Uno Minda Limited (532539) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Minda Industries Limited Q2 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sunil Bohra, Group CFO, Minda Industries Limited. Thank you, and over to you, Mr. Bohra.

Thank you, Aisha. Good afternoon, and a warm welcome to all the participants. I hope you and your near and dear ones are all keeping safe and healthy. On the earnings call today, I'm joined by my colleague, Mr. Tripurari Kumar. We hope you have had a chance to have a quick look at our financial results and presentation that is uploaded from the stock exchange as well as the company's website. I will briefly discuss about the business landscape and then update on our performance in the preceding quarter, following which we will be glad to respond to your queries. The performance of the auto industry for the second quarter ended September 2020 has progressively improved with each passing month, with September volumes being best in the first half of the fiscal. Further, the October month continued to witness strong growth in the volume on the back of celebrating for upcoming festivals, wherein certain OEMs have also reported highest ever monthly sales. Strong demand was experienced during the festive period of Navaratri Durga Puja and Dussehra. A very good monsoon, higher kharif acreage and continued government support has ensured a very robust rural and semi-urban demand popular and entry-level passenger cars. Urban markets, which were lagging in demand are now fast catching up as well. The market demand sentiments were further supported by the preference for personal mobility. Tractor sales volumes are expected to grow this fiscal over the previous year, primarily driven by a strong rural income owing to solid rabi crop harvest. Moreover, government initiatives in the form of a hike in minimum support price for kharif crops and increased budgetary allocation under [indiscernible] are supporting [indiscernible] [early] income. The auto loan interest rates are below 8%, the lowest in a decade, and that should also entice customers to purchase new vehicles. During the second quarter, the auto sector volumes declined by 8% as against the volumes recorded for Q2 of FY 2020. The 2Wheeler segment declined by [ 7% ], 3Wheeler, [ 3% ], 4Wheeler by 8% and [indiscernible] segment declined sharply by 24%. According to [CM], passenger vehicles' auto volumes increased by 14% Y-o-Y in October falling increase of 26% in September and 14% in August. The inventory [indiscernible] for 2-wheeler and passenger vehicles are also within a comfortable zone with 4Wheeler inventory around 30 days and 2Wheeler inventory around 45 days. With the festive season continuing into November, the sales volumes are expected to remain strong. OEMs are also offering various special discounts to further supplement the demand. As you know, GST collections for October were at an 8-month high and cost INR 1 lakh crore mark and the service sector grew for the first time in 8 months in October. The above factors augur well for the economy in general and the auto sector, in particular, in the ensuing year. Coming to our performance. You may refer to Slide 5 and 6 at the consolidated level during Q2 of FY '21, the company entered a revenue of INR 1,465 crores as against INR 1,360 crores for Q2 FY '20, registering a growth of 8% year-on-year despite the industry volume and negativity for the quarter. The revenue for Q1 of FY '21 was INR 417 crores. Our product portfolio tick value enhancement and customer mix has supported in outperformance of Q2. EBITDA for the quarter was at INR 215 crores in comparison to an EBITDA of INR 172 crores during the corresponding quarter at the end of FY '20. EBITDA loss for the preceding quarter was at INR 71 crores. The EBITDA has been positively impacted by short-term cost reduction initiatives and better operating leverage. The temporary salary reductions have been reinstated with the [indiscernible] September 1. During the quarter, we had an exchange -- foreign exchange gain of around INR 8 crores in other income, which is not part of EBITDA, but part of other income. The finance cost is lower on account of reduced interest rates and utilization of cheaper sources of funding like commercial papers. The depreciation had been higher due to amortization of intangibles related to acquisition of Delvis and commissioning of new alloy wheel plant at SUPA. Accordingly, the profit before tax before exceptional items for Q2 FY '21 was at INR 129 crores as against profit before tax of INR 69 crores in Q2 of FY '20. The growth in PBT is largely on account of better operating leverage and lower interest costs. Our tax rate for the quarter is around 34%, primarily due to the reversal of deferred tax credit generated in the first quarter which was at the full tax rate. Lower book depreciation versus tax depreciation and non extension of R&D tax benefit. For full year, we expect our cash rate to be around 24%. Our profit after tax with the lion's share for the quarter was at INR 81 crores as against INR 49 crores in the corresponding quarter last year. Moving to the product lines. You will refer to Slide 7 and Slide 8. First, to start with Switching Systems. The segment achieved revenue of... [Audio Gap] ...and attributing about 32% of total consolidated turnover. We are localizing sun roof, gear shifter and mutually, neutral switches for [indiscernible] vehicles. Our click value has also been positively impacted in 2Wheelers due to changeover to BS6 and additional features like USB and [indiscernible]. Moving on to Lighting businesses. It has achieved revenue of INR 363 crores for Q2, contributing 25% of our total turnover. Our 2Wheeler business has received new orders from RE, [indiscernible], Chetak, TVS, [indiscernible]. In 4Wheeler, we have, for the first time, received an order from MSIL for LED tail lamp with rear facia. Moving to Light Metal Technology on LMT business, it achieved a revenue of INR 180 crores for Q2, contributing 12% of our total turnover. The LPDC wheel light under commissioning stage and we should be ready for customer inspection in Q4 of FY '21. For our 2Wheeler alloy project at SUPA, 2 lines have been commissioned out of 4 lines. The remaining lines are expected to be commissioned by March and we expect stabilization in a couple of quarters thereafter. Turning to our Acoustic or Horn businesses. The business has achieved revenue of INR 167 crores for Q2, contributing 11% of our total turnover. The Indian business received first our order for electronics in India from M&M PV Division. Moving to other product businesses, it has achieved revenue of INR 283 crores for Q2 contributing 19% of overall top line. We have started supplying sensors, which is Wheel Speed Sensor to our Korean customers. Of -- if you see it's a high level of INR [ 283 ] crores, it's largely consist of INR 50 crores of sensor sales, INR 45 crores of blow molding and INR 30 crores of [ices]. Total borrowings as of September 30, 2020, were at around INR 1,152 crores compared to INR 1,159 crores for Q1 of FY '21, approximately INR 298 crores of cash was available as of September, resulting into a net debt of around INR [ 823 ] crores. Moving on to Slide 9. In terms of our revenue pie for the quarter ended September 30, 2020, OEM business accounted for 86% of total revenue and aftermarket business is around 14%. And in terms of segment mix, 4Wheeler have contributed around 52%, while just -- it's for 2Wheeler, which is at 48%. Moving to Slide 10. TG, TGMINDA Japan and Minda have agreed on consolidating all its business under 1 umbrella with MIL playing a significant role in the joint venture. Minda has already increased in volume in TGMINDA to 49% in September '18. You might be aware of it. And TGMINDA had been acquired with 95% stake. So TGMINDA has acquired 95% stake in TGSIN from TG Japan in September 2020. With an objective to consolidate entire TG and Minda business in India under 1 umbrella, the Board has in principal approved the merger of MINDATG with TGMINDA. To ensure that the shareholding is identical post-merger, Board has approved the same 1.1% stake in MINDATG held by MIL to TG for a consideration of INR 0.56 crores. Due to the [whole] transaction, line-by-line consolidation will be discontinued for Minda TG, as it will become an associate company. In another transaction, MIL Board has approved purchase of a 13% stake in Tokairika Minda Private Limited, as we call TRMN for Minda Finance Limited as part of our community consolidation exercise for a consideration of INR 22.5 (sic) [ 22.59 ] crores. TRMN will now become an associate company of MIL and will be consolidated by equity method. As you might know, TRMN engages in business of seat belts, gear shifters, locks and safety devices for automotive application. In FY '20, TRMN reported a turnover of around INR 600 crores. Moving to Slide 11. Harita Seating Systems [indiscernible] is now placed for final hearing on November 16, 2020. And as you know, the rights issue of INR 243 crores has been successfully completed, and it was oversubscribed by 1.2x. The company has largely used the money to repay that obligation and investment in TGMINDA for acquisition of TGSIN. That is all from our side, and now we can open the floor for Q&A.

