Uno Minda Limited (532539) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Uno Minda Limited Q4 FY '23 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 risk and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. Now I hand over the conference to Mr. Sunil Bohra, Group CFO. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and a warm welcome to all the participants. On the earnings call today, I'm joined by my colleague Ankur Modi. We have uploaded our financial results and investor presentation for Q4 FY '23 on the stock exchanges and our company's website. We hope everybody had an opportunity to go through the same. I will first start with the industry updates and overview, followed by our financial and operational performance for Q4 and FY '23. Post that, we will open the floor for Q&A. India remains one of the fastest-growing economy in the world despite decelerating global demand and tightening of monetary policy to control inflation. India stands tall and steadfast emerging as a beacon of resilience in the global economy. The overall growth is estimated to be 6.9% for full year with real GDP growing 7.7% year-on-year during the first 3 quarters of fiscal year '22-'23. Growth was underpinned by strong investment activity bolstered by the government's CapEx push and buoyant private consumption, particularly among high-income earners. Income -- inflation remained high, averaging around 6.7% in FY '22-'23, wherein recently, the WPI has went into negative with higher base effect. This should lead to continuation of the pause in interest rate hikes. The current account deficit narrowed in Q3 on back of strong growth in service exports and easing global commodity prices. Speaking about auto industry, the automobile production achieved robust growth of 13% in FY '23 with growth witnessed across all vehicle categories. Passenger car segment achieved highest ever production cropping 4.5 million for the first time. Prestige growth was a function of series of new model launches and better product availability due to the easing of supply chain. The demand for high-end variants and premium SUVs remain robust. After 3 consecutive fiscal years of headwinds, 2-wheeler category also recorded growth of 10%. However, production volumes are still significantly lower than pre-pandemic levels. There is a weakness at the lower end of the market as visible from sale of smaller cars and entry level 2-wheelers. The industry grew despite rising interest rates and inflation reducing disposable earnings. Commercial Vehicle category 2 registered healthy growth of 29% in FY '23 and is close to the previous peak of '18-'19, supported by a healthy pickup in macroeconomic activity. Over the quarter ending March '23, EVs and CVs grew by 13% and 6%, respectively, whereas 2-wheeler declined marginally by 2%. During FY '23, the electric vehicle market in India has also delivered significant growth with a rapid increase in sales of LCV, 2-wheeler and 3-wheeler electric vehicles. Resultantly, the Indian electric vehicle sales crossed 1 million units for the first time in FY '23. As per society of manufacturers of electric vehicles, in the electric 2-wheeler segment, the industry sold 7.26 lakh high-speeds E-2-wheeler in FY '23 in comparison to 2.52 lakh units in FY '22. EV penetration in this category during the year was at 4.5%. EV-2-wheeler sales for the quarter was around INR 2.16 lakhs, representing overall penetration of around 5.4%. Penetration level have been gradually increasing quarter-on-quarter basis. Going forward, we expect growth momentum in the automobile industry to continue into FY '24 and will be poised for a reasonable growth owing to strong demand, especially in passenger cars and easing supply chain issues. Few initiatives announced... [Technical Difficulty] Sorry, apologies for this. Few initiatives announced in the budget will also positively affect the passenger vehicle sector growth in FY '24. However, an increase in cost of ownership remains near-term headwinds for the industry. The long-term prospects for the auto industry remains highly optimistic. India embraced the challenges faced in the past few years, and now it is at the cusp of rapid growth over the next decade. Indian consumer approach and behavior is changing considerably towards mobility. Considering the growth prospects, some of our customers have also announced large capacity expansion. This augurs well for the entire auto industry. With PACE, which is personalization, autonomous, connected and electrification as 4 of its existing and future product road map, we are well placed to capture growth opportunities in the sector. We are focused to solidify and increase our market share by providing high-quality innovative products and securing new business in both IT and EV segments. Specific highlights for the quarter and FY '23. You can refer to Slide #5. The company has completed acquisition of its remaining stake in Minda Kosei Aluminum making it a wholly owned subsidiary. The Board has also approved merger of MKA and other 2 Kosei joint