Minda Corporation Limited (MINDACORP) Q4 FY23 Earnings Concall Transcript

Minda Corporation Limited (NSE:MINDACORP) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

Aakash Minda — Executive Director, Group Finance and Strategy

Analysts:

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Dhananjay Mishra — Sunidhi Securities — Analyst

Mihir Desai — Pendulum Investments — Analyst

Harish Shah — HS Investment — Analyst

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

Rajesh Kumar — Reliance Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q4 FY ’23 Earnings Conference Call of Minda Corporation, hosted by Dolat Capital. [Operator Instructions]

I now hand the conference over to Mr. Abhishek Jain from Dolat Capital. Thank you. And over to you, sir.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

Thank you, Jacob. Good evening, everyone.

On behalf of Dolat Capital, we are pleased to welcome you to Minda Corporation 4Q FY ’23 Earnings Call. We thank the management for providing us the opportunity.

From the management side, we have with us Mr. Aakash Minda, Executive Director, Finance & Strategy; Mr. Neeraj Mahajan, Group President, Marketing; Mr. Vinod Raheja, Group CFO; Mr. Anshul Saxena, Group Head, Strategy and Merger and Acquisitions; and Ms. Pushpa Mani, Lead Investor Relations.

Before we begin, let me mention short cautionary statements. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties that may cause actual events to differ from the anticipated outcome.

Now, we hand over the call to Mr. Aakash Minda for opening remarks. Post, we will start the Q&A session. Over to you, sir.

Aakash Minda — Executive Director, Group Finance and Strategy

Hi. Good afternoon. Am I audible?

Operator

Yes, sir. You are.

Aakash Minda — Executive Director, Group Finance and Strategy

Okay. Thank you. So good afternoon, everybody. Thank you, Abhishek and Dolat Capital for holding the conference call for Minda Corporation.

I would like to begin. Good evening, everyone, and welcome to the Quarter Four and Financial Year ’23 Earnings Conference Call of Minda Corporation. On behalf of the company, I thank you all for joining us on this conference call and hope all you are keeping safe and healthy.

In fiscal year 2023, the overall industry experienced double-digit growth across vehicle segment except two-wheelers, where the growth had been sluggish due to rural demand and under pressure on the back of negative rural sentiments due to inflationary pressure, rise in vehicle cost and increasing fuel prices. Despite the same, Minda Corporation recorded another year of resilient and better-than-industry performance with revenue from operations of INR4,300 crores, a growth of 45% year-on-year basis.

EBITDA margin for the year improved by 83 basis points to 10.7%. We delivered double-digit EBITDA margin for the 11th straight quarter. Normalized PAT for the year stood at INR219 crores with a PAT margin of 5.1%. The growth was driven by addition of new customers and products, premiumization across products, leading to increase in kit value and increase in business’ existing and new customers. In line with the company’s philosophy to reward its shareholders, the Board of Directors have declared a final dividend of 40% on the face value, that is INR0.80 per equity share, taking the total dividend for the year to 60%, that is INR1.20 per equity share.

Now, I would like to take you all through the key developments during the year. The company entered into two strategic technology partnerships with Daesung Eltec from Korea for Advanced Driver Assistance Systems; and with LocoNav for Telematics Software Solutions. These partnerships not only make us complete solution provider but also place us ahead of the technology curve.

Second, at Minda Corp, we are continuously committed to drive innovation. The company has filed highest-ever quarterly patent, filings of more than 20 patents across various business verticals, taking the total patent count to more than 250. Third, this year remained a marquee year for the two-wheeler smart key businesses, which continued to gain traction and clocked more than 10% of the total two-wheeler lockset revenue with key customers, including all the leading names in ICE and EV two-wheeler OEMs globally.

The company inaugurated the state-of-the-art plant in quarter three FY ’23, and is planning to add other plants as per capacity, additional requirements. These plants do not only aim at increasing our production capacity and keep us closer to the customer, but are also well equipped with advanced machines, backed by cutting edge technology. Next, in line with the company’s focus on its offering in the electric vehicle space, it added prominent new customers in the electric vehicle portfolio in domestic as well as export segment.

In the financial year ’23, EV order book account for more than 20% of the total order book. Our order book remained very strong, in line to achieve 20% to 25% year-on-year growth for the next two years to three years. In the financial year 2023, Minda Corporation generated a healthy lifetime order book of INR7,800 crore, giving an annual revenue of more than INR2,000 crores across segments and products. Out of this, 20% came from the EV industry, the EV OEMs and platforms, representing our various products, growing acceptability and readiness for EV mobility going forward.

During the year, we made a financial investment of INR400 crores in Pricol from open market, acquiring 15.7% stake. We have filed for CCI application for stake acquisition up to 24.5% at this stage, in line with all governance and compliance requirements. We continue to be very bullish on the instrument cluster business and as a product segment to grow. We are focused to solidify our market position by providing high-quality innovative products and securing new business from our customers in our core products, including various products such as locksets, vehicle access, wiring harness, driver information systems, sensors, EV products, as well as other products. Moreover, all our products are undergoing through premiumization, resulting in enhanced content value.

Now, I will take you through the key highlights of the investor presentation. I request you to please refer to the presentation which is uploaded. I move to the Slide 3, which is sharing about Spark Minda Group or Minda Corporation. At the group level, we are reporting about a INR5,000 cores company, with 16,000 workforce, 34 plants, and having more than nine partnerships in the automotive space.

Going to the next page, shares about Minda Corporation’s global and domestic presence, which shows a strong foothold on the domestic segment across automotive regions in North, West and South, as well as international operations of Vietnam, Indonesia and our office in Japan.

Moving to the next slide of highlights of quarter four and full-year performance. For the quarter four FY ’23, revenue growth for the quarter continues to outperform the industry performance. Double-digit EBITDA margin for the 11th straight quarter on a sequential basis. Total lifetime order book in the quarter stood at INR2,000 crores with more than 11% export orders. Highest-everly quarterly patents filing with more than 20 patents during this quarter. Two-wheeler smart key continued to gain traction, with more than 10% of the total two-wheeler lockset revenue.

For the full year, Minda Corporation revenue growth of 45% year-on-year despite challenging macro and microeconomic situations. EBITDA margin improved by 83 basis points to 10.7% on year-on-year basis. We won businesses across segments and EV, constituting almost 18% to 20% of the order wins. 32 patents filed during the year. Total patents in the company now stand at 250-plus. Signed two technology partnerships for new technology products.

Moving to the next slide, Slide 6, which shows a snapshot of consistent and sustainable market-beating profitable growth. On the top part, there is quarterly revenue, EBITDA and PAT. If I look at year-on-year, the revenue has grown by 13%, EBITDA has grown from INR108 cores to INR117 crores by 9%. And PAT — normalized PAT has grown from INR54 crores to INR56 crores, a growth by 4%. If I look at the annual growth, from INR2,976 crores, the company has posted INR4,300 crores, which is a 45% jump and in EBITDA, from 9.9% to 10.7%. In absolute terms, INR295 crores to INR461 crores, which is 57% jump. And PAT margins go from INR137 crores to INR219 crores, with 60% jump.

Moving to the next slide, Slide 7, which is the key business highlights and order wins across various products. Our new technology products of integrated vehicle access continues to lead the market. We have won orders for EV die casting products for export as well as domestic OEMs. First-time products on wiring harness for OBD2 norms, the new technology products in EV in the commercial vehicles sector, as well as two-wheeler segments. And in the cluster division, in the new technology of TFT and LED systems — LCD. These are the marquee businesses starting production in FY ’23.

Moving to the next slide, which is showing a snapshot of the Minda Corporation. The total number of shareholders are, at the end of this year are about 90,000. The promoters hold 65% and other institutions hold the remaining. On the left, we show the various customers and manufacturing facilities.

Moving to the next slide, on Slide 9, which shows the industry performance. Automotive sector grew quarter-on — quarter four year-on-year basis by 1%, almost flat. Two-wheeler de-grew by 3%. On year-on-year, full-year basis, automotive industry grew by 12.5%, two-wheeler by 9%, PV by 25%, three wheeler by 12%, CV by 28%, tractors by 11.5%. Overall, demand continues to remain strong across segments despite of the various challenges on semiconductor and other macro concerns.

Moving to the next slide, which is the revenue breakdown. By geography, India continues to remain the largest share with 84%, 85% in this year compared to last year. Europe and North America are about the same [Phonetic], 8% to 10% and Southeast Asia are about 6% to 8%. By end market, the two and three-wheeler segment continues to be about 44% to 45%. Passenger vehicle is about 14%. Commercial vehicles are about 25% to 30%, and aftermarket is about 12% to 15%. By business vertical, the mechatronics and aftermarket is about 48%, information and connected systems, which is wiring harness was 36%, and clusters and sensors are about 16%.

Moving to the next slide, which is Slide 11, it shows from last year to this year the vehicle access business continues to be about 26%, wiring harness is about 30%, clusters is about 12% and DCD, die casting is about 17%, and others marked 15%. So, we are still the market leader in two-wheeler lockset and wiring harness business, pioneer in keyless entry solutions, moving from mechanical clusters to incorporate latest technologies in TFT displays, the company is one of the key players in two-wheeler and CV segment of late also and gaining traction in PV segment as well. In die casting division, we focus on niche products which are more margin accretive.

Moving to Slide 11, on the order book status. As showed earlier, we have booked orders worth INR1,700 crores this year, where replacement business is about INR3,600 crores and lifetime new business is about INR4,200 crores, and 20% of this is marked by EV. More than INR1,000 crores worth of export orders across various products and segments were booked during this year.

Moving to the next slide of the consolidated performance for the year. On quarter four year-on-basis, the revenue grew from INR948 crores to INR1,075 crores, giving an year-on-year increase of 13.4%. EBITDA grew from INR108 crores to INR117 crores with Y-o-Y increase of 8.5%. And EBITDA margin went from 11.4% to 10.9% across various challenges. The PBT grew from 7.6 — from INR72 crores to INR67 crores, and the normalized tax was INR56 crores.

On year-on-year — on a full year basis, the total revenue of INR2,976 crores, it grew to INR4,300 crores, with 45% jump. EBITDA has grown by 56.7% from INR295 crores to INR461 crores. For full year, EBITDA percentage has grown from 9.9% to 10.7%. Normalized PAT has increased from INR137 crores to INR219 crores, up by approximately 60% and 50 basis points.

On domestic front, in quarter four and full-year, industry grew by 1.7% and 12.5%, respectively, while Minda Corp., grew at 13.4% and 27%. Exports grew in line with the top line going forward. It continues to be driven by addition of new customers across geographies. The EBITDA margin was delivered in spite of the commodity prices showing rising trend and semiconductor supplies have started easing out. Board of Directors has declared a final dividend of 40%, that is INR0.80 per equity share. Total dividend for the year is 60%, that is INR1.20 per equity share.

