Lumax orderbook in lighting segment stands at Rs 300 crore & non-lighting is Rs 450 crore: Deepak Jain, CMD, Lumax Industries

Deepak Jain, Chairman & Managing Director, Lumax Industries, talks about the demand situation, foray in infotainment range with Alpine, PLI scheme and its benefits, expansion plans, CapEx, orderbook, exports and growth opportunities in electric vehicles segment among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: How do you see the demand and are you being able to cater to it and is it a sustainable demand? 

A: Demand is very strong and stable. As you know that there is a shortage of semiconductors and our main customers Maruti and Mahindra are impacted with it and I feel that this will basically need some production cuts. We have seen it even in September. Going forward, we may see production cuts even in October. Although, the demand is stable, but it depends on how the OEMs will manage the supply chain and the shortage of semiconductors. We are closely monitoring the delivery schedules of the OEMs. From Lumax point of view, we import electronic LEDs a lot and we are not facing any shortage there. But we are expecting production cuts in October as well.

See Zee Business Live TV Streaming Below:

Q: Lumax has recently forayed into the premium audio infotainment range with Alpine. What does it mean for you and how much revenue do you see from this space and what it will add to the top line and bottom line for Lumax Industries?

A: The collaboration with Alpine is basically for the audio system that Lumax Auto Technologies, our group company does and it will do for the aftermarket. We have a target that the infotainment premium segment, which is almost close to Rs 150 crore market, and in the next two years, we want to garner 20-25% of the market share in the space. Alpine is a global brand and we wish to penetrate it with the premium audio segment. 

Q: Government has announced the PLI scheme. How do you see it and how will it help you and how big the opportunity is it for you?

A: We are quite happy that the government has supported the advanced technologies under the PLI scheme, which is unique in it is compared with other sectors. For Lumax and the group, its entire product line is basically based on advanced technologies be it lighting, gear shifting systems because the automatic transmission is happening in it. Secondly, recently, the joint ventures we created is for electronics, sensors and antennas, so, I think, all technologies will qualify under the PLI scheme and we are waiting to get the final list of components from the government. But in this, we also see that our product categories are EV and IC ignostic, i.e., they are used in IC engines as well as in EV engines. So, I expect that the components manufactured at Lumax Components will be benefitted a lot from the PLI scheme. 

Q: What is the company’s share in the LED lighting compared to conventional lighting industry-wise? Also, what will be the expansion plans product-wise and do you think that there is any opportunity in other segments the way things are transforming?

A: If I will talk about the lighting LED, then almost 35% of our revenue today comes from the LED.LED is coming somewhere in the lighting in whatever development we are doing. Our focus is to take this 35% of revenue basket from LED to 50% in the next 2-3 years. For this purpose, we have already invested in the electronics facility and we have to wait and watch that can it qualify under PLI because it is a very recent investment and the year is 2019-20, I hope that this will qualify. This is meant mainly for localization on SMPs and also on LED assemblies. Secondly, the future product categories are concerned then as I have said mainly electrical, electronics and telematics are the three areas where Lumax Group is seeing the future mobility. Under it, we have made joint ventures or will do. For this purpose, we have an estimate that in the next two years, we will make an investment of about Rs 300 crore. Already, Rs 150 crore has been invested in the electronic facility and going forward in the next two years, we have an outlay of another Rs 150 crore. Even under PLI in five years, we have a threshold of Rs 250 crore and I am sure that as the Lumax Group will be able to do. 

Q: What will be your group’s CapEx for FY22 and FY23 and can you segregate it a bit for us?

A: The FY22, the current year, the CapEx plan is close to Rs 120 crore of which Rs 90 crore has already gone in the electronic facility for basically LED, SMP Localisation. We have already made an engagement with Stanley for their HVAC panel, which is also a product. Going forward, we will have an investment of Rs 100 crore in FY23 and that will help us in launching the new product categories like antennas, some switches and sensors as well as some telematics. We will also invest basically in certain Brownfield projects for capacity expansion. 

Q: What is the order book of the company on middle to long term basis and what uptick we can see over few quarters?

A: As far as our orderbook is concerned then in lighting we have an orderbook close to about Rs 300 crore and for non-lighting, we have near Rs 450 crore. I think, this will keep on improving as new launches take place in which lighting has huge support and as I have said that the new joint ventures are fructifying and its revenue scheme will strengthen further this orderbook in the next two to three years. 

Q: How the exports are looking and what kind of orders you are getting on the front? 

A: Our revenue share in export as a group is still very less, I think, it is about 7% and mainly because our product category of lighting, they are not very export friendly and are quite fragile. However, I believe that when PLI is out then its first impetus is on localization. With it, maybe, we will be able to talk with the partners about it, if we have export competitiveness. For us within 5 years timeframe, we want our export orders also to grow about 10-15% and for this purpose, we have a special focus even in the aftermarket because we can see an opportunity in both domestic and exports. With OEMs, we are continuing to discuss certain things.

Q: In the electric vehicle segment, companies like Tesla and others are entering India with great hopes and it seems that the future belongs to electric. So, what is Lