Minda Corporation Limited (MINDACORP) Q3 FY23 Earnings Concall Transcript

Minda Corporation Limited (NSE:MINDACORP) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Ashok Minda — Chairman and Group Chief Executive Officer

Vinod Raheja — Group Chief Financial Officer

Analysts:

Varun Baxi — Nirmal Bang Institutional Equities — Analyst

Vishal — Swan Investments — Analyst

Anil Kumar — — Analyst

Arihant Sharma — Infinity Capital — Analyst

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Jay Kale — Elara Capital — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Rajesh Kumar — Sharegiants Wealth Advisors Private Limited — Analyst

Bismith Naik — RW Investment Advisors — Analyst

Harish Shah — HS Investments — Analyst

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the 3Q FY ’23 Minda Corporation Limited Conference Call hosted by Nirmal Bang Institutional Equities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Varun Baxi from Nirmal Bang Equities. Thank you, and over to you, sir.

Varun Baxi — Nirmal Bang Institutional Equities — Analyst

Thank you. On behalf of Nirmal Bang Institutional Equities, I thank you all for joining this call. I also thank management for providing us the opportunity to host this call. I now hand over the call to Ms. Pushpa Mani for introducing the management and take it from there.

Over to you, Pushpa.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Hi. Good afternoon, everybody. This is Aakash Minda this side. I would request our Group Chairman, Mr. Ashok Minda to give us the opening remarks. Thank you.

Ashok Minda — Chairman and Group Chief Executive Officer

Thank you, Aakash. Good evening, everyone, and welcome to the quarter 3 financial year ’23 earnings conference call of Minda Corporation. I would like to thank you all for joining us on this conference call here today and hope you all are keeping safe and healthy.

The auto industry saw steady growth on year-on-year basis in the third quarter of financial year ’23, and the growth is visible across vehicle segments. Supply\ side constraint seems to be easing out with better semiconductor situation, but uncertainty and long lead times still continues, which is likely to persist until the end of financial year ’23. Export saw an improving trend, but situation’s yet to be normalized on the back of certain macroeconomic factors.

Among the headwinds and tailwinds, I’m pleased to report that Minda Corporation has continued its growth momentum with revenue growth faster than the industry and double-digit EBITDA margin for 10 straight quarters. The company’s revenue from operation stood at INR1,068 crores, registering a growth of 45% year-on-year, and 22% on like-to-like basis excluding Minda Instruments. With EBITDA margin of 10.7%, PAT for the quarter stood at INR52 crores with PAT margin of 4.9%. The growth was driven by better revenue visibility in both business verticals improving product mix, increasing content per vehicle, and increasing in share of business. In line with our philosophy to reward our shareholders, the Board of Director have declared an interim dividend of 20% on the face value, which is INR0.40 per equity share.

Now, I would like to take you all through the key developments during the quarter. The company entered into technology license agreement with LocoNav for telematics software for both web and Android/iOS platforms. Minda Corporation is already providing telematic hardware kit and with the addition of software capabilities, we have become a complete system solution provider in telematics. The company has filed five patents during the quarter in various business verticals taking the total number of patents to 249. We have inaugurated one more state-of-the art Wiring Harness plant in Chakan, Pune. This plant is spread across 1,90,000 square feet, and the factory is equipped with advanced machine backed by cutting-edge technology.

Successful EV launches by key OEMs like Tata, Hyundai, Mahindra, Bajaj, Honda, etc. were clear signs of EV transformation on the ground, and we at Minda Corporation are all set to capture the fast-growing EV space with products like smart key, DC-DC converter, battery charger, ITS, and telematics. Nine months financial year ’23, EV order constitutes 24% of the total order book by Minda Corporation. We are focused to solidify our market leadership by providing high quality innovative products, and securing new business in our core products including locksets, wiring harness, instrument clusters, and sensors. Moreover, all our products are undergoing premiumisation, resulting in increased content value.

Moving forward, our strategy will be to continue to strengthen our core products and expand our customer base by onboarding new customers and increasing share of business with existing customers. We would be targeting this through in-house R&D, implementing technological upgrades, and forming strategic partnerships globally. It is important to emphasize that Minda Corporation remains dedicated to understanding customer needs and integrating advanced technology into its products for quality and sustainability opportunities.

With this, I would like to hand over to Mr. Aakash Minda for a brief overview of the earnings presentation. Over to you, Aakash.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, sir. I would request all of you to refer to the slides posted online for the earnings presentation quarter 3. I thank Mr. Baxi for Nirmal Bang for organizing this call. I’ll refer to Page 3 to share about the organization. Minda Corporation is about a INR3,500 crores company with 16,000 people and 34 plants having nine partnerships across various products and technologies.

Moving on to the next slide. We have again 34 plants and primarily we focuses — the operations in India and Asian countries. I move to Slide 5, which is showing the highlights of quarter 3 and nine months performance. Continued growth momentum with revenue growing faster than the market growth. Double digit EBITDA margin for the 10th straight quarter on sequential basis. PAT stood at INR52 crores with a PAT margin of 5% in quarter 3. Secured marquee orders of a wiring harness for EV platform of a Southeast Asian OEM. Order wins across various segments with EV constituting to about 24% of the orders received in the first nine months. LocoNav for telematics solutions — software solutions becoming a complete system provider in telematics.

I’ll now move to the next slide where we show the consistent and sustainable market-beating performance, profitable growth by Minda Corporation. As revenue in quarter 3, Minda Corporation has done INR1,068 crores, which is year-on-year 45% growth, which is consistent and sustainable market-beating growth. The EBITDA stood at 10.7% at INR114 crores, which is again 45% growth from last year. PAT at about 4.9% at INR52 crores.

About — moving to the next slide. This is a snapshot about the Minda Corporation Limited, which shows all the products, the key customers, the green customers are EV customers, manufacturing facilities, and R&D capabilities. On the right, it shows about the number of shareholders and other shareholdings.

Moving to the next slide sharing about the Indian automotive industry performance. If I compare nine month year-on-year growth, the industry grew by about 16.3% wherein two-wheelers grew by 13%, passenger vehicle by 30%, tractors by 5%, and CV by about 40%. If I talk about the year-on-year growth for quarter 3, the industry grew by about 4.6% where two-wheelers growth was pretty much flat and the passenger vehicles grew by 21%, and tractors grew by about 6%. On a quarter-on-quarter basis, the industry degrew by about 17%, two-wheelers degrew by about 18%, passenger vehicle by 10.5%, commercial vehicles and tractors by a large number of 26%.

Quarter 3 FY ’23 saw strong demand in PV segment with new launches. The weakness in rural demand continues on the back of uneven monsoon, tepid rural sentiments and increased financial costs. Going forward, the industry growth to be led by continued spend on infrastructure, improved fleet utilization and profitability, a strong order book aided by a slew of new launches. The premiumization trend in the two-wheeler and other segment is anticipated to continue in the near growth — near term. Overall, industry growth in quarter 3 is 4.6% compared to last year. We remain cautiously optimistic on the industry — auto industry on the back of strong cues in demand from domestic markets while export remains challenging on the slack of ongoing global headwinds.

I move to the next slide, which is the revenue breakup for Minda Corporation. By geography, India still continues to be about 45%. By end-market, two-wheeler continues to be about 45% of the group revenue where commercial vehicle is about 30%, passenger vehicle is about 15%, and after market is about 12%. By business vertical, mechatronics and aftermarket are about 47%, information and connected systems, which is primarily riding on about 37%, and Minda Instruments Limited, which is a clusters and sensors division is about 15%.

Moving to the next slide, which is the division wise revenue. If I look at the left pie chart, the locksets or security divisions contribute about 28% of the topline, wiring harness about 28%, clusters is about 10% and die casting is about 16%, and others contribute about 17%. Minda Corporation is the market leader into two-wheeler locking systems and wiring harness businesses. We are pioneer in keyless entry solutions for two-wheelers, better control over quality in lockset with our own die casting division. Moving from mechanical cluster to incorporate the latest TFT digital cluster, the company is one of the key players in the two-wheeler and CV segment. And off late, entering in the PV segments. In die casting division, we focus on niche products with more exports.

Moving to the next slide on the consolidated performance of quarter 3 and nine months. On quarter 3, we did our operating revenue of INR1,068 crores, which is 45% increased year-on-year basis, if I include Minda Instruments if it’s added, we grew by 22%. EBITDA margins stood at 10.7% at INR114 crores, which is 45% higher than last year. PBT stood at INR72 crores, which is growth of 44% year-on-year and PAT margin stood at INR52 crores, a year-on-year 41% increase. On a nine month level, we have grown from INR2,028 crores to INR3,226 crores. At EBITDA level, we have moved from 9.2% to 10.7%, which is from INR187 crores to INR345 crores in nine-month EBITDA. PBT has grown from — by 100% from INR111 crores to INR222 crores and profit after tax has grown by about again 95% from INR83 crores to INR163 crores.

On the domestic front, new business across segments further aided by new product launches and increase in share of business with existing customers. Exports are showing signs of revival while remaining cautiously optimistic on the same going forward. On the EBITDA front, we delivered double-digit margin on the back of various cost control initiatives and increased efficiencies. Semiconductor supplies have eased out but long time — long lead times still continues. Commodity prices after — are softening and are almost stable on quarter-to-quarter basis, but on year-on-year basis, they are increased.

Moving on to the next slide, which is Slide 12, on the business verticals wise performance. I first focus on the mechatronics division. The top line is at around INR547 crores with 13.8% margin. The additional in the same band, which is about 14%. The growth in revenue was supposed — supported by strong demand in domestic market, increase in business with key customers and new launches. Exports have risen on quarter-on-quarter and year-on-year basis on the back of new orders. EBITDA margin increased by 80 basis points on the back of higher sales.

On the information and connected systems, now this includes wiring harness and Minda Instruments Limited, the EBITDA margin stood at 7.4%. We understand and we acknowledge that the wiring harness division continues to perform below its potential. The growth in revenue was supported by strong demand in domestic market. Export is focused on the wiring harness division, and EBITDA margin is also increased on wiring harness division on quarter-to-quarter basis.

Moving on to the next slide of partnership with LocoNav. Minda Corporation used to offer hardware solutions, and now with LocoNav give us all — which will give us the software solutions, we now offer a complete system solution as in our business plan to offer system solutions to all our customers. On the next slide, we show our plants, our growing facilities, and also consolidating multiple plants into large facilities to get better economies of scale and to come close to the customer.

Moving to the next slide, which is the strategic pillars of growth. Our four strategic pillars of growth are focus on enhancing on the core, innovation technology, growing EV opportunity, and strengthening passenger vehicle OEM. We want to transform and become to — the complete solution provider and partner of choice. Cost leadership in manufacturing and thought leadership position in technology. There’s a premiumization happening in the market, which Minda Corporation is acquiring. And our product innovation in all business segments to drive this content per vehicle for Minda Corporation. We want to deliver better results than the industry and continue to outperform the market.

On the next slide, we just show how the technology and the products of Minda Corporation are moving. So vehicle access, if you see the traditional lock and key are moving to smart and intelligent vehicle access, which includes passive entry passive start, flush door handles, powered lift gate systems, and cybersecurity. In the wiring harness, the wiring harness will continue more into the vehicle architecture of power distribution unit, battery distribution unit, high voltage wiring harnesses, smart junction boxes, etc.