venture entities, which are Minda -- Kosei Minda Aluminum, and Kosei Minda Mould. The company has commissioned 30K expansion line in Gujarat, expanding its capacity from 2.9 lakh wheels per month to 3.25 lakhs wheels per month. Another 45,000 wheels per month capacity has been added from KMA through consolidation of Kosei Minda. We continue to build strong order book for 4 wheel lighting, alloy wheel business as well as for EV-specific products. Coming to financial and operational performance. You can refer to Slide #7 and 8. At consolidated level, revenue from operations for the quarter increased by 20% year-on-year to INR 2,889 crores from INR 2,415 crores in Q4 of FY '22 as we continue to gain market share and increase kit value. We have witnessed growth amongst all our products led by EV products, lighting, PV alloy wheels, et cetera. The consolidated revenue largely remains even on quarter-on-quarter basis as increase in passenger vehicle volumes are offset by a decline in 2-wheeler volumes and reduction in commodity prices being passed on to the customer. EBITDA for the quarter was at INR 319 crores, improving by 16% from INR 276 crores year-on-year basis. EBITDA margins for the current quarter though marginally down at 11.1% against 11.4% in the corresponding quarter last year, which is as per our guidance. Finance costs have increased to INR 21 crore in comparison to corresponding quarter last year on account of incremental borrowing for CapEx and working capital and certain investments. Borrowing costs have also gone up following series of hikes by RBI, which is being passed on by the bank in a staggered manner. Our effective tax rate has decreased from 30% in last financial year to around 24% in FY '23 on account of movement to the new tax regime in the current financial year, a reversal of around INR 6 crores of tax provisions no longer required post favorable closure of referring tax assessments. The profit after tax, which is Uno Minda's share for the quarter was at INR 183 crores as against INR 144 crores in Q4, reporting a growth of 27%. We would like to highlight that PAT for the quarter is highest ever quarterly PAT reported by the company. On a full year basis, the company has demonstrated excellent performance with 35% growth in annual revenues to INR 11,236 crores in FY '23 as against INR 8,313 crores in FY '22. While industry volumes have grown by 13%, we continued our outperformance by registering growth at 35%. EBITDA for the same period in FY '23 is INR 1,242 crores in comparison to INR 885 crores in FY '22. Talking about margins. The EBITDA margins were higher at 11.1% in FY '23 as against 10.7% in FY '22 due to benefits of operating leverage, partially offset by higher material costs. We would like to inform you that company has achieved pretax ROCE of 19.2% for FY '23, a significant improvement from previous financial years. Dividend. The Board has also recommended the final dividend of INR 1 per share, which is 50% of the face value, reflecting commitment from the company to return value to shareholders on a consistent basis. The company had also paid interim dividend of INR 0.5 per share in February '22, making a total dividend of INR 1.5 per share for FY '23 translating into dividend payout ratio of 13.2%. Coming to the business segment-wise performance and moving to product lines, starting with switching systems. You may refer to Slide #13. The segment achieved revenues of INR 835 crores for Q4 and INR 3,203 crores for full financial '23, contributing 28.5% of our consolidated revenues. Increasing features like infotainment, sunroof, power windows, overhead console, et cetera, led to increase in number of switches in PV continued to drive the business growth along with increasing SOP with Indian and coring customers. During the quarter, we received incremental orders from Korean customer, further strengthening the relationship. In 2-wheeler switch business, we have started export of heated grip and CAN-based switches. Our expansion of 4-wheeler switch plants at Chennai and Farrukhnagar, Gurugram are going as per the plan and is expected to commence operations in Q2 of FY '24 and Q3 of FY '24, respectively. Moving to Lighting business. It has achieved revenue of INR 673 crores for Q4 FY '23 and INR 2,575 crores for full year FY '23, contributing to around 23% of our consolidated revenues. We have received incremental orders of more than INR 300 crores in 4-wheeler lighting business from Indian and Japanese OEMs. We have been working on various innovative lighting products and are accredited with various first in the business. We recently launched cornering lamps for one of the 2-wheeler OEM and connected lamp for a Japanese 4-wheeler OEM. 4-wheeler lighting Gujarat plant has been commissioned and is ramping up from current quarter with SOP of underlying model in last week of March '23. Besides, we have completed land acquisition for our new lighting plant announced in November '22. The plant will be set up in Khed City, Pune. We have acquired 86 acre of land in Khed City for