Fiem Industries Ltd (NSE:FIEMIND) Q3 FY23 Earnings Concall dated Feb. 16, 2023.
Corporate Participants:
J.K. Jain — Chairman & Managing Director
O. P. Gupta — Chief Financial Officer
Arvind K. Chauhan — Company Secretary
Rajesh Sharma — Whole-time Director
Analysts:
Sahil Sanghvi — Monarch Networth Capital — Analyst
Viraj Kacharia — Securities Investment Manager — Analyst
Unidentified Participant — — Analyst
Komal Ladh — YellowJersey Investment Advisors — Analyst
Nirvana Laha — Individual Investor — Analyst
Shakti Agrawal — Individual Investor — Analyst
Ashutosh Tiwari — Equirus Securities — Analyst
Anika Mittal — Nvest Research — Analyst
Rahul Picha — Multi-Act PMS — Analyst
Nidhi Babaria — Envision Capital — Analyst
Pritesh Chheda — Lucky Investment Managers — Analyst
Vishal — Swan Investments — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Fiem Industries Limited Q3 FY ’23 Earnings Conference Call hosted by Monarch Networth Capital. 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]
I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you and over to you, sir.
Sahil Sanghvi — Monarch Networth Capital — Analyst
Thank you, Aman. Good afternoon, everyone. On behalf of Monarch Networth Capital, I welcome you all to Q3 FY ’23 conference call of Fiem Industries Limited. We will start the call with the initial comment about the results and the future outlook of the Company, and then we will open the floor for question-and-answers. So without much delay now, I hand over the call to Mr. J.K. Jain, Chairman and MD of the Company. Over to you, Jain sir.
J.K. Jain — Chairman & Managing Director
Thank you. Good evening, everyone, and welcome to Q3 FY ’23 earning call of Fiem Industries. Joining me on the call are Rahul Jain, Director; Rajesh Sharma, Director; Arvind Chauhan, Company Secretary; O.P Gupta, CFO, and other members of the finance team. The results and the investor presentation for the Q3 FY ’23 have been made available on both the stock exchange and the Company website. I hope everyone has had a chance to review the same.
As we start this calendar year, the Indian economy finds itself in the spotlight on the global stage. With the challenges facing the global economy, the world is relying on India to provide its stability and growth. The domestic economy is projected to grow at 6.5% with the auto industries playing a crucial role as it contributes 49% to the manufacturing GDP. Government also continues to play an active role for the growth of the industry. The recent Union Budget proposed a custom duty exemption for the capital goods and the machinery used in the production of lithium cell for EVs. This move is expected to promote EV industries and will boost local manufacturing. In addition, the tax rationalization at the lowest slab is expected to increase the demand by enhancing the disposable income for the taxpayers. Overall, the Indian economy is likely to [Indecipherable] the growth of the industries as we move forward.
Let me the shift the focus to the operating environment for the two-wheeler industries. Domestic sales have grown at a healthy rate of 16.8% for the quarter. We are optimistic that the demand will continue to improve, and the new peak will be these in the coming years. Now looking at our operating performance, we have delivered the strong result once again, maintaining our outperformance of the industry. We have achieved the highest ever sales and the profitability for the first nine months of the year, but sales have grown 30% to INR1,401 crores with the net profit of INR101.5 crores. The LED shares as percentage of the total automotive lighting has touched 50% this quarter, reflecting the trend towards the faster adoption of this technology. As maintained by us, this would move to 60% going-forward. Electric vehicle adoption continues to grow and the total two-wheeler EV have grown more than three times over last year. During the quarter we saw a number of the EV OEMs facing challenges relating to FAME-II incentives. I am confident that these are temporary hurdles and the industry will adopt and move forward shiftly. The share of the EVs will continue to grow at a rapid pace. As we entered the fourth quarter, outlook for the economy remains bullish. There is a significant increase in the investment for the infrastructure and the rural economy, agriculture sector is looking promising due to the higher minimum support price. Overall, I continue to stay positive on demand outlook.
With this, I hand over to Mr. O.P. Gupta and the finance team do update on operational performance.
O. P. Gupta — Chief Financial Officer
Thank you, sir. Good evening to everyone. I’m presenting quarter three number for FY ’23. The Company registered a sales of INR437.9 crores in Q3 FY ’23, which is a 13.5% growth from INR385.69 crores in same quarter last year. The sale for nine months have shown a 30.7% increase on a year-on-year basis to INR1,401.2 crores. The EBITDA for Q3 FY ’23 is INR59.63 crores, translating into the healthy margin of 13.62% as compared to an EBITDA of INR47.59 crore that is 12.24% in Q3 of previous financial year. Nine-month EBITDA stand at INR187.6 crores, which is a growth of 43.6% over the nine-month period of previous financial year. PAT Increased by 33.19% to INR32.02 crores as compared to INR24.04 crores in corresponding quarter of FY ’22. Nine months PAT is 61% higher at INR101.58 crores. In comparison to nine months period of previous financial year. During the quarter, the Company has made a capex of INR18.42 crores, largely in plant and machinery at our Hosur plant. Now we continue to be a [Technical Issues] company.
With this, I end the financial brief and now the floor is open for question-and-answers.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Viraj Kacharia from Securities Investment Manager. Please go ahead.
Viraj Kacharia — Securities Investment Manager — Analyst
Yeah, hi, thanks for the opportunity and congratulations on good set of numbers in such a challenging environment. I have couple of questions. Am I audible? Hello?
Operator
Yes, you’re audible.
J.K. Jain — Chairman & Managing Director
Yes, yes.
Viraj Kacharia — Securities Investment Manager — Analyst
Yeah. Sir, first is just a clarification, for Yamaha, when we report sales for Yamaha, would majority of the sales be purely LED or there will be some traditional lighting business as well?v
Arvind K. Chauhan — Company Secretary
This is all purely LED.