Slide 14 on the consolidated leverage position. If I compare the year-on-year, net worth of the company has increased to INR1,591 crores. The long-term borrowings stand at INR235 crores and the short-term borrowing is at INR318 crores. Gross debt overall has gone from INR391 crores to INR553 crores. Overall, the net debt-to-net worth is at comfortable 0.25 times. Capital employed at the group level is about INR1,530 crores. ROCE has increased from 18.4% to 20.8%.

Moving to the next slide, which is Slide 15, on the business vertical performances. If I look at the business vertical, which is the mechatronics and aftermarket, on a quarter-on-quarter basis, the sales has gone from INR547 crores to INR535 crores, and EBITDA has gone from INR13.8 crores to INR13.9 crores [Phonetic]. Revenue grew by 10% on year-on-year basis due to increase in share of business and premiumization against market growth of 1.7%. Margins marginally declined due to stagnancy in exports, mainly due to geopolitical situation in Europe. On a full year basis, on the right side, the division has performed INR1,687 crores to INR2,061 crores, from 12.3% EBITDA percentage to 13.5%.

In the information and connected systems, now consists of wiring harness and instrument clusters and sensors, on the revenue front, it has gone from INR462 crores to INR540 crores on year-on-year basis and sequentially from INR522 crores to INR540 crores. The revenue was supported by demand in domestic market. Margins improved due to wiring harness margins continuously on the rising trend due to various factors such as component localization. Minda Instruments margins improved mainly due to semiconductor supply chain easing out and better operational efficiencies. On the full year, the revenue stands at INR2,239 crores with 8.2% EBITDA margin.

Moving to the next slide, which shows the journey of new alliances in the recent past. So, this is just to share with you, again, that in the last — in this financial year we have signed two partnerships in ADAS solutions and telematic solutions to complete our technology edge and focus on offering products as system solutions to the customers.

Now moving to the strategic pillars on Slide number 18. We continue to focus on enhancing the core. Innovation and technology continues to be the core in terms of the in-house R&D center and partnering with global players. First, how we can enhance electric vehicle growth opportunity and all the Minda Corporation products are EV-agnostic. Strengthening the passenger vehicle offerings with in-house as well as partnerships, transforming and becoming complete solution provider, focusing on cost leadership in manufacturing and thought leadership when it comes to technology. Premiumization and product innovation in all business segments continue to drive content per vehicle, and most important, to deliver better than industry growth and continue to improve margin profile.

Moving to the next slide on the engineering capabilities. We have filed — we have now more than 250 patents. More than 2% continues to be the R&D spend and the following year, we will continue to increase further. And we have more than 500 engineering count all across various technology and products.

Moving to the next slide on the electric vehicle opportunity. This is just showing the various products that we offer in the two-wheeler segment. Various old and new customers that we continue to add and the potential kit value going from INR4,000 to about INR20,000 in our legacy products that we are already manufacturing and supplying, as well as which are under development.

Moving on to the next slide, is the value proposition of Minda Corporation. Just in the interest of time, I’ll skip this. But the interest and the focus continues to be on how we can perform sustainable and grow year-on-year and quarter-on-quarter, delivering our customers and focusing on innovation and technology. Last, not the least is our immense focus on the ESG framework and how to become carbon-neutral in the next years to come. Minda Corporation has also won various awards from our customers and across various social responsibility campaigns that have been conducted across the — in India — not only in India but across the world.

With this, I would like to conclude my presentation. And now I would like to open the floor for any questions. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Abhishek Jain from Dolat Capital. Please go ahead, sir.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

Hello, hello. Am I audible?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes, Abhishek.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

First of all, congrats for a strong set of numbers in this tough time. My first question is related with the information and connected system business. So how do you see the growth going ahead in the wiring harness business and what kind of the margin guidance you have in this business?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes. Abhishek, wiring harness continues to ease in our systems of the vehicles. And if you see the latest trends from BS-IV 4 to BS-VI and in various segments such as tractors like — from current BS-III [Phonetic] to TREM IV, TREM V, electric vehicle mobility, more and more premiumization happening in the car, the content of the wiring harness is set to go forward and even more. It depends on the segment as well as on the ICE or EV type of a vehicle.

But technically, again, I would not be able to give you a number on the particular growth, but it is going to be in line or even better than industry growth, having more and more content per vehicle such as connection systems in the electric vehicle mobility and others. On the margin front, we do not give future guidance. But again, our endeavor is to continue to improve the performance on the wiring harness due to the various initiatives that we have been continuously taking on manpower productivity, component localization, strengthening our plants and production process.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

So as the semiconductor prices is going down, can we see a double-digit margin in this business, wiring harness business?

Aakash Minda — Executive Director, Group Finance and Strategy

So, semiconductor is more related to our electronics business, which comes to the clusters and sensors and now the keyless solutions and the electric vehicle mobility. In wiring harness, yes, there are some semiconductors depending on the end application and the products, but wiring harness is not so much impacted when it comes to the semiconductors. It is the other product lines where we have more electronics.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

Okay, sir. And in wiring harness business, how was the break [Phonetic] in FY ’23, two-wheelers, EVs and the passenger vehicles and OSV [Phonetic]?

Aakash Minda — Executive Director, Group Finance and Strategy

So largely it remains in line with the group’s overall segmentation. So about 50% comes from the two-wheelers, about 25% to 30% comes from the commercial vehicles and the remaining comes from off-roads and other segments.

Abhishek Jain — Dolat Capital Market Private Limited — Analyst

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

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you, Abhishek.

Operator

Thank you. [Operator Instructions] The next question is from the line of Radha from B&K Securities. Please go ahead.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Hi, sir. Good evening. Thank you for the opportunity. Sir, my question was on the mechatronics division. So with respect to the locksets, I wanted to understand what is your share of business with top customers, like Bajaj, HMSI, TVS, Hero, Suzuki?

Aakash Minda — Executive Director, Group Finance and Strategy

So ma’am, I will not be able to share the exact number, that is the confidential information. But largely, wherever and whichever product Minda Corporation works in, either with the customer or in the segment, we are one of the leaders having more than 30% or 35% share of business across segments. In the two-wheeler lockset which is higher — or more than about 40%, if I may say, at all customer segment level. It may vary from different customer to customer.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Understood, sir. But could you tell us where the share of business is higher, from which customers and from which it would be lower, like maybe higher from Bajaj and lower from TVS, is that the case?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, I think you are putting a question in just another way. As I told you, at the industry level, it is more than 40%. I will not be able to give you a breakup due to confidentiality with our customers on the customers breakup.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay, sir. No worries. Sir, that Honda Activa H, the new series is launched by HMSI. So, I believe they have a different kind of lockset. I’m not sure whether we can call it smart locks but maybe an advanced lock system. So are we supplying that product to them?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, as I shared, I cannot disclose a particular customer name or the product, but yes, Honda is one of our customers for the keyless solutions.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay, sir. So then from the industry perspective, I believe in your opening remarks you mentioned that 10% of the revenues is from smart locks. I mean, in the industry you’re talking about, I mean, what is the penetration of smart locks in the industry today and how do you see it in the next three years to four years?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, currently, the industry in India is about 5% to 7% is the penetration of the smart access solutions. Of course, with exports and the large premium bikes and the EVs coming in, the penetration is much higher compared to the lower-end segments and the commuter bikes.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

5% to 7% is in two-wheelers, is it?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes. That is right, for the two-wheelers. And in the next, mid-term to long term, this definitely will be increasing from two perspectives. One, when the premiumization of the vehicles is happening, customer demand is focusing more on personalization and convenience and comfort, moving from high end to the lower-end variants for the vehicles, and of course, the export markets continuing to grow as well.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Sir, how much do you see this 5% to 7% in the next few years?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, it depends, again, but technically, you can say in the next mid-term to long term about 30% to 40% should be the target that we have in mind.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

So, sir, any models that you can name, which are having 5% to 7%, I mean, which we can call as smart locks? You may not be supplying to them. I’m not asking about your supply. But, I mean, what are the models that are currently using smart locks in the two-wheeler industry in the Indian market?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, for example, there is OLA Electric, there is Hero Vida, there are some TVS products, there are Bajaj Chetak. So these are some of the models.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay. So, Bajaj Chetak, we will call that as a smart lock only, right?

Aakash Minda — Executive Director, Group Finance and Strategy

That’s right.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

The button and the — they have that button system. Okay, sir. Okay. Understood, sir. And sir, what would be the price difference you said between normal locks versus smart locks?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, a normal lockset is about INR300 to INR400, and in the smart locks, the keyless ignition can depend on the various configurations. But the average price is about INR2,000 to about INR3,000.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay sir. And, sir, lastly, what would be your maintenance capex per year?

Aakash Minda — Executive Director, Group Finance and Strategy

Typically, our depreciation is in the tune of about 4% to 5%. And typically, speaking about maintenance or regular capex is typically about 1%.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Maintenance capex, 1%?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes. Maintenance and other regular capex, not particularly maintenance capex.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

So 1% of what?

Aakash Minda — Executive Director, Group Finance and Strategy

Revenue, ma’am.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay, okay, understood. Okay. Yes, sir. Thank you so much for answering my questions. Thanks. All the best.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you.

Operator

Thank you. The next question is from the line of Dhananjay Kumar Mishra. Please go ahead, sir.

Dhananjay Mishra — Sunidhi Securities — Analyst

Thanks for the opportunity, and congratulation on a decent set of number. Sir, just wanted to understand, in EV segment, this kit value which you have mentioned. So from traditional ICE vehicle and then we are close to — I mean, we can provide the kit value up to — close to 8,000 to 10,000. So have we reached this kit value for any of the customer as of now, or where we are in terms of kit value with a particular customer?

Aakash Minda — Executive Director, Group Finance and Strategy

So, as I mentioned, this is the potential maximum kit value that we can offer. Currently, if I may say that we are offering somewhere between 10,000 to 12,000 is what we have currently reached and which is under mass production.

Dhananjay Mishra — Sunidhi Securities — Analyst

Can you repeat? I didn’t get the number.

Aakash Minda — Executive Director, Group Finance and Strategy

10,000 to 12,000.

Dhananjay Mishra — Sunidhi Securities — Analyst

That is a potential we can — but are we — have we got order from any customer to — this much kit value for a particular model?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes, we have. I cannot name the customer or the model. But [Speech Overlap].

Dhananjay Mishra — Sunidhi Securities — Analyst

No, I was just asking, I mean, whether we — because we have increased this mechatronics, we have increased our — this thing by 2,000 to 3,000. And then in information and connected system, we have increased 2,000. So we can provide 8,000 to 10,000 kind of products for EV, so that’s what I asked. And in terms of — just for the earlier call, sir, what was the total capex put together in FY ’23 and whether the maintenance or new capex, or what is your plan, if you can give for FY ’24 as well?

Aakash Minda — Executive Director, Group Finance and Strategy

So for the last year or for the full-year FY ’23, it’s INR250 crores.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay. And breakup you can give, specifically in which segment we have?

Aakash Minda — Executive Director, Group Finance and Strategy

So, breakup is generally, if I may say, is about 2% to 2.5% goes into the engineering and R&D. About 1% to 1.5% goes in the regular and maintenance capex. About 1% to 2% goes in our plant upgradation or new plant and other such things like that. So, this is the breakup of the more or less 4% to 5% of the capex.

Dhananjay Mishra — Sunidhi Securities — Analyst

So for growth, we don’t need to increase capacity — our particular plant capacity? This is regular maintenance and upgradation we’ll do — will take care of growth for next two years, three years?

Aakash Minda — Executive Director, Group Finance and Strategy

No. So different plants and different product lines have different capacity utilizations. So mechatronics, our business vertical one in the keyless solutions or in the lockset have about 55% to 60%. In the wiring harness, again, we have about 68% or 60% capacity utilization. Interior plastics is about 80%. And the EV division is currently still only at about low 25% to 30%.

So, this is just some of the numbers that I’m giving you as we’re coming up with the new plants, new low-cost automation, as well as we focus on — with this current infrastructure, how we can increase our revenues and having flexible lines and other such innovative ideas on how we can sweat our assets more and generate more and more revenue and profitability.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay, okay. And lastly, one question, with related to [Phonetic] die casting, if you could give the quarterly revenue number for die casting and for the full year also, how it has grown?

Aakash Minda — Executive Director, Group Finance and Strategy

Yeah. For the quarter four, for the die casting, it is about INR185 crores. For the full year, probably die casting is about INR730 crores. On a full-year basis, in FY ’23, it was INR522 crores. So on a full-year basis, it has grown by 40%.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay. Okay. Thank you. But just one more question is just to Pricol. So, we have shown intent to increase our stake in the company. So are we also in talk with them? I mean, any advance talk is happening, or just it is Board approval?

Aakash Minda — Executive Director, Group Finance and Strategy

It’s a financial investment, Mr. Dhananjay. And we have applied for CCI in full governance and compliance. So that’s where it basically stands as of now.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay. Okay. That’s all from my side. All the best. Thank you.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you.

Operator

[Operator Instructions] The next question is from the line of Mihir Desai [Phonetic] from Pendulum Investments. Please go ahead.

Mihir Desai — Pendulum Investments — Analyst

Thank you for the opportunity. Sir, I had two questions on the macro front. So, I just wanted to check with you, how has the global market landscape impacted your company’s performance?

Aakash Minda — Executive Director, Group Finance and Strategy

So besides India, if we look at various reports, I think next 10 years are India Inc., [Phonetic] and due to the various concerns of geopolitical issues, COVID, etc, of course, the other markets are under pressure whether it’s America or Europe or other such countries. So coming to Minda Corporation, definitely exports for this particular quarter are under pressure, but our interest and focus is always to keep wining new orders. So even if when there is a pressure from the export market, we try to outperform them.

Mihir Desai — Pendulum Investments — Analyst

Sure, sir. Sir, also, I just wanted to check what are the steps that we are taking to address the supply chain challenges and disruptions?

Aakash Minda — Executive Director, Group Finance and Strategy

So, there are various activities or actions and strategies are in place. First off, commodity inflation or indexation, we are back to back giving to our customers. And we are strategizing with our suppliers [Technical Issues] in terms of time and amount. That’s number one.

Number two, of course, there are various strategies when China Plus One derisking that are happening. So, we are looking at localization of our components through our various suppliers and supplier partners. As an organization, now we are heavily working on various important topics such as the quality, cost and competitiveness with our business partners.

So as a group, we want to take up our supplier partners the way our OEMs have taken and groomed up and grown up over the years. That’s our strategy so that they grow with us to support us the next generation of technologies and the requirements that are there from a financial perspective, health perspective, quality, operations and, of course, all compliance perspective, including ESG as well.

Mihir Desai — Pendulum Investments — Analyst

Sure sir. Thank you. Sir, also I just wanted to check, what is the progress on ongoing research and development initiatives?

Aakash Minda — Executive Director, Group Finance and Strategy

Sorry, my friend, I think that’s a very general question, but I’ll share that we continue to focus on our own core products and areas in technologies. The idea is that how we can focus on the case or pace, which is connected autonomous, shared and electrified and electrification. So, all these products are going through the premiumization route and using the comfort, convenience and individualization and personalization. So, we are now focusing on how all our products can be moved and taking shape with these requirements and trends.

So, we are going to — and we are making all our products into electronics and adding with our own design center for how we can focus on personalization, services and differentiate on that aspect. We continue to also have run multiple new R&D and innovation products and projects, which are totally advanced and new, not only in India, but for the world, which are under the incubation phase or are in the R&D phase for various technologies in our own product lines and how we can look at into new technology and new partnerships perspective.

On the electric vehicle space as well, or the electric vehicle mobility, we continue to add products in-house, as well as through partners — through technology partners, as well as the engineering centers on the product capability. Also as an organization, from our R&D center, we are working on filing more and more number of patents and how do we improve the design quality within automotive and coming up with new trends and technologies that you will see in your new vehicles available in two-wheelers or four-wheelers.