[Operator Instructions] The first question is from the line of Ashutosh Tiwari from Equirus Securities.

Yes. Sir, congrats on good set of numbers. Firstly, on the 2Wheeler alloy wheel plant, you mentioned 2 lines of commissions. So what kind of revenue we expect in this year, in the second half? And then any color on next year, what you're looking at?

So Ashutosh, we have just commissioned the line in September and in the month of September, the sale was almost, I think, around INR 3 crores. So the lines are now gradually being sort of stabilized. And we will be commissioning our -- another 2 lines. So for next year, which is '21-'22, our capacity based on our total peak revenue of around INR 470 crores, we should be roughly around 60% to 70% of our capacity levels. But definitely, we will have better clarity maybe by the time we speak, maybe in February or March.

You said peak revenue is INR 470 crores?

Yes. That was the plant which we have put up. The peak total revenue was expected to be around INR 470 crores based on the total investment.

Okay. And sensors, you mentioned the numbers part -- as part of other sales, I missed that number. Can you provide that number?

Yes. So the quarter of something around INR 50 crores.

INR 50 crores in the first quarter you said?

Second quarter.

I mean I'm saying that this is -- INR 50 crores is on the new plant that you commissioned?

No, no. That is total sensor sales.

Total. Okay, okay, okay. And so the new plant was commissioned basically? And so...

No. So new plant has got 3 products. The first one, which is the high-temperature sensor, has been commissioned. The wheel speed sensor is expected to be commissioned in the last quarter.

Okay. And what kind of numbers we can look at from these new sensors, next year basically or overall sensors next year?

We'll give you better clarity, if you don't mind, in the next call on this.

Sure. And secondly, on this employee cost, like you say this INR 204 crores, you mentioned that there was salary cut and others. So on a normalized basis, the number should be how much on a quarterly basis?

No. So if you see the benefit in the total cost for a month, it was roughly around INR 6 crores -- INR 6 crores, INR 6.5 crores on a monthly basis.

Okay. On a monthly basis?

Yes.

Roughly INR 13 crores would have been the benefit in the current quarter, that INR 204 crores?

Yes.

Okay. And we also have saved a lot on the other expenses when the -- of the decline Y-o-Y. Will some part of that sustain when things normalize going ahead?

Well, definitely, some part of it should sustain because, as you know, the industry we are in, there is a lot of expenses, which goes towards traveling and admin, overheads like that. And I think we are still away from getting to a normal situation. So there's definitely a good saving. We expect it to continue. That's number one. And number two, even on the rentals, wherever we have, we have actually negotiated for a full year reduction. So those savings will continue, and in fact, to continue for because we have actually a reset base. So whenever we give next year's increase on the quarterly, it will be on the lower base. So that reduction actually is what we call, I would say, a long-term reduction, which we have achieved. And also the negotiations which we have done on various administrative and overheads like consultants, et cetera, et cetera, they have all been negotiated for the full year basis. So we do expect those savings to continue.

Okay. So -- because, I mean, even if we remove that INR 15 crore saving on employee cost, and then also margin is 13.7% despite the fact that in this quarter, LMT sales are lower, so your alloy wheel sales would have been declined Y-o-Y due to high margin. Despite that, margins are pretty good.

Right.

And lastly, on the profit from associate front, also there is a significant jump over last year, INR 10 crores number. So which of the entities are contributing more right now in terms of profit on associates?

No. If you see the improvement in profit in associate, it's actually proportionate almost to the profit increase, which you see the industry is about. So it is, I think, generally in the -- in line with the group wherein whatever sales growth and business growth we have seen plus whatever actions we have taken from cost aspect. I think every business has contributed, I would say, broadly proportionately.

Okay. And last question, if I can ask. You mentioned that the TG, the association reorganization that you're doing. You will have a better role -- bigger role going ahead. So I think despite -- I mean, if you look at TG Minda despite having a good fixed sale number, I think the profitability is a bit lower. So will we be looking at increasing profitability at that entity a lot over next 3, 4 -- 2, 3 years basically?

