Fiem Industries Limited (FIEMIND) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Fiam Industries Limited Q3 F526 Earnings Call. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sahil Sangwi from Monarch Networks Capital Limited. Thank you, and over to you, sir.

Thank you, Rudra. Good evening, everyone, and welcome to the PM Industry's Limited Q3 FI26 earnings conference call. The disclaimer, the conference call may contain forward-looking statements about the company, which are based on belief, opinions, and expectations of the company as on date of the call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to find. I now hand over the call to Mr. J.K. Jain for the opening remarks. Jain, sir, over to you.

Thank you. Good afternoon, and welcome to the Q3 FY26, Unnamed Call of Fiam Industries Limited. Joining me in today's call are Rahul Jain, Joint Managing Director, Rajesh Sharma, Joint Managing Director, Vinit Sani, CEO and Director, Arvind Chauhan, Company Secretary, O.P. Gupta, CFO, and other members of the finance team. Our investor presentations and results are now available on our website and the stock exchange. I trust you must have reviewed the same. Let me begin with an overview of the broader economic environment. The Indian economy continues to demonstrate resilient and steady momentum in spite of the geopolitical challenges. As highlighted in the recent economy survey, India's real GDP growth for FY26 is estimated at around 7.4%, and the growth is expected to remain strong going into FY27. This reflects broad-based domestic demand, healthy investment, and stable consumption trend. Inflation has remained under control, which has supported purchasing power and consumer confidence. The recent union budget has reinforced physical discipline while maintaining a strong focus on infrastructure and manufacturing. In addition, GSC rationalization has improved affordability in the two-wheeler segment. This has supported retail traction and overall industry sentiment. Overall, the macro and policy environment remains constructive for the automotive ecosystem. Coming to the two-wheeler industries, the quarter witnessed broad-based recovery. Total two-wheeler production grew by 15% year-on-year to 6.8 million units in the quarter. For the first nine months, industry's production is already at 19.6 million units. This puts the sector in a strong position going into the final quarter and expected to cross the previous peak of roughly 24.5 million units recorded in FY19. Leading OEMs like TVS, Honda have reported healthy volume performance during the quarter, supported by the festival demand and improving ruler sentiment. Overall, Q3 has been a balanced and healthy quarter for the industry. Against this improving industry's backdrop, Fiam has once again delivered a very strong performance. Further, as part of the long-term commitment to sustainable manufacturing, we are rolling out renewable energy projects across all our plants. This green initiative will help reduce energy costs, improve operational efficiency, and is strengthening our commitment to becoming a carbon-neutral company. Vehicle platform become more advanced, the styling differentiation is gaining importance. Lighting and the electronics are emerging as the key element in defining brand identity. In this environment, our focus remains clear by strengthening technology, maintaining high-quality standards, driving cost efficiency, and ensuring timely delivery. In line with our state-of-art EMC and EMI laboratory in Gurgaon has started trials and product validation. This enhances our electronic capabilities and significantly strengthening our in-house testing and validation infrastructure. Our commitment to the passenger car Business continues to gain momentum. We are now supplying products such as number plate lamp, rear reflector, and fog lamp across various models to Mahindra and Mahindra. In addition, high mount stop lamp of Boloro and Scorpio are currently under development. We continue to invest in innovation across advanced lighting and electronic technologies, including laser systems. Touch interference, interface, adaptive drive beam and metric lighting solution, etc. This focus on innovation will enable us to participate in higher-value lighting solutions in future. As we move into the final quarter of the financial year, the overall industry's outlook remains positive. With supportive macro conditions, stable policies, directions, and a healthy order pipeline, we remain confident about the future growth. With this, I now hand over to Mr. O.P. Gupta and the finance team to take you through the detailed financial performance.

Thank you, sir. Good afternoon to everyone. I am presenting quarter 3 numbers for FY26 in comparison to the corresponding quarter of previous financial year. The company has registered sales of Rs. 685.81 crore in Q3 FY26 against Rs. 590.1 crores in corresponding quarter of previous financial year, which is an increase of 16.22%. I am delighted to announce that for the first time, the EBITDA margin of company has crossed 14 percent, reflecting overall operational efficiency. The EBITDA for this quarter is Rs. 97.7 crore, which works out to Rs. 14.25 percent as compared to an EBITDA of Rs. 77.88 crore. That is 13.2% in the corresponding quarter of previous year. Bet for quarter 3 is Rs. 63.45 crore as compared to Rs. 47.41 crore in corresponding quarter of previous financial year, which is higher by 33.83%. Now, I would like to present the 9-month number 4 FY26. The company has registered sales of Rs. 2,046.3 crore in the nine months of current financial list as against Rs. 1,771.15 crore in the corresponding period per year, which is an increase of 15.54%. The EBITDA in nine months of current financial year stand at Rs. 284.16 crore, translating into an EBITDA margin of 13.89%, as compared to an EBITDA of Rs. 236.92 crore, that is 13.38% in the corresponding period of previous year. Pat for nine months of current financial year is Rs. 183.29 crore as against Rs. 146.44 crore in the corresponding period of previous financial year, which is higher by 25.16%. During the quarter, Quarter 3, the company has made a capex of Rs. 41.02 crore, and total capex in the 9 month of current financial year is Rs. 78.83 crore. With this, I end the financial brief, and now the floor is open for questions and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for the moment while the question queue assembles. Our first question comes from the line of C.A. Garvit Koyal from Serene Alpha Analytics LLP. Please go ahead.

Hi, I'm Audible.

Yes, sir, you are.

Good morning, sir, and congrats for a good set of numbers. The first question is on the insurance and fire incidents part. Over the last two years, the company has disclosed fire incidents at more than one manufacturing unit. Can management help us understand the root cause identified in each case and whether there are any common operational or the safety gaps and what other permanent protective measures have been implemented to ensure that such incidents do not reoccur? Additionally, have these incidents led to any changes in the insurance terms or the PKM or any internal safety audit across the plant?

So, regarding that, let me break this question into three parts. First part is about the insurance. As we already disclosed, our insurance is under process, and for the unit 7, that is the RIE unit, we already received around 50 crore, and the rest of the assessment is under process. It should be completed, whatever in the due process time. Now, all the policies what we are taking and the insurance is on reinstatement basis. So, as you understand, in case of this kind of policy, the assessment takes time. Now, coming to the Unit 8, that we already informed to the exchange as well, and we already filed on January 30th, 82.30 crore insurance claim on reinstatement basis. So, it will take time. Now about the safety aspect and all these things, the regions are already there with the survey, so there is nothing big issue about that. But yes, whatever the safety measures we are taking, what we are doing, I think Mr. Rajesh Sharma, he can explain a little bit.

There is a plant Rai as well as Tapukhara. These are all being audited on the periodic basis. This is being hired a third party. And at the same time, safety team from Fiam is also auditing and regularly monitoring the situations. So Rai plant, whatever fire incident is being happened because of short circuit. And it is being claimed. It is being already highlighted and being presented. And similarly, all the plants, we have a full commitment and safety measures, which is being necessary to run the production line and to save the human, which is being, in all the cases, is being taken care of.

Just to add, in both the cases, there is no injury to anybody. So whatever the safety measures existing in the company, in every factory, it is appreciated by all. But this is an unfortunate event. So sometimes things are beyond control and this kind of things happen. To add this thing, there is no loss of business in any of the events. You can see the numbers. So, rest of the things for future management is taking a very serious view about the safety aspect, and this is being undertaken with the help of external risk assessment agencies, and this will be you, maybe quarter on quarter we can update you.

Thank you, sir. And secondly, on the four-wheeler segment, while management has been discussing this opportunity for some time, the revenue mix has not seen a meaningful shift yet. At the same time, competitors in this category are scaling up rapidly and several new players are entering into this segment. So, in that context, could you help us understand when you expect the four-wheeler business to start contributing meaningfully to the revenues and what timeline we should realistically factor in for that? Additionally, from an execution standpoint, will four-wheeler orders be catered from the existing manufacturing facilities only or through the dedicated plans for this segment?

Yeah, I am Vinit Thani, this side. Yes, we are, I am answering your second question first. We are catering the four-wheeler orders from our existing facilities only at this moment, and this we had shared in our previous calls also. Regarding the revenue, we had shared to you that we are in the process of building our credibility first, entering into small lamps. And in the next investor meet, which would be in May next year, when we close this financial year, we'll be sharing you a business plan and the revenue impact that the four-wheeler is going to make in future.

Got it, sir. Got it. I think I will join back the queue, sir. Thank you very much.

Thank you. My next question comes from the line of Anubhav from Prescient Capital. Please go ahead.

Am I audible?

Yes, sir, you are. Please go ahead.

Kong acts on a good set of my number. My first question is that gross margins this quarter showed a substantial improvement both year on year and why over and even on quarter and quarter sequentially. So, what drove this improvement and is this sustainable?

Yeah, thanks for that question. So, yes, you're right. The margins are, as we mentioned, are at an all-time high for us at 14.25% at the victor level. It's driven by a number of factors. There is operating leverage kicking in. There is improved efficiency. There have been some efficiency tries that have been done at the factories which are resulting in some positive impact. And, of course, there is a product mix. But also, we also got some escalations during the quarter. So that has also come in to boost the margin. From a going forward perspective, we feel confident that the efficiency parameters that we have done will keep helping the margin. So we believe that we should ideally be at 14% plus EBITDA margin in future as well. That's the kind of target we are setting for ourselves.

I get that. And if you look at the sales, primary sales data for all your key two-wheeler OEMs, whether it is TBS, HMSI,

Suzuki,

Royal MP, all of them have grown 20% plus, but our top line growth has been slightly lower at 16%. So can you throw some light on that?

So, there has been growth across the industry, but it's not 20%. We look at the production figures rather than sales. So, if you look at production figures, TVS has grown 17%. We have outperformed that growth. On that, it's grown 18%. We are broadly in line there. I think also what happens is quarter over quarter, there's a product mix in terms of which model is there and are we there in that model and so on. So from our overall market share perspective, we continue to be right up there with our customers.

I get that. And, sir, please don't mind asking my question, but I think it will be on the mind of all the analysts, because our competitor, listed competitor, Lumax Industries, they have also declared their results, and their revenue from HMS side, both this quarter and for the nine months, has grown like at 50% plus, very, very strong growth, whereas our growth has been Much lower compared to that. So, again, can you throw some light on what's driving this, like, market share loss, if I may call that, in this financial year?

Yeah, this is in line with the same answer is being given. This is totally different on the model mix, which are as of now. And there are few models which are exclusively with the competitor. Those are giving the right.

And also there is, they have a large four-wheeler business which we don't have. So I think like from a Honda perspective and overall numbers if you look at, sometimes that picture also doesn't come out. But what we do like to reinforce is that our market share with Honda remains the same.

So, they specifically clearly reported HMSI and not Honda. So, I don't think that can be the reason, but I get the point on models. So, yeah, and Sir, any update on any new RFQ from any other passenger vehicle OEM other than M&M, and also like last quarter we had reported that we were working on an RFQ from Force Motors. So has that converted into some concrete orders?

Yes, so we need to decide, yes, Force Motors has converted. This is under development. We will be reporting that in the next meet. And also, Mahindra, we are working on certain RFQs which are at final stages. At least two major RFQs are at final stages. Hopefully, we will be sharing that development in our next meet.

Good luck. Thanks, I will get back in the queue.

Thank you. Thank you. Our next question comes from the line of Shubham Sehgal from Simple. Please go ahead.

Hello, I'm out of the way.

Yes, you are, sir, but can you speak a little more louder?

Yeah, sure.

Please go ahead.

Yes, please go ahead.

Yes, yes. So my first question was, have we started supplies to Yamaha for their Tracer 7 model? As if I'm not wrong, the model has been commercialized in Europe and UK. And despite this model win and also the other new models we have for the India geography, why have we seen a decline in sales to Yamaha this quarter?

This Tracer 700 is already in production right now and we have started supplying to Europe and last four months it is in continuous supply. The decline in Yamaha is only because of there are few models which are being exported are always based on the period base. Like it is sometimes the volume which is being inclined or sometimes volume is being always being increased condition. So, this is quarter to quarter. You can see some Yamaha because export model is always being up and down and quantity is being fixed for certain models. Okay, okay, got it.

Domestic market all, yeah.

No, no, go ahead, go ahead. Yeah, all domestic models, whatever as of now running is being accelerated right now and it is being given the good business in domestic market.

Okay, and just an update on two other models, I think. So, one on TVS, we had mentioned for TVS, we had developed a new technology-based lighting system. Any update on that? And also, for the passenger vehicle RFQ, we had also mentioned that we were in final stages for an RFQ with Mercedes. So, any update on these two?

Yeah, so Norton, as of now, it is being launched, and mass production will start in a couple of months. We are ready, and vehicle homologation is as of now on, and might be in the next three months' time. We'll be in position to start our supplies from here to Norton, UK, and to TVSM India, too.

Can you repeat your question on Mercedes, please?

Yeah, so we had mentioned in the last call that we were in the final stages of an RFQ for Force Motors and Mercedes. So any update on Mercedes?

