Aakash Minda, Auto News, ET Auto
“Minda Corporation has a very strong order book when it comes to the EV customers. We have now bagged about Rs 950 crore worth of lifetime order books in this financial year itself. This will start translating from FY23 onwards,” says Aakash Minda, ED, Minda Corporation.In the context of challenging times, input pressures etc, what is the outlook going forward both on margins as well as revenue and the order book for the current financial year?
Our endeavour is to grow and outperform the industry. The focus is to continue momentum of growth and outperform on a quarter-on-quarter and year-on-year basis on that. The company has delivered consolidated revenue of Rs 947 crore with 11.4% EBITDA at Rs 107 crore in Q4. This is in line with our commitment for delivering consistent and improved performance quarter-on-quarter.
When it comes to the next few quarters, our endeavour is to outperform the industry by at least 10-15%. Of course, it depends on the overall industry uptake but our endeavour remains on these lines and also deliver consistent and sustainable EBITDA numbers, which is in double digit from here on.
Your EV contribution is inching up quite well for the company. How many times can we actually see that growing in FY23 on a year-on-year basis?
A lot of push and support is being given by the government and a lot of other customers for the EV penetration across India, especially in tier-1 and tier-2 cities. Definitely EV is the buzzword. Minda Corporation has a very strong order book when it comes to the EV customers. We have now bagged about Rs 950 crore worth of lifetime order books in this financial year itself.
This will start translating from FY23 onwards. It all depends on how the EV uptake is but this will start showing in our top line to the tune of Rs 70-80 crore from FY23.
Help us understand the rest of the breakup as far as revenue contribution goes. Segment wise, could you give us a breakup of how you see this panning out in FY23? We see that the passenger vehicle contribution has gone up compared with the previous year. What is the outlook?
Of course, two-wheelers did not perform very well in FY23 and Minda Corporation’s 45-50% revenue comes from the two-wheeler space and our focus is now looking at how we can grow the other segments as the end customer revenue. The reason why we are having about 15-17% from the passenger vehicle segment is due to our exports.
The die-casting exports into our four-wheeler OEMs globally has also added to the passenger car and as well as exports for the industry and the group. In the future, our endeavour is to bring down dependency on the two-wheelers from about 50-55% to about 40-45% organically and grow in other areas like passenger cars. There are various new product lines – whether it is interior plastic, joint venture for shark fin antenna, Minda Vast vehicle access product lines and cluster – to corporate strategies that are going to start showing when it comes to the passenger vehicle penetration more and more for Minda Corporation.
One of the points that you mentioned is growth in exports. What kind of contribution do you see from exports in FY23 and what strategies are you employing there?
Last year, our export revenue was about 12% in FY22 and next year, our endeavour is to take it much higher. We are looking at entering new geographies but America and Europe are our biggest markets for exports.
We have seen a sharp rise in commodity inflation across the globe. Could you quantify what sort of impact are you seeing with this rise in commodity prices?
Over the past two years, the raw material prices, semiconductor issues, logistics prices have all shot up through the roof. This has definitely impacted Minda Corporation because any hike in raw material prices impacts us as well. We have back-to-back arrangement with most or all of our customers but there is definitely a lag, whether it is domestic customers or exports. Traditionally, there have been some raw material which have never been indexed in the auto industry or with us, but now we are taking it up with the customers to support us to even index them due to the volatility in the market.
Going forward, in this financial year or in FY23, we believe there will be global tensions or raw material index issues as well as shortages in semiconductors. This will definitely impact and this may hamper the growth as well as the profitability from Minda Corporation in the upcoming quarters and years as a industry as a whole as well.
In terms of capex, you have laid out plans for the new financial year. Where do you stand as far as the requirement to build more capacity is concerned? What is the capex going to be and what are the key focus areas for you?
Typically about 4% to 5% of our revenue is spent in our capex items. It is more so on the engineering and technology front and increasing the capacity and capex in our plants – whether Greenfield or Brownfield – and in the last year also, we had spent a lot of money in terms of partnerships, acquiring Minda Instruments Ltd. as well as other alliances.
For the next year, our focus remains on the same lines. We would work on investing in new technology and products to become a system solutions provider in all the product lines that we are working on and making them smarter and more advanced and futuristic. In terms of our new plants that are coming up, these are closer to the customer based on the new product lines and the new customer order wins that we have had in this year.
These are our capex needs going forward and we are going to fund them by our own internal cash accruals. Our target is to generate free cash flow to the tune of 4% to 5% and we have enough cash in our hand to fund our capex growth for next year and may be the years to come.