So definitely, Ashutosh, I think that is the plan that once we had consolidated entities into one, definitely we get immediately the savings of nearest overheads and common costs of common functions. That's number one. Number two, we are having a very strong focus on improving our margin profile in TG. And with our more and more active enrollment, we expect to improve its profitability profile going forward. In fact, if you see, even in this year, actually, we have done better than the last year in TG. So that impact is visible. And I completely agree with you that going forward, we should be in a better trajectory from where we are today.

The next question is from the line of Mukesh Saraf from Spark Capital.

Yes. First question is, again, just on the income from associates and JVs part of it. INR 10 crores this quarter is quite strong. Could you give some sense if there's some benefit or some improvement you have seen in Onkyo and I think D Ten? These are 2 entities where -- you had mentioned last time where you have a lot to probably improve there.

Yes. So as I said, Mukesh, we have seen sort of margin profile improvement across. There is a good improvement in ROKI also. There's a good improvement in TG also, which was, I think, a negative number earlier, which has now been into green. So I think all of them put together have moved -- made this movement from 6 to 10. And Onkyo is still actually for the quarter in red because of some operational issues. Then I'm sure once we see that coming into green, that will further improve this number going forward.

Okay. Okay. So we can probably expect it to continue to kind of do well from here, this INR 10 crore number. And obviously, based on OEM volumes, but broadly, it can continue?

Yes.

Okay. And second question is on the CapEx. Sir, I mean -- so if I look at your net debt numbers from March until now, they're largely the same. You've obviously done the rights issue. So CapEx seems like we are probably at about INR 160 crores, INR 170 crores so far in the first half. So how do we see that going forward? Because we were also expecting some kind of debt to come off with the rights issue that we are doing.

So Mukesh, you are right that we have -- what we have done in our funds we have generated from the right issue, part has been, as I said, invested into our subsidiary -- associate, JV company, which is TG Minda for acquisition of TGSIN. And rest have primarily been utilized in the payment of debt. Actually, around INR 100-odd crores has been used actually in October. And that's why we have been completing our fund utilization. So it is not that the entirety was closed in September. The part has also gone into October. That's number one. In terms of CapEx and other things, because of the business volume growth, basically a little bit amount of working capital also has increased. And that's where I think -- the net debt is broadly while the same, the amount which we have raised of around INR 240 crores has broadly been utilized primarily in debt repayment, some of it, equity and also CapEx and working capital.

Got it. Got it. And just last question is on the TRMN. We have acquired a 13% stake. I mean I think in the past, you were mentioning that you did not want to get a smaller stake and you're looking at probably a larger stake. So is there any immediate plans to increase it further from this 13%?

Yes. So I can't comment on the next step, but that is definitely part of the overall plan. So the first step was to, as -- if you remember, our long-term pending comment at whatever is held outside of Minda Industries by the family companies, we need to transfer everything into Minda Industries. And this was the last piece which was left out to be brought into India. So with this, we actually complete that exercise. So whatever holding was there, that moves to Minda Industries. And that holding -- actually, we had an option to increase our volume from 13% to 30%. So that we will definitely be discussing with our JV partner, and we'll see that -- we'll try to see if we can close it within this financial year.

Okay. And just could you give some other numbers for TRMN apart from the revenue, which you have mentioned is about INR 600 crores? Could we give an EBITDA number?

Trip, do you have it handy?

I have it [indiscernible].

The next question is from the line of [ G. Vivek ] from Goldman Sachs Investments.

Yes. This is GS Investments, not Goldman Sachs. And this is regarding the Harita merger. And it's a case of [Foreign Language]. When will it get completed? And what value addition are you expecting from Harita merger? And what value can it add to Minda Industries? And top and bottom line, yes.