Yes, there is an update. Mercedes' top-level team visited us in the month of January, senior members from Germany and India, the top people. And I'm happy to inform that our plant and other things stand approved as a potential supplier to Mercedes globally for small lands. Of course, we will now wait for RFQs to come in, but probably we are the only lighting suppliers at this moment to reach this place with Mercedes. This was their fifth visit to our plant. So, it's moving in the right direction. It takes time, but it is moving in a proper manner.

Okay, when can we expect to get commercialized, like in a year or two, like any rough time?

So, normally, it is very difficult to put a time to it, but we are expecting certain RSUs to come in the next financial year, and then it is their process development time is around 18 months to 2 years with Mercedes, but important point is to find a foothold in Mercedes, because there the potential is huge. So, that is what we are targeting.

Okay, got it. Thanks a lot.

Thank you. Our next question comes from the line of Viraj, an individual investor. Please go ahead.

Yes, sir, you

are. Please go ahead.

Yeah, hi. So, just a couple of questions. One is on the gross margin. I just wanted to get your perspective. See, if I look at the margins, contribution margins in this quarter, you know, we've gone somewhere around 40.3%, which is the highest level since March 23 quarter. So, just trying to understand what drove such high gross margins for us, and was there any element of one-off in this?

Yeah, we just mentioned that. The combination of efficiency, operating leverage, product mix, and also some escalations which have come through for the quarter. Can we quantify the escalation? As I said, A, this is the combination, and B, going forward, we are still guiding for a 14% plus EBITDA.

Okay. So why I ask this thing? See, we have been making investments, rightly so, in terms of investments in P&L towards a forward and lighting business. Right? And if I were to, you know, adjust for that, then the implied margins would be upward to a 16-17% cost. You know, while we're making the investments in P&L, the revenue maturity is still yet to play out. So if I look at the existing business X of that, you know, the two of the business, that would already be above, close to 16% or above. So I'm just trying to understand, you know, you know, considering that. Commentary is quite positive in your growth. How should one understand the susceptibility of margins, you know, for the interval improvement?

So first, I wouldn't sort of agree that you can de-link the business like that because, you know, a lot... Four-wheeler projects are also working with our current capex and current capacities. Having said that, I think the important thing what we are seeing is that there's a lot of efficiencies that are kicking in. There's a lot of, with the new volumes that we have overall, there's a lot of operating leverage coming in. So going forward in spite of all the investments that are already envisaged. So next two years, for example, we envisage a 200 crore capex. Which is a combination of our existing projects, as well as whatever we need on the four-wheeler side. Even with that, we believe that we should be at these margins, or at least 14% plus is what we are targeting.

Okay. Just a follow-up to this. If you look at some of the other players in the space, right, you know, they earn somewhere close to 17, 18% or slightly above margins in the lighting business. You know, the mix can differ between four wheeler to wheeler, but if you were to see this kind of a growth rate, you know, say low teams or double-digit growth rate sustaining for us, then do you think that, you know, margins for us, you know, the scope of further improvement in margin structure in the business?

And I think it's a highly competitive market, and I don't see 17-18% margin coming through at all here. I think 14% plus is a very good aspiration to have, which we are focusing at least for the next 24 months. I think that's what we want to get to.

Got it. One more, two more questions, sir. One is on, see, if I look at it, two-wheeler business. You know, we have HSMI, TVS. You know, accounting for almost 60, 65% of the overall business. In terms of diversification, how are you thinking about it? See, I understand, you know, there may be quarters where a customer may grow or not grow to the expectation we would like it to be. But in terms of looking at the white spaces and maturity of those white spaces, you know, how are we thinking about it?

Great question. So I think from a OEM perspective, if you see what we are, the OEM we are not serving is only Bajaj in this matrix. Other than that, we serve everyone, and our share even with a hero is growing. On the other opportunities, what you mentioned is something that was highlighted in the chairman's speech as well, that there is an increased focus now on electronics in the company. So as we move ahead with all the OEMs that we have, there is an increased contribution coming from electronic component, which should help us drive growth much faster going forward. So that has been our trust, which is where all the investment is also going, the EMI, EMC labs and other areas which we are investing are heavily into electronics and technology.

So, when you say electronics, is that a part of the lighting system, or this is a separate business vertical which we are kicking to, which we were not earlier?

No, this will be the part of lighting system only.

Okay, and any color you can give, how large is Hero for us now?