Viraj Kacharia — Securities Investment Manager — Analyst
If you adjust the sales to Yamaha, which is close to 15%, 16%, and if we look at the overall LED sales for us is close to 35% of overall sales. So ex-Yamaha, the overall LED penetration would just be around 20% for us. In that relation, how would it compare for the industry, sir.
Arvind K. Chauhan — Company Secretary
I think your first — this is Arvind.
Viraj Kacharia — Securities Investment Manager — Analyst
Hi.
Arvind K. Chauhan — Company Secretary
Regarding this LED penetration — yeah, hi. So this LED, it’s not 35%, it is 50% as of now for this quarter.
Viraj Kacharia — Securities Investment Manager — Analyst
No, no. Yamaha, as a percentage of sales is close to 15%, 16% percent of sales and LED sales is actually 35% of overall sales. So, for simplicity if I remove — adjust for the amount of sales, roughly LED penetration is still around 20% for rest of the business, SSMI, TVS. So in that sense I’m just trying to understand how does it compare for the industry.
Arvind K. Chauhan — Company Secretary
I think the total sales you are comparing with also includes the plastic as well rearview mirror pie chart you’re asking for the Yamaha, but anyway, to clarify, the LED what’s the percentage you are looking for, it is already clear this Yamaha all lamps are LED, that is one thing. Second thing about the LED percentage of ICE, in our 50% LED portion, 43% is coming from the ICE and 7% is from the EVs.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. When you say 43% is for ICE, but when I say it for the two-wheeler industry, generally, what will be the penetration for LED integratively?
Arvind K. Chauhan — Company Secretary
See it is — for the industry, at volume levels it should be lower because you can work it out because we are reporting here on the value basis, not on the volume basis, but industry always…
Viraj Kacharia — Securities Investment Manager — Analyst
Yeah, I am talking about value only sir.
Rajesh Sharma — Whole-time Director
Value means it is for the industry we have to collect all companies’ automotive lighting case.
J.K. Jain — Chairman & Managing Director
Moreover, what we are talking about, out of our turnover, the LEDs constitutes 50%.
Rajesh Sharma — Whole-time Director
Total lighting.
Viraj Kacharia — Securities Investment Manager — Analyst
Understood. Basically my question was, sir, just to understand when I talk about the tool industry in India, what will be the penetration of LED, to get a sense.
J.K. Jain — Chairman & Managing Director
Yeah, the penetration is very strong because day-by-day, most of the conventional lamps are being changed into the LEDs. So, we hope that in the coming years, the penetration will be, as we mentioned, it is going to be higher and higher.
Arvind K. Chauhan — Company Secretary
But giving the specific numbers on the industry volume is not possible.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. Second question was when I look at the new launches, in the last week talked about having a very strong pipeline. Now, some of those customers, see Yamaha, they recently launched — upgraded a whole new portfolio and they launched new models like FZS and all. So, if you can just provide some perspective, have we — are we kind of a supplier for those new models as well, and same as for the Hero Motors, the launches we were expecting, when do we expect that to come across?
J.K. Jain — Chairman & Managing Director
Yamaha as it is, we are the sole supplier for headlamp and taillamp antenna modes. There are two kinds of model is being launched one is for the domestic and one is for the export. So export and domestic, both models, we are the 100% supplier of headlamp and taillamp and those are all in LEDs.
Viraj Kacharia — Securities Investment Manager — Analyst
I think they all launched MT-15 and FZ right and a whole lot of other…
Arvind K. Chauhan — Company Secretary
R models. There are 14 [Phonetic] models which is already launched for the domestic as well as export market. Our MT series is being supplied by [Indecipherable].
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. And for Hero Motors, sir?
Arvind K. Chauhan — Company Secretary
Yeah, Hero Motors, as we already communicated in last con call also, we are into right now on ramp up situation, so might be in the next quarter we will be having sales triggering also in our overall turnover.
Viraj Kacharia — Securities Investment Manager — Analyst
But will this be for the new products in the ICE or EV, or this is also for the older products we’re using LED?
Arvind K. Chauhan — Company Secretary
These are both. As of now, it is very difficult for us [Speech Overlap].
J.K. Jain — Chairman & Managing Director
[Speech Overlap] binding also, we cannot announce.
Arvind K. Chauhan — Company Secretary
Yeah.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay, got it. Just two more questions, sir. If I look at the other segment, correct me in my thinking, which is EV and other categories, Q-on-Q it’s been flat despite the volumes and issues a lot of EV guys are facing in the industry. So what is given a stable performance in third quarter in others?
Arvind K. Chauhan — Company Secretary
You’re talking about the EV industry overall, this quarter?
Viraj Kacharia — Securities Investment Manager — Analyst
No, so when we report others, it’s around 12% of our revenue, so it’s around INR50 crores to INR53 crores the revenue from other customers, in this particular quarter. I think last quarter also we did something along similar run rate, which was around INR50 crores to INR53 crores.
Arvind K. Chauhan — Company Secretary
I think in EV what you’re looking at, actually there is disruption with some of the customers, but if you see our portfolio, we are active with more than 20 per customer. So I think why one customer which is not moving up, there is another customer where there is increased volume. So for us, EV has only gone up this quarter over last quarter.
Viraj Kacharia — Securities Investment Manager — Analyst
And do we have any money outstanding because a lot of companies are facing working capital issues?
O. P. Gupta — Chief Financial Officer
No, it is not that case. We are getting our money on time. It’s just based on whatever the terms agreed.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay, just last question was on the margins. I think we did something like close to 39% contribution margin, and in the past, we talked about us having pricing pressure — I mean, cost pressure from various raw materials. So, have we recovered all of the price increase from the customers, or there’s still some more left? So, how should one understand the contribution margin moving for us in coming months?
O. P. Gupta — Chief Financial Officer
So these margins, you’re saying some improvement. This improvement is — I think you’re talking about that EBITDA margins?
