they get a liberal bonus from the management. And then my query is, and regarding the long list of orders with you. How much that was impacted during the COVID time? And have we -- just to compliment all that, have you matured all that? And the second thing is that, among the -- in this quantum of revenue, what percentage is the PLI incentives? Because I think we must have got sometime -- some amount of that also. And that shows the dedication of our employees, that how hard they are working just to achieve the targets and to go even beyond the target. So these are the only simple queries. But before I wind up, I compliment our corporate governance. I thank our CFO, our [indiscernible], and even the moderator for getting me a chance to speak. And finally, I pray God to bestow positivity on you all, and particularly, to my friend and, Chairman Emeritus in safe, sound health, because the health of the company, the health of our management, the safety, the positivity, these are all the positive factors for my company. And the growth of my company is virtually the growth of my investment. So best of luck to you. And festive greeting for the time to come. Thank you, sir.

Thank you. Thank you very much, Sri Yash Palji. And may I now request [ Sri Mahendrapal Butani ].

My name is MP Butani. I'm speaking from -- attending this meeting from [indiscernible] , New Delhi. And first of all, I would like to thank and appreciate to CS and his team for your quick responses, transparent approach and accurate compliances made well in time. And given the respond to some of our queries through mail well in time. I feel also proud that the management team has taken all possible steps for employee safety during the pandemic and significant CRS contribution activities under your leadership done in the crucial time for society. Sir, from the -- it has been noted that our company has improved their profitability and cash flow. And I'm also happy to note that the company has a very strong foreign technical collaboration and its own R&D center in Taiwan. Sir, our company is a market leader and first mover in the technology over the competition. Therefore, under your leadership and guidance, company will perform better and better year and year ahead. Sir, under CRS, [Foreign Language] Thank you, sir.

Thank you. Thank you, Mr. Butani. May I now request Sri. Sarjeet Singh.

Chairman, sir, first of all, good morning to you, all the Board of Directors, all the staff of Lumax Industries Limited, and my fellow shareholders. Chairman sir, [Foreign Language] Thank you, sir.

May I now request Sri Gagan Kumar.

Good morning, Mr. Chairman, Board of Directors and fellow shareholders. Myself, Gagan Kumar, I'm joining this meeting from Delhi. [Foreign Language] are we planning to split our bonus. Kindly address on that. Thank you. Thank you so much.

Thank you very much. And may I also now request [ Sri Surendra Kumar Arora ], who's the last speaker on the list to kindly address.

Chairman sir, [Foreign Language]. My name is [ Surendra Kumar Arora ]. [Foreign Language] Thank you very much for that, sir. [Foreign Language] Thank you very much.

Thank you very much, Sri Aroraji. Since [Foreign Language , I will now try and address all the queries. [Foreign Language] On the behalf of the management and the Board [Foreign Language] You have actually mentioned around about 4 key points. One is regarding the stock. And in stock, you have given about suggestions for a bonus or for a share split. It's been duly noted. Our endeavor always is to maximize shareholder value, but more so by completely ensuring that we are meeting customer needs and focusing on our business performance. One of the queries raised by Yash Palji on the PLI. PLI has been launched with the government on advanced automotive technology products. Currently, Lumax Industries, which is into lighting systems, do not qualify for the PLI because lighting systems as a product is not recognized by the government. If the list is revised and lighting is added, surely, we will apply and make avail of the PLI facilities. There was a very good suggestion by Sri Butani for the CSR, especially for the senior citizens of the company. We will look into it whether we can actually attribute towards that. Our endeavor is to actually promote and give support to the marginalized sections of the society. I think there have been request on physical AGMs. And of course, I can speak on behalf of everyone and Chairman Emeritus especially that he loves to interact with you. And whenever the time comes right, Hopefully, this Corona kaal will be over soon completely. And we can try and also attempt on certain physical things. Particularly on 2 specific points on the rupee dollar. Rupee dollar, I think, is something which is not in our control. Rupee always keeps on depreciating, in the span of 5 years, at least about 15%. Last -- since about June, it has been under pressure. We still feel that it will continue to remain under pressure. But I think for us, we are a net importer. And we have back-end arrangements with the customer to assure that we are able to get this rupee exchange volatility in future course of business. Particularly on exports, I feel that it's a double-edged sword because we have to also ensure that how the other currencies are behaving in other competing economies, and I believe that rupee is actually a currency which has performed a lot better. So the export competitiveness, if I compare with certain other Asian economies, their export competitiveness, only because of exchange rate fluctuation, has improved more than the rupee, so I think there would be some benefit, but depending on the product and the category. I think on single-use plastics, we will continue to follow basically as a corporate citizen, a responsible citizen on recycle, reuse, and also follow whatever the government protocols are. So I think with this, I have actually responded to all the queries raised by our shareholder. I think since all the queries have been responded now, I'll actually hand over the e-voting process to the scrutinizer. The e-voting facility will remain open at the NSDL website for the next 15 minutes to enable the shareholders to cast their votes. And the combined results of the remote e-voting and the voting during the AGM along the scrutinizer report will be announced by 24th July 2022 and will be placed on the website of the company and the website of the NSDL and also on the website of the stock exchange. I would sincerely like to thank all the members of the company for the cooperation and support for conducting this meeting effectively and efficiently through the audiovisual means. And particularly, I would like to thank all the Board members and my Lumax management team who have not just joined the meeting, but have continued to give us support, guidance and motivation during a very, very challenging time and also the future direction to set the right growth for the company. I'd also like to thank all of my colleagues and -- on the Board for the valuable guidance and advice, and also, most importantly, our valued shareholders to all of you for your trust and confidence in the management of the company. The meeting shall now stand concluded at the end of 15 minutes from now. Thank you very much, and have a good day. [Foreign Language].