MINDA INDUSTRIES LTD (MINDAIND) Q3 FY23 Earnings Concall Transcript

MINDA INDUSTRIES LTD (NSE:MINDAIND) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Ankur Modi — Head Treasury, Investor Relations & Corporate Communications

Analysts:

Siddhartha Bera — Nomura — Analyst

Ashutosh Tiwari — Equirus Securities — Analyst

Mukesh Saraf — Avendus Spark — Analyst

Aditya Jhawar — Investec — Analyst

Mumuksh Mandlesha — Emkay Global — Analyst

Nishit Jalan — Axis Capital — Analyst

Rishi Vora — Kotak Securities — Analyst

Karan Kokane — Ambit Capital — Analyst

Komal Ladha — YellowJersey — Analyst

Shashank Kanodia — ICICI Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Uno Minda Limited Q3 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the Company, which are based on the beliefs, opinions, and expectations of the company, as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions, after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sunil Bohra, Group CFO of Uno Minda Limited. Thank you and over to you sir.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thanks, Mike. Good evening everyone, and a warm welcome to all the participants. On the earnings call today, I’m joined by my colleague, Ankur Modi. We have uploaded our financial results and investor presentation for Q3 FY ’23, on the stock exchanges and our company’s website. We hope everybody had an opportunity to go through the same.

I will first start with industry updates, an overview followed by our financial and operational performance for the Q3 and nine month of the current fiscal. Post that we will open the floor for Q&A.

Starting with industry update. India continues to be one of the world’s fastest-growing economies due to estimated high domestic growth, supported by export opportunities on the back of India becoming a manufacturing hub, and various government initiatives to encourage Make in India. The automobile industry, specifically PV segment is also on a growth trajectory, supported by robust demand in both, urban and rural sector.

Cool-off in metal prices and shortages of semiconductor is subsiding. According to CM [Phonetic] for the first time, India has surpassed Japan in auto sales and become the world’s third-largest auto market, underlining both India’s credentials as the fastest-growing economy in general, and the potential of the auto sector in particular. Considering the Indian automobile industry contributes 7.1% of India’s GDP, and 49% of its manufacturing GDP, calibrated steps are taken to maintain this industry growth trajectory and realize the industry’s true potential.

During the quarter, we saw highest retail sales in October and November in the history of Indian automobile industry. The demand was well-supported initially by festival sales, followed by great Indian wedding season. After two months of attermined rush December ’22 was relatively low, due to calendar year, and with routine price hikes from OEMs.

In terms of production, we witnessed healthy growth in overall industry volumes during the quarter. EV, 3-wheeler and CV grew by 21%, 13% and 12% respectively Y-o-Y basis, while 2-wheeler recorded a growth of near 1%. Production volumes declined on quarter-on-quarter basis due to early festival, the related growth was captured in Q2 FY ’23 itself. Production volumes were also impacted due to planned annual maintenance shutdown, at most of the major OEMs.

Now, talking about the segmentwise performance. The PV segment has continued to show remarkable consistency in growth during the entire year. PV segment to break all records by clocking more than 34 lakh retail sales in calendar year ’22. PV production volumes are likely [Technical Issues] pandemic level and record highest ever annual volumes. Better availability of model mixes, new launches and increase in rural demand continues to keep the segment in healthy growth trajectory.

Increase in the standard of living had led to a rise in the need for premiumization. India has seen a robust year-on-year growth in luxury car sales in CY ’22, which reflects the growing appetite for luxury cars and goods in a post-pandemic world. Compact SUV and SUV category, coupled with high variant models continue to rule, while entry-level segment, sub-segment is still feeling the pinch. Apart from this, while waiting period for some models have come down, compact SUVs, SUVs, and luxury vehicles continue to witness a minimum waiting of two to three months.

The demand for both, ICE and EV variants remain strong across segments, accompanied by continuous investments in R&D. Our focus on localization remains intact and we have been able to increase the wallet share among customers across variants. Speaking of the 2-wheeler segment, the 2-wheeler industry saw improved sentiments during the festive and wedding season, during the quarter under review, but it could not sustain and continues to face headwinds with industry volumes still below the peak, pre-COVID levels. While sentiments are improving at sales base and are better than what it was a year ago. Rural market is yet to fully come to the party as the cost of ownership has shot up.

The trend is specifically observed for the entry-level, commuter segment 2-wheelers, implying that the purchasing power of the consumer at the bottom end of the pyramid has been impacted. 2-wheeler exports have also remained under pressure. Near term challenges persist for 2-wheeler, however, medium to long-term outlook remains positive.

The 3-wheeler segment continue to — the recovery path with robust growth. The 3-wheeler segment, which was completely down during COVID has recovered well and has narrowed its gap when compared to CY 2019. Within the segment it’s the electric rickshaw sub-segment, which is showing triple-digit growth, thus pushing the EV market-share above 50% mark.

The CV segment has continued to grow during the entire calendar year ’22 and is about to reach the pre-pandemic levels, due to rise in e-commerce, agriculture, infrastructure, mining activities, improving sentiments of fleet owners, replacement of fleet and the new model launches. The government’s ongoing push for infrastructure development, coupled with the increase in demand for LCV, HCV, buses and construction equipment has kept this sector’s growth momentum.

The Budget ’23 had proposed that custom duty exemption is extended for import of capital goods and machinery required to manufacture lithium-ion cells for batteries used in EV. This will provide impetus to green mobility and boost local manufacturing. In addition, funds will be allocated for the central government to scrap old vehicles, under the vehicle scrapping policy as described earlier. States will also receive assistance in replacing old vehicles and ambulances.