In the clusters and sensors division, which is a driver information system, the analog cluster is moving to all digital clusters, which are all TFT as explained before with integrated telematics and ADAS systems. In the EV area, we’re looking at more lightweighting as well as offering more electronic content through our internal and collaborative approach of partnership and offering new products in areas of motor and motor controller power electronics.

Moving to the next slide. This is the kit value offering on the two-wheeler EV content. Minda Corporation offers about INR16,000 to INR20,000 potential EV kit value. Our current kit value offering in the legacy or the ICE is about INR4,000 to INR5,000. With the premiumization of all the products, Minda Corporation will almost double its content and additional products in the EV product lines like DC-DC converter and battery chargers and other power electronics will get us more kit value of INR8,000 to INR10,000.

Last not the least, value propositions. The Minda Corporation would like to grow ahead of the market and deliver the customer the best of the solutions. Last not the least, as we move on to the ESG, CSR and awards, Minda Corporation values ESG as paramount. And this is directed and even governed by our Board of Directors and monitored on regularly basis. More details can be looked on our website. On the corporate social responsibility in quarter 3, we have set up various camps all across India and overseas for focusing on education, woman hygiene, and people with disabilities. In quarter 3, the company had received many customer awards, which shows confidence that the customers bestow on Minda Corporation Limited. In total, we were awarded a total of 57 external awards in the quarter 3 across various forums.

With this, I would like to conclude my presentation and invite everybody for questions. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We have the first question from the line of Vishal from Swan Investments. Please go ahead.

Vishal — Swan Investments — Analyst

Thank you for taking my questions, sir, and congrats on decent set of numbers. Sir, there are actually two, three questions from my side. Sir, if you see last two, three quarters, your employee cost trajectory has gone up, so it was last year around INR115 crores to INR120 odd crores, which has gone up now to INR145 crores, so INR155 crores, INR157 crores, so is there something you want to highlight here?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes, Vishal. Thank you for your question. Of course, there are some of the minimum wages of various states that have been increased leading to higher wages in the southern states per se. And, of course… Sorry, come again.

Vinod Raheja — Group Chief Financial Officer

Last year MIL was not there.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes, so last year, Minda Instruments Limited was also not there in these numbers, so Minda Corporation — Minda Instruments Limited has also now been added, which has higher manpower as well.

Vishal — Swan Investments — Analyst

Okay, sir. Sir, also can you give me the number of total debt broken into long-term and short-term debt for this — as of December ending?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. The total debt is about INR413 crores out of which long-term is about INR95 crores and short term loan is about INR322 crores. Over the last quarter, this has come down by about INR35 crores.

Vishal — Swan Investments — Analyst

Okay. And was there any improvement in the working capital cycle this quarter?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. There have been margin improvements in this quarter based on our various initiatives that we have taken on working capital.

Vishal — Swan Investments — Analyst

Okay. Okay. Sir, I don’t know, I have missed this part, what is the outlook regarding your understanding on the two-wheeler business going forward for the next quarter and for the next year? That is my last question, sir.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So if your question is on the outlook of the industry, definitely quarter 4 historically is usually a better quarter than others. But overall, the past trend in the last few quarters of two-wheelers have not been that encouraging, so we expect around a flattish growth for the two-wheeler industry particularly going forward.

Vishal — Swan Investments — Analyst

Okay. Okay. And sir, just one more question to add on. Sir, our information and connected services business has seen a drop quarter-on-quarter from INR616 odd crores to INR522 crores. So is it because of the softness in the two-wheeler demand quarter-on-quarter? Is my understanding right?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

No. So there are two key factors on this. One, in the last quarter in the Minda Instruments Limited, there was a premium purchase of about INR30 odd crores. So this quarter that is not there, so — and that INR30 odd crores has come down, number one. Number two, the INR65 odd crores has come down due to the rather in line with the two-wheeler industry also coming down with the same percentage. So our numbers have also come down, our top line has come down in the same ratio that the two-wheeler industry has performed.

Vishal — Swan Investments — Analyst

Okay. Okay. Thank you so much, sir. Thank you and all the best, sir.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Anil Kumar from Jefferies Securities. Please go ahead.

Anil Kumar — — Analyst

Hi. Congratulations for a wonderful performance and I have a couple of questions. The first question is regarding — you have plans for your future product portfolio as EV scale up happens. And do you have any plans for any inorganic growth?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So see, Mr. Anil, our — all of our product lines are EV agnostic. When the EV or even ICE is happening, there is a premiumization in the market happening, which is what Minda Corporation is acquiring and playing on. All of our product lines like you see the keyless solutions are going to go through premiumization. Lock and key, we are going to keyless. Analog clusters will go to mechanical — to TFT clusters. Wiring harness will have with regulations and maybe have more content. Of course, in electronic — EV space there is — which is the DC-DC converters, battery chargers, and other PDU, BDU that I’ve explained are going to be part of the portfolio. So we have a clear strategy of 3x3x3 in our EV product area on where — which segments we would like to target, what product lines we are looking at, and what are the expertise we would like to bring, both organically and through partnerships.

Anil Kumar — — Analyst

Okay. Thank you. And the next question is on what are your plans regarding leveraging China Plus trend that we’re seeing in the manufacturing sector. Are you doing anything to mitigate or do you have any specific plans?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So we do continue to explore the opportunity. Definitely, we can see a shift from the export order side, so the customers who have been rather exporting or rather importing from China are moving on to India and — which is where we are capturing some of the opportunity. As you can see, our exports have also grown on year-on-year and quarter-on-quarter across all divisions, and this is where the biggest opportunity lies.