lighting plant as well as for future requirements. The above acquisition also marks a shift in the company's strategy from buying pocket of lands as per exact requirement to buying a large plot of land to meet current as well as future requirement. The revised strategy will serve dual purpose. First, it will expedite future expansions as it will eliminate any delay on account of land acquisitions. Secondly, we can build bigger plants and consolidate our existing plants to be able to better manage our operations and achieve economies of scale. Moving to our casting business, it has achieved revenue of INR 538 crores for Q4 and INR 2,175 crores for full financial year '23, contributing to 19% of our consolidated revenues. During the quarter, we started commercial production of 30K line in Gujarat Plant and is expected to stabilize in Q1 FY '24. 4-wheel alloy wheel capacity at Gujarat now stands at 1.2 lakhs wheels per month of GDC technology and 25,000 wheel of LPDC technology. With respect to capacity expansion of 60K at Bawal, the land acquisition is in process. Post-acquisition, the construction activities will commence. In 2-wheeler alloy wheel business, we have started supplies to customers. The ongoing expansion of 2-wheeler alloy wheel plant at Supa is expected to commence operations in a phased manner by Q3 FY '24. In aluminum die casting business, we have started supplies to a PV OEM and a 2-wheeler EV OEM. Moving to acoustics, Slide #14. Our Acoustics business had achieved revenues of INR 196 crores for Q4 FY '24 and INR 736 crores for full financial year FY '23, contributing 7% of our consolidated revenues. While India business remained stable, European subsidiary Clarton Horn made decent recovery supported with price increases from some of its customers. Moving to our seating business. We achieved revenues of INR 263 crores for Q4 FY '24 and INR 1,053 crores for full financial year '23, contributing 9% of our consolidated revenues. The seating business achieved highest exports of INR 200 crores in FY '23. Exports is expected to be one of the key drivers of growth of the business. Seating business is poised for healthy growth with SOP of at least 3 new 2-wheeler EV OEMs in next 6 months. Moving to other product businesses. We have achieved revenue of INR 384 crores for Q4 FY '23 and INR 1,494 crores for full financial year, contributing 13% of overall top line. Other businesses mainly comprise of controllers, sensors, ADAS, blow moulding business, battery and aftermarket. Blow moulding business sensors, controllers, EV systems continue to grow. The share of profit loss of associates, joint ventures for Q4 is at INR 24 crores as against INR 29 crores in Q4 FY '22. While all our JVs associated contributed positively, major contribution came from Denso Ten, ROKI and TG. Moving to EV sales. The revenues from EV 2-wheeler OEMs increased to INR 78 crore in Q4 FY '24 as against INR 67 crores in the last quarter. EV 2-wheeler OEM revenues as a percentage of our 2-wheeler domestic revenues stands at around 8% for Q4 FY '24 as against 2-wheeler EV penetration of around 5%. The revenues from EV 2-wheeler OEM has been steadily increasing, given our formidable EV-specific portfolio and potential kit value, we have outperformed the EV 2-wheeler industry as well. Our JV with FRIWO EV Systems, which is currently operating from a temporary facility at Manesar would move to its new plant at Farrukhnagar by Q2 FY '24. Uno Minda Buehler is also expected to commence operations from its new plant by Q2 FY '24. Commencement of these starts should give further boost to our EV 2-wheeler OEM revenue. We are pleased to inform you that we have completed the development of soundbox, which is the artificial sound meter for EV 2-wheeler during the quarter and have also started supplies of the same. We have announced multiple order wins from EV OEMs in last few quarters, and we continue to receive further orders. Total annual peak revenues from this order stands at INR 1,900 crores, out of which orders from 2-wheeler EV OEM comprise of INR 1,340 crores and for 2-wheeler EV-specific products, INR 700 crores. We have also one order from PV/CV OEMs of around INR 550 crores, including order for EV-specific products from an LCV OEMs. Moving to aftermarket and industrial revenues, you can refer to Slide #14. In terms of our revenue pie for the quarter ended March 31, 2023, OEM business accounted for 89% and aftermarket business at around 11%. Our aftermarket division revenues were at INR 281 crores as against INR 225 crores in corresponding quarter last year. Aftermarket revenues have grown 25% year-on-year basis. Our aftermarket division for the first bank has crossed INR 1,000 crore mark and achieved revenues of INR 1,042 crores for full year. We are successfully running various B2C marketing campaigns for our aftermarket division. Moving to our cash flows and debt levels. Our net debt as of March 31 was INR 1,078 crores compared with INR 586 crore as on March 31, 2022. Our net debt-to-equity stands at 0.24, while the funding requirement is towards capital expenditure, both growth and sustaining CapEx have working capital requirement of INR 284 crores, consequent to 35% growth in group revenues were all met by internal cash generation. Net debt has increased primarily on account of investment of around INR 125 crores in FRIWO Germany. Investment in TRMN plus some new joint ventures of around INR 40-odd crores, acquisition of minority stake in Minda Kosei for INR 115 crores, an advance of INR 70 crores for acquisition of a land in Pune for existing and future projects. The consolidated financials also include debt of INR 60 crores and net esteemed assets of INR 75 crores of KMM and KMA, with Kosei Minda Mould and Kosei Minda Aluminum, wherein the financial is getting consolidated pursuant to taking management control. CapEx also includes INR 75 crores of assets of KMM and KMA as explained a while back, advance of INR 70 crores for land in Pune and certain lease assets capitalized as per IndAS. Moving to strategic business update. First, being Kosei entity's restructuring, the company has completed the acquisition of remaining stake of 22.64% in Minda Kosei Aluminum, making it a wholly owned subsidiary. During the quarter, the Board of the company has approved acquisition of 81.69%, in Kosei Minda Aluminum Company Private Limited and 49.9% in Kosei Minda Mould Private Limited from JV partners, Kosei Japan. The acquisition is planned through a composite scheme of merger with Uno Minda through swap of shares. The scheme was filed with stock exchanges seeking for NOC. The proposed transaction is one more step towards gaining significant pie of this growing 4-wheel Norway market, simplification of the group structure and to facilitate achievement of economies of scale. While the merger will be subject to various statutory authorities, Uno Minda has started managing the business and operation of these entities with effect from April 1. Consequently, financials of KMM and KMA are getting consolidated line by line from March 31, 2023. While consolidation is reflecting in consolidated balance sheet as on March 31, 2023 with addition of assets and liabilities of both these companies, the P&L consolidation will come from subsequent quarters. The company has entered into TLA with Kosei Japan to ensure continuity of technical support. We would like to inform you that order for merger of 2 other schemes, which is Minda iConnect merger and Harita Fehrer Plus Battery Business merger, the addition is reserved by NCLT for pronouncement. Moving to our kit value. You may refer to Slide #30 for potential kit value. During the year, we saw further expansion in our kit value across vehicle segments. In C segment of passenger vehicle, we achieved 43% increase in kit value owing to addition of connected tail lamp, recliners, HD camera, besides here also added products of our joint venture entity, TGSIN, which was not added to potential kit value till last year. In SUV segment, our potential kit value is at around whopping INR 1.97 lakhs. Kit value in 2-wheelers has also increased due to increasing application of sensors like side-stand switch, speed sensor, acceleration, position sensor as well as due to different type of lamp like LED headlamps, blinkers, reflects, reflector and cornering lamps, et cetera. Moving to ESG, where climate change is one of the greatest challenges of our time, and we, as an organization, are acutely cognizant of the role that we have to play in mitigating greenhouse gas. Emissions. Energy conservation and optimization is of the utmost importance to us. However, in addition to adopting various energy efficiency measures, we have significantly increased our uptake of renewable energy as key aspect of our decarbonization strategy. In the last 2 years, we have installed rooftop solar panels at 25 plants, along with solar OPAL access projects at fixed locations, increasing our renewable energy share at 18%. As a testament to our commitment to decarbonizing our operations, we have also set ourselves an ambitious target of meeting 40% of our energy needs from renewable energy by 2025. Moving to next year. As you know, while we do have our revenues linked to industry volumes based on the order book, we remain optimistic on our ability to outperform the industry growth. We will start production from multiple projects like new plant of EV JV with FRIWO, new plant of EV motors, 4-wheeler and 2-wheeler alloy wheel expansion, 4-wheeler switch expansion in Chennai and ramp up of 4-wheel lighting plant at Gujarat. This should significantly boost our revenues for next financial year. In terms of margin, we expect to maintain the EBITDA margin within the current range on an annual basis. Next year, based on the current approved projects, we expect to incur project CapEx of around INR 400 crores and sustaining CapEx of around INR 300 crores. Kindly note that this CapEx guidance doesn't include CapEx, which may incur for building land bank as part of our strategy for future growth. With this, I would like to now open up the floor for questions.

[Operator Instructions] We have our first question from the line of Mumuksh Mandlesha from Anand Rathi.

Congress Sunil-sir on the new role, sir.

Mumuksh, your voice is very feeble, actually. Could not hear.

Can you hear me, sir, clearly now?

Yes, yes, yes. Much better.

Congrats sir on the new role sir. Sir, the CapEx for this year was higher than the guidance. Is this mainly from land bank, sir?

So there are 2-3 aspects. As I said, Mumuksh, one is definitely land bank, then there is around INR 65 crores, INR 70 crores worth of assets which are added as part of consolidation, which were not there earlier, which is KMA and KMM. And also there are certain assets which you have to capitalize because of -- the leasing assets because of the IndAS 116. So all this put together are more than INR 200 crores.

Got it. Got it. Sir, can you talk more about the new EV order wins and also on the 4-wheeler lighting. And can you update the progress in terms of order wins for the Buehler JV for the motor, sir?

Yes. So in terms of 4-wheeler lighting, as we have said, we have got around INR 300 crores of incremental orders this year. So if you see since last 2 years, we have been persistently adding business. And today, as we speak, we have added more than INR 1,000 crores worth of new business for lighting in 4-wheelers and that's why we are setting up this new plant in Pune to cater to large part of those incremental business. In terms of EV, as I said, we have added significant new business from EV for both products, which are existing products, which are EV-agnostic or products which are EV-specific. So that's what we'll continue to sort of grow, in all these businesses. We know that we will start SOP gradually as the OEMs also start volumes and also replace some of the imports with the domestic ones. And in terms of the motor JV with Buehler, we have already added 2 customers. As we said last time, and we are also engaging with a few more customers. Hopefully, we should have some good outcome in next couple of quarters.

Right. Sir, the order book, which you have mentioned will be excluding the Buehler orders?

No, this is all including. These are all EV products, which includes the motor.

Okay. Okay. And sir, this quarter, the gross margin was lower sequentially. Any reasons for those, sir?

Yes. So gross margin is low. And you are right, primarily because of there are 2-3 businesses where we had what you call the higher RMC, which are the new ones, relatively like there has been some impact in the 2-wheeler alloy wheel, where the price increases, et cetera, we have got in Q3 itself. So obviously, you don't have that advantage of getting the arrears. So normally, what happens is that in Q4, you tend to get a lot of PIs closed. But this time, a, we have got good PI closure in Q3 and also in Q4, there has been a softening on the -- of the commodity. So you don't see that kind of PI benefit from the customers, and that impacts the gross margins.

Okay, got it, sir.

Thank you, Mumuksh.

We have our next question from the line of Siddhartha Bera from Nomura.

Sir, first question on the revenue side, like you said, we have one of a few orders from Korean customers in switches. And in the past, also in the lights and alloy wheels, we have continued to win orders. So if you can broadly highlight our revenues, how much will be Korean players in terms of mix? And in terms of the order book, how does it look? And if you have the share of business as well, that will be very helpful.

So thanks, Siddhartha. So in terms of the switch business, we have added roughly around incremental INR 30 crores of new business for the new upcoming model from the Korean customer. And in terms of alloy wheel, you know that we have set up only 25,000 unit capacity, which is the LPDC capacity, which we are supplying to the Korean customers, and we are currently not what you call have expanded our capacity. So until then, we are limited by the capacity constraints because LPDC is a technology, which is what Koreans sort of apply in their vehicles. And lighting, I don't know, lighting normally, we have not yet been able to penetrate into the Korean customers, honestly speaking. And your last point was in terms of the order book. So we are not actually separately capturing our what we call the order book as customer-wise. So what we do is we do calculate our market share product wise, but order book normally customer-wise, we will get only when we see the business by business, we don't normally see at a group level, but it's a good point. Maybe from next time onwards, we'll start capturing that data, Siddhartha.

Got it. Sir, second question, again, on the revenue side, I mean, this quarter, on the casting side, despite like PV industry volumes going up, we have not seen quarter-on-quarter increase. So is it limited the capacity or why it is sort of flat quarter-on-quarter? And second, again, on the others, we have seen some dip quarter-on-quarter. So if you can just highlight the reasons for this.