Hero, we are working already on 10 odd projects of Hero, that is for front and rear lighting both, wherein few projects are already in mass production, Destiny is already in mass production, X-Team is also in mass production, X-440 is in production. Further on, there are a few models which will soon be launched, and we will announce those business also very soon.

Okay, I will come back and see you. Thank you.

Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. Our next question comes from the line of Sia Deshmukh from Pune eStock Proking. Please go ahead.

Hello, am I the person?

Yes, ma'am, you are. Please go ahead.

Okay, just from an industry understanding perspective, does the automotive lighting components industry typically face challenges around, you know, dead or low-moving inventory? And if yes, how does our company manage such risks operationally?

Can you please repeat your question? This is not clear.

Like, the automotive lighting industry typically faces challenges around dead or slow-moving inventories.

No, wherefore we brought this information. This is wrong information.

Okay, thank you.

Thank you. Our next question comes from the line of Pawan from Ratnat Raya, capital. Please go ahead.

Sir, can you please outline other projects from what you are doing for Mahindra and also Mathedis? I understand we had ARFQ, which we are working for Post Motors also. So, can you just outline for us when can there be products which would be commercial production for four-wheelers, especially at SK?

So, at this stage, we will not be able to divulge the actual products that we are working on. We are also working on certain new technologies with these customers. So, as and when they mature up and we are ready to declare, we will do that in these meets. But currently, we are not able to do this because we are under NDA with our customers. And next quarter, we will be sharing a bit more about the production plans in the future.

Okay. Okay. Thank you. That was my question.

Thank you. Our next question comes from the line of Shrikant, an individual investor. Please go ahead.

Hi. Good evening. Just let me know if I'm audible.

Yes, sir. You are. Please go ahead.

Yeah. Thank you. Good evening to the management. Congratulations for a good set of numbers. So, as per the last call we had discussed, we were in some proof of concept in ambient interior lighting. So, any update on that?

Yes, we have got some official go-aheads from the customer on developing proof of concept for the technology that you mentioned and a couple of other technologies. We are in the process of doing that. And as we speak, I get a mail of RFQ also from our customer on ambient lighting, just sharing with you online. So it is moving in the right direction.

Okay, going forward, can we see this contributing go to our top link as a product?

See, we do see this contributing as a product, but still it has a long way to go because you need to establish hardware, software, lighting solutions, and we are working actively with our customer. So the proof of concept will be made, then they will prove it in the car, get the management approval, but it has a good potential of growth in the coming future because most of the cars are going for ambient lighting.

Okay. And secondly, like, do we like, are there any kind of plans to add any other products? Like we have a bank angle lean sensor or canister. So any kind of that product, which we are looking to add to our portfolio?

Yeah, bank angle sensor, we are already supplying as of now for all models of Honda, and yeah, these are all under technical assistance, and it is being supplying to Honda only, and canister, of course, is no more right now, it is almost out, and there are a few customers only, they are getting this Yamaha or some TVS only.

Okay, so any kind of, like, do we plan to venture out in a joint venture or to produce any kind of product in future?

We both are under technical assistance from Japan. One is of Ford and so, another is of ISEN. So, these are, both are running under technical assistance agreement only with the Japanese company.

Okay, so, understood. Thank you. Thank you. That's all for me.

Thank you. Our next question comes from the line of C.A. Vunch from Serene Alpha Analytics LLP. Please go ahead.

Hello, I'm Audible.

Yes, sir, you are. Please go ahead.

So, I have a question. So, from a medium-term perspective, how does management assess the industry outlook over 12 to 24 months? And also, I want to know the supply side or demand side factors, which you believe could pose some risks or opportunities for us in the future.

Over the next 12 to 24 months, we continue to guide with our initial guidance, just 15 to 20 percent growth. We have kind of always outperformed the industry, so we will strive to do the same. Industry anyway is doing very well, as we have commented, first nine months have been very good. Even going forward, we believe the outlook is pretty positive. So, from a demand side, we don't see any challenges. From a supply side, also, you know, a little bit of supply shocks were there, say, 12-18 months on some few components that have been taken care of. So, there are no specific challenges that we see, right?

Okay. Okay, so thank you.

Thank you. Our next question comes from the line of Kush Nahar from Electrum Portfolio Management Services. Please go ahead.

Yeah, thank you for the opportunity, sir. So, just one question on the four-wheelers. Are we open for any acquisitions or are we looking at that so that, you know, our time to market becomes a bit faster instead of putting up a greenfield facility from the start?