Mihir Desai — Pendulum Investments — Analyst

Sure, sir. Thank you. Sir, lastly one broad question which I wanted to ask you is that, sir, as an investor, say, currently five years down the line, what would be the strategy of a company from current where we are, how do you look at the company, say, five years down the line, sir?

Aakash Minda — Executive Director, Group Finance and Strategy

So, at a very large level, we would like to move from components to a complete system solutions provider. All the product lines and the domains what we are doing is, we would like to develop our different technologies and complete a system solution offering with respect to the three or four product lines and the product domains, if I may say, we are in. So currently running many products and how we will be consolidating and integrating them to offer a system solution. From that perspective also, having a downstream plan in terms of our operational excellence and becoming a cost leadership in that respect, and of course, all the value chain when it comes to the people and employees and partners.

On the numbers front, of course, we would like to move ahead of the market. If the market is going flat, we would like to be higher by about 10% to 15%, which we have consistently showed over the last two and a half, three years. And in my opening remarks, I also mentioned that I would like to — or we would like to as an organization, are committed to grow above 20% to 25% year-on-year as Minda Corporation. It most importantly has to be a sustainable and a growth journey quarter-on-quarter.

Mihir Desai — Pendulum Investments — Analyst

Sure sir. Thank you, sir. If I have further questions I will join the queue.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you.

Operator

Thank you. The next question is from the line of Harish Shah [Phonetic] from HS Investment. Please go ahead.

Harish Shah — HS Investment — Analyst

Thanks for the opportunity. I hope my voice is audible.

Aakash Minda — Executive Director, Group Finance and Strategy

Yes, it is.

Harish Shah — HS Investment — Analyst

Yeah. Thank you so much. Sir, this is basically with regards to how do you see operational efficiencies kicking in? Are we taking any digital transformation initiatives?

And the second is — the second question is with respect to our international — expanding our international footprint, if you can provide any steps that we have taken for that.

Aakash Minda — Executive Director, Group Finance and Strategy

Yeah. So, again, we are into the manufacturing business and automotive. So, definitely, operational excellence is the most important forte for us, and especially with the ongoing setup in technology changes and the customer demand, we have to fall much faster in line. For those initiatives, we are firstly setting up and providing our state-of-the-art plants and improving end-to-end our traceability, low-cost automation, robotics, business excellence, IoT and all such digital control in the process and we are partnering up and already have partnered up with various external companies to strengthen this. And also we have a very strong internal team to continue on the group business excellence is what we call.

Sorry, can you repeat your second question, please?

Harish Shah — HS Investment — Analyst

So sir, my second question was with regards to strengthening our international and global presence, if you can just provide any update, any direction towards that aspect?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes. So first, there are two folds to that. We are primarily in India and India is what we are focusing is how we can firstly increase the exports and then send products from India to all over the world, are looking at the various good opportunities that are coming across the Indian continent. That’s number one. We do not have plans to acquire any company, which are having large operation base overseas. So, our focus remains on how we can be in India and work with the exports and have a larger share of revenue from the export businesses in the next years to come.

Harish Shah — HS Investment — Analyst

Okay. Thank you. And my last question is with regards to our mechatronics division. How do you see the margin panning up in the coming quarters?

Aakash Minda — Executive Director, Group Finance and Strategy

So the mechatronics division, in our presentation also, we have showed that it’s about 13% to 14% EBITDA. While of course, we want to grow this and you will see upcoming quarters am increase in the content, electronics, etc. First and most important is to stabilize this. And then we will continue to improve it year-on-year. With the change in technology, we need to first utilize our capacities, get adjusted to the new volumes and the customer demand, deliver, most importantly, and then focus on growing year-on-year.

Harish Shah — HS Investment — Analyst

Okay. Thanks for your detailed reply — answers and wish you all the best. Thank you again.

Operator

Thank you. Thank you. The next question is from Saral Seth from Indsec Securities and Finance Limited. Please go ahead.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

Yeah. Hi, sir. Congratulations for good set of results and thanks for taking my question. Sir, my question pertains to how do we plan to increase our content per vehicle from here going ahead over next two years to three years across segments, because we are seeing decent premiumization which is happening across the board. So do we still feel that there is room for further penetration in our products to increase content per vehicle?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes, absolutely. It is not even the beginning, if I may say, Saral. As you see, the bikes, cars, etc., are all going through the premiumization route. And if I speak about our products, the vehicle access, so from a traditional lock and key, as I mentioned earlier, we’re now moving to keyless solutions, and this is only the 5% to 7% penetration as of now. Going forward, of course, it is only going to increase.

When it comes to the wiring harness content and increasing kit value, as I had mentioned earlier as well, the more number of connection systems, high voltage cables, high more complex wiring harnesses are definitely going to lead to increase in the content per vehicle. In the instrument clusters and space, our analog clusters are moving to digital and TFT clusters with more personalization and comfort and convenience, which is more of a dashboard or A cockpit and more driver information system and connected. So this is how the clusters are now moving, which all of us would like to get connected to our own and others. That is again a very less penetration, and all the technologies are included only in high-end vehicles whether in two-wheelers or four-wheelers and slowly they will have rather pass. They will come into the low-cost commuters segment, which is where the volume lies across India.