Viraj Kacharia — Securities Investment Manager — Analyst
No, I am talking about contribution margin, which was close to 39%. So, last few quarters, we were facing raw material cost pressures. So, in that sense, have we got all the price increase?
Arvind K. Chauhan — Company Secretary
Yeah, we have got all of our escalations from the customers. Virtually, if you see that, the margins have increased, this is because of all — most of the escalations that come in the Company because there’s hardly escalations left, the Company is very closely monitoring this escalation that we are getting money on time. So this is what is reflected in our margins.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay, fine. I’ll come back in queue. Thank you.
Operator
Thank you. Next question is from the line of [Indecipherable]. Please go ahead.
Unidentified Participant — — Analyst
Yeah, hi, good evening, thanks for the opportunity. My first question is on your Yamaha revenue trajectory. Now, from a peak of about INR90 crores a quarter, we are now down to about INR67 crores, and this quarter, it was on a Y-o-Y basis also down 14%, 15%. So, just wanted to understand how should we think about this going forward?
Arvind K. Chauhan — Company Secretary
In last quarter also we have explained about this. There was some certain models, which were fixed volume for the export market, especially for the European market, and those volumes has already been covered. So, might be there are few more models which are under pipeline, will again come in next quarter or next to next quarter. So, this is only because of the fixed volume.
J.K. Jain — Chairman & Managing Director
Moreover, exports are down. The total industry’s exports are down as compared to the domestic market.
Unidentified Participant — — Analyst
So basically, you’re saying for Yamaha India, the product that they export from here to Europe, those export numbers are down, and that is what is impacting these numbers?
J.K. Jain — Chairman & Managing Director
Right, yeah, not only for Yamaha, for everyone — for the whole industry as such.
Unidentified Participant — — Analyst
Yeah, yeah. I didn’t get — quite catch the first comment. When you said there was a fixed number for export, was that like one-time model which you supplied because typically in the auto industry, you always have orders for them, lifecycle of the models, which would be normally much longer than rather the one-time model.
J.K. Jain — Chairman & Managing Director
It is a regular. It is obviously five-years model. Five years, one model will be launched for five years, but their order line is obviously for two quarter will be okay, and two quarter will be obviously down.
Unidentified Participant — — Analyst
Okay.
J.K. Jain — Chairman & Managing Director
This is normal trend. Normal trend in — basically export is down for the two-wheeler industries at the moment.
Unidentified Participant — — Analyst
Right, got it, got it. Second question was on your sides, just on the Yamaha line, so you mentioned that there are these FZ series of models which have got a launched. So, should they boost the Yamaha number going forward?
Arvind K. Chauhan — Company Secretary
Can you repeat your question?
Unidentified Participant — — Analyst
This was just a follow up on the Yamaha side, where I was asking that you responded to an earlier question that on the FZ series you are there as a sole supplier? Would we expect that that would support the Yamaha revenue going forward, or is that something that is already there in this quarter’s numbers as well?
Arvind K. Chauhan — Company Secretary
That will definitely support. That will support for recovery of all — whatever losses we are having.
Unidentified Participant — — Analyst
Okay, great, that’s good to hear. My second question was on margins. Now, if I look at our company for a very long period of time, our margins have been very closely in that 12%, 13% kind of range. Now we are seeing them starting to inch up to 13.5%, and gradually hopefully even higher. So, what is really driving this margin performance?
Arvind K. Chauhan — Company Secretary
Actually if you see that, in earlier period, we have been delivering margin to the tune of 12%, and every time we have been telling that, our escalations during the period of raw material costs has been not — has been difficult with the customer, but customer is taking time to pay the same, but now you see that we have virtually received most of the escalations on time and you see that the raw material consumption has also gone down by 1%. So, that is why you see the reflection in our EBITDA margins because that is why EBITDA has gone up by 1.5% from 12% to 13.5%, which we opt to maintain the same.
Unidentified Participant — — Analyst
No, my question was more slightly longer period. I understand that right now, this is RM lead land but even before this entire process, where RM started shooting up happened, we were always around that 11%, 12% kind of mark. We were never at the 13.5%. So, just wanted to understand what…
Arvind K. Chauhan — Company Secretary
Hopefully because now the turnover is growing, you see that every year the turnover is growing, but our cost of overheads is not going in that percent — in that amount. So, the percentage is coming down. So that is clearly visible in our overall percentage. So, this top line is growing. Every year, we are growing by 15%, 20%, nine months we have grown by 30%. So that increase in sales with a corresponding not increasing the fixed overhead is giving impetus to our improving margins.
Unidentified Participant — — Analyst
Great, great, so you’re really running a very tight ship and we can see the benefit of that. My last question was on Hero. Now, we understand that for Hero, the largest supplier was Unitech and they are having kind of their own issues, financial issues and we recently checked with Lumax and they mentioned that they are already a very large supplier and hence they have not seen any benefit from Unitech share going down. So, would it be fair to assume that a large part of that benefit would account to a company like Fiem?
J.K. Jain — Chairman & Managing Director
No, it is not like that. The technology on which we are working as of now, better developed supposed to get that business, and that business is not only for the domestic market, even for the export market also.
Unidentified Participant — — Analyst
So then, who is that business going to? I would assume typically when an auto OEM finds a supplier in distress, they kind of try to diversify away from that supplier.
J.K. Jain — Chairman & Managing Director
Of course out of the three suppliers who are already paired, but what the point is that we are getting the business on our strength, and we can only talk about our company. We cannot talk about the competitors.
Unidentified Participant — — Analyst
Understood. Thanks a lot, sir.
Operator
Thank you. Next question is from the line of Komal Ladh from YellowJersey Investment Advisors. Please go ahead.
Komal Ladh — YellowJersey Investment Advisors — Analyst
Hello. Can you be please give your share of business with different customers?
Rajesh Sharma — Whole-time Director
Customer wise. So the business wallets here, I think you are referring.
Komal Ladh — YellowJersey Investment Advisors — Analyst
Yeah.
