Uno Minda Limited (532539) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Minda Industries Limited Q3 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 the 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. Thank you, and over to you, sir.

Thank you very much. Good afternoon, and a warm welcome to all of the participants. I hope you and your near and dear ones are all keeping safe and healthy. On the earnings call today, I am joined by my colleague [indiscernible] to talk about our existing EV portfolio and switches for EV product pipeline; Mr. Ankur Modi; and Mr. H.S. Rana. We hope you have had a chance to look at our financial results and presentation that is uploaded on the stock exchange as well as the company's website. We 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. Starting with the industry update. As you know, the auto industry performance for the quarter from October to December continued its growth momentum, with October being one of the best months during the quarter. This was backed by sustained retail sales momentum post festivals, low channel inventory and a soft base and with rising preference for personal mobility and continued positive sentiments in rural and semi-urban markets. Manufacturing and distribution activities have been getting ramped up gradually since second quarter, in line with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production agency. Nevertheless, the most automotive industry segments have reported successive improvement in offtake throughout the second half of 2020 on the back of initial bounce provided by pent-up demand, followed by the preference for affordable personal mobility and continued rural resilience. e-commerce and the need for last-mile connectivity have served LCVs well throughout, with trucks being the latest category to rebound amid pickup in the freight rates, amid normal economic activity domestically. On the flip side, segments related to public transport, such as buses and passenger 3Wheelers, continue to lag heavily due to closure of schools and offices for most part amid ongoing concerns over social distancing, which also has started off easing to some extent. Commodity prices have seen a sharp increase during the quarter and will remain a headwind going forward until the commodity price adjustments are aligned with our customers. The proposed PLI scheme of INR 57,000 crores for the auto sector was also a major development in the latest quarter, with the intent of the scheme for auto sector being furthering the Make in India initiative and making it also export-oriented from largely an import-dependent industry for some critical components. Overall, the demand is expected to be sustained on the back of rural markets which have higher income visibility due to good monsoon, higher [indiscernible] rates and better MSPs. The mobility demand surge driven by COVID risk is expected to normalize as public transport restarts across regions. Overall, the medium- to long-term outlook looks positive for the industry. Moving on to budget updates. While we all know about the budget announcements, so let me highlight about a few pointers from the budget that pertain to us and the auto industry, and I'll try to be brief. The voluntary vehicle scrappage strategy policy has been included in the budget. This will encourage the consumer demand towards new and environment-friendly vehicles. Similarly, the Ministry of Roads and Highways had proposed a green tax on all vehicles for reducing pollution, and this highlights the efforts of the government to shift the energy consumption towards the renewable sources. All these are good lead indicators that the reforms are going to broaden the scope of work for Minda Industries. The Finance Minister has also announced that custom duties on specified auto parts, like ignition wiring sets, safety glass, parts of signaling equipment, et cetera, will be hiked to 15% percent. This will certainly promote domestic manufacturing of automobile components in the country and reduce the quantum of imports. Volumes in the CV segment is yet to recover fully from the COVID, and the government has given it a welcome push by announcing a new scheme worth INR 18,000 crores to support augmentation of public bus transportation services. With Harita sitting in our portfolio, this augurs well for us, and we will be monitoring the situation closely to see how we can benefit the most from these opportunities. Overall, we believe the budget was more focused on building future India with a lot of emphasis on infrastructure building, which is a key necessity and ingredient for industry to flourish and create employment opportunities to meet the needs of growing India. Now I would request our colleague, Mr. Amit Jain, to talk about our key products. Amit, over to you.