Apart from this, the capital outlay of over INR10 lakh crore for infrastructure spending will help AMCV [Phonetic] 15:54 sales, which is already witnessing an upswing. The Union Budget ’23 also raises the personal income tax rebate limit from INR5 lakh to INR7 lakh. This is likely to provide more disposable income, with such initiatives, we are hopeful of a continued surge in demand for auto industry.

Moving to Auto Expo Components 2023, Uno Minda recently participated in auto expo, which is Asia’s largest automotive show. We were present in the expo, showcasing our formidable product portfolio, built around megatrends of personalization, autonomous, connected and electrified. Personalization was showcased as affordable luxury, technologies in lighting, seating, acoustics and smartphone were integrated to showcase what an Indian customer can expect in his or her car.

Autonomous was exhibited by considering Indian driving condition, hence it revolved around driver assistance system and driver behavior monitoring. Connected as Connected platform to collect, control, monitor and monetize vehicles data. Electrification, Uno Minda has been convincing present in the EV technology across segments with charging and powertrain solutions. The above technologies developed by Uno Minda were very well showcased in the three technology demonstrators of 2-wheeler, 3-wheeler and a 4-wheeler respectively, to give a real-time experience to [Technical Issues]

Besides, the product exhibits Uno Minda also showcased new technologies we are working on. We saw overwhelming response at our stall with visits from leading OEMs, media, investors, and other stakeholders. We gave enthralling experience of our futuristic products and technologies, with live technology demonstrators to visitors.

Moving to key operational slide, you may refer to slide number 5. As was approved by the Board, the company executed the joint-venture agreement with Buehler Motors and Tachi-S during the quarter. We are happy to inform, the company also received confirmed orders from couple of 2-wheeler EV OEMs for motors in the newly formed joint-venture with Buehler Motors. The Company has also entered into technical licensing agreement with Asentec company of Korea, a leading global supplier of automotive sensors and actuators to design, develop, manufacture and market high-tech speed sensors in India.

Uno Minda had set up separate division for automotive sensors, two years back, considering the rising demand of the evolving technology in sensor space. Sensor division has come a long way since its inception with manufacturing of engine and exhaust sensors, transmission and suspension sensors, active safety and comfort sensors among others.

The current partnership with Asentec will further strengthen its advanced sensors product portfolio. Uno Minda EV also won incremental order with annual peak value of INR300 crores, comprising of off board charger, motor controller, BMS and DC-DC converters. The Company strengthened relationship with marquee American 2-wheeler OEMs, both incremental orders for switches, as well as heated grips.

Coming to the financial and operational performance, you can refer to Slide 7 and 8. At consolidated level, revenue from operations for the quarter increased by 34% year-on-year basis to INR2,915 crores from INR2,184 crores in Q3 of FY ’22. While revenues grow marginally as well on quarter-on-quarter basis, as the company continues to gain market-share and increase its book value. We have witnessed growth amongst all our products with lighting and PV, alloy wheel registering from new growth.

As guided, we have continued to outperform the industry with our 34% growth against industry volume growth of 5% on year-on-year basis. Even quarter-on-quarter basis, while industry volumes have declined by 16%, Uno Minda has registered growth, despite softening of some commodity prices, impacting revenues negatively.

EBITDA for the quarter was at INR338 crores, improving by 44% from INR235 crores year-on year basis. The EBITDA margins for the current quarter has improved to 11.6% as against 10.8% in corresponding quarter last year. Operating leverage, supported by increased volumes has led to margin expansion. However, higher energy costs and inflationary impact on other administrative expenses had constrained further margin expansion.

Finance costs have remained stable at INR13 crore in comparison to corresponding quarter last year, in-spite of rising interest rate scenario. Sequential drop in the finance cost is mainly on account of hedge accounting on the unhedged portion of the foreign currency loan. We see increase in tax expenses from INR42 crore in Q3 FY ’22 to INR62 crore in Q3 FY ’23 on account of higher profits. Sequentially, increase in tax from INR55 crore to INR66 crore is mainly on account of reversal of some deferred tax liability in Uno Minda Europe and some timing differences.

The profit after tax which is Uno Minda’s share for the quarter was at INR162 crore, as against INR101 crore in Q3 FY ’22, registering a growth of 60% on a year-on-year basis.

Coming to the business segmentwise performance, going into product line, starting with switches system. You can refer to slide number 13. The segment achieved revenues of INR815 crore for Q3 FY ’13, contributing 28% of our consolidated revenues. Premiumization, leading to increased numbers of switches continue to drive the business growth along with increasing share of business with Indian and Korean customers.

During the quarter we received incremental orders from Korean customer, further strengthening the relationship. In 2-wheeler switch business as well, we have won incremental export orders for switches and aided goods from the 2-wheeler American OEM. We have also commenced construction of our expansion of 4-wheeler switch plants at Chennai and Farrukhnagar.

Moving to lighting business, it has achieved revenue of INR644 crores for Q3, contributing 22% of our consolidated revenues. Lighting business has grown exponentially over last year, with multiple large order, specifically 4-wheeler lighting. 4-wheeler lighting Gujarat plant had commissioned last quarter and it’s ramping up in subsequent quarters.

Moving to our Casting business, it has achieved revenues of INR579 crores for Q3, contributing to 20% of our consolidated avenues. The revenues for Casting business has been increasing year-on-year basis, with increase in capacity of 4-wheeler alloy wheel and commissioning of 2-wheeler alloy wheel plant.

Last quarter, underlying volumes of both 2-wheeler and 4-wheeler had declined quarter-on-quarter basis, along with reduction in commodity price, impacting the revenue for the quarter. We continue to be bullish on the casting business and expect recovery in volumes, as well as higher penetration, to lead to significant revenue growth in subsequent quarters.

Moving to Acoustics, slide number 14. Our Acoustic business had achieved revenues of INR187 crores for Q3, contributing 6% of our consolidated revenues. While India business remains stable, European subsidiary, Clarton Horn remain under pressure with unprecedented increase in energy costs and lower industry volumes.

Moving to our Seating business, which achieved revenues of INR263 crore for Q3, contributing 9% of our consolidated revenues. Revival in CV segment and diversification in customer supported the growth in seating business. Export of suspended seats marginally impacted due to ongoing geopolitical issues. Seating business won order from a new 2-wheeler EV OEM customer.

Moving to other product businesses. We have achieved revenues of INR427 crores for Q3 FY ’23, contributing 12% of overall top-line. Other businesses mainly comprise of controller and sensors, ADAS, blow molding business, erstwhle [Phonetic], Isis [Phonetic], battery and aftermarket.

Growth in other revenues can be attributed to blow molding business on commission of the Bangalore expansion, our Engineering Services business in Europe and aftermarket. The share of profit, loss of associate joint-ventures for Q3 is at INR25 crore as against INR19 crore in Q3 FY ’22. While all our JV associate contributed positively, major contribution came from DENSO TEN, Roki and TG.

Moving to EV business. During the quarter, we have reserved incremental orders of off board charger, motor controller, BMS and DC-DC converter from 2-wheeler EV OEMs. As was guided, we have now received orders for motor, as well in our new formed JV with Buehler Motors. The annual peak value of these orders is expected to be around INR300crores.

We would also like to inform you that Uno Minda EV System, our JV with FRIWO has started supplies of off board charger for 2-wheeler EV OEMs at interim location, through final assembly and testing with SOP for three more orders lined up in next six months.

Moving to aftermarket and exports, refer to slide number 14. In terms of our revenue pie for the quarter ended December 31, OEM business accounted for 89%, and aftermarket business at around 11%. Our aftermarket division revenues were at INR286 crores as against two INR262 crore in corresponding quarter last year. Aftermarket revenues have grown 9% Y-o-Y basis and 11% sequentially. Aftermarket continues to grow at healthy run rate with increased focus and marketing effort.

Moving to our cash flows and debt levels, our net debt as of 31st December was at INR683 crore, compared to INR570 crore as on March 31, ’22. And our net-debt-to-equity stands at 0.16. Net debt has increased marginally on account of increased working capital borrowings, principal increase in revenues as well as due to some incremental borrowings for capital expenditure.

We have also been making steady improvement in ROCE. If we analyze profitability of nine months, our ROCE stood at 20.8%, which is highest in last few years. Moving to dividend, the Board has approved and declared interim dividend of INR$0.5 per share, which is 25% of face value, reflecting commitment from the company to returning value to shareholders on consistent basis. The dividend amount in absolute value will be double the amount paid as interim dividend in FY ’21, ’22.

Moving to some strategic business updates, starting with Minda Kosei Aluminum. The Company continues to identify opportunities for further consolidation help define the Group structure, thereby creating enhanced stakeholder or shareholder value. In pursuit of the same, the Board of the Company has approved acquiring remaining stake in Minda Kosei Aluminum, which is 22.64%, currently held by JV partner Kosei to make Minda Kosei Aluminum a wholly-owned subsidiary. The purchase consideration for 22.64% stake is agreed at INR115.5 crores. Post acquisition, while JV for MKA will be terminated. The Company will enter into technical licensing with Kosei to ensure continuity of technology support.

The transaction is targeted to be completed on or before 31st of March, ’23. The TG Minda business, which is a joint-venture between Uno Minda and TG Japan, engaged in business of automotive safety system, fuel cap, weather strips, sealing parts is planning to enhance the production capacity at its main plant in Neemrana, to meet the growing demand for airbags as safety regulations become stricter in India.

Driver and passenger side airbags for up frontal collisions are increasingly equipped on vehicles in India. The use of side and curtain airbags to protect vehicle occupants in side collisions is also being mandatory. In fact, the Company has already received large orders for curtail airbags, for three models one of the Japanese OEM. To meet the accompanying growth in demand, TG Minda India will expand its Neemrana and install airbag production equipments.

The Board has approved capital expenditure of INR175 crore for the said expansion. The commercial production of the expansion is expected to start from December of 2024. Moving to some recognitions and awards at Uno Minda, it has been our constant endeavor to incorporate, demonstrate and live up to the highest standards of corporate ethos and governance in our policies and practices for earned and inclusive growth.

We are happy and proud to state that Uno Minda has been honored with the Certificate of Recognition for Excellence in Corporate Governance in the category of listed Medium Corporates at the 22nd Annual Institute of Company Secretaries of India National Awards for Excellence in Corporate Governance 2022. on. Uno Minda is an employee-centric organization, always puts our people at the heart of whatever we do.

At Uno Minda, we believe the success of the organization and its people go hand-in-hand. Recognizing our people practices Uno Minda was recognized as Great Place to Work by GPW Institute India for second consecutive year. We also featured amongst top 25 best workplaces in manufacturing companies in India for 2023, for inspiring trust among people, who are still in pride, creating an environment that promotes camaraderie, and delivering a great workplace experience for all our employees.

Beyond business, we are strategically focused on reaching large number of people in the community, and providing more opportunities for holistic development, this achieving responsible growth, by shaping the lives up individuals to new possibilities. There are numerous initiatives which our charitable foundation undertakes, to enhance underprivileged people’s lives. Recognizing our effort in CSR field we won prestigious awards, such as the Greentech award and the CSR Times award, which is the Gold Award in the category of promotion of education at the 9th Annual Greentech CSR India Awards 2022, and for the project Samarth – Jyoti in the category for women empowerment at the 9th Corporate Social Responsibility Summit, respectively.

With this, I would like — we’ll now open up the floor for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We have the first question from the line of Siddhartha Bera from Nomura. Please go ahead.

Siddhartha Bera — Nomura — Analyst

Yes, sir. Thanks for the opportunity and congrats on a good set of numbers. Sir, my first question is on the switch side, so if we look at…

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Siddhartha, your line is not very clear actually.

Operator

Mr. Siddhartha, request you to kindly go off the speakerphone and speak to the microphone.

Siddhartha Bera — Nomura — Analyst

Yeah, is it better now?

Operator

Slightly better. If you could go off the speakerphone, it will be better.

Siddhartha Bera — Nomura — Analyst

Yeah. I am directly talking from the phone only.

Operator

All right.

Siddhartha Bera — Nomura — Analyst

So, sir, on the switch business, I just wanted to understand that if you look at production and then highlighted industry volumes are down, on a sequential basis in maybe double-digits, and we have managed to grow the business sequentially. So just wanted to understand here first, any particular new orders, which have started or what has led to this performance in this segment.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Okay, that’s one. Any other questions Siddhartha?

Siddhartha Bera — Nomura — Analyst

Yes. I have a couple of them. So I’ll just go ahead with my questions. So the second question will be, sir, on this EV side, so we have said about INR3 billion new orders, but we had earlier also said about I think INR4.5 billion orders in the initial part of the year. So if you can just help us understand how to look at the revenue ramp-up, what is the total order book as of now, currently? And how to understand the ramp up in the next couple of years.

And the third is on the Kosei business, I mean, we saw that it has been acquired at quite an attractive valuation. So just wanted to understand more, why Kosei sort of agreed to sort of sell off their stake now, and what happened just later. I mean I understand we have a TLA, but just in case how to understand the business ramp up scope going ahead for this? These are — the initial ones I have more, I’ll come back later in the queue.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Okay, thanks. Thanks, Siddhartha. So switch business, industry volumes are down, and how we managed to grow I think, which has been our sustained endeavor, Siddhartha. If you remember that, how we are increasing our kit value with that side-stand switch etc. where we have been the leader. So definitely that has added. There has been some addition in the technology, and also these exports from the American 2-wheeler OEMs, and increasing our share of business with some of our customers, with really speaking. I think, all of these actions have played their role in terms of achieving the kind of numbers which we’ve delivered which had the industry de-growth. That’s on the switch business.

In terms of EV side, INR3 billion new orders and earlier INR4.5 billion, how to look at revenue ramp up, So this is all incremental orders and these are all what we always say, it’s annualized peak volumes, and we expect these volumes to be kicking in from FY ’25 [Technical Issues] fixed range in terms of the annual numbers. Then Kosei why sell off now, attractive valuation and business growth expense. So this was specific request from our JV partner, not that we were not interested, obviously we were also interested. But they were also may be having some requirement for fund. So it was a mutual discussion, mutual negotiation in terms of arriving at this value. But definitely it’s attractive and I’m sure it’s much, much accretive to the shareholders of Uno Minda Limited.

In terms of business ramp up we spoke, it goes unhindered because even today the business was completely run by Uno Minda with the sort of a technical support required from Kosei Japan and that model will continue. So we will enter into a TLA for roughly around 10 years, once we terminate this JVA. So there will be consistency of the support whatever we’ve been getting, which will be compensated through the royalty to the Kosei, which will continue as it has been now. So this is the broad structure and while the Board has given us a timeline of 31st of March, 2023 to sort of discuss and agree on the path forward in terms of agreeing on to the technical licensing module, and what will be the implications of that going forward.

So just to make sure that the growth of the business is not compromised, and in fact we really put up the business at a faster growth pedestal. Because now it’s fully our baby, and you can even go little more aggressively, if need.

Siddhartha Bera — Nomura — Analyst

Got it, got it. Sir in the presentation what we said is that, we were sort of ramping-up this U.S. 2-wheeler switch. So that has come in the current quarter only, Q3 only or it is the order which we have got and will come up later?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

No, it has been there for last nine months now, but obviously, the volumes have been improving. So that also helps on month-on-month basis. As I’ve said, there have been some incremental orders which we have received, that also will kick in, in the current calendar year.

Siddhartha Bera — Nomura — Analyst

Got it. And what would be the size of these orders, sir, the Korean 4-wheelers switch and U.S. 2-wheeler switch?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So Korean 4-wheeler switch, while the number may not excite you, it is INR40 crores annually. But if you see from business perspective and strategic point, it’s sizable, considering the Minda require itself to like INR900 crore to INR1,000 crore, it is almost 4% 5% of the revenue incrementally. And it will help us increase our share of business in the Korean — with the Korean customers which is what we have been discussing for quite some time now.

Siddhartha Bera — Nomura — Analyst

Got it. Thanks a lot sir. I’ll come back in the queue.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you, Siddhartha.

Operator

Thank you. We have the next question from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead.

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah, hi, sir. Firstly, congrats on good number. Just on this Kosei, you mentioned that royalty which is already you are paying only that will continue for TLA as well. There is no increase in that?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

No, no. That’s what I said, that the current mechanism of compensating for technical support will continue. Only thing, as of now it is through a JVA. So JVAs will have to be terminated and will be TLA. So principal unit has been that the same trend should continue, though we will sit across the table and make sure that the support services what we have been getting on a case to case business that continues, and there should be zero impact on that. And in terms of timeline as I said, we will target to close in next two months.

Ashutosh Tiwari — Equirus Securities — Analyst

And you mentioned on this electric 2-wheeler orders, almost INR800 crores, 900 crores we have won so far, that we’ve declared in Q1 in this quarter, that already peak out in ’25, is that correct… [Speech Overlap]

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yes, I think ’25, ’26, that timeframe. Based on that — and this is based on the [Speech Overlap] customers now. Obviously, it can be earlier, it can be later, based on the investigation of the EV.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay. And what was the revenue from this 2-wheeler and 4-wheeler alloy wheels in this quarter?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So 2-wheeler, 4-wheeler alloy wheel volumes have definitely been impacted compared to the last quarter. So 2-wheeler the volume has been significantly lower. So commodity price itself impacted almost like INR30 crores of INR35 crores of revenue in this division, in the last quarter versus Q2. On top of it, the volumes have been lower, in primarily the 2-wheeler business. So put together, if I see, 2-wheeler and — you said 4-wheeler alloy wheel, right?

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah, yeah. Definitely, yeah.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah, so both would be let’s around INR200 crore for the quarter.

Ashutosh Tiwari — Equirus Securities — Analyst

And so again, is there any individually in 2-wheeler and 4-wheeler?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Can we leave it? Don’t mind.

Ashutosh Tiwari — Equirus Securities — Analyst

Sure. And lastly, Two more questions. One is on the TG Minda capex of INR175 crores, what kind of sales it can generate for us?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So this can generate sales of almost INR350 crores a year.

Ashutosh Tiwari — Equirus Securities — Analyst

Towards [Indecipherable] done. Okay.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah.

Ashutosh Tiwari — Equirus Securities — Analyst

And lastly on the margin side, because we — and again ensuring that gas prices have remained high, probably you’ve not got compensation from OEMs. So can we get that directly from Q4 also margin can improve further from here?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So we have been honestly — two things discussing consistently with our customers for compensating the gas price. Though we have been getting positive, yes, but it has to yet get concluded that number one. Number two, in terms of margin, I would say, yes, it will definitely have an impact on a quarter-to-quarter basis, but we have been guiding for a margin on a annual basis. So you still hold onto that margin range of roughly 12%. And if you see first nine months, we are within that range, even if we get that, hopefully, then we will be looking above the average what we’ve been so far.

Ashutosh Tiwari — Equirus Securities — Analyst

Sure. Thanks a lot.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you, Ashutosh.

Operator

Thank you. We have the next question from the line of Mukesh Saraf from Avendus Spark. Please go-ahead.

Mukesh Saraf — Avendus Spark — Analyst

Yes, good evening and thank you for the opportunity. My first question is on the alloy wheel business, you’ve obviously mentioned that the revenue got down, also because the pricing has come off as the material cost has come off. Is that under the activity that we have seen, as the pricing come up only to the extent of how other costs have come down on the RM side or is that under the company ratio?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So this is down, it’s primarily what we’re talking Mukesh is the aluminum package only, nothing else.

Mukesh Saraf — Avendus Spark — Analyst

Yeah. I’m asking regarding the aluminum price so, have our costs also come down to that extent on the QCM [Phonetic] extent of the pricing?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah, absolutely, Mukesh. So with obviously little bit of lag, it’s like customer it is we have got now monthly price adjustment, somewhere it is quarterly. So customer to customer, it does get impacted to somewhere, it would have got in Q3, some of it got in Q4.

Mukesh Saraf — Avendus Spark — Analyst

Okay. So it hasn’t been — I mean our margins in terms of per ton have been — should be maintained, just one question.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yes, absolute margins first and as have been impacted primarily because of the gas prices has that [Indecipherable] would have been definitely much better.

Mukesh Saraf — Avendus Spark — Analyst

Right. Got it. And secondly on — in the other segment you had mentioned that blow molding has been one of the reasons why the growth is quite strong sequentially. So does it mean that the Bangalore facility is already up and running? Is that right?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah. Bangalore facility is up and running.

Mukesh Saraf — Avendus Spark — Analyst

The new one?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yes.

Mukesh Saraf — Avendus Spark — Analyst

Okay, okay. Because it is expected to start, I think in the fourth quarter if I’m not wrong. So — but it is already started there?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah, it is just started in — and also started supply because the key business what we have got was for the new model of — one of our Japanese OEM, which has started, getting into SOP in December.

Mukesh Saraf — Avendus Spark — Analyst

Okay. And so that’s the primary driver of that other segment growing up. So the reason I am asking is…

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

No, other segment, there has been lot of improvement, I won’t say that the primary driver honestly, Mukesh. Because lot of other businesses, like sensors have done well, controllers have done. So there — I think one of them who are chipping in and I won’t say it’s entirely because of one business.

Mukesh Saraf — Avendus Spark — Analyst

Okay. It’s quite a strong growth there sequentially. So could you just highlight if or if you could probably give a sense on what could be if at all the EV revenues that we have so-far? I think last time we had mentioned that we’ll probably give that number later. So is there some — is there some color you can give there?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yes. So that number maybe we’ll start reporting from the next fiscal, let the number be little more — more meaningful, that is why it happens at 3%, 4% in terms of the EV number. So and our 2-wheeler revenue is also less than half. So from that perspective, it won’t make a significant impact, so maybe first quarter onward, you’ll evaluate If you start giving purely EV numbers separately.

Mukesh Saraf — Avendus Spark — Analyst

Sure.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

In terms of — yeah.

Mukesh Saraf — Avendus Spark — Analyst

Right, right. And sir lastly, any color on the capex that we plan for the upcoming year at ’24, and so if you could just give a breakup of that capex across [Indecipherable]

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So that maybe we have — as we said, normally in case we update in the annual — along with the annual — we just started the — our budgetary cycle and entire February and March it will go into our budgeting, planning, etc., capital allocation and all that. So you will have a better when we speak about with our annual results.

Mukesh Saraf — Avendus Spark — Analyst

Right, right. All right, sir. Thank you so much. I’ll get back in the queue.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you, Mukesh.

Operator

Thank you. We have the next question from the line of Aditya Jhawar from Investec. Please go ahead.

Aditya Jhawar — Investec — Analyst

Hi. Thanks for the opportunity and congrats on good set of numbers. [Speech Overlap] Number one on airbags…

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Sorry? Airbags.

Aditya Jhawar — Investec — Analyst

Just looking on airbags, the incremental change that is the mandatory six airbags, so what kind of incremental opportunity are we seeing in this?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yes, so as I said the incremental opportunity which is almost the confirmed orders in-hand which is more than let’s say around INR350 crores. And that is we are expanding these facilities. Some of it we achieve through our existing capacity, but definitely it will be another investment, because the kind of facility we have for airbags, also will actually, when we had the visit to our Gujarat plant. It’s a very, very high-tech plant in terms of airbag manufacturers with automated cutting, stitching, etc., lot of things. There are highly automated machines, and that’s why we did this kind of capex [Indecipherable]

Aditya Jhawar — Investec — Analyst

Okay. So this facility will be ready in December ’24 but this is becoming mandatory from October ’23, and our largest customer has a large portfolio dependent on the entry segment car. So do you foresee that we would be losing market share in the first initial couple of years?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

I won’t comment on market share Aditya, as of now, because, while we have the current date is October, I think a lot of water we are still little flow on that [Indecipherable]

Aditya Jhawar — Investec — Analyst

Okay.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

As of now whatever guidance we have got from customers, we are working based on that. So I’m sure it will not impact our strategic business, because whatever models they are associated, airbags are associated, these are the timelines given to us by our customers, in case, customer asks us to refund, we’ll be happy to do that. Because, it’s not that we’ll need two years to set up these equipments and start supply in case they want six months earlier, we will be able to do that, with some sort of prepayment. But as of now the December ’24 timeline is what we have been given by our customers, even took the SOP of their model.

Aditya Jhawar — Investec — Analyst

Okay. Perfect, perfect. And on gross margin beginning of this quarter we saw a very good expansion. So if you could help us understand that what is the benefit of lower RM price? Was there a lag effect of price escalation and what could be the contribution of product mix change? And is there some price escalation pending which can accrue in Q4?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So. Aditya, it’s a very good point. And in fact this is what you remember we have been discussing given the commodity prices are going up.So there is always a quarter lag impact. So when prices are going up, we were seeing some sort of a negative impact so now even prices are going down, obviously there is some positive factor it is coming in Q3, but it maybe not be what you call forever, because we want to go into Q4 and buy spot price then we’ll get the Q3 basis, and that is the reason why we top off the annual margin guidances rather than looking at the quarter-to-quarter.

And secondly, whether it will have any you said the long impact, answer to that is no, because, when we say the commodity price indexation is aligned with almost all our customers with 95% of commodities being indexed, so while you might have some quarter-to-quarter moving, but on an annual basis, things get pass through to our customers.

So from that perspective, we have tried to insulate the business from the volatility of the commodity.

Aditya Jhawar — Investec — Analyst

Okay. Is that already some impact of product mix change that you can quantify?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Product mix change…

Aditya Jhawar — Investec — Analyst

Say for example, switches, like, any comment on it.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So not a — if you see the segment volumes which I don’t see if there is any significant structural shift which is happening in our what we call volumes.

Aditya Jhawar — Investec — Analyst

Okay. Fair enough. Now couple of just bookkeeping questions. So this EV revenue now will be accounted in two entities that is Uno Minda EV system as well as the JV we have for traction motor with Buehler, right?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Two — EV revenue, yes. So there will be three pieces actually. So as of now, you are right that motors for 2-wheeler will go in to Buehler. Heavy components which are part of the JVs will go there, but there are some products which are not part of JV like there are some EV component for CVs. There are EV products like telematics things like that, they are part of the controller division. So you’ll have actually the EV revenue coming in to — yeah, and this is for only EV specific products, I assume you’re talking, otherwise all the other products will get accounted, where they are.

Aditya Jhawar — Investec — Analyst

Yeah, EV specific products only.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah. So it will be three pluses, not two.

Aditya Jhawar — Investec — Analyst

Okay. And sir, can you please repeat the net debt number?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So our net debt number for Q3, right? Or — so Q3 was INR683 crore on 31st of December which is net debt.

Aditya Jhawar — Investec — Analyst

Perfect. That’s it. All the best again.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you, Aditya.

Operator

Thank you. We have the next question from the line of M Mandlesha from Emkay Global. Please go ahead.

Mumuksh Mandlesha — Emkay Global — Analyst

Hi, sir. Mumuksh here. Congratulations on good quarter and thanks for giving the opportunity, sir.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you.

Mumuksh Mandlesha — Emkay Global — Analyst

Sir, if possible, can you share the other revenue breakup, as it has gone up 20% Q-on-Q, some of the key growth drivers there?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So can this be taken offline Ankur if you don’t mind in terms of the data for modeling?

Mumuksh Mandlesha — Emkay Global — Analyst

Sure, I’ll take that. So sequentially other expenses is also gone up by 11% versus 1% revenue growth. What led to the increase sir?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah, so in other, as I said, there are two, three key factors at play. One is the consumable, which is the gas price, then other is in the last quarter, you have this annual maintenance shutdown, so there are some shutdown expenses which come there. Plus with the opening of the economy, the travel has kicked in. So with the advantage which was there, may be a year back also, obviously some of those, the costs are as expected, coming back in the system. So these are I think three or four key reasons why the other expenses are higher.

Mumuksh Mandlesha — Emkay Global — Analyst

Right. And so then sequentially, and how do you see the gas prices, sir?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So the gas prices in terms of the major businesses, where there consumer is In the casting and also in Europe, we are not seeing any signs of softening as of now.

Mumuksh Mandlesha — Emkay Global — Analyst

Sir, at the auto component expo, you shocased the camera-based systems and already on company has some orders. Can you share some medium term plans or targets for this camera-based systems, or they need autonomous sir?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So we are working to set-up a camera manufacturing line. We have got already a short business, at the moment we look for spare camera. So this is the — currently we’re working on to setup the project for camera manufacturing. In terms of the autonomous, I think there are a lot of products which we are working in terms of ADAS. So as of now what we have got assured business and the supply is primarily towards the sensors, your rear view cameras, your buzzers etc., the RPAS system etc., this is what currently we are doing. But there are a lot of new technologies we are working as you said rightly mentioned that we’ve showcased in our expo.

So obviously these things take time to get traction. Good thing is that, we have got a very good feedback from our customers and the engagement has started. But as you know that the engagement to getting business also is a couple of years journey which we have little live here.

Mumuksh Mandlesha — Emkay Global — Analyst

All right, sir. Thank you so much for the opportunity sir.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you, Mumuksh.

Operator

We have the next question from the line of Nishit Jalan from Axis Capital. Please go-ahead.

Nishit Jalan — Axis Capital — Analyst

Yeah, hi sir. Many congratulations on good set of numbers. I have three questions. First, firstly at the LMT [Phonetic] segment I think you mentioned INR400 crores of revenues from [Indecipherable] So seems like our casting business has scaled up very significantly, right? I assume the number was closer INR200 crores a quarter earlier. So some color on that.

Secondly, on the TG Minda capex expansion and the capex of INR175 crores, what kind of a top line can we get — our capacity utilization in that plant? So just wanted to understand the kind of ramp-up we can see.

And thirdly if you can just guide us for the overall capex and investments that we are planning to do in FY ’22 and FY ’24 because obviously, we are seeing a lot of growth and lot of new plants are coming up plus we are buying [Indecipherable] couple of big subsidiaries also. So just wanted an update on that. Thank you so much.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thanks, Nishit. So in terms of LMT segment, you asked that when very good revenue in Casting segment, can you just be little elaborative on that, what do you mean by that?

Nishit Jalan — Axis Capital — Analyst

So in LMT your total revenue was INR550 crores [Phonetic], right? And your alloy wheel revenues you mentioned was about INR400 odd crores.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Okay.

Nishit Jalan — Axis Capital — Analyst

So I assume the remaining is the aluminum die casting revenues? So just wanted to understand that it seems like the aluminum die casting revenues was around INR180 crores for this quarter. And what I understand was the run rate at the previous quarters exceeded to INR100 odd crores. So just wanted to understand is that correct and what has led to such kind of a strong ramp up? And if you can share along these numbers for the nine month also that be great.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

So I don’t have it [Indecipherable]

Ankur Modi — Head Treasury, Investor Relations & Corporate Communications

Nishit on casting, I’ll come back to you.

Nishit Jalan — Axis Capital — Analyst

Sure. No worries.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Then TG Minda, INR175 crore capex in terms of top line can be I think I answered to somebody else in the question. You can yet expecting to add at least INR350 crore of additional revenue from this capex. And overall CapEx and investment for FY ’24 also I think you spoke with you on that, that maybe we can give you a better number, visibility in — when we speak about our annual results, because we just started our budgeting exercise. And it should be over by end of March, it’s a long process for us, with multiple businesses, it takes almost like roughly six weeks from start to end. We just started that process, so hopefully when we interact next time, we should have maybe a better visibility in terms of what is a capex going to be for FY ’24.

Nishit Jalan — Axis Capital — Analyst

Okay, thank you.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you sir.

Operator

Thank you. We have the next question from the line of Rishi Vora from Kotak Securities. Please go-ahead.

Rishi Vora — Kotak Securities — Analyst

Hello, sir. Thank you for taking my question and congratulations on good set of numbers.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Okay.

Rishi Vora — Kotak Securities — Analyst

First of all, sir, allow me, so how should we think about Kosei Minda JV. So will it continue over the next few quarters, we should also look at some consolidation happening in that JV?