We have to answer your question. Yes, we are open. For acquisition and high growth route. However, we are also conservative in acquiring any organization because it has to be a right fit with our philosophy. So, we will see in future how it develops.

Anything else we're looking at currently at advanced stages for the four-wheeler or two-wheeler? No. All right, sir. Thank you.

Thank you. Our next question comes from the line of Anubha from Prescient Capital. Please go ahead.

Thanks for the opportunity. So apart from Mercedes, is there any international OEM that we are working with to get in order?

We have a very initial working which has started for another OEM. Which we will talk later. It is at a very initial stage, but we are talking to them. In fact, they have approached us. So, we are working on that.

You get that. And on the aftermarket business, is that a focus area and are we trying to like grow that? Because that has remained flat for quite some quarters. So, if you can like throw some light on that.

We are working with OEM, and the product belongs to our product, whatever is being developed, belongs to the customer. And we are going to, as per with the agreement, we cannot sell those supplies to market. So market is flat. But you do have a few products which are being developed by us in past. Like for some specific customers, wherein we are not in OEM, we are supplying, and that market is very interesting. And another point is now all the new businesses, whatever is being developed, those are all in LED, which is having no aftermarket. It is already being used only once there is accident.

Get that. I will get that interview. Thanks.

Thank you. Anyone who wishes to ask a question may press star and one on the touchstone telephone. Our next question comes from the line of Vijaykumar Pandey from Nuwama. Please go ahead.

Thank you for picking my question. I'm just going to ask two questions.

Sorry to interrupt you, sir, but can you speak a little louder?

Is it okay now?

Yeah, please go ahead.

First, I wanted to speak in terms of voice here with Mr. Nisai and Yauha.

Sorry to interrupt you, sir. Your voice is breaking.

Hello, is it okay now?

Can you move to a different environment and speak something?

Is it okay now?

Yeah, please go ahead.

Yeah, I wanted to check about our wallet share with market share with HMSI and Yamaha. I just declined as compared to what it was previously because our growth has been slightly lower than what they have been growing, at least the production rate. That's it, basically. If you just want to watch the track, you can throw a little bit of light on track.

See, it is already being replied in last question also, because this is all depend on the model mix, which model is running good, which model is doing good, which model which state is doing good. So, this is only the model mix, wherein overall market grew by HMSI is 18%, we are at 14%. So, we are stable there, there is no market drop.

Okay, so, which is the model we are not present?

There are a few, like a highness headlamp, we are not supplying, front lighting is not supplying, rear is not supplying. So there are a few products wherein we are not there, but most of the market, most of the vehicles segment, our presence is here.

Okay, sir. Thank you. And secondly, I wanted to understand about you. Oh, plan to get into the electronic segment. How do you see that electronic segment to be developing? And what? Like, which are the products you are targeted to get into? Because electronics includes a variety of segments. So if you can give a little bit of the electronic.

Yeah, these are the part of lighting only, and what all LED business we are doing, it is being well designed and developed in-house only. All SMT, EMS processes are being done in-house, and additionally, the testing facilities which is being under installation, commissioning, which will very soon be restart, that will also enhance our overall R&D capability, which will be 100% off captive uses for lighting business.

Okay. Okay. Okay. So, as such, we are not getting into, we will not be supplying any external electronics product?

No, as of now.

Okay. Okay, sir. Thank you. Thank you. And all the best for upcoming quarters.

Thank you. Thank you. Our next question comes from the line of Vinay Nadkarni from Bhatwa Investments Private Limited. Please go ahead.

I just wanted to check out, is there any input costs going up because of supply constraints or anything of that sort?

Nothing specific, and if it does, you know, as we mentioned, it is kind of passed on. It sometimes comes with a lag, but otherwise, all the input clocks are passed on, on a rolling basis.

Okay. Secondly, can you help us with your Q3 capacity utilization of your plants? Roughly, what would it be? Ballpark.

Between 77, 78 odd percent, but you know, again, these numbers also depend on how many shifts you are running and so on and so forth. But I think overall, we are well positioned with our capex plan for the next year. We've already spent close to 80 crores. In nine months, we will spend another 20 crores. And also setting up enough capacities for future so that we can handle the growth going forward in the next two years.

Okay, and what are these capex spent on in this year? If you have covered it somewhere, I'll just pick it up from there.

No, there is no specific we have given the plant-wise, but this is basically on the machines and expanding the manufacturing capacities only, and some part is at the Thakukana facilities.