Yes. Thanks, Sunil. So in line with [ macro ] trends of what's called CASE, connectivity, autonomous, shared mobility and electrification, we at Minda Industries have also been tracking these macro trends and more specifically for India, looking at how these trends stack up. And one of them, and the most important for us today, is electrification. And we -- in this call, I'll try and mention a few points about how Minda looks at electrification and what we are doing here. On electrification, if you refer to Slide 4 in the deck, we have been working to upgrade our existing group products to meet requirements specific to electric vehicles like low energy consumption, light weighting. We have several products in this segment that we have gone into production with, which includes LED headlamps, tail lamps, side indicators, low-current switches and electronic horns. We've also launched a few new products for electric vehicles from our range of products like sensors. We have launched new sensors specific to electric vehicles like APS or accelerated position sensor, brake pedal sensor for regenerative braking, EV battery temperature sensors and also vacuum sensors for EV brake systems. If you refer Slide 5, over the last couple of years, we have also been working on a complete new range of products for electric vehicles which were earlier not a part of our portfolio. These products are synergetic to our group and are mainly in the area of electrical and electronics. These products are mainly focused on the low-voltage electric vehicles, which are primarily for 2Wheeler and for 3Wheelers. We believe that this segment of 2Wheelers and 3Wheelers will have the largest and the quickest adoption in the electric vehicle segment and primarily because there is less dependency on charging infrastructure and as well as the range of these vehicles would be enough for more city driving conditions. On -- our focus in these new products for 2Wheelers and 3Wheelers include ECUs, DC-DC converters, on-board and off-board chargers, telematics control units and smart plugs. We've also been working on developing battery management systems for lithium-ion batteries along with our technical partner, Auto Motive Power, in the U.S. Out of these range of products, ECUs, telematics control units and spark plugs are already in production, and they went into production this year. And a few products like battery management systems and on-board chargers will go into production in the next few months, mainly in the next financial year '21-'22 for some of the major OEMs in India. We believe the FAME II policy and the entry of established players into a very fragmented EV market currently will see a very strong growth of 2-wheel and 3-wheel EV vehicles. Most of our products like ECUs, telematic control units, smart plugs and battery management systems will -- can also be upgraded for the 4-wheel segment. So we see some strong future growth of all our platforms in these segments also. So I think that's all from my side on the electric vehicle outlook from Minda Industries. Over to you, Sunil.