Anil Kumar — — Analyst

That’s all from my side. Congratulations and all the best.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, Anil.

Operator

Thank you. We have the next question from the line of Arihant Sharma from Infinity Capital. Please go ahead.

Arihant Sharma — Infinity Capital — Analyst

Yeah. Good evening, sir, and thanks for allowing me. My first question is related to which key geographies are you exporting to — any of it’s global in that?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yeah, our major or most of our exports are to Europe.

Arihant Sharma — Infinity Capital — Analyst

Okay. And any other region?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. We are also exporting to America, we are also exporting to Latin America and Southeast Asian countries also.

Arihant Sharma — Infinity Capital — Analyst

Okay, okay. And my second question is how was the competitive intensity in quarter 3 in the key business verticals of mechatronics and wiring harness?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sorry. Can you repeat the question, please?

Arihant Sharma — Infinity Capital — Analyst

How was the competitive intensity in this quarter related to the key business verticals?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

You mean by competition or you mean something else?

Arihant Sharma — Infinity Capital — Analyst

Yeah, competition. Yeah.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So definitely the competition is not there when it comes to the keyless solutions as I’ve already explained before. We are the only company who’s offering the keyless solutions. Of course, competition will follow, but all the RFQs or 100% RFQs are being won for the keyless solutions on the premiumization. On the clusters and sensors, there are of course various competition. It’s a cut-throat competition very honestly. Yet, but rewinning orders all across whether it’s EV and ICE and across all segments. Also, gaining share of business as well as cross-selling and increasing penetration over new customers as well.

Arihant Sharma — Infinity Capital — Analyst

Okay. Thank you. That’s all from my side and all the best for the coming quarters.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, Arihant.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Sachin from UTI. Please go ahead.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Hi, sir.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Hi, Sachin.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Hello? Hi. Sir, just one or two questions from my side. Maybe your comments on wiring harness. I know you commented on this competitive intensity, but especially post BS-VI, is there any loss of market share for us? If you can give some color there. And second question is also related to this, which is to do with indigenization of component, and how much margin improvement do you see over the next couple of few quarters? Thank you.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. Sachin, thank you for the question. Yes, firstly, we acknowledge that the wiring harness division continues to perform below our expectations and below the potential that it has. We are working on it on multiple fronts. In fact, first to share with you that from BS-IV to BS-VI, there has been a content increase and going forward there will be also a further content increase in tractors, some TREM IV to TREM V, and also in electric vehicle mobility. We are doing various actions and initiatives focusing on internal. If you see a few quarters back, there was concern in terms of the raw material fluctuation, so we have addressed that issue and permanently taken care of it with various strategy that we are taking from front end and back end.

Secondly, on the component localization, as I’ve also explained before that this is a long lead time item and issue. Currently, we are — out of the all components, we are sourcing about 10% to 12% internally. And going forward in the mid-term to long-term, this is going to go upward of 50%. And of course, the major concern of the roadblock is the lead time taken for the customer approval as we have to put in our connection systems and this takes approval of the complete validation of a new vehicle mobility. So these are some of the areas that we doing. Of course, as I mentioned, we are consolidating our plants and also opening new plants to get the best infrastructure, to offer the latest lines as well as the operational excellence for the wiring harness. Our current facilities are not that equipped or not that advanced, if I may say that, what they should be and what they need to be. So these are some of the areas that we are focusing on in order to increase productivity and improve profitability.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

[Technical Issues] By when do you think it should come through and if at all it happens, what’s the level of improvement you think in the numbers would come through?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

It will be taking about six to eight quarters just putting it primarily because of the lead time and time to develop. And we will see at the group level, about 50 to 60 — or maybe 50 to 100 basis points over the next quarter as one place starts improving.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

And what kind of investments do we need to put in place to modernize our facilities for this specific issue?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

See, wiring harness typically is a labor-intensive product and — but now, we are working across various plants and various technologies in order to automate this, which is again not done in the world and we are exploring such advanced manufacturing excellence and production excellence activities. So I will not give you a number, but, yes, it means it’s definitely in terms of upgrading our facilities and plants.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Sure. I’m just trying to understand maybe for 100 basis point improvement, is there any ballpark number or any IRR that — Will that be asset dilutive? Does it make sense for us to completely modernize? Any number — capex number that you can share us should…

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sachin, I — all I can say is there has to be horses for courses approach. So a vehicle or a four-wheeler advanced passenger vehicle wiring harness needs to be built in a particular plant or an EV wiring harness needs to be built in a particular plant versus a tractor wiring harness. So each plant is different based on the product mix, the customers, and the location. Hence, we are adding various strategies to commonize them, to club them, also be close to the customer, and judiciously doing capital allocation on the requirement of the new technologies and products that we are doing.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Sure. That’s helpful. Sir, if time permits maybe one more question from my side. On the new product range that we just spoke about or we are endeavored to get into, which are, let’s say, more to do with the EV or let’s say a keyless entry that — products that we are talking about, what’s the — and what’s the progress from our side? I know you’ve been sharing some order inflow numbers, but if you can share more color in terms of maybe the revenue numbers that we would have achieved till date at the product level and various client-level approvals? If you can share more color there. Thank you.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So our order intake across all the products is very healthy. As I mentioned in the first nine months of this year. Out of the INR6,000 crore of order intake, about 28% is coming from the EV customers. So far in the quarter 3, we have done about INR45 crores of sales with the EV customers. So in the first nine months, it’s about INR90 odd crores, which translate to about 2% to 3%. And this is across various segments, various customers including startups as well as large OEMs in all segments. Also, including exports.