Yes. Yes, I think you are right. It is like a typical [Foreign Language]. But on a serious note, we all know that because of pandemic, we had no [ areas ] initially. And the last hearing we had, we have been advised by the NCLT to publish -- there's a requirement to publish some ad for any objections at all. So that has all happened. So we are pretty hopeful that on the next hearing, which is on 16, and I believe even the Chennai NCLT hearing for Harita Seating System is scheduled in the same week, we should have an approval in place. So hopefully, we should have this transaction closed within this financial year. And then secondly, in terms of the advantages, what we have said earlier also that there are 2 advantages, large -- which is, first, Harita Seating, obviously, while they have been very strong in CVs and tractors, of course, in terms of 2Wheeler seating, they have been servicing only 2 key customers, which was TVS and RE. And once it comes into our fold, we definitely are confident of adding 1 or 2 more customers, and we have been actually working on that with them. No -- passively, not very aggressively because that would be a good operation also in a listed company. So until the transaction is closed, obviously, we have to maintain that distance, and we can't have active involvement in the operations of the company. Secondly, we have also been able to generate some business for them through our customers. One of the Japanese OEMs, we have actually got some business for them. And also one CV customer, we have got added into the productivity. So there have been advantage from both sides. And third thing, we have also started work, which we said initially also, that -- to launch the Harita Seating Systems into our aftermarket channel. We have a very strong aftermarket channel, which is with 600 plus dealers. So we are working with them already. We started working to launch their products into our aftermarket. We see that we give a better growth to that. So overall, our target has been that we should be able to double that company's top line and outperform the industry growth, and maybe in the 4 to 5 years, once we have it in our fold, and that is the growth I think which company has also been expecting. So if you talk to them, looking at it, they have always been sort of getting that shadow of OE because they have been untouchable with others. So we are pretty confident that we should be able to add significant value to Harita. Now secondly, whatever customers Harita has, some of those customers, we don't have like for tractors and like John Deere. They are the global suppliers, et cetera. So there, we do expect to work with them and see that we add those customers or their customers into our productivity or how do we sell our more products, lights, switches, et cetera, to those. So we do have opportunity of cross-selling to each of these customers, and I think that is a bigger picture strategy behind Harita acquisition.

What about Harita Fehrer, the subsidiary?

So that also is part of the transaction. It's part of this listed entity. So it will come as it is.

Is it -- that is also an attractive proposition for Minda Industries? And if so, how? Because that is now mostly into exports, I believe, no?

No. So actually, the 2Wheeler seating is part of larger businesses in Harita Fehrer.

Okay. Okay. And coming to the Minda Industries original business, how do you foresee -- after the setback of COVID, everything is on the recovery mode. The opportunity size keeps on increasing. What's the growth rate we can expect on time to come for Minda?

Yes, I wish I was having a clear answer. It's like almost shooting in the dark to guess what the numbers could be, looking at what the markets are doing, too, because while we are seeing a very, very good demand momentum, the market all has been suppressed for last 2 years because of various reasons and one large reason being migration from BS4 to BS6. So definitely in past, there has been a lot of demand, which was, I would say, artificially or whatever, we were suppressed. So that demand also is expected to come to the market. Second, because of pandemic, there is a very good demand, which we believe is there in the market currently because of personal mobility and process for owning our own vehicles. Obviously, affordability is key. So all these sectors are definitely giving a good momentum to the industry. Now how long will this continue? I think it's anybody's guess, but what we have been saying is very clear, and that's the trajectory we have been working on because end customer sale is not in our hands. So obviously, I would not like to go into prediction what the end consumer demand will be. But if you see quarter after quarter, even if you see this quarter, the OE volumes, absolute volumes have been lower by 8%, whereas our top line is higher by 8%. So there's a clear outperformance of almost 16%. So our aspiration or our endeavor has always been to sort of outperform the industry growth. And that's what the path we have been in the last 2 or 3 years, and we do believe and we are confident that in the next few years, we should be able to continue on that path of outperformance, outperforming the industry growth. Whatever that growth is, we should be able to do more than that.

Yes. This is for Mukesh. For TRMN last 2 years, the gross margin has been in the range of around 25%, 26% and EBITDA was around 8%.

[Operator Instructions] The next question is from the line of Vijay Karpe from Bryanston Investments.

Congratulations on a strong set of numbers. My question pertains to the alloy wheel division. Out of the 3.6 million 2Wheeler capacity, how much share is coming in this year?