Other product lines that we also continue to see adding is again in terms of sensors, we are increasing the portfolio. Interior plastics division, we’ve added many products such as ADAS, shark fin antenna, cluster handles and other various technologies, particularly in the EV space and electronics of telematics, intelligent transportation. There is a vast array of products, which are now moving from the traditional car or a two-wheeler to high-end connected personalized and advanced vehicles. So, this is how the penetration will increase and more and more kit value for Minda Corporation will increase.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

Right, sir. That was a very detailed answer. Sir, my second question is on the aluminum die casting. How do you see the business shaping up over the next two years to three years? We have done well to ramp up this business. Do you see any competition in this business? Or do you feel that there is enough room for growth?

Aakash Minda — Executive Director, Group Finance and Strategy

There is definitely a lot of opportunity when it comes to the light-weighting aspect. Because when more and more electric vehicle mobility is coming in and the world is speaking about emission systems and the other such things, which is where the aluminum casting or the die casting comes in. And as I would like to again share, Minda Corporation die casting division had a 40% year-on-year growth in this last year and more and more exports coming in going forward. So definitely, there is a room for growth. We would like to continue to focus on our domestic as well as export market. We have a strong team with a good amount of — an excellent amount of technology to cater to the need. We are well placed for the next four years to five years with respect to any technology that is needed in the light-weighting solutions.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

And sir, this aluminum die casting, how much would be domestic and how much would be exports, sir, if you can share that number?

Aakash Minda — Executive Director, Group Finance and Strategy

So technically, you may say about 60% is domestic and about 35% to 40% is exports.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

And would it be fair to assume, sir, that the margins in this business are higher than the blended margin, sir?

Aakash Minda — Executive Director, Group Finance and Strategy

Yes. Of course. But I would like to also highlight that the capex and the below EBITDA number just in terms of depreciation are also higher in this business compared to others because it is a highly capital-intensive business.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

And sir, any new product launches, which we are doing in aluminum die casting, wherein we can gain market share or take new orders?

Aakash Minda — Executive Director, Group Finance and Strategy

Yeah. The focus is definitely on electric vehicle mobility. There are various players under many opportunities that are coming in again from the motors or battery package housing or other converter businesses. So there are various product lines that we are working on for the EV die casting purpose.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

And sir, my final question, if I can squeeze in. Sir, what is the — I mean, there were questions about margin trajectory, but I would like to understand what are the levers for margins going ahead. Is it like sustained cost optimization? Or is it raw material tailwinds? Or is it better realization-led operational efficiency, which could come in, sir?

Aakash Minda — Executive Director, Group Finance and Strategy

So, I think you answered all your questions yourself, but it’s a mix of all. And again, while there are pressures from the raw material, wage increase to various states like we have seen all across, the margins definitely continue to be under pressure. But as an organization, our focus is on how to gain costs and leadership in the manufacturing from in-house all the way to our suppliers.

So definitely, the indexation with our partners, how we can focus on increasing productivity and manpower productivity improvement, more and more dependence on automation and robots is something that what we will be looking at in the future, as well as the products that we are going to be working on and are working on, of course, we’ll be needing much more automation rather than manual lifting, which will be reducing the manpower dependency and increasing the quality as well as our productivity and efficiency and profitability.

Saral Seth — Indsec Securities & Finance Ltd. — Analyst

Sure, sir. Thank you. That was detailed answers. I’ll fall back in queue.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you. Thank you. The next question is from the line of Radha from B&K Securities. Please go ahead.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Hi, sir. Thank you for the opportunity once again. Sir, my question is on the aluminum die casting side. So just wanted to understand, I believe that as we move on from aluminum to zinc and to magnesium. So in the value content or the product improves, so is there a margin difference if we are providing aluminum die casted products versus zinc and magnesium die casted products and what would that be?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, very challenging question. But again, we are primarily into aluminum casting. We are not into magnesium casting. Of course, there are more pros and cons when it comes to the technology per se. But more importantly, the application of each of the zinc or aluminum, or magnesium casting plays an important effect. Honestly, I cannot comment on the profit margin across all three.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay, sir. And sir, I mean, if we see the magnesium die casted products, I mean, is the industry or do you believe the industry will slowly start moving to these magnesium die casted products at least in the premium vehicles? And if yes, then what is the penetration now? And I mean, if the industry moves towards it, will it start with the passenger vehicles and so on?

Aakash Minda — Executive Director, Group Finance and Strategy

Ma’am, magnesium casting is a very typical process and it is very safety critical if I may say compared to zinc or aluminum by the nature of it. So, there are not too many players in India who do that. But yes, as a technology, it does exist, but immediately, the application needs to be validated and tested, which will take many years to come in my opinion as an individual.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Okay. And sir, lastly, out of the components that we make in the aluminum die casted products, I mean, what percentage of that would be we making for products that are in the engine subcomponent or transmission subcomponents and components that will not be required in the EV engine? And what would be your strategy to — when the industry replaces those products, what would be your strategy to cover that part of the revenue?

Aakash Minda — Executive Director, Group Finance and Strategy

So — ma’am, firstly, again, these are both types of products that we make, firstly for IC engine related, then there are EV batteries or motor related, and then there are products, which are EV agnostic or engine agnostic, which does no matter irrespective of the engine. So, there is a variety of mix and across segments. Exports also again on the IC engine side as well, which is also growing, but we are very clearly launching new EV die casting products, which will not hamper our IC engine products in the casting segment.

Radha Agarwalla — Batlivala & Karani Securities — Analyst

Understood, sir. Thank you, sir, for answering my questions. All the best.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you.

Operator

Thank you. The next question is from the line of Monika Arora from Sharegiants Wealth Advisors. Please go ahead. Ms. Arora, your line is unmuted. Please go ahead with your question.