Sachin Trivedi — UTI AMC Pvt. Ltd. — Analyst

Sure. That’s helpful. Thanks.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. We have the next question from the line of Abhishek from Dolat Capital. Please go ahead.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Thanks for the opportunity and congrats for the decent set of number in tough time. Sir, my — few questions on the information and connected system. The company has secured large orders for the TFT cluster around this INR2,000 crores in the passenger vehicle, so how much revenue can we expect in FY ’24 and what would be the EBITDA margin?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So I will not be able to share the profitability statements, but of course, the order intakes usually take about two years to develop, especially a advanced product like a TFT cluster. So the SOP should start in mid-year — mid-financial year ’25 or next calendar year. And of course, the order intake is we can on a thumb rule state that, therefore, that comes to an annual number.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Okay. And, sir, how was the revenue performance of Minda Instruments for the nine months basis on the topline and the EBITDA?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. One second. For the Minda Instruments, we have done on the nine month about INR530 crores with an EBITDA margin of about 11%.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

And what is your target, sir, for the next year?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sorry?

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

What is your target for the next year?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Our target is grow higher than the industry, which is primarily catering to the two-wheelers segment. So definitely getting more and more business from the electric vehicle mobility, other segments, and grow this higher than the rest of the industry.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Okay. And sir, in the wiring harness business, how is the mix for two-wheelers, CVs, and the passenger vehicle?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So primarily about 50% comes from the two-wheeler space, about 30-odd percent comes from the — sorry, commercial vehicle aspect, and the remaining comes from the four-wheeler and tractors.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

So, sir, despite a strong mix in the wiring harness business, your margin is still at 7.4% or 8%, and as you mentioned that semiconductor prices is cooling down, so — and the raw materials prices has also gone down. So what is the key constraint for the margin expansion?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Abhishek, I just explained the concerns and the way forward for the wiring harness division in the previous question asked. I’m happy to repeat the same that we are doing multiple activities and actions. We have reduced the raw material fluctuation impact on the group with various internal and external strategies, and that result I think can be seen over the last few quarters.

On the internal front, one of the most challenging and most opportunity that we have is on the localization of the components, which takes lot of time in terms of at least two years for the component validation from the customers. Currently, we are using about 10% to 12% of our localized in-house made components, which is expected to go to 50% in about six to eight quarters, which will [Technical Issues] basis points.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

But you have already started the PCB manufacturing in-house. That fixed cost has gone down in this quarter. Despite we are not looking any improvement on quarter-on-quarter basis in this segment.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sorry. I didn’t understand the question. PCB is not anything related with the wiring harness.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Okay. Okay. Fine, sir. And my last question on this — how much is the current net debt of the company, sir?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sorry?

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Current net debt.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

We are almost cash — net debt free. So we have net debt of about INR56 crores.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

But if we see the differences on interest cost plus other income that is used, we have finished huge interest cost at quarters, so why we are sitting on the cash and we are not paying the debt given that our interest cost has gone up significantly?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So your voice is not clear, Abhishek. Can you repeat the question, please?

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Sir, if we see that interest cost has gone up significantly and this is much higher than the other income and — so why don’t we pay the — why you are sitting on the cash despite — given that the increase in the huge interest cost?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So yeah, I’ll ask Mr. Vinod to take up this question, please.

Vinod Raheja — Group Chief Financial Officer

Yes. So this needs to be seen from two, three different perspectives. One that we talked about the net debt position actually and we need to look at the cash position in our Asian business, then in Minda Instruments, and then in Minda Corporation. Yes, we have a sort of cash and bank balances, I can see a level that is a standalone level also with the corresponding debt, but we want to keep the cash ready for any opportunity that may come in our way actually.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

So it will be the…

Vinod Raheja — Group Chief Financial Officer

Percentage by interest rate differential, we are okay with that.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

But every quarter, we are paying INR6 crores to INR7 crores arbitrage as the interest cost, and so the annual cost would be around INR28 crores, INR29 crores. As you said that net debt date is only INR50 crores, INR60 crores. So in the net debt of INR50 crores, INR60 crores, we are paying that INR25 crores to INR28 crores kind of the interest cost, is it the right decision of the management? It is very difficult to digest at this point when the interest cost is quite high.

Vinod Raheja — Group Chief Financial Officer

No, like I mentioned that the position of cash needs to be seen at company level like attrition level. In our overseas subsidiaries, we have cash balance of about INR50 crores or so. And we know that that needs to be repatriated efficiently. Similarly in Minda Instruments also, we have cash balance, which needs to be deployed and therefore, the position I extend on Minda Corporation needs to be seen separately.

Abhishek Jain — Dolat Capital Market Private Ltd. — Analyst

Okay, sir. Thanks. That’s all from my side.

Vinod Raheja — Group Chief Financial Officer

Yeah.

Operator

Thank you. We have the next question from the line of Mohit Khanna from Banyan Capital Advisors. Please go ahead.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Hello, sir. Good evening. I have a question regarding the EV business. Sir, you did mention that your revenues from EV from — for nine months is INR90 crores. Could you also please talk about the profitability of these — of this INR90 crore of the EV business? That would be the first and I’ll come back with the second.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So, Mohit, the profitability varies. Of course, the products which are under the premiumization, for example, keyless solutions have a higher profitability. Also, there may be low profitability in some of the products because still they are in their start-up phase and their volume have to still yet — have to still pick up, so the economies of scale have to yet come in place to see. So — but, yes, overall, our intent so that every product that we bring or every project that we do needs to be much higher than the current profitability.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

So is it fair to say that this INR90 crores of revenue is earning more than the operating EBITDA margin of 10.7% that we are generating at a consolidated level?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