Rajesh Sharma — Whole-time Director
Okay. So this we are giving for the full year based on ’21, ’22 numbers. The TVS, for headlamps we are having 73%, taillamps 69%, winker 82%, and for rearview mirror 55%. For Yamaha, headlamp is 91%, taillamp is 64%, winker is 5%, and rearview mirror is 32%. Suzuki, headlamps is 80%, taillamp is also 80%, winker is 23%, rearview mirror, we are sole supplier so 100%. For HMSI, headlamp is 40%, taillamp is 76%, winker is 85%, and rearview mirror is 100%. Apart from the rearview for RR and position lamp we are 100% with Yamaha as well as Suzuki.
Komal Ladh — YellowJersey Investment Advisors — Analyst
Okay, thank you. And I wanted to ask that what kind of demand can we expect from two-wheeler industries in coming two years as well as in export market?
Arvind K. Chauhan — Company Secretary
So, domestic two-wheeler industry, or you’re talking about the export, or both?
Komal Ladh — YellowJersey Investment Advisors — Analyst
Domestic two-wheeler industry and as well as export.
Arvind K. Chauhan — Company Secretary
So domestic two-wheeler industry, I think there is — you could see over the last few quarters, there is a lot of activity and I think it is well positioned for growth, I think. There is over the next couple of years, it should get back to the peak that the industry had achieved in FY ’19. So, there is enough headroom, all the economic factors, the macro factors seem to be stacking up well. So, we feel very confident that the industry will grow very confidently from here on. Export market, I think is also something that our company specifically is working actively with our OEMs. And I think there is a lot of potential with China Plus One strategy is coming in Thailand, other markets, even European markets are looking for a lot of diversification. So, there is a lot of positive development there. So, over the next two, three years, the industry should do fairly well.
Komal Ladh — YellowJersey Investment Advisors — Analyst
Can we expect to cross the peak in FY ’24 or FY ’25?
Arvind K. Chauhan — Company Secretary
It’d be tough to give an exact estimate. There are many macro events at play, but clearly we are hitting them.
Komal Ladh — YellowJersey Investment Advisors — Analyst
Okay, thank you.
Operator
Thank you. The next question is from the line of [Indecipherable]. Please go ahead.
Unidentified Participant — — Analyst
Yeah, thanks for the opportunity. So, my first question is on the raw material prices trend. So how is the raw material prices currently and do we expect some sort of a price decreases that we have to take if the raw material prices are decreasing?
J.K. Jain — Chairman & Managing Director
The prices there is — of late, there are softening in the prices, but this is never a concern for us, actually. This is always passed on to the customers. There is a lag of, say, one quarter, two quarter, but this is always passed through.
Unidentified Participant — — Analyst
And sir, my second question that we’ve talked about is that we grow ahead of the industry going forward. So, I want you to understand what sort of a volume growth do we expect because of increasing share of business with existing customers, increasing adding new customers, so do we expect faster volume growth than the industry?
J.K. Jain — Chairman & Managing Director
See, when we’re talking about our growth, there are lot many growth sectors, and this is not only the volumes everything, the technology give us the advantage of more realization as well as whatever we can get — can get more businesses from our existing OEM customers and the EVs and all LEDs. There are so many factors for these growth drivers.
Unidentified Participant — — Analyst
Okay. Okay. Sir, my third question is regarding LED adoption. So, as far as our current order book, could you tell us how there’s a higher share of LED in the two-wheeler segment, and given the pricing pressure that the two-wheeler industry has seen, can we expect the LED adoption to be as fast as we are thinking?
J.K. Jain — Chairman & Managing Director
As of now, as we have already declared, 50% penetration is already there. And here on, every year you can see 10% of additional increase of conventional to LED is being adopted by the customers. So, we hope in next five years 100% will be changed to LED.
Unidentified Participant — — Analyst
Okay, okay. And sir lastly, on the EV orderbook, the orderbook we have from our EV customers, so there are a few players which are facing issues from FAME-II subsidy. So, is our order book very much — has a higher proportion of those two customers especially Hero Electric and Okinawa?
J.K. Jain — Chairman & Managing Director
We are supplying — basically as I told in my speech, these are all short-term hurdle. They are not permanent. So they will come out very easily.
Arvind K. Chauhan — Company Secretary
They have already started their volumes and production is on.
Unidentified Participant — — Analyst
Okay, sir. Thanks. Thanks. I’ll join back the queue.
Operator
Thank you. Our next question is from the line of Nirvana Laha as an individual investor. Please go ahead.
Nirvana Laha — Individual Investor — Analyst
Hi, thanks for the opportunity. Sir, good to see that you’re saying that the impact will not be substantial or permanent. So just one question. I assume you faced some impact in quarter three. So, can you confirm that and do you think there’ll be impact in quarter four, or are you expecting normalized volumes from quarter four from the EV players?
Arvind K. Chauhan — Company Secretary
There is no impact on us. I think the previous question you’re asking it is about the subsidy issue. There is no impact on the business.
Nirvana Laha — Individual Investor — Analyst
Yeah, okay. So in terms of orders received by Fiem from these players, there was no impact it was business as usual. Got it.
Arvind K. Chauhan — Company Secretary
No impact.
Nirvana Laha — Individual Investor — Analyst
Okay, and you don’t foresee any impact in the coming one or two quarters based on the orders you’re receiving?
Rajesh Sharma — Whole-time Director
I think the way you have to look at it is that we have a very diversified customer base here. There will be one or two players who will be impacted. There will be other two players who will ramp up volume, and that is what has happened to keep our volumes the way they are. So to that extent, we feel that the overall volumes, our share will continue to go up, our EV volumes. Now which player does what is something that remains to be sort of seen over the next few quarters, but overall industry is going up, and that is why we’ve been insulated because of our diversified…
Nirvana Laha — Individual Investor — Analyst
Okay, that’s great to hear. So, one figure. What percentage of your sales roughly are related to OEM exports, not your exports, but if you can give a rough figure OEM exports?