Yes. So a very good point, Siddhartha. So on the casting business, there are 2 reasons, and I'm trying to be fully honest. First, there has been softening of commodity prices. So you know that is passed on to the customers immediately. So that has an impact in terms of the revenue. Second, because of this OBD 2 norm kicking in from April 1, the 2-wheeler volumes in the Q4, there we have seen some unplanned drop, and that's why we had to maybe limit some of our production, which has impacted our casting revenues. So I think these are the 2 key reason why you see the casting business overall lower than what you have seen in the previous quarter. And in terms of other, others let's see. Mainly battery, if I remember Yes. So mainly it was aftermarket batteries, which goes into that other segment.

Okay. Okay. Sir, last question on the margin side, now again on the gross margins. These are quite low levels if you look at the last couple of years' trends. So I mean, should we expect some normalization as your other businesses ramp up? Or do you believe -- I mean, it might -- I mean these are more sustainable levels. Can you just help us understand that?

Yes. So Siddhartha, in terms of margins, you know that this quarter, we have commissioned 2 new plants where you start with your OpEx, but you don't have much of the revenues. So that has an impact a little bit. And second is in terms of the PI, as I shared a little while back to Mumuksh. In terms of normally -- in Q3, Q4, you do get a good PI, which starts -- which is actually retrospective because normally, it takes time, you file a claim in Q1, then you have discussions in Q2 and start getting Q3, Q4. This time, we have got some good, what you call, closure of such PI in Q3. And Q4, there has been some softening of the commodities. Obviously, you can't have any price increase, and there was some offset, obviously, customer would force you to do that, right? So I think these were the 3 key reasons. But yes, I will note to your point, and we are working on this to see that we improve it in terms of overall gross margin as we move forward.

Sir, I'll come back in the queue.

Thank you, Siddhartha.

[Operator Instructions] We have our next question from the line of Aditya Jhawar from Investec.

Yes. My first question is on Harita. So sir, if you can highlight that how has been the progress in winning orders from the Indian OEMs, the thought process we had that after acquisition, we will diversify our geographic footprint and try to engage with more OEMs where TVS did not have a relationship with, We -- it's encouraging to see where are we are doing extremely well in export. But on the domestic front, if you can throw some light.

Yes. So that's a very good question, Aditya, and I think it's a miss from my side also, we should have captured in the presentation. So you have actually added one more 2-wheeler OEM in our 2-wheeler seating business, which will start SOP somewhere from the next quarter. So which earlier obviously being part of OEM, they were not able to do. So we have got a big success in terms of addition of a domestic OEM 2-wheeler category. And you know that post acquisition, we have added some of the 4-wheeler customers also and some PV customers also post Minda acquisition. So that value add from Minda is definitely happening, and we are very happy to say that we have actually added one more 2-wheeler OEM, which is what you call an existing one, not a 2-wheeler OE -- EV but traditional 2-wheeler OEM.

Okay. That's very good to hear. My second question is on the Korean OEM. So clearly, now we are supplying LPDC products from Gujarat. Is there a line of sight that in the next 2 to 3 years, the business will ramp up quite a bit and there is a plan to set up a facility in Tamil Nadu, so that it's relatively better. And it's heartening to see that we have also penetrated in the switching. If you can throw some light on this?

Yes. So in terms of LPDC, yes, we might have to expand the facilities. But whether it will be Tamil Nadu or existing we have to see, because Aditya, you will appreciate once you open a new location, then you have the entire paraphernalia of the management, systems, everything that's replicated and you sort of have no advantage of operating leverage. In fact, you have negative because initially, you have a lot of fixed costs and where your revenue doesn't come in the first year. And then what we normally do is we weigh that against the logistics cost in terms of what customer looks at the landed price. So what is our landed price versus if you have to set up a plant in -- closer to the customer or we expand the plant in the region where there are more customers or we expand the existing plant. So we look at all those aspects. But yes, the teams are working in terms of coming up with a project for increasing capacity for LPDC wheel. Yes, there is some discussions going on with the customers for more business, what we can secure. And once we have visibility of that business, you know that normally we would commit into CapEx only after that because we don't want a scenario where we commit for CapEx and then sort of you are at a disadvantage when you have to secure a new business. So that is the strategy we are adopting, Aditya.