I can’t give a direct answer to that, but yes, we are in line.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Fair enough. And also, you did mention regarding the modernization of the wiring harness facility, I’m not sure if I missed that, so how many such facilities we need to upgrade? I think in total you have around 34 facilities that’s all company-wide total. So how many of them is wiring harness and how much of them needs to be upgraded? And do you foresee any sort of loss of business while you are upgrading the facilities?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

No. So there are eight facilities of wiring harness across India and every facility has a different capacity utilization and different level of modernization, sanitization, and advanced electronics and advanced production systems. We are doing two fronts. One, we are doing consolidation. For example, there are four plants in the North. We are — and we may decide that we may do two plants or continue to do three plants depending on the customer requirement as well as what strategy fits best. And similarly, in the South, we have other plants as well, which we are deciding to newly open new plants, be more closer to the customer, and have advanced because maybe there the capacity is above 85% to 90%. Hence, it is not possible to close down the lines and shift to a new production facility. So whereas the multiple and mixed bag strategy that we have to apply in order to open new facilities, consolidate new facilities, and expand new facilities depending on the customer requirements and the lead times.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Fair enough. So when can we expect a little bit more firm answer on the consolidation of the facilities and upgrading? So regarding the capex cycle or I would say, capex plan from the…

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

We have already started a new facility in Pune for wiring harness division, which is again for the West customers. We already have existing two facilities in Pune already, and now we will slowly maybe transfer the businesses. Not all. It’s not possible. The additional new businesses of let’s say electric vehicle, mobility, passenger vehicles, or advanced technologies will be coming in this position — this facility, sorry. And also, we may duplicate some lines. So, of course, we are adapting various strategies whether it should be our own land or our own building versus it should be leased, or opex or whatever. So it’s a different model and I will not be able to comment on each facility as of now.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Fair enough. And just coming — last one from my side. Just coming to the growth aspect. sir, for the fourth quarter, I believe you mentioned that you expect a flat industry growth, so what does that mean for Minda Corp and how do we see growth two, three quarters down the line? Do you expect next few quarters to be flat growth for the industry and Minda outperforming by how much percentage points?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So, Mohit, again, I can’t comment on the industry. But the two-wheeler aspect was about a flattish growth. Typically, quarter 4 is one of the better quarters in the entire year. As far as Minda Corporation is concerned, our single most objective is to grow higher than the industry. So if the industry is going flat, we would like to grow by 10% to 12% higher than the industry with all respects. So we continue to focus on that and I think we have been delivering that for last 10 quarters consistently and sustainably, and we wish to do that with all the initiatives growing forward as well.

Mohit Khanna — Banyan Capital Advisors LLP — Analyst

Fair enough. Thank you so much.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. We have the next question from the line of Jay Kale from Elara Securities. Please go ahead.

Jay Kale — Elara Capital — Analyst

Yeah. Thanks for taking the question. So my first question is regarding your smart key solution. So we understand that you’ve done INR90 crore revenue from the EV business. How much of that would be smart keys? And are you seeing adoption of smart keys incrementally for ICE two-wheelers as well at least in the — on the premium side? That is one. And secondly, within the EV two-wheeler that are sold today of the high-speed scooters, approximately how much percentage would have adopted smart key solutions since this also entails the cost added into it?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Hi, Jay. So out of the, let’s say, quarter 3 numbers, I would say about 60% or 50% to 60% comes from the security systems because that’s one of the first products which has taken leap. Out of this, many of them is in the exports segment also. We’ve been exporting keyless solutions for the last two years irrespective of ICE and EV. Going forward, of course, there is more penetration in the ICE or EV where more premiumization is happening across all previous segments. Definitely, the higher segments will see the adaptability first and the EV segment will see the adaptability first compared to the commuter segment. If I speak about the future per se, typically — again, as I mentioned, INR4,000 to INR5,000 is the keyless product sort for INR1 lakhs scooter about 4% to 5% is the typically the cost of the complete keyless solution.

Jay Kale — Elara Capital — Analyst

Understood, but what I mean to say is that out of the because that out of the 60,000 or 70,000 odd EV two-wheelers high-speed scooters that are selling per month 60,000, 70,000, how much percent would have adopted the EV solutions since not all high-speed scooters would want to get that additional cost?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

See, the real answer is a little different, Jay. The likes of the top five customers that are there in the EV space such as Ola, Bajaj, TVS, Hero Electric and all, I would say about 40% to 50%. Again that also if you look at for example, the bikes at Hero Electric, they are high-speed, but yet low-cost. But if you look at ola, they are high-speed and high-cost. So again the value chain is the same but it, of course, penetrates in the higher segments to the likes of Ola and Vida and others. And then, you will eventually come — or should see them in the likes of Hero Electric.

Jay Kale — Elara Capital — Analyst

Fair point. My next question is on the wiring harness side. Just dwelling on the localization part, so we understand that right now you’d be going ahead with localization for the ICE wiring harness or the low voltage wiring harness. Going forward with EVs coming in and — which will also require some bit of high voltage wiring harness, where are we in the curve in terms of localizing them from the start itself because that will be a key metric to get orders for EV wiring harness as well since high voltage wiring harness will entail a lot of cost, and unless you localize it, it might be difficult to get orders over there?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yeah. Good question, Jay. It’s the same funda. Of course, because the volumes are low hence the industry continues to import the high voltage connection systems just because they are available at a accepted quality and accepted technology overseas. What Minda Corporation is doing on both fronts, we are looking at tie-ups with EV high voltage connectors for all segments globally as well as we’ve set up our in-house shop and design center for the EV component manufacturing and designing.

Jay Kale — Elara Capital — Analyst

Understood. Thanks and all the best.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, Jay.