Okay. And lastly, does this FTA with the EU and UK open up some opportunities for exports directly to manufacturers abroad, or is that not possible?

Generally, we deal with the entities here in India through an onward export. So, for example, a Yamaha or a Honda, they export onwards. We do not directly export except for a few things like Hygiene.

But there's some disturbance in the background. Mr. Vinay?

No, there is no disturbance here.

No, it's from your end, actually. Okay, please go ahead.

Yeah, so there is no major implication. As we explained, most of the exports that we have are in the form of indirect export, where we actually export to the, we sell to the local entity, which is the Honda and Yamaha, who further exports. So they may get a fillip further.

Similarly, like Norton is being taken over by previous. Which will be in direct sales to UK also. The product will be supplied and manufactured here and will supply to TVS, and TVS will forward it to UK.

No, no, what I, yeah, that you had explained last time. What I was trying to understand is, for manufacturers in Europe and in UK, Two-wheeler manufacturers, would you like to, I mean, would you be exploring opportunities to supply to them directly, not those who are manufacturing in India?

We are already supplying, like in Europe, we supply directly to Pialdeo, Aprilia, we supply directly to both the customers from here for their different models.

So this FTA will help you?

Not such. It is already in regular supply, and it will not be such.

Thank you.

Thank you. My next question comes from the line of Miraj, an individual investor. Please go ahead.

Yeah, thanks for the opportunity. Just two questions. One is to understand, you know, you talked about increase in electronic content. So the current lighting, you know, LED modules which you supply to customers, if you take that as a base of 100, then how much the content increases post-increase electronic content? Any enough indication?

It is totally different on product-wise. It is very difficult to say percentage, but it always varies from 30% to 80%.

On the existing basis, would I be right?

Yes, exactly.

Okay, got it. So, just one last question was, and this is from Mr. Dan. So, our cash levels, if you see, that will just keep on increasing. So, despite the CapEx which we are planning and even accounting for the potential PD CapEx, the overall cash position in the company would just keep on increasing. So, how are we thinking about utilization of this? I mean, I'm just... I think more from a two, three, or five-year perspective, you know, how are you thinking about utilization of this surplus cash?

Yeah, so we want to be well positioned for any growth opportunities that may come by, whether it's organic, inorganic, whether it is in four wheeler or whether it is in our two wheeler related space. So at this point of time, there is expansion anyway, as we mentioned 200 odd crore capex going through in the next 18 to 24 months. But yes, you're right, even then we will have some surplus and I think we will at appropriate time take a call. But at this time, we think business presents opportunities, which we could utilize this cash at some point of time, and we are constantly looking for such opportunities.

Okay, thank you, and good luck.

Thank you. Participants who wish to ask a question may press star and one on the touchtone telephone. Our next question comes from the line of CA Garvit Koyal from Serene Alpha Analytics LLP. Please go ahead.

Hi, thanks for the follow-up. Regarding the growth part, we are guiding for 15 to 20% kind of growth, right, which is more or less equivalent to our historical average of 15%. But if I look at your competitors, they are on the higher base, right, and they are growing and expecting to grow. They are providing the guidance of maybe more than 20% kind of number on such higher base. I agree that right now we are in two-wheeler segment, but next year onwards, I'm expecting, based on your commentary, like we will be getting some contributions from four-wheeler meaningfully, right? So, considering that thing in mind, on a lower base as compared to the competitor, why are not we aggressive in the terms of the growth outlook?

So, on the four-wheeler side, I think we've already explained that we will kind of present you with those numbers. Those numbers are on top of, this is the organic rate of growth that we are talking about, 15 to 20. And obviously, we will strive for more, but our guidance continues to be in this range at this point of time. As and when four-wheeler takes shape and there is a significant uptrend that we will add on to this growth.

Thank you for the clarification. Thank you.

Thank you. Our next question comes from the line of Srikant, an individual investor. Please go ahead.

Yeah, thanks for the follow-up. Post Q3 capex, what would be the current cash level?

Uh, so this is 22, uh, 222 crores as of 31 December.

Yeah. Thank you. All the best.

Thank you. Our next question comes from the line of Kush Nahar from Electrum Portfolio Management Services. Please go ahead.

Yeah, thank you for the opportunity again, sir. So my question was more on the electronic side. So like we mentioned, going ahead, we focus more on electronics. So I just wanted to understand this will be beneficial to us more in terms of content per vehicle. So on the revenue side or more of backward integration, which will help in, you know, maintaining 14% plus 14 to 16% EBITDA margins. So where will we get the value from?

This will definitely increase the value also. And another point is, like in our CMD speech, we are already working on upcoming technology, where in laser, where in ADB, where in metrics. This will also give us a positive sign once you have electronics R&D facilities in-house and testing and validation also.

We will be both on revenue side also plus benefit of the mid-term margin also.

Sure.

Ok sir, thank you.

Thank you. Our next question comes from the line of Sahil Sankmi from Monarch Net Worth Capital Limited. Please go ahead.

First of all, congratulations for very good numbers. My first question is, so this year, what will be the total capex target, and next year, how much will we spend?

This year will be 100 crores for F526, and for the next two years, we think it could be upwards of 200 crores, around 200 crores.

So, 200 total, right? I mean, not each, but 200 total for next two years.

Total for the next 24 months.

Okay, okay. And secondly, at the start of the call, Jain sir did say that there is a lot of planning going around green energy rollouts across the manufacturing units. So if you can give some more information on that, what kind of capacity of power plant are we trying to add and what kind of savings can we expect on the power cost?

So, Sahil, thank you for this green energy initiatives and whatever the renewable energy we are implementing across our plants. One major part is the solar. Solar in both forms, that is, rooftop as well as the open access. And in the south, we are also exploring the wind energy. Maybe next one or two quarters, you will get a clear picture where we are, but this initiative is already, we are rolling it out, and you will see the impact in next two, three quarters.

So, this will, any timeline when this can get commissioned, if you can help us with that?

No, okay. So, let me clarify. This rooftop, we will be implementing. So, it is, it takes around four to six month time, depending upon the capacity. And open access is very, you know, short, short timer. So, it is around one month or two month time. No, no, that's okay. So, to start with, we can start for the open access, it takes around two months time to start, and then gradually it is implemented. So, maybe next, so maybe after two, three quarters, you will get the clear picture.

Thank you.

My next question comes from the line of Vinay Nadkarni from Hathaway Investments Private Limited. Please go ahead.

Yeah, just one query. We had, see, there is so much of dependence on one single sector, automotive. You had in the past said that you are also looking at exploring other areas of indoor and outdoor applications. Any progress on that? Because today, the automotive sector is doing well, so we are happy.

You know, we've always been automotive-focused companies, and that is something that we've always done, and I don't think we've mentioned anything in the indoor and outdoor, so our focus will continue to be, and our fortunes will continue to be driven by auto industry, whether it's positive or negative, it will be driven by auto. So, there is no other sector specifically outside of automotive that we are looking at.

Okay, fine. Thanks a lot, sir.

Thank you. Our next question comes from the line of C.A. Garvit Koyal from Sireen Alpha Analytics LLP. Please go ahead.

Hi, thanks for the follow-up again. Sir, you mentioned our certain products are not getting, we are not providing to our end customers, Yamaha and HMCI. So, I just wanted to understand what is the reason for that? Why are we not providing these products? Are these products getting provided by any other competitor of ours only or what is the scenario?

I think this is, let me clarify it again. We are talking about, we were explaining to one question that how we are supplying to the export and any, you know, global market. So what the OEM do? They take this product from us in India by their Indian entity only, and then onwards they supply to their plants in Europe, in Indonesia, in Japan, wherever they are. So that is the route. Otherwise, there is no such thing that we don't supply to our customers.

No, sir. Let me repeat. I'm just trying to understand the growth. I think our customers are growing at a higher pace in this particular quarter than the growth of ours. So that is why I think you explained that some of the products we are not supplying. So on that part, I'm trying to understand from you who is providing those products to those customers.

Competitors. See, there may be different competitors they may be supplying, but whatever product is being supplied by us, it is totally dependent on the requirement from the individual customers from worldwide. So global requirement is not stable like domestic market here in India. It is totally dependent on the area and month-wise. There are a few products which is always be run during high winter season. So production of two-wheeler vehicles is always be reduced there. So this is a cycle only, and whatever model makes, volume is being fixed at the time of RFQ, these are all being supplied by us.

Understood, understood. And it is not like the demand for the models which we are catering is not getting reduced, right? It's not like that.

No, no, it is not like that.

Okay, understood.

Thank you. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Sahil Sangvi for closing comments. Over to you, sir.

I would like to thank everyone for participation in today's conference call. I hope that we have adequately addressed all your queries. If you have any further questions, please don't hesitate to contact us. Thank you, and have a good evening.

Thank you. On behalf of Monarch Network Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.