Okay. And the next question -- and sorry to go back on margins. So we understand that this quarter, we did not get the price increase benefit that we typically get in Q4. But if you have to look at the historical trend, our gross margin trajectory has been coming down. And if you can give us some sense that what is a function of the business mix change that is having an impact on this? And what should be a sustainable gross margin going ahead?

Yes. So Aditya, the way this gross margin is that some of the business has higher gross margins, where you have higher other costs like, for example, in casting, you will have higher gross margin, but there, the operating cost or the conversion costs are very high because of the inherent nature of the business and also the CapEx intensity in those business are higher. So in this quarter also that we have started these 2 new projects, which is the blow-moulding business in what you call Bangalore, the new plant and also this lighting plant in Gujarat there. Obviously, initially, you have higher RM costs, which impacts this and also in terms of mix, normally, the -- as I said, the higher CapEx business like blow moulding or casting will have higher gross margin because of the conversion costs of like electricity and also depreciation are higher versus what you see in the other businesses. Also, in the new lighting business, which we are adding, the lighting, what we call the LED aspect there, structurally, the gross margins are less, but the cost of what you call the conversion to FG is also less. Say for example, if you have a -- but in terms of EBITDA, it may not be very different. So I'll give you an example, in terms of, say, lighting halogen lamp or so, right, there, if my gross margin say was around 30%, 35%. But in the LED segment, it may be only 20% because the cost to convert that from RM to the finished good because in LED, there is a lot of electronic components, right? So you don't have that kind of conversion cost because the price itself goes 3x. So a Halogen lamp to a LED lamp, you know the delta is almost 2.5 to 3x. In fact, some of the tail lamps are even much, much more. So there, your GRM is lower, but it compensates at the EBITDA level because the conversion cost from GRM to EBITDA is different. I hope I've been able to give you a little detailed answer, but it gives you a gist.

Absolutely. And the final question I have is that on CapEx, you mentioned that INR 400 crore total CapEx out of that sustaining would be about INR 300 crores, but that doesn't include your land bank CapEx. So what could be the magnitude of this land bank CapEx, Sunil?

Yes. So this -- first of all, this land, which we have acquired in Khed, that totally was something around INR 160-odd crores. Of that, we have paid INR 70 crores in March as an advance and balance was paid in April. So this INR 90 crores, obviously, will -- has already been paid. We are also looking at another sort of a similar land bank in North, where we have -- you know that our customer is consistently expanding. So obviously, we would also need to expand for future growth so strategically, we know that land is a scarce resource, and we are faced with this challenge many places. In fact, you would have seen the notice in one of our projects, which we have announced in November for the expansion of 60K alloy wheel in Bawal. There we are still not having land in our hand. And the customer SOP date is approaching very fast. So land has been a consistent challenge of late. And that's why we have been thinking, yes, it's an investment. It's a onetime investment, which will get recovered maybe future because future if you have to put up those projects, I'm sure you will imagine the land prices which are -- continues to go up and has a -- is a commodity, can address 2 things. One, you have the land in hand, which gives confidence to the customer also in terms -- when it has -- he has award your business that, yes, you will not waste any time for preparing land. The land is an asset which continues to appreciate. So if not today, you have to anyway buy tomorrow when you have to set up a plant, right? And land being an inflationary sort of commodity and also scarce commodity, it makes sense to build a land bank. And most important thing, which is the third part, Aditya, is that when you talk of that scale, then you also have ability to go and negotiate better incentives with the government. So the project which we are setting up in Pune, we have got a very good incentive scheme from the government approved for our lighting plant. So there are multiple benefits. Yes, it has an immediate cash flow, but it more than offsets the benefits going into future.

Perfect. Perfect. Just last question, again any update on the airbag capacity when it is coming on stream? Any -- are you hearing about government changing the time lines of airbag being mandatory airbag that is expected from October?

Yes. So time line, I will refrain from commenting, Aditya, because it is in the government court so no one can comment on. But based on what our customer says, see we are gearing up, we are ramping up. We are setting up a new plant with INR 175 crores worth of investment adjacent to a plant in Neemrana, specifically for airbags, and this capacity will be up and running by middle of next year.

Middle of next year. Okay. So earlier you had planned in Q4, now it's middle of next year.

Yes. So Q4 the plant will be ready. I said up and running. So you will have that commissioning time, et cetera, et cetera. That's factoring that also.

Perfect. Perfect. That's it from my side, all the best.