Operator

Thank you. We have the next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Vignesh Iyer — Sequent Investments — Analyst

Hello, sir. Thank you for the opportunity. Sir, I would like to know what is the capacity utilization for quarter 3 and nine months FY ’23 for all the divisions specifically like security solutions, wiring harness and die casting and electronics if you could help me with?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So — again, various facilities or various segments have different capacity utilizations. If I speak about security systems division, it’s about 65%, wiring harness is about 75% to 80%, die casting division is at about 85%, and other electronics are low, which are about 35% to 40%.

Vignesh Iyer — Sequent Investments — Analyst

So this is for the quarter 3 attributes, right?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. It’s pretty much sustained throughout the year.

Vignesh Iyer — Sequent Investments — Analyst

Okay. So the nine months number, would it change much as such?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Not really. It will be almost in the same lines.

Vignesh Iyer — Sequent Investments — Analyst

Okay. Fair enough. Fair enough. Thank you. That’s all from me.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, Vignesh.

Operator

Thank you. We have the next question from the line of Rajesh Kumar from Sharegiant. Please go ahead.

Rajesh Kumar — Sharegiants Wealth Advisors Private Limited — Analyst

Thank you so much for taking my question. My first question is how is your EV portfolio panning out and which all products are under development in EV segment?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So if you see the slide that we’ve already posted consistently on our presentation, which is Slide number 18, our kit value for the current products are about INR4,000 to INR5,000. The product’s current — the currency — the current offering is going to go to about INR10,000 with the current product offerings and additional INR8,000 to INR10,000 for the new power electronics products of kit. If you look at the sheet starting from the top right, the connected clusters, instrument keyless entry solutions, telematics, die casting, sensors, wiring harness, these products are already in our portfolio and supplying. Also, if you look at the next slide that is the DC-DC converters, battery chargers, and other PDU, BDUs are also being supplied to the customers already in mass production and under development are about other three — the four product lines, which we’re working on organically and with new partners.

Rajesh Kumar — Sharegiants Wealth Advisors Private Limited — Analyst

That’s it, sir. Thank you, sir, for the clarity. My next question is on your PV segment sales has been in the range of 13% to 14%, is there a plan to grow your PV sales?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yes. We would like to definitely grow our PV sales as for all the right reasons. We are adding consistently new product lines as well as making breakthroughs in our products to the four-wheeler OEMs. For example, instrument clusters. We’ve now got — in the last two quarters ago, these are a big breakthrough in the four-wheeler passenger vehicle cluster space. All our centers, for example, are now being — focusing on cross-selling as well as offering different customers. We’ve added new product lines such as the shark fin antenna with our joint venture. We are offering our new product lines with ADAS solutions with our partner from Korea. Minda VAST continues to focus on the order book solutions for the vehicle access product lines in the four-wheeler vehicle access. Having said all of this, definitely this jump of 14% to about 30%, 40% will not happen tomorrow. This will happen over a long-term period.

Rajesh Kumar — Sharegiants Wealth Advisors Private Limited — Analyst

What kind of impact raw material prices had on the Q3 FY ’23 performance of the company, and how has been the key commodity prices behaved in the last quarter? And what Minda as a company is going to negate the effect of fluctuating raw material prices?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So I’ll give you an answer one by one in terms of copper, zinc, tin, lead, aluminum, nickel, if you want, but our focus on the products that impact us the most. If you look at copper, which impacts us a lot on year-on-year, they are gone 18%, but on year-on-year they have increased by 3%. Aluminium has gone down year-on-year by 16% and quarter-on-quarter by 1%. So if you look at the graph, which is published by — on other websites, year-on-year they have increased, but they are still higher than the — compared to last year.

And on quarter-on-quarter, they have started stabilizing. So there are various initiatives that we do from the front end and backend. From the front-end side, of course, there are from the customers we have arrangements on all our — on most of our products, commodities for the back-to-back arrangements, which appeared over three to six months. And on the external side as well with the suppliers we have created some strategic alliances on how we can mitigate these ups and downs.

Rajesh Kumar — Sharegiants Wealth Advisors Private Limited — Analyst

Thank you, sir, for answering all the questions. Thanks a lot.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. We have the next question from the line of Harish Shah from HS Investments. Please go ahead. Mr. Harish Shah, your line has been unmuted. Please proceed with your question. As there is no response from this line, we will move to the next question from the line of Bismith Naik from RW Advisors. Please go ahead.

Bismith Naik — RW Investment Advisors — Analyst

Yes, sir. One question from my side. This premiumization that we talk about, can you give us — can you quantify it in any way as to what percentage of revenue used to come in FY ’21, ’22 and nine month FY ’23?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

See, typically, our kit value has been increasing by 20% to 30% year-on-year due to the premiumization, so, let’s say, in two-wheeler if we used to offer a INR100 product, it is now about INR120. Then the year after that, it’s about INR140 or INR150. So this is typically between 1.2x to 1.3x with typically of all our product lines that go year-on-year.

Bismith Naik — RW Investment Advisors — Analyst

Okay. And if I heard it correctly, 20% to 30% of our components are in business, this is pertaining to wiring harness only, right?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yeah. It is about 10% to 12%, not 20% to 30%.

Bismith Naik — RW Investment Advisors — Analyst

Okay. 10% to 12%. On a group level you’re talking about or wiring harness?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

We are primarily a lot more wiring harness division because there is the significant material in-house manufacturing.

Bismith Naik — RW Investment Advisors — Analyst

Okay. So this is supposed to go to what percentage in the next six to eight quarters?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

As I mentioned, it is supposed to go to about 40% to 50% in the next six to eight quarters depending on various initiatives and approvals from the customers.

Bismith Naik — RW Investment Advisors — Analyst

Understood. Understood, sir. Thank you.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Okay. Thank you.