So Vijay, as I said, I think it's very difficult to put a number because when you are in a start-up phase and a ramp-up phase, there are a lot of challenges come en route. So we are not currently in a situation or a stable situation where one can actually commit or comment on the absolute number and then get a question on that at a later stage. So I think the way we have been working, I wish that this pandemic ends soon, and we should be able to organize a trip for all the investors and analysts, everybody there. We have built a state-of-the-art, very high-tech plant there. And I'm seeing -- I think you have to see it to believe it. I would say very confidently say this is the best plant which you will find in the country, very highly automated plant. Having said that, to stabilize definitely takes a little bit time because all these things, automation, which we have done in the country, has been done for almost, I would say, the first time. So there will be challenges en route. But once we stabilize, as we said, we should be able to stabilize -- we should be able to commence all the 4 lines by end of FY '20 and take roughly around a couple of quarters to stabilize the plant. Post that, I think it will be fair for you to expect us to give some stable number. Until then, I would like to sort of stay away on committing any absolute numbers.

All right. Then anything regarding on Kosei Minda. I think we have not subscribed to the rights issue, right?

Yes, you are right.

Okay. And my last question, now Maruti has started the third line in Gujarat. So how will that benefit our alloy wheel plant?

So first of all, I don't think they have started that. My information, they are planning to start in next year. But whenever they start, this will definitely have a very positive impact on Minda because I think we were among the first ones to move to Gujarat. And we have set up 5 plants there dedicatedly for Maruti, while they are also serving customers -- other customers from there. But Maruti has been the anchor customer while we have set up, and they had a large investment in Gujarat. So once we see any volume uptick, I think we should be able to ramp up our volumes very fast. But if you see in terms of alloy wheel, as of now, we are almost 100% of our capacity currently, if you see in September and October. So we are currently in process of putting another 30,000 a year of wheel line there. So our capacity will increase by that. So as of now, installed capacity is 120 at Bawal and 60 at Gujarat. We will be sort of increasing that 60 by another 30. So to be prepared before Maruti commences the third line, we should be able to have capacity to sort of support their demand.

The next question is from the line of Siddhartha Bera from Nomura.

Congrats on a great set of results. Sir, first one question was, again, on the other part of the business where we have seen a very good improvement compared to last year, like 54% up Y-o-Y. You indicated that there will be sensors, but I assume that sensors will -- some part of it will be in the last year also. So if you can just help us understand how this strong growth is coming and the other part of which is driving demand here.

So sensors, there is one new product, which is a wheel speed sensor. So what we have done is, it will take 30 seconds to help you understand, is that we have got this line construction in China. So it was not only buying of technology and CapEx [ multiples ]. It was also buying a couple of Korean customers. So what we did was with that newly constructed lines, we have manufactured some volumes of inventory in China and then moved those lines to India. So currently from that inventory which has been produced, we are servicing the Korean customers. And from fourth quarter, once this line is up and running in India, we should be able to start exports from India. So that is there. Then another business, which is Minda Kyoraku, which is our blow molding business, that has also seen a good growth. And the last which is the biggest is our aftermarket division, which earlier used to be Minda Distribution and Services, which is now a division of MIL after merger. So MDSL has seen a very good growth. If you see on a quarterly basis, the aftermarket growth, what we have seen is more than north of 30%. So that is also giving a lot of growth to that segment.

Got it, sir. So this sensor, sir, what will be the -- for the new sensor business, what should be the ramp-up? How to understand, say, in the second half and in the next year, how much ramp-up can happen? Any color you can give on that?

So Siddhartha, again, I think this is the same like 2Wheeler alloy wheel. So we are here -- actually, we are still to commission the plant in the fourth quarter. So once we commission, we should be able to give you a better clarity in terms of volume for next year. Current year, we may not have any significant revenue from these 2 new products.

Got it, sir. And lastly, on this Harita business, I think a lot of our customers in the CV segment are launching new platforms and new models under the BS6. So have we seen any material improvement in our realizations or per product for these new products? Any color?

For Harita?

For Harita, yes, Harita seats for the CV segment.

We won't be able to comment on Harita, honestly, Siddhartha.