Arvind K. Chauhan — Company Secretary
No, see it is difficult to give because this is — we are we are supplying to their global motors and cylinders, so many geographies in Europe and other Japan islands, but we cannot give the numbers out to exports.
Rajesh Sharma — Whole-time Director
[Speech Overla] apply directly to Indian customers, and they are exporting their vehicles or their parts to their subsidiary companies. It will be difficult for us to calculate the percentage.
Nirvana Laha — Individual Investor — Analyst
Okay, so not even a ballpark kind of number? So the reason I ask this question is because export demand may be impacted, as you’re saying, but domestic demand may grow strongly, so just to model that.
Arvind K. Chauhan — Company Secretary
But it’s very difficult to give this number.
Nirvana Laha — Individual Investor — Analyst
Okay, okay, no problem. And for Hero Motors, the upcoming supplies, are they going to be LED supplies or halogen, or is it a mix of both?
Arvind K. Chauhan — Company Secretary
All LEDs.
Nirvana Laha — Individual Investor — Analyst
All LEDs, okay. Final question from my side, so, you mentioned that margins are improving due to operating leverage, and revenues increasing, but also the gradual conversion to LED should also be one of the strong reasons, right?
J.K. Jain — Chairman & Managing Director
Yeah, yes, yes. Yeah, that’s true. That is one of the — and moreover, it is our USP to how to get the margins, how to save the — how to become economical because customer doesn’t give any margins.
Rajesh Sharma — Whole-time Director
So basically, it is all the internal efficiency, yes.
Nirvana Laha — Individual Investor — Analyst
Right. Given that you’re saying you expect in five years 100% conversion to LED, the margins should sustain right? Of course, there can be one-off events, which nobody can predict, but the 13.5%, 14% kind of margins, if everything else remains normal, should be the same. Is that the correct understanding?
Rajesh Sharma — Whole-time Director
Yes.
J.K. Jain — Chairman & Managing Director
Yeah, basically the trend is like that. So, based on the trend I can say that in next five years [Indecipherable].
Nirvana Laha — Individual Investor — Analyst
Okay. And any developments on modeling purpose?
Rajesh Sharma — Whole-time Director
Yeah, for your modeling purposes to answer yes. I mean, this is the margin we would expect going forward.
Nirvana Laha — Individual Investor — Analyst
Okay, great. Any developments that you want to talk about with respect to any new products, either four wheelers and lighting or anything else at all?
Rajesh Sharma — Whole-time Director
So, I think there is a lot of ecosystem, there is lots happening with the ecosystem, with the overall industry, and there is active discussion on a number of strategic sort of initiatives. However, we would be able to only talk about it when something actually culminates. So, at this point of time, it’ll be too premature.
Nirvana Laha — Individual Investor — Analyst
Sure, but would you like to highlight at least any area of the universe that you’re looking at?
J.K. Jain — Chairman & Managing Director
We’re strategically — at the moment, we can’t disclose.
Rajesh Sharma — Whole-time Director
But it will be all efficiencies only across the industry. There is no [Speech Overlap]. So it will be very related businesses.
Nirvana Laha — Individual Investor — Analyst
Okay, and this is not seeking guidance, but just in how many quarters do you think you’ll be in a position to announce something on this, just if you have an idea?
Rajesh Sharma — Whole-time Director
No, no, no. See, the things we have shared that — this will be all our related industry, the automotive, and next thing we can definitely inform, as and when something culminates.
Nirvana Laha — Individual Investor — Analyst
Okay. Thank you so much. Wish you all the best.
Rajesh Sharma — Whole-time Director
Thank you.
Operator
Thank you. Next question is from the line of Shakti Agrawal as an individual investor. Please go ahead.
Shakti Agrawal — Individual Investor — Analyst
Hi, congratulations on a good set of numbers. Sir, I wanted to understand what is our capacity utilization at this point?
Arvind K. Chauhan — Company Secretary
See, our capacity utilization is in the range of 75% for this quarter.
Shakti Agrawal — Individual Investor — Analyst
75% for this quarter. What is the peak capacity utilization that we can achieve, sir?
Arvind K. Chauhan — Company Secretary
Peak, it can go beyond 90%.
Shakti Agrawal — Individual Investor — Analyst
Okay. Peak it can go beyond 90%. All right. Any breakthrough in the four-wheeler division, sir? Because we’ve been discussing for last couple of quarters about breakthrough in the four-wheeler division and diversification towards this? Has there been any breakthrough in that?
Arvind K. Chauhan — Company Secretary
As already informed, we are working on the opportunities, but definitely nothing too inform as of now.
Shakti Agrawal — Individual Investor — Analyst
Okay, nothing. And sir, what is the overall contribution in the entire two wheeler on our contribution in terms of light, what is the overall cost contribution in that?
Arvind K. Chauhan — Company Secretary
You’re talking about our market share in the two-wheeler lighting?
Shakti Agrawal — Individual Investor — Analyst
No, no. Like in 2019, you’d mentioned that our overall contribution is about like INR2,000, INR2,500 rupees in the entire thing. Just wanted to know what is the overall contribution in the entire two-wheeler — this thing for headlights, taillights, what you supply.
Rajesh Sharma — Whole-time Director
I think you’re talking about the kit value per vehicle.
Shakti Agrawal — Individual Investor — Analyst
Yes, yes.
Rajesh Sharma — Whole-time Director
So, it depends, means, INR2,000 to INR5,000 and maybe more in some cases because…
Arvind K. Chauhan — Company Secretary
It varies from INR800 to INR5,000.
Shakti Agrawal — Individual Investor — Analyst
Okay, INR800 to INR5,000. All right. That would be quite helpful. Sir, now, the two-wheeler industry has grown about 10%. We have grown about 30%. So, is that the kind of outperformance that we’re going to continue going forward as well? Let’s say if the two-wheel industry grows by 10%, we are going to grow by 30%?
J.K. Jain — Chairman & Managing Director
Basically, if you see, we have to reach minimum near 2019 level. We are much below, much, much below. So we reach 2019 level, then it comes very high, the percent is very, very high.
Shakti Agrawal — Individual Investor — Analyst
No, no sir. I’m just saying that let’s say industry has grown 10%, the two-wheeler industry [Speech Overlap].
Arvind K. Chauhan — Company Secretary
See, what we maintain that we always outgrown the industry growth. We are very hopeful. I mean this is nothing to say that we will not grow better. In fact, we will grow very strong.
Shakti Agrawal — Individual Investor — Analyst
Okay, okay, okay. And sir, what are we — in terms of capex, what are the capex numbers that we’re looking for FY ’24?
Rajesh Sharma — Whole-time Director
So, I think for the current year, we should be maybe between INR45 crores and INR50 crores, and for next year again there should be another outflow INR40 crores to INR50 crores additional. Yeah, so another INR50 crores odd you should estimate.
Shakti Agrawal — Individual Investor — Analyst
All right. All right. Sir, thank you. That’s it from my side and congratulations, sir. Hope the company keeps performing on the [Speech Overlap] parameters.
Operator
Thank you. Next question is from the line of Viraj Kacharia from Securities Investment Manager. Please go ahead. Viraj, your line is unmuted, please unmute yourself and proceed with the question.
Viraj Kacharia — Securities Investment Manager — Analyst
Yeah, can you hear me now? Hello?
Operator
Yes, yes.
Viraj Kacharia — Securities Investment Manager — Analyst
Yeah. Thank you for the opportunity. Just two questions. First is, you talked about an opportunity in exports for us. So, is this direct export opportunity or we are talking more about, say, supply to Yamaha or SSMI for their global…
Arvind K. Chauhan — Company Secretary
There are — our supplies are domestic — to all the domestic customers and domestic customers are exporting. There are few supplies we are doing direct transport, that is of Harley Davidson, and Piaggio. These are our direct export. And some of Suzuki and Yamaha also we do direct export, but major percentage are with Indian customers only, Indian OEMs.
Viraj Kacharia — Securities Investment Manager — Analyst
So when we talk about an increasing opportunity in exports, can you provide some perspective, what is that opportunity and how are we looking to play that?
Arvind K. Chauhan — Company Secretary
Overall volume forecast from the customers are good. I think we are hope — we hope there will be a good opportunity for the growth of numbers overall
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. And typically in exports also, the product development cycle is between, say, three, four years to five years. So, when we are talking to customers for export opportunities, where would we be in that journey?
Arvind K. Chauhan — Company Secretary
Yeah, it is always be like 1.5 years to two years the development time and five years is our total vehicle…
J.K. Jain — Chairman & Managing Director
Lifetime.
Arvind K. Chauhan — Company Secretary
…which is the lifetime of the vehicle.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. So, a lot of that would start materializing in next two, three years. Is that understanding right?
Arvind K. Chauhan — Company Secretary
Yeah, we are — we — as of now, we are working on our 85% — 90 plus new models for different OEMs of with all our OEMs for domestic as well as exports market.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. Second question was on the cash part. What would be the cash as of December 31?
J.K. Jain — Chairman & Managing Director
INR270 crores [Phonetic].
Arvind K. Chauhan — Company Secretary
INR207 crores is at December.
Viraj Kacharia — Securities Investment Manager — Analyst
Sorry, your voice was not coming clear.
Arvind K. Chauhan — Company Secretary
This is INR207 crore.
Viraj Kacharia — Securities Investment Manager — Analyst
Net cash, right?
Arvind K. Chauhan — Company Secretary
Yes.
Viraj Kacharia — Securities Investment Manager — Analyst
Okay. Thank you.
Arvind K. Chauhan — Company Secretary
Thank you.
Operator
Thank you. Next question is from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead.
Ashutosh Tiwari — Equirus Securities — Analyst
Yeah, hi. On this Hero order that we have got, is this for scooter or motorcycle models or EV?
Arvind K. Chauhan — Company Secretary
So very typical — to specify the motors you understand — yeah, there are scooter and motorcycle model, but mainly the first products will come with motorcycle.
Ashutosh Tiwari — Equirus Securities — Analyst
Okay and this is like a new model or from the — like, say, they are launching the lot of the extract models as part of that as a new model or refresh?
Arvind K. Chauhan — Company Secretary
They are doing both models. One is existing, another is new model.
Ashutosh Tiwari — Equirus Securities — Analyst
Okay. Okay. And Yamaha, you mentioned that a couple of more models will be added for next year.
Arvind K. Chauhan — Company Secretary
Yeah.
Ashutosh Tiwari — Equirus Securities — Analyst
Okay.
Arvind K. Chauhan — Company Secretary
There are three models we’ll be adding, a new within next year that will be for domestic as well as for export, both.
Ashutosh Tiwari — Equirus Securities — Analyst
So, this is a like a refresh of the earlier models or it completely new models?
Arvind K. Chauhan — Company Secretary
Completely new model.
Ashutosh Tiwari — Equirus Securities — Analyst
So Yamaha will again go back to growth from next year?
Arvind K. Chauhan — Company Secretary
Yes.
Ashutosh Tiwari — Equirus Securities — Analyst
Okay, okay. And you mentioned you have INR200 crores plus cash on the balance sheet right now, the net cash.
O. P. Gupta — Chief Financial Officer
That is what we shown no? Net cash is INR207 crores.
Arvind K. Chauhan — Company Secretary
INR207 crores.
Ashutosh Tiwari — Equirus Securities — Analyst
So any plans to increase dividend and or how should we — because capex is going to be lower only for us, so any plan to increase dividend or what is thought process in cash?
Arvind K. Chauhan — Company Secretary
See, this is — regarding the dividend, it is — you already have seen 20% to 25% of our net profits as per the policy. So definitely the cash is more, it will be increased and it all depends on the Board decision.