Operator

Thank you. We will move to the next question from the line of Harish Shah from HS Investments. Please go ahead.

Harish Shah — HS Investments — Analyst

Thanks for the opportunity. Just wanted to know the division-wise capacity utilization about the company. How are our capex plans lined-up? And if you can share the cost of debt at the consol level for the current quarter.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Sorry, you have multiple questions, I’ll go one by one. I…

Harish Shah — HS Investments — Analyst

Sure, sir.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Already answered the question on the capacity utilization where it’s different across different segments and different plants and divisions. Security is about 5%, wiring harness is about 25%, die casting is about 85% and 90%, and electronics at about 25%.

Harish Shah — HS Investments — Analyst

These are the current quarters or the nine-month?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

They are for the current quarter and largely they remain the same over the nine months.

Harish Shah — HS Investments — Analyst

Okay. And how about the capex plans?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Typically, capex is about 4% to 5% of our top line. About 2% to 3% goes in our technology and R&D, about 1.5% to 2% goes in future investments, in future technologies and future capex is for growth, and about 1% to 1.5% is on the regular maintenance capex.

Harish Shah — HS Investments — Analyst

Okay. And my last question is what will be the cost of debt at the consol level during the current quarter?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

So I’ll ask our CFO, Vinod to answer this.

Vinod Raheja — Group Chief Financial Officer

Yes. So at consol level, the cost of debt would be in the range of about 7% to 7.5% for the quarter.

Harish Shah — HS Investments — Analyst

Okay. Thanks and I wish you all the best.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. We have the next question from the line of Navin Matta from Mahindra Manulife. Please go ahead.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Yeah. Hi. Thanks for the opportunity. Couple of questions. One was if I look at our CV segment revenues this quarter and compare it to the second quarter, there is a slight decline. Whilst we have seen improvement in production growth for CVs, so I was just trying to understand why would that be the case?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

No, Navin. We — quarter 3 is almost same at about 29.3%.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

I’m talking about the absolute revenue that is down and, let’s say, production growth for at least MHCV is up by 10%, so just trying to understand if it is a specific model or a specific customer where we would have…

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Quarter-on-quarter, the industry has gone down by 6% and our segment-wise revenue is almost the same. So we…

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

You would be including LCV in this?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

No, this is only purely CVs.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

MHCV?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Correct. All CVs including tractors.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Including tractors, okay. Okay, got it. And secondly, sir, if I just kind of normalize that impact of INR30 crores in the second quarter, I’m just trying to understand if margins if you compare to 2Q, ideally it could be lower this quarter by almost 30, 40 basis points if I kind of make that adjustment. So have we kind of seen a mix effect or it’s commodity in this quarter?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yeah. So I’ll ask Vinod to answer this question, Navin.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Yeah.

Vinod Raheja — Group Chief Financial Officer

Yeah. First of all, let’s see, we need to see the margins till the time those are moving in a narrow range of 30 basis points here or there, honestly, which won’t be a cause of concern. There are many moving parts actually so far as auto OEM business is concerned. One is the impact of commodity prices, which we passed after a lag. Many a times, there are delays in receipt of revised prices from customers. So to this extent, there are sort of variations, but those need to be within a time, which should not sort of [Technical Issues] the overall trend actually. Beyond this, there is nothing.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Sir, I’m trying to understand this in the context of ideally you should have seen some benefits to lower commodity costs and also pass through. So in that context, ideally, we should have seen a margin expansion, but I — but we’ve seen a contraction. So some of it is understood by the operating negative leverage, but I was just trying to understand directionally, is it commodity or is it purely mix in small ways?

Vinod Raheja — Group Chief Financial Officer

Yes, if we really closely look at the commodity prices, actually in Q3 there was a slight upward vis-a-vis Q2. While of course, if I compare it with, say, Q1 or Q4 of last year, there of course has been decline. So it needs to be seen in that perspective.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Okay. And just to kind of understand whether all the commodity benefit — the fall that we’ve seen in the last couple of quarters, is that well reflected in this quarter or you would assume that some more pass-throughs should come about?

Vinod Raheja — Group Chief Financial Officer

No, no. It has completely been sort of incorporated actually.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

It is incorporated.

Vinod Raheja — Group Chief Financial Officer

In fact, on account of pass-throughs, it shouldn’t have any sort of adverse impact on our margins at all.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

No, sorry. I was actually asking whether it should have a positive effect if we have pass-through and commodity costs have also come down, should we see a benefit on account of that on our gross margins?

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Yeah. So, Navin, yes. Again, primarily as I mentioned, quarter-on-quarter, either they have gone up or gone down by 0.1% or 1%, or 2%. There is not much of a difference in the commodity lag per se. Of course, exports do take some time in terms of payment terms and all that so that is a little positive side that we may see in future. But again, it depends on the large sale that happens.

Navin Matta — Mahindra Manulife Investment Management Pvt Ltd — Analyst

Got it, sir. Got it. Thank you so much.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you.

Operator

Thank you. Ladies and gentlemen, we will now close the question queue and that was the last question. I would like to hand the conference over to Mr. Aakash Minda for closing comments. Please go ahead.

Aakash Minda — Executive Director- Group Finance & Strategy and Chief Executive Officer BV III -Plastics & Interior

Thank you, everybody, for joining once again. Again, our focus is to deliver consistently and sustainably, and we’ve been doing for the last 10 quarters. And I would like to reiterate that we have done a closing of about — revenue of about INR1,068 crores with the 10.7% EBITDA. The — one of the important factors going forward are electric vehicle mobility, more products per customer, more customers per product, focusing on technology as well as operational excellence going forward. These are our core areas of focus going forward. Thank you very much.

Operator

[Operator Closing Remarks]