The next question is from the line of Basudeb Banerjee from AMBIT Capital.

Congrats on a good set of numbers. A few things as new businesses continue to get added or there is some shifting from associate to subsidiary. So I just wanted to understand. This 8% Y-o-Y revenue growth is clean growth or it's on addition of some new entity coming as a subsidiary from associate as such?

No, there is no entity which we have made from associate to subsidiary. In fact, once this merger is through -- and this merger will take some time, TG and Minda and Minda TG because it will be a court-approved merger. So once this merger through, then almost like INR 70-odd crores of top line will reduce. It will not increase from the perspective that year. Once it becomes associate, we will stop consolidation.

In this quarter, there is one delivered which was not there a year ago.

Yes, you are right.

Yes. And how much did this delivered in terms of revenue? You mentioned in earlier comments, I suppose.

Yes. So around INR 50 crores.

INR 50 crores. Okay. And sir, yes, as some participants earlier said that despite the alloy wheel mix coming down, overall margin has moved up. So it is primarily led by good maintenance of other expenditures. And as Bohra, sir, was also saying that this reduction is structural and permanent irrespective of revenue moving up. So if you can explain like how and what are the stuff you did in the last 3 or 6 months to reduce this as such.

Basudeb, as I said a little while back, please don't take me that I'm going a little...

No, no, no. [indiscernible], sir.

So we have done a lot of actions in past. So obviously, when we are talking of other expenses, there is -- a big aspect is traveling. So traveling in this pandemic is almost negligible. Another is your various rents, which we see our rental expenditure almost annually is around INR 80 crores or so because of various warehouses and various locations spread out the country. We have a good reduction there. We have got a lot of consultants, auditors, advisers, everywhere, lose the fee. And wherever we have reduced, mostly, we have tried to ensure that we'll do for full year. So that is what I was saying, that the large part of the other expenses or the reductions we have seen in Q2 ideally should continue broadly moving to the next couple of quarters as well.

Okay. So a couple of quarters. And sir, as input commodity prices have been increasing for many OEMs as such, so your gross margin is also largely stable. Do you see any risk to [ input parity ] pricing for you in the forthcoming quarters as such?

No, there is -- I won't say this, Basudeb, but definitely, in a price -- when a price increases, there is always a lag between a pass-through because most of the contracts we have -- whenever there are major contracts like alloy wheel and all, it's a pass-through with a 1-quarter lag. And we -- and on a conservative basis, we don't account for that increase unless we have an approval from the customer. So there might be a possibility in increasing scenario that you may have a little lower or a higher cost in the quarter and get recovery in the coming quarter. But on a full year basis, because most of our contracts is structured in such a way that either we have a quarterly price adjustment or somewhere -- actually, somewhere annual. So on an annual basis, it should ideally average out, and we should not have any material impact to our financials.

That's good, sir. And in your presentation as per the cash flow statement where first half investing cash flow is around INR 160-odd crores, how much of it is in investments and how much is in the CapEx?

So large part is in property -- in CapEx and also the investment in TG Minda and Onkyo. So we have equity infusion of almost INR 44-odd crores into our associate companies and I think almost INR 150 crores in our CapEx, which is primarily into the alloy wheel project and the sensor project and also plus some small sustaining CapEx also or replacement CapEx of roughly around -- which includes around INR 50 crores of such CapEx.

So when should we see the year end with total investment and total CapEx this year?

So on an overall basis, we should be somewhere around 250 because the large part of alloy wheel CapEx, while it has happened in first half, a little bit still pending because 2 lines of that we have just ordered. It's yet to arrive which will come in -- maybe around January. So putting that in totality, we should be somewhere around INR 250 crores for the full year.

And the investments?

Investment, as I said, this -- the TRMN, which we had just announced, INR 22.5 crore will come. And we are -- we will talk to where we're at. We started talking to our partner to take the stake to 30% to make -- to be a meaningful partner and have an active role in the joint venture. We already have agreed for having our Deputy Managing Director position in that company, TRMN from Minda. So we will be having active roles. So once we do that, if that happens, then that investment in TRMN should be around INR 65-odd crore in total.