Yes. Thanks, Amit. So while we all know that the EV volumes in India are not significant as of now, and that most of our products are agnostic to type of energy a vehicle operates, it is an important aspect to always stay atop, and it will also help us capture additional opportunities the EV segment will provide to us. Coming to our performance. You may refer to Slide 8 and 9. At a consolidated level, during Q3 of fiscal year 2021, the company reported a revenue of INR 1,802 crores as against INR 1,327 crores for Q2 of FY 2020, registering a growth of 36% year-on-year. This, as you will note, is significantly higher than the overall industry volume growth of 17%. The revenue for Q2 fiscal year 2021 was INR 1,465 crores, implying a quarter-on-quarter growth of 23%. We have witnessed growth across almost all of our product portfolio. Healthy demand, coupled with higher kit value per vehicle, is enabling us to continue to outperform the industry. EBITDA for Q3 FY '21 was at INR 264 crores in comparison to EBITDA of INR 163 crores for corresponding quarter, i.e., Q3 of FY 2020. The EBITDA margin also has improved significantly on a year-on-year basis from 12.3% to 14.6% in the current quarter due to better operating leverage and sustained cost control. EBITDA for the preceding quarter, i.e., Q2 of fiscal year 2021, was at INR 215 crores. And as you may note, the EBITDA margin is same as in Q2 despite the full impact of manpower cost reinstatement, which happened in the current quarter. The profit before tax for Q3 FY 2021 was INR 164 crores as against PBT of INR 78 crores in Q3 of FY '20, registering a growth of 110%. Depreciation has been higher as new plants of alloy wheel and sensor has been commissioned and capitalized during the quarter. Finance cost has increased marginally quarter-on-quarter basis on account of interest on loan for above expansion, which were capitalized in last quarter. The profit after tax which is Minda Industries' share for the quarter was INR 108 crores as against INR 45 crores in the corresponding quarter last year, an increase of 142%. We are happy to communicate that Board has also declared an interim dividend of 17.5% of face value to reward and distribute wealth to its shareholders. Moving to the product lines. You may please refer to Slide 10 and 11, starting with switching system. The segment achieved revenue of INR 631 crores for Q3, contributing about 35% of total consolidated turnover. Beside industry growth, demand for premiumization in switches continues to drive our growth in the category with new orders received for various switches like steering wheel switch, second gear switch, driver side switch for new customers and also some power windows, sunroof switches, et cetera. So we have been adding new customers for switches, which currently we have not been serving. In our 2Wheeler switch, we have acquired a new customer, John Deere, with orders for USB chargers and ignition switch. Moving to lighting business. It achieved a revenue of INR 426 crores for Q3, contributing to 24% of our total turnover. We continue to receive more orders for LED lighting in 2Wheelers, commanding a better pricing with recent order coming from Yamaha. As commented earlier, we will need to set up a greenfield plant for meeting increased demand in 4Wheeler lighting business. Our teams are working to build a master plan for the same. Moving to Light Material Technologies (sic) [ Light Metal Technology ] or LMT business, which has achieved revenue of INR 270 crores for Q3, contributing to 15% of our total turnover. On our 2Wheeler alloy wheel project at Supa, the third line have also been commissioned. Previously, 2 lines had been commissioned in end of Q2 FY '21. We have also started commercial sales from the lines already commissioned with revenues of around INR 30 crores in the current quarter. The last and fourth line is expected to be commissioned by March, and we expect stabilization to take a couple of quarters thereafter to reach optimum utilization levels. Moving to acoustics or horn business. The business has achieved a revenue of INR 188 crores for Q3, contributing 10% of our total turnover. Our European subsidiary, Clarton Horn, has received new orders for electronic horns from Korean customers and our U.S. customer. Moving to other product businesses. It has achieved a revenue of INR 288 crore for Q3, contributing to 16% of overall top line. The other product revenues mainly comprises of sales from sensor business at around INR 55 crores, a similar amount from blow molding parts business, and around INR 33 crores from i-SYS. We have received orders from our recently commissioned temperature sensor also for Yamaha. For our wheel speed sensors as well, apart from Korean market, we are in process of getting approvals and new orders from the Indian customers. We have healthy order pipeline for our blow molding parts business with new orders from another Japanese customer. In fact, our current capacities are not sufficient to meet the demand order. Hence, we would be required to enhance our capacities. We will discuss the same order in our subsequent slides. Total borrowings as of December 31, 2020, were INR 1,083 crores compared to INR 1,152 crores for Q1 FY '21, while we were able to reduce our working capital as at 31st March '21 last fiscal year-end, which was also positively impacted due to last 10 days being nonoperational due to COVID with increased volumes. And there has been increase in working capital levels with respect to March '21 and also addition of new working capital in our alloy wheel Supa plant. We have also invested around INR 250 crore of CapEx in year-to-date. Despite all the same and supported by proceeds from the right issue, the borrowings have reduced. And approx INR 190 crore of cash was available as of December 31, 2020, resulting into our net gearing at around 0.37. Moving to Slide 12. In terms of our revenue pie for the quarter ended December 31, 2020, OEM business accounted for 86% of total revenue, and aftermarket business is around 14%. Our aftermarket segment continues to see the outperformance, as mentioned in the last quarter, with sales in current quarter improving more than 50% with respect to corresponding period last year. I'm happy to mention here that our direct aftermarket sales in the last quarter has reached annualized revenues of close to INR 1,000 crores per annum. In terms of segment mix of 4Wheelers, have contributed around 52%, while the rest is for 2Wheelers, which is at 48%. Moving on to the next slide. In continuation to our update on consolidation of business of Minda TG and TG Minda in previous quarters and to reap efficiencies of consolidation, the Board has approved dilution of 1.1% stake in Minda TG Rubber Pvt Ltd. by a fresh issuance of shares to TG Japan, our JV partner, instead of sale of shares by the company, as it was resolved earlier. Overall, it does not have any impact on the strategy which we have informed in the last quarter. Moving to Slide 14. With regards to Harita Seating Systems, the NCLT, Delhi has pronounced its decision for merger this week, and we are awaiting copy of the final orders from NCLT, Delhi. In NCLT, Chennai, the date for pronouncement of decision is yet awaited, wherein the hearing has been completed. We expect the date for pronouncement of decision in next few weeks. The Minda Kyoraku's CapEx. As we referred a little while back, our blow molding part business under our subsidiary, Minda Kyoraku, has been doing extremely well with healthy order book. Considering the orders already won and expected orders, we would be required to enhance our capacity to meet these orders. Further, we also need to have an in-house paint shop facility. In view of the above, MKL will be incurring expenditure of around INR 87.3 crores for enhancement of capacity and setting up in-house paint shop at Bangalore. In order to ensure we don't have 2 facilities in Bangalore wherein in the current plant, we don't have the space for setting up a paint shop in the current location, we will be setting up a new greenfield plant. And we will move the existing facility also to the new locations. We'll have all the operations in one location but with a bigger space and with further potential to increase capacity should there need be in the future. This would not require any investment from parent company, which is Minda Industries, as Minda Kyoraku will be having sufficient cash to fund the expansion. The expansion will be completed by April '22. That's all from our side, and now we can open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Nikhil Kale from Axis Capital.

Firstly, congratulations on a very good set of numbers. Sir, my first question was on the top line. So I think in terms of our segments, the switch division has clocked almost 40% plus kind of a Y-o-Y growth. So if you could just, sir, provide more color on what has driven this growth? Is it more on the EV side or on the 2Wheeler side? And how do you see this going forward?

So the growth in switches, Nikhil, as you rightly mentioned, it is north of 30%, 35%. And the growth is primarily in both in 4Wheelers also and in 2Wheelers also. It is supported with new customer additions, as you would have noted in the past few quarters, due to investment -- due in part to new customer additions in 4Wheelers. And also, in 2Wheelers, we have added a lot of more components, a, definitely, it has benefit of BS6. And B, it also has benefit of new products like the side stand switch, which we have been speaking some time back, which has restarted gradually now. So with all this, there has been also improvement in our share of business with some of the customers. So I think all of the factors have helped.

Okay. And just on a related part there. You mentioned a few new orders on the switch side. So I mean, by when can we start -- can you expect those to kind of make to revenues in the next couple of quarters? And what would be the quantum? Is there any significantly big order there?

So first of all, Nikhil, all these businesses which we speak about for the orders, normally, they are like 18 to 24 months ahead because once you get a business, it's normally for the new production line. And in terms of value, the various components which we just spoke about, this was primarily -- it's not that they are new products, but they are like products which we are -- we seek our business from another customer whom we have not been supplying, say, for example, Mahindra or MSIL. Some of the switches which we were earlier not supplying, they have been added. And total order value for this component is roughly around INR 60 crore a year.

Okay. Okay. And my last question was on the margin front. So again, on the margin front, I think it's been a very good performance. And I know that you don't get into segment-wise details. But just if you could just provide some qualitative color. Have you seen a broad-based improvement in margins across all segments? And specifically on the [ PV-LI, ] where you mentioned in the past that the margins there, which were in the high 25% plus kind of margins, they will not sustain and they will normalize. So has that started to happen? I believe you had some -- mentioned pricing in certain products that you are supplying to Maruti. So has that started to happen? Or is it still some way down?

Yes. So that has started to happen but with the increase in volumes, if you observe, Nikhil, that there is definitely operating leverage, which helps. So with the significant growth in sales, while there have been efficiencies which we have brought in the system by reducing the operating cost or reducing the -- what we call the prices of the material we procure to whatever extent we could do, there have been efficiencies which we have been able to bring. I think I touched base last time also in terms of, specifically, this alloy wheel. So alloy wheel will be -- in terms of operating cost, we will be actually in the top decile in terms of global operating cost. I think we are being benchmarked by the others, the way we run our alloy wheel plant. So that also gives a lot of advantage in terms of the margin. And in terms of overall number, it still enjoys the kind of margin you spoke about despite the new businesses which are coming at the competitive pricing.

And just about the other segments also, are you seeing margin improvements there?

Also, other segment also, if you see the overall margin, margin profile has improved. But if I may have to pick a segment which still there is scope for improvement, it is our lighting and acoustics, the investment part.

The next question is from the line of Ronak Sarda from Systematix.

Congrats on a great set of numbers. Sunil, first question, on the LMT segment. I mean, if I knock off the INR 30-odd crores incremental top line from 2Wheeler plants, the Y-o-Y growth is largely flat this year. So is there some kind of supply chain constraints are we facing? Because Maruti's product mix had largely normalized during the quarter.

No. So if I say only 4-wheel, so 4-wheel segment, which is Minda Kosei, right, so Minda Kosei compared to last year has done significantly more. I think their total sales is higher by more than 30%, exactly 33%, to be precise.

Right. Okay. Okay. My mistake.

Maybe we can cross-check your numbers separately in that.

So the 4Wheeler segment has seen almost kind of 33% growth, and then this fairly looks okay. Perfect. Okay. And secondly, on the balance sheet side and cash flow side, if you can help us understand what are the kind of CapEx you're looking for current year and next year now, given we have added the blow molding CapEx to it? And would we kind of generate free cash flow during the year? Or what's the sense given the working capital normalization? So how do you see the cash flow side for the full year?

Yes. So Ronak, as I said this awhile back that in terms of, first, the CapEx, I'll take your 2, 3 questions one by one. So current year, we have done a CapEx of roughly around INR 240 crores. And I think overall, for rest of the year, it should be around 300 plus/minus few percentage points. And that's what, I think, we have been guiding earlier that we are not cutting our growth CapEx because large part of this CapEx is that it is a growth CapEx, primarily sensor and alloy wheel projects. As far as your future CapEx goes for next year, normally, we comment on it along the annual budgets because we have just started our budgeting exercise. So while I may not be able to give you a broad number now, but definitely, we will be free cash positive in the next year. And also in the current year, I'm pretty confident that despite we have got working capital, which has sort of taken back -- so if you see our last year, we had a huge free cash flow, as I said primarily because the last 10 days of lockdown, I'm sure every company has been a little conservative in releasing the payments. So while there has been receipts, payments were a little controlled away. So that had led to maybe a normal situation at the end of the year, which led to some better free cash flows. But that cycle has, a, reversed. B, with the increase in volumes, that is also taking a little more working capital. And also, when you start a new plant like Supa, which is like a huge plant, then also you need what we have called both in terms of debtors and inventories. So all these things have taken a lot of money. But if I have to take out my project CapEx, I'm pretty confident that end of the year, we should be free cash flow positive.

Sure. Sure. And the final question, I mean, on the electric vehicle portfolio, which you just highlighted, so what's the sense? I mean...

[Operator Instructions]

Sure. Sorry. So looking at the EV product portfolio, what's the sense in next 3 years there -- could this be in terms of contribution to overall top line? Do we have a target in that sense? And is it equally -- will it be equally profitable to the current margins? Or should we see this as slightly dilutive in the near term?

So Ronak, I completely understand the logic of asking this question. But if I may say so, honestly, it will be a bit premature for us to comment on the kind of revenue we have or the kind of margin we have for the future because the EV market itself is evolving. And as we see today, it is almost negligible. So I'm sure, next few years, 4, 5 years, the market will evolve in itself. And while we have sort of chosen to show a big picture today, is that we all know that most of our products are going in almost all the EVs, barring filters. Almost all of our products will go into EV or non-EV. There are traditional properties which we are working, and that's what we thought we shared for. Maybe I would request Amit to share his thoughts on what does he see 3 years hence.

Yes. Thanks, Sunil. So I think, from my perspective, the focus of products that we have in terms of EV have been in places where we believe that there is enough government push to discourage imports, right? So there is now these OEMs who are wanting local products, and we're focused on some of the high-value products. If you look at it, we are not looking at low-value products, but we are looking at high-value products. And we believe that the margins in these should be decent. As Sunil said, can't comment too much about it right now because they also are under pressure from Chinese suppliers and stuff. And we are evolving. We are adding more features, and we are trying to make sure that we are able to give better value to some of these OEMs. And I think, at the same time, the whole EV scene is going to evolve. We're trying to find more value of people investing in the EV, which is today more expensive than their IC equivalent. So there is this whole evolution happening with respect to price, features and what the customer would demand. But our focus is look at the traditional OEMs and their entry into EVs, look at high-value products than low-value products and also look at where we can counter their imports through the subsidies and others that the FAME II policy is pushing for. So I think that's what I can share right now.

The next question is from the line of Ashutosh Tiwari from Equirus Securities.

Congrats on a strong set of numbers. I mean, it's really amazing number that you delivered. Firstly, I understand lighting growth because of the increasing trend into LED and...

[Operator Instructions]

Is it better now?

Yes. Slightly better.

Yes. So I'm asking that if I look at the switch growth that you have mentioned, both 4Wheeler, 2Wheeler has grown very strongly, especially in the 2Wheelers, which is, what exactly is the content increase because of this -- you mentioned the side stands switch and BS6-related increase in the switching cost, basically. I mean...

So Ashutosh, you know that this exercise we normally do at end of the year in terms of what if the, product-wise, kit value increased, so I'm sorry, I'm not going to share exact details as of now.

But I mean, the question is because, I mean, we have seen almost 35%, 40% growth in the switches vertical Y-o-Y. And obviously, industry has not grown so much. So I mean, is it the addition of switches? Or are the same switches -- just basically, I mean, there is a content increase over there?

So it's both, Ashutosh. As I said, I think last time also, we said that we added some switch like a gear super switch, which was not there earlier. So we have been adding more switches, which increases our kit value also and also addition of newer customers. So it's both which has helped.

And switches generally -- basically, compared to lighting, it's obviously a high-margin business. That's why probably it's getting some benefit in margin as well.

Yes.

And sir, on the 2Wheeler alloy wheel side, we did INR 30 crores, as you mentioned in the last quarter. Going to next year, what kind of revenue you can assume from there based on whatever ramp-up we are seeing in the segment? Also, you mentioned new orders. So is it from same OEM or a new OEM we added?

So we have actually been talking to other OEMs, and we have been sort of almost at the verge of closure. And so I think as of now, while our capacity is 4 million, and this will get ramped up, as I said, by mid of next year to capacity, almost September. So if you see 6 months, we should get a peak revenue, which should be something around INR 230 crore, INR 240 crores, plus at 6 months, if I take the average of around INR 100-odd crore, INR 150 crore, then we should see our revenue next year in the range of INR 350 crore to INR 400 crore. And also, in terms of capacity, the kind of response we are getting from new customers, we might look to pull forward our second phase, which we said that we will announce maybe after a year or earlier. But considering the various requests from customers for the 2Wheeler alloy wheel, we actually are evaluating internally. We are not taking a decision, and that's why I did not cover initially. We might look to prepone our second phase of the Supa plant, which goes from 4 million to 6 million wheels.

Okay. Okay. And sir, in this -- basically, you have mentioned a new order from Mahindra and Renault, I believe. So that is related to switches or lighting?

Mahindra, I remember it was for switch. Renault, I don't think I mentioned.

John Deere for the 2Wheeler switches.

And sir, lighting, I mean, the increase is mainly driven by the new orders that we got from Maruti. And also, LED content increased, right?

No. So the new orders, as we said, Ashutosh, will get commercialized only in FY '22-'23. And as I mentioned that the kind of orders we have won, I think last call I also mentioned, that current sales are roughly like INR 400-odd crores, and the new business expense is like INR 200-odd crores. So we will need to expand our capacities. And the team has been working, as I said, a little while back. And we might need to set up another facility in Gujarat. People are working on it. As of now, it has not been put up to Board for consideration. It's still on the papers. But most likely, we will need to sort of set up a facility for meeting the increased demand, which is definitely, I'm sure, you'll appreciate, is a good sign that the business is sort of getting newer and newer sort of volumes to grow.

And sir, lastly, on this 4Wheeler alloy wheel order from Korean OEMs, when will that delivery start?

So that, as we said, this 4Wheeler alloy wheel -- I mean, you meant 4Wheeler, not 2Wheeler?

Yes. 4Wheeler, yes, 4Wheeler.

Yes. So that is expected to start somewhere around the festive season this year, which is linked to their model launch, which is slated for this festive season, upcoming, in FY '21 -- calendar '21.

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

Congrats on a great set of results. Sir, first question is on the -- again, on the EV side. So will it be possible to share the, I mean, per vehicle, how much content will we be making, including the products which we have shown?

Amit, do you want to guess now or...

Broadly, sir, I mean...

I think it's hard to tell, but -- because I think there's various combinations there. But on an average 3Wheeler, for example, I'm hoping to see anywhere from -- I mean, if I include all the group products, maybe it's a larger number, right, over 15,000. But I think on the new products that we possibly would be adding, it would be in the 7,000 to 10,000 ranges. I mean, I'm talking of kit value, where we would be contributing to that particular vehicle. But still, in the works. So this is just very, very broad directionally.

Understood. And what other things have you included here, so sensors, LED, light switches and components? Or what other things you're trying to introduce?

No. I think when I'm mentioning that what are new products in the range of anywhere between 5,000 to 10,000, I'm talking of products that we don't make in the company today, but we would be looking at introducing going forward.

Okay. Understood. So basically, the products under development, which we have shown in the slide, that's probably what you're indicating?

That's right. That's right.

And coming also -- and these products -- so we will be having our own IP for these products? Is that the correct -- is there something that you want to share?

You said on IT?

IP, IP. IP rights, intellectual property rights. So we will have the IP rights for these products also?

Yes. Yes, we would. We would. These are all homegrown products for which, yes, we would have the intellectual property rights.

Understood. And anything on the passenger vehicle side also you are looking? Or this will be largely focused on the 2, 3Wheeler segments?

I think as I mentioned some of these products, when I look at, say, things like smart plugs, things like battery management systems or I did mention the TCUs or telematics control units, could be used both for 2-wheel, 3-wheel as well as 4-wheel. Other products like chargers and others would need considerable amount of redesign to be used for 4Wheelers. So that is something that we have in our road map, but it's too early for me to talk about their development.

Understood, sir. And lastly, on the overall, I mean -- directionally, the 3 categories which we have shown production development and study, I mean, some time lines can you share? Like where we will start, I mean, booking revenues for these products, say, in the next 4, 5 years?

So I think a few of the products that I've already mentioned, I think if you look at the front colors which have already gone into production, so we did some volume this year. Obviously, the -- all these OEMs are just picking up. So they are not doing great set of numbers for me to talk about. But some of the other projects, which I said are under development, which were highlighted, all go into production in '21-'22. So by mid of '21-'22, they would go into production. Products that I've mentioned under study, I believe, are 1.5 years out right now.

Okay. Great, sir. Lastly, on the sensor side. So sir, we have been indicating that sensors is likely to ramp up much strongly. So are these centers for electric vehicles in addition to the ones which we are already planning to ramp up? Or this is included in the sensors which we have talked about in the past?

I think this would be included in the sensors that we have talked about in the past. But these are maybe, right now, not a great deal of volume to be able to also talk about as a separate set. But I would imagine if Sunil's mentioned numbers, this wouldn't be included in those.

Yes. It is there, Siddharth. So as you have been saying, so sensors actually have done, I think, one of the best in the segment. So compared to last year sales, Q3 versus this, 2-, 3-year sensors sale is almost double in terms of revenue.

Okay. And sir, annualized, how much we'll be doing, sensors? And how should we look at the ramp-up now?

So from an annualized number of INR 130 crore, INR 120 crore, we are over INR 200 crore now.

Okay. Okay. And that should go up to what level of...

As we said, over 3- to 5-year period, our overall objective has been to take it to a range of INR 400 crores to INR 500 crores.

The next question is from the line of Vimal Gohil from Union AMC.

Congratulations on a great set of numbers. Sir, my question is on -- first question is on LED. You seem to be doing really well out there, despite some of the competition over there is extremely high. And we have -- we already have some well-entrenched suppliers in large OEMs like Maruti, and I'm talking of Japanese suppliers. So how do you intend to counter that? That's my first question. Second one is on account -- on the P&L. I see a sequential decline in the share of associates. So what should we read over there? And if you could just comment on your gross margins that despite raw material pricing pressure, your gross margins were in good stead. Was it because of mix? Or is there anything else to read into it? And last one would be, if you could just comment -- make your comments on the PLI. How is Minda Industries looking to capitalize on the impending opportunities going forward?

Yes. So thanks, Vimal. I think you have 4 questions, and let me try and answer all 4 of them one by one. Going by the same sequence, you said how do we counter the LED business, and there is a lot of new entrants. So as we have been speaking, Vimal, for past couple of years, that the lighting is the most competitive business in India, where we have all the global majors in the country. We talk of Lumax with Stanley or Motherson with Magneti Marelli or [indiscernible]. So you think the name, and I think almost all the global lighting manufacturers are there in the country. And everyone has some technological tie-up overseas globally. But we have been holding our fort without any global tie-up based on, on our own. And that is why, if you remember, last year, when we have acquired Delvis, the whole strategy for acquiring Delvis was to fill that technology gap which we have been observing. And once we filled that gap last year, you would have seen that -- the kind of businesses we have won, and they are all competitive businesses in the country. So we are in a competitive landscape where we have to deal with not only the new players but also the existing players. And I'm happy to say that we have handled that pretty effectively and efficiently, to increase our share of business in the lighting segment and garner newer business, which is also primarily from the Japanese OEMs. That's on the LED. Secondly, your question was on share of associates, why it is going down. Yes, in associates, last year, I think last quarter, we had INR 10 crores and this quarter, roughly INR 9 crores. There is a drop of INR 1 crore there. This is primarily because of a couple of businesses. Again, we have faced some challenges, as in the past. We have seen the improvement. But there were a couple of businesses where, because of the sudden demand, et cetera, we had to airlift material. There has been a significant logistic cost and some material price hikes, which is primarily in 2 businesses, which is Minda TTE and Minda Onkyo. So these 2 businesses, we have faced some challenge in terms of profitability and maintaining the supply chain demand and also had some significant costs via airlift of the material. That's on the associates. And in terms of gross margin, yes, your point is right that we have been able to withstand the storm, primarily because, a, we have -- if you see, the kind of inventory in the pipeline is almost like 30 days or so, which does help you. And as I said in the beginning, we do have these kind of headwinds going forward in Q4 because the price adjustment with the customers normally has a lag of a quarter or a half year or a year when dealing with some customers. So adjustment has happened in January or in April. So going into next quarter, we do expect some -- to face some headwinds. And currently, we are working on it, how to utilize those headwinds, how do we address -- proactively request the customers for price adjustments. But specifically on Q3, yes, we have been able to sort of face the challenge of spikes. And as you know, the spike actually happened gradually. So it is not that the full quarter we have seen the price increase from day 1. Yes, we exited because of a high price. So there definitely is a benefit of, a, the low-cost inventory to enter into the quarter and also the kind of -- some negotiations or renegotiations we have been able to do and also some inventory which we have been able to procure on a timely manner to sort of be at the price high coming on our books. So that's on the gross margin. In terms of PLI, first of all, definitely, I can confirm that whatever are the boundary lines which have been drawn for PLI, we qualify almost all the conditions. We are all waiting to see what are the contours of the scheme. But definitely, the 3, 4 key parameters are the policy's components on the scheme, which is maybe a global champion scheme or an export-oriented scheme. So we are already there. And once the schemes are announced, I'm sure it will give a bump up to all the companies in the country, not only Minda, where it will enhance the competitiveness globally. So while the government is giving a subsidy, I'm sure, the idea for that subsidy or support is to be more globally competitive. Yes, part of it, you would like to retain to your bottom line. But I'm sure some part of it, we will try and see to garner more business globally. And we are working with a lot of our customers irrespective of the PLI's claim. So how do we make India as an export hub? We have set up our marketing team. We enhanced our marketing efforts in ASEAN. And now we will be soon setting up another office in Thailand. And we have, what we call, increased our marketing efforts in Europe, as we mentioned earlier. And we are working on restructuring our marketing team in Europe. So to see how do we get more pie of export because we have long-term relationships with our customers in Europe and ASEAN, but somehow we have been limiting ourselves to only few products. The strategy is now not only to get new customers, but whatever existing customers we have, how do we sort of market them more and more products. And instead of catching new customer, existing customers since we are already there, the idea is to be competitive there and provide the quality, what they are looking for and export from India. But as I mentioned, this is something which you start today, and you work with the customers and you get into the business cycle for the new model. So it takes something like 2 years to 3 years. So it is not something that today PLI's team comes and tomorrow, we'll start supplying. I will have its own time line. So that's the overall big picture on the export and the PLI scheme.

Fair enough, sir. Sir, just one last question. I missed out on the gross debt number that you gave. Could you just repeat that for me, please?

I think it was INR 1,080 crore or something.

Okay. Okay. Fair enough. Fair enough. And that has come down, right, as compared to what we had in March because...

Yes. Around INR 100-odd crores.

[Operator Instructions] The next question is from the line of Mukesh Saraf from Spark Capital.

Firstly, sir, the question is, in general, on the CapEx intensity that we have seen in the last 15 years. And obviously, our ROCE has kind of dipped even this year significantly. So what is the kind of thought process there? Because in the plan, what you have been telling us so far, is to now sweat out these assets and get the ROCEs back on track. So is there any change there given that now we are looking at, again, CapEx around MKL? And probably some of these new products that you would -- that you've shown, especially on the EV side of it, that there are some of the product under development and under study. So is there any big change in this next 2-, 3-year CapEx plans and how the ROCEs can kind of improve again?