Ashutosh Tiwari — Equirus Securities — Analyst
Okay, okay, fine. Thank you and all the best.
Arvind K. Chauhan — Company Secretary
Thank you.
Operator
Thank you. The next question is from the line of Anika Mittal from Nvest Research. Please go ahead.
Anika Mittal — Nvest Research — Analyst
Hello. Sir, what is the revenue guidance for the complete financial ’23, do you see quarter four will be better than quarter three financial year ’23?
J.K. Jain — Chairman & Managing Director
What is that?
Arvind K. Chauhan — Company Secretary
Sure. The — generally, we have given a guidance of 15% [Phonetic] revenue growth, but overall on…
Anika Mittal — Nvest Research — Analyst
Yes, sir.
Arvind K. Chauhan — Company Secretary
Overall, generally, Q4 is always better than Q3 for us theoretically.
Anika Mittal — Nvest Research — Analyst
Okay.
Arvind K. Chauhan — Company Secretary
So, to kind of maintain that.
Anika Mittal — Nvest Research — Analyst
Okay, sir. But sir, EV share for the quarter three financial year ’22?
Arvind K. Chauhan — Company Secretary
EV share is right now close to 6%.
Anika Mittal — Nvest Research — Analyst
6%. Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Rahul Picha from Multi-Act PMS. Please go ahead.
Rahul Picha — Multi-Act PMS — Analyst
Yeah, thank you for the opportunity. Sir, on the Hero business that we have won, what could be the contribution in the next financial year? Like, will it be a meaningful contribution?
J.K. Jain — Chairman & Managing Director
No, it is just the beginning. So next quarter will not be meaningful. Maybe from the next year, it will be very good supportive.
Rahul Picha — Multi-Act PMS — Analyst
So, can we expect it to be in the top five customers for next year, FY ’24?
J.K. Jain — Chairman & Managing Director
No.
Arvind K. Chauhan — Company Secretary
We cannot comment as of now. It totally will depend on the customer ramp up plan.
Rahul Picha — Multi-Act PMS — Analyst
Okay and what kind of wallet share are we expecting in the next quarter or the next year for Hero?
Arvind K. Chauhan — Company Secretary
Honda is [Speech Overlap].
J.K. Jain — Chairman & Managing Director
[Speech Overlap] at the moment to speak, yeah.
Arvind K. Chauhan — Company Secretary
Yeah, it is too premature to talk about these parameters. So, definitely when the next year numbers will come, you will get a clear picture. First, vehicle will be launched. Those all figure will definitely come out on the platform.
Rahul Picha — Multi-Act PMS — Analyst
Okay, sure. Thank you.
Operator
Thank you. Next question is from the line of Nidhi Babaria from Envision Capital. Please go ahead.
Nidhi Babaria — Envision Capital — Analyst
Thank you, sir, for taking my question. Sorry if I missed it initially, but if you can help me understand the order book which we have right now. And also when we say that the current margin is a lot of — a lot of current margins has been contributed via other expense. So, do we mean to say that the gross margins are going to be stable at 39% kind of range and the — like the…
Arvind K. Chauhan — Company Secretary
Yeah.
Nidhi Babaria — Envision Capital — Analyst
Okay.
Arvind K. Chauhan — Company Secretary
Yes, we have a 95 plus new projects as of now under development. Those will be materialized in next year or maybe next to next year. So, we have a strong project portfolio which is under development which will give us our sales figure into positive direction of sales growth.
Nidhi Babaria — Envision Capital — Analyst
Okay and sir, do we give order book guidance?
Arvind K. Chauhan — Company Secretary
No, we generally don’t give the order book guidance, yeah.
Nidhi Babaria — Envision Capital — Analyst
Okay.
J.K. Jain — Chairman & Managing Director
Approximate — you can say the approximate value is around INR850 crores to INR900 crores
Arvind K. Chauhan — Company Secretary
Yes. The projects we are entering will — which is INR850 crores to INR900 crores value in next year’s time.
Nidhi Babaria — Envision Capital — Analyst
Okay and this will be the — come under production in FY ’24 itself or it will be in next three years?
J.K. Jain — Chairman & Managing Director
Some in ’24, some in ’25, yeah.
Nidhi Babaria — Envision Capital — Analyst
Okay. Okay, sir. Thank you.
J.K. Jain — Chairman & Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.
Pritesh Chheda — Lucky Investment Managers — Analyst
Sir, what is the expected shift in LED to non-LED next year in FY ’24? And even now, the LED to non-LED pricing is 2:1 — sorry, 3:1?
Arvind K. Chauhan — Company Secretary
Sir, your voice is breaking, but we can…
J.K. Jain — Chairman & Managing Director
Yes, will you repeat the question?
Pritesh Chheda — Lucky Investment Managers — Analyst
Sir, question is, what will be the LED to non-LED shift, share shift in FY ’24?
J.K. Jain — Chairman & Managing Director
As we have explained earlier, at the moment, we are at 50% level and we expect to 60% level.
Pritesh Chheda — Lucky Investment Managers — Analyst
Next year based on whatever models and RFQs and production plan that you have?
J.K. Jain — Chairman & Managing Director
Yeah.
Arvind K. Chauhan — Company Secretary
Two years.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay. And the premium LED to non LED is 3:1, 2:1, the pricing?
Arvind K. Chauhan — Company Secretary
It totally will depend on the technology, what kind of technology is being input for with LED or without — non-LED. There are reflected type, there are projected type. So, every cost is different. It will be very difficult to calculate by this way. But normal condition is conventional to normal LED, it is almost still 1:3.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay, okay. On the margin side, is there any upsides to margins when LED mix keeps on rising?
Arvind K. Chauhan — Company Secretary
We are already doing 13.5% to 13.6% now, so it is always our…
J.K. Jain — Chairman & Managing Director
Margins are always the same.
Arvind K. Chauhan — Company Secretary
Yeah.
Pritesh Chheda — Lucky Investment Managers — Analyst
Margins are always same?
J.K. Jain — Chairman & Managing Director
LED or non-LED.
Arvind K. Chauhan — Company Secretary
Yeah.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay. So when you move next year on a higher utilization at 90%, will there be a further margin offset from 13% that we are reporting — 13%, 14% that we’re reporting right now or you think that lot of the margins are captured?
Rajesh Sharma — Whole-time Director
Margin in terms of amount will increase, but in terms of percentage, we have already outperformed everybody and we are [Indecipherable] first to maintain this margin at 13.5%, 13.6%, 13.75% [Phonetic], but when the sale grows, then definitely, the amount, the margin will be very huge.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay. Okay. And lastly, sir, on exports, I couldn’t get your comments. Someone asked you on exports whether are you getting any direct exports or most of your export opportunities that you’re seeing are deemed exports that is basically the supply to a Honda or Suzuki or a Yamaha in India and they in turn tend to export the product lines? Are you…
O. P. Gupta — Chief Financial Officer
Basically, our export — yeah, please continue.
Pritesh Chheda — Lucky Investment Managers — Analyst
Are you a part — are you a part of any global supply, direct supply or are you ideally global direct supply? That was the point.
O. P. Gupta — Chief Financial Officer
Yeah, basically, direct supply, globally, we are giving to Harley Davidson, we are giving to Yamaha and Piaggio. So, these are the direct supplies. But rest of the things, we are giving to the OEMs in India and they are exporting with their own channel to different countries.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay. So how much is direct supply in total exports for you, percentage?
O. P. Gupta — Chief Financial Officer
Yeah. 2.7% at the moment, direct exports.
Pritesh Chheda — Lucky Investment Managers — Analyst
2.7% of the export or 2.7% of total sale? 2.7% [Phonetic] of your total sales?
O. P. Gupta — Chief Financial Officer
Our sales.
Arvind K. Chauhan — Company Secretary
Our sales.
Pritesh Chheda — Lucky Investment Managers — Analyst
Okay, okay, okay. Thank you very much, sir. Thank you.
Arvind K. Chauhan — Company Secretary
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of [Indecipherable] as an individual investor. Please go ahead.
Unidentified Participant — — Analyst
Thank you. Thank you for the opportunity, sir. I just wanted to know like the overall market size of the two wheeler lightning. Is there any number you’re looking forward to?
J.K. Jain — Chairman & Managing Director
No, basically you can say about INR8,000 crores to INR9,000 crores at the moment. And we are at the 33% level as of date.
Unidentified Participant — — Analyst
Okay. And is there any ballpark number for the same future opportunity growth for the same?
J.K. Jain — Chairman & Managing Director
Yeah, basically, as we told that we have more than 95 projects in hand, which is going to be in next two years. So, we have a very robust pipeline.
Unidentified Participant — — Analyst
All right, all right. And so, these numbers are including your LED light numbers, right?
J.K. Jain — Chairman & Managing Director
Yes, yes, yes.
Unidentified Participant — — Analyst
EV, kind of. Okay, okay. Thank you. Thank you for all my questions.
Operator
Thank you. Next question is from line of Vishal from Swan Investments. Please go ahead.
Vishal — Swan Investments — Analyst
Thank you for taking my question, sir. Just one question regarding, sir, what will be our import content in LED and non-LED lighting?
Arvind K. Chauhan — Company Secretary
The non-LED lighting is nil.
J.K. Jain — Chairman & Managing Director
Nil, almost nil.
Arvind K. Chauhan — Company Secretary
Almost nil. And for the LED head lamp, the content is more. It ranges from 35% to 60%. So, it depends on what product we are talking. But LED, the import content is more.
J.K. Jain — Chairman & Managing Director
And it varies from product to product.
Vishal — Swan Investments — Analyst
Okay, okay. Sir, then in that case, as the proportion of LED lighting increase, we have to maintain more of inventory and our working capital will be stretched. Is that — that can happen LED vis-a-vis non-LED?
J.K. Jain — Chairman & Managing Director
Yes, basically, your question is correct because for the electronic product, we have to have a very, very high inventory and also projections we have to give for a year. Earlier, it was six. But now, we have to give a projection for one year, so the inventory is very high. That’s true.
Vishal — Swan Investments — Analyst
Okay. Sir, then in that case, sir, the working capital — the working capital cycle in LED is stretched and the capital intensity in LED is also high. So, sir, in that case, how do you manage the ROC in both the business, LED and non-LED? Is the non- LED business more ROC accretive than the LED business? Is my understanding right?
J.K. Jain — Chairman & Managing Director
No, no, basically, the sales of the LED business is higher and being a fixed cost, so the profit rate’s better. And with regard to the how you manage it is our USP to how we repeat our turnover versus [Indecipherable].
Arvind K. Chauhan — Company Secretary
One thing you have to understand, this is the higher level of inventory is required because this is the import of the electronics and the LED. When the situation normalizes, that lead time will also be reduced, correct?
Vishal — Swan Investments — Analyst
Is the price difference of — in LED, 3:1, still there or it is lower now?
J.K. Jain — Chairman & Managing Director
Now better, now getting better day by day.
Vishal — Swan Investments — Analyst
Okay, okay. Got it, sir. Got it. Thank you and all the best, sir.
J.K. Jain — Chairman & Managing Director
Thank you.
Operator
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Sahil Sanghvi for closing remarks. Thank you and over to you.
Sahil Sanghvi — Monarch Networth Capital — Analyst
Thank you. We, on behalf of Monarch Networth Capital, we want to thank the management for very patiently answering all the questions. J.K. sir — Jain sir, do you have any closing remarks?
J.K. Jain — Chairman & Managing Director
Yeah, I will. I appreciate everyone’s participation in the conference call. And I hope that we have provided satisfactory answers to all your queries. If you have any further questions, please don’t hesitate to contact us. Thank you, and have a good day.
Operator
[Operator Closing Remarks]