As there is no response, we’ll move to the next question. The next question is from the line of Rajesh Kumar from Reliance Wealth. Please go ahead.

Rajesh Kumar — Reliance Capital — Analyst

Hi. Thank you for taking my question. My first question is on the working capital. How do you see in future your working capital days to evolve? What’s the company’s status on that?

Aakash Minda — Executive Director, Group Finance and Strategy

So the challenge in the automotive industry is definitely continuously increasing the working capital. Like one of the key metric is that we also monitor and working towards that. And hence, as I mentioned, one of the important factors in that is our suppliers or our creditor partners. This is where we are working with them on how we can strategize to decrease our inventory days as well as their payment terms as well. I mean there are, of course, MSME norms which the government [Indecipherable] 45 days and all. So, this is one aspect that we’re working on across various segments.

Number two is, of course, on our work-in-progress inventories and FG inventories that we look at. So inventories definitely is an important aspect with more and more imports with the electronics now coming in and the customers mandating and requiring us to have high number of lead time items in our inventory, that is where the maximum number of days go up.

When it comes to the customer aspect of it, definitely, there are sector norms. Customers are good paymasters and they are traditional one. There is no issue on that. But yes, wherein some cases, we manage them appropriately if in case, but we are constantly reaching out to them on how to reduce our debtor days on that aspect. So of course, if you see, yes, our working capital days have gone up from 30 days to 40 days, but we are working on these fronts, as I mentioned to come down significantly.

Rajesh Kumar — Reliance Capital — Analyst

Thank you, sir. Sir, my next question is on — we have entered into two strategic partnerships in FY ’23. Can you help us in giving some color how this has panned out so far and their potential impact on the business going ahead?

Aakash Minda — Executive Director, Group Finance and Strategy

So when it comes to the Daesung Eltec, it’s concentrated on the ADAS solutions. So, this is a company from Korea. And what we are here targeting now is we basically have zero application in India from that point. So currently, our team is working with our Korean counterpart on the application for the Indian environment as well as the Indian end customer usage. That’s what we are continuously working on because the products that we have developed are for the Korean or international usage. That’s one.

On the second side, of course, we are working on the customers and demonstrating our samples, putting onto their vehicles to get more and more interest into that front. When it comes to the telematics, LocoNav company and Minda Corporation is offering the hardware and LocoNav is offering the cloud and the software solution to that. So as a joint system solution offering, we are working with various partners or with the customers to offer them a complete solution on this aspect. So, of course, our products are in the market, fitted on the vehicles, whether in EV or in IC engine across segments.

Rajesh Kumar — Reliance Capital — Analyst

Sir, my next question is how about your targets for a strategic partnership and especially post Pricol? How will you be able to finance it?

Aakash Minda — Executive Director, Group Finance and Strategy

So as I mentioned, this is a financial investment. So, we will see when the opportunity comes, what will be done and what can be done. But of course, we are much more confident on our performance and our balance sheet than ever, with the way we’ve already said before is that you can see the numbers and the next year targets are also much, much higher for us and we as an organization are committed to deliver more and more free cash flow. So, we will see when the opportunity comes, whether it is any and all JVs or ELAs or M&As and we will evaluate them at the right course of action.

But as an organization, we are focusing on bringing in new partners through JVs or ELAs for completing our system solution and offering advanced technology. And we will come back to the market and to you whenever there are developments, which will be soon. Of course, when it comes to M&A, we are open to all opportunities that come our way. We have the full bandwidth and have developed the management capability to grow further through M&A as well. But yes, we are very clear on what we are not going to do. We’re not looking at any companies which are outside India and are also in the product range, product lines of Minda Corporation, which are the domains that we are already working. So there are some clear norms that we have set up for M&As as well as the technology systems and partnerships.

Rajesh Kumar — Reliance Capital — Analyst

Sir, on ROCE, what is the level you are targeting in the longer run? And what are the strategic levers or your strategies to achieve the same?

Aakash Minda — Executive Director, Group Finance and Strategy

So, our ROCE is, again, currently moved from — if you see over the last few years, we have gone from 15% to 20% this year in the last three years only. And if you look at the FATR of the organization, we are somewhere on the 4.2 times to 4.5 times. And this year, we have done about 5.4 times. So with the nature of the products and our product line strategy, this is how we continue to invest in the products, which are going to continuously give us higher ROCE numbers. And this is a key parameter in the metric before any capital allocation that we do for any new project or even a new partnership or a plant. [Speech Overlap]

Rajesh Kumar — Reliance Capital — Analyst

Okay. Thank you, sir. That was my last question. Thank you.

Aakash Minda — Executive Director, Group Finance and Strategy

Thank you.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Aakash Minda for closing comments.

Aakash Minda — Executive Director, Group Finance and Strategy

So thank you very much. Going forward in FY ’24, we are very confident of doing better than the industry or performing the industry with our own capabilities and technologies and customer engagement. We continue to focus on delivering numbers and performance on a consistent and sustainable basis. And we are developing our ability to navigate the market challenges by relentlessly focusing on new products, R&D, innovation and strategic tie-ups to cater to the evolving demand of the automotive space. Our strategic approach will remain on fortifying our core products and expanding our products and customer base, both by attracting new clients and deepening our relationships with existing ones. We are fully poised and confident of margin-accretive growth in the next years to come.

Thank you for your support.

Operator

[Operator Closing Remarks]