Secondly, in this quarter, we have setup wholly owned subsidiaries on the auto component side, can you give us some color on what it is pertaining to? And thirdly on TG Mind when you announced a CapEx of INR175 crores, so it’s completely borne by the company or it would be split between Toyoda Gosei and Minda?

And lastly, sir, just CapEx and investment numbers for FY ’23, if you could guide us that would be helpful. Thank you.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Yeah. So in terms of — Rishi starting one, serial wise so alloy wheel, as you said the question in that JV obviously will get terminated and will get in to technical licensing agreement. Even today, we are sort of having the services only are in need based requirement, whatever for support we need, so that will continue. And the same kind of setup what we have in form of the JV will get [Indecipherable] delay, only thing is they will not have equity partnership otherwise, whatever technical support we are getting that will continue. And whether this JV will consolidate or not, I can’t comment today. But we’ll note we have suggestion in terms of further simplifying this structure, because JV becomes undergoing subsidiary I think that’s a good suggestion that you look at appropriate time in future.

The two wholly-owned subsidiaries, they are more of enabling things as you remember, even last time when we have opened two subsidiaries, which we have got registered in to our PLI scheme so this is more a ground work which we do, and have a couple of entities ready for any potential, such opportunity or a potential JV for which we might need. But as of now, there is not going to be any operations in these two entities. The TG Minda CapEx is going to be fully funded by the company through a mix of debt and equity. There is not going to be any equity infusion, either by TG or by Uno Minda.

And last CapEx FY ’23, I think numbers which we guided last quarter that relates on the INR600 odd crores, INR600 crore to INR700 crore kind of a capex for FY ’23. And just to sort of update it TG Minda capex it will reduce, that will not appear in to our capex, because the capex guidance, which we do, that is what we feel that consolidated financials and and TG is not consolidated it is accounted against JVs/ & Associates. So this capex will not figure in our annual difference.

Rishi Vora — Kotak Securities — Analyst

Okay. Thank you so much for it. Thank you. Thanks, Rishi.

Operator

Thank you. We have the next question from the line of Karan Kokane from Ambit Capital. Please go-ahead.

Karan Kokane — Ambit Capital — Analyst

Yeah, hi sir. Thanks for the opportunity. Just wanted some clarity on this Buehler Motors’ order. So in the presentation you have mentioned that you’re doing a CapEx of INR110 crore, so what would be the revenue potential? And is this a part of the INR300 crores or this is on top of that?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

The INR300 crore was the business, and then INR10 crore is capex. So I think, if I’m understanding correctly, there are two different numbers. And then INR10 crores of capex swap we have announced that can generate potentially capex of INR400 crore to INR500 crore in the next four to five year, which is what we said in the last quarter, when we have entered into the JV. Yes, so anything else?

Karan Kokane — Ambit Capital — Analyst

That is on top of it? Okay.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

That is separate so capex, that is separate with the revenue, so that is separate base.

Karan Kokane — Ambit Capital — Analyst

Okay, understood. Thanks. That’s it from my side.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thanks, Karan.

Operator

Thank you. Due to time constraints, that was the last question. I’d now like to hand the conference over to Mr. Sunil Bohra for closing comments.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Sorry, I think maybe we can take one more question. I think we have still two, three minutes.

Operator

Sure, sir. We have the next question from the line of Komal Ladha from YellowJersey. Please go ahead.

Komal Ladha — YellowJersey — Analyst

Hi, firstly, congratulations for the good set of numbers. I just wanted to ask, like the 2-wheeler hasn’t grown that much. So what might be the reason and what can you expect in coming quarters?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

What’s very difficult Komal, we normally don’t comment on what our industry volumes are going to be. I think it best answered by our customers. So we’ll be not like to comment on behalf of our customers in terms of the industry volumes. I hope you won’t mind it.

Komal Ladha — YellowJersey — Analyst

Okay. Thank you.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Okay. You can take one more if it’s okay.

Operator

Okay, sir. Sure. We have the next question from the line of Shashank Kanodia from ICICI Securities. Please go ahead.

Shashank Kanodia — ICICI Securities — Analyst

Yeah, good evening sir and congratulations, always outgrowing the expectations.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you.

Shashank Kanodia — ICICI Securities — Analyst

So just wanted to check is there any meant of stocking at the customer point for any of the products that you manufacture so basically driving that point that going forward.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Sorry, I could not recall the question.

Shashank Kanodia — ICICI Securities — Analyst

Yeah. Sir, I just wanted to check, so is there any element of inventory being stocked up at our customers for any of the product that we manufacture? So going forward will our growth rate be at par and plus the original growth rates or there could be a lag effect to that?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

There is no possibility Shashank that our customer will be stocking our product. I don’t think our product [indecipherable] customers will build inventory. Our customers they have milk run, some of them take supplies two times, three times a day, so. I won’t say that our customers will be stocking up inventory for our products at all.

Shashank Kanodia — ICICI Securities — Analyst

RIght. So there could be no lag effect to the OEM growth going forward, right? So obviously we do outperform the contentwise, but there should not be any lag effect, right?

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Absolutely.

Shashank Kanodia — ICICI Securities — Analyst

Sure sir. Thank you so much and wish you all the best.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

Thank you. Thank you, everyone. So…

Operator

Yes, sir.

Sunil Bohra — Group Chief Finance Officer & Group Chief Strategy Officer

At the end, I would like to thank everyone for joining on the call. I hope we have been able to respond to all your queries adequately. For any further information request you to please do get in touch with us. Stay safe, stay healthy. And thank you once again for dialing with us.

Operator

[Operator Closing Remarks]