Thank you, Aditya.

[Operator Instructions] We have our next question from the line of Ashutosh Tiwari from Equirus Securities.

Yes. Sir, what was the revenue in the passenger vehicle alloy wheels and 2-wheeler alloy wheels for the year?

So 4-wheeler alloy was somewhere around INR 350 crores, whereas 2-wheeler alloy and casting was INR 100 crores, INR 100 crores each.

And for the full year?

Come again?

Full year for the 2-wheeler alloy wheel?

This is for the quarter and for full year just [indiscernible].

INR 300 crore each roughly for casting and AW, 2W.

Yes. So for AW, 2W it will be somewhere around INR 450 crores and casting also somewhere around INR 400 crores and whereas 4-wheeler allow would be coming around INR 1,275 crores.

Okay. And this lighting order win that you mentioned INR 300 crores is the full year order wins, right?

It is annual peak revenue yes.

And this we won in the entire year in '23 is it as a whole?

Yes. This is the annual deriving which we will achieve but...

No, no, I got it but this order came for the -- in the 4 quarters, not only in the fourth quarter, I mean to say.

Fourth quarter. Fourth quarter.

This is in the -- only for the fourth quarter. Yes. The additional revenue was in the fourth quarter.

Okay. So how much orders we have won in this financial year as a whole, like FY 2023 as a whole in lighting?

So overall, as I said, Ashutosh-ji for total order book for EV customers, 2-wheeler EV only is around INR 1,340 crores of which EV-specific products would be INR 700 crores.

Lighting, lighting I'm asking, in lighting.

4-wheeler lighting. So this would be, I think, in aggregate, we would have announced a lot of quarters would be some around INR 800 crores kind of plus orders...

INR 1,000 crores, that's INR 8,000 crores.

Yes, INR 80,000 crores of annual the order value, which would have received for 4-wheeler lighting up till now, increment.

In the last year. Okay. Okay. And lastly, coming back again on the margin side. If you look at -- like you can see the major compression in the EBITDA margins come in a stand-alone side, if you look at it, probably we used to make around 10% kind of margin as standalone consistently. This quarter is only 8.4%. And mainly, you have 2-wheeler switches, lighting and this 2-wheeler alloy wheels business over there. So is the compression only coming from 2-wheeler alloy views only or even the switches and lighting business has had some compression in EBITDA margin in this quarter?

Yes. So Ashutosh, because we are going into a little detail. So I can tell you that in 2-wheeler, obviously, there has been a little bit of impact on the exports though not that big, but obviously, it adds because export has got a much better margin. Also in lighting in 4-wheeler, some of the service income or the tolling income, which comes, we have -- because the model launch happened in Q3, we have been able to advance that income in -- some of that income in Q3 versus Q4. And AW, 2W as we just spoke that volumes have been lower. So all these things put together definitely has impact on the stand-alone financials.

So that should normalize, like say, going ahead. The full year number is probably the right reflection of the margins? Is that correct?

Yes. Yes.

Okay. Okay. Got it. And I guess just on the land, the CapEx side, you mentioned INR 160 crores is total land cost out of which you have paid INR 70 crores so INR 90 crore is remaining?

Yes. INR 90 crore we have paid already in April.

You already paid in April. So this INR 90 crore is over and above this INR 700 crore CapEx guidance project plus IndAS?

Yes.

Okay, that's all from my side.

Thank you.

We have our next question from the line of Sonal Gupta from HSBC Asset Management.

Just a couple of questions. One is -- sorry, I missed what is the net debt now?

Close to INR 1,000 crores, if I remember correctly.

Yes.

Yes.

INR 1,000 crores, INR 1,070 crores. And sorry, on the -- again, on the CapEx, what was the CapEx in FY '23 because I think the press release is not very clear.

Yes. So total is if you see there it's showing something like INR 900-odd crore but that also includes INR 200 crores of CapEx roughly relating to, one, this INR 70-odd crores for land bank around INR 60 crores, INR 70-odd crores, another for this asset, which has been added, which is KMA and KMM and some leased assets, which are capitalized as part of IndAS 116. So the -- if you see the real actual CapEx might be around INR 700-odd crores.

Right. So I mean, if we exclude like it separately show the noncontrolling interest in subsidiary at INR 115 crores. So the plant equipment and land would be how much?

Sorry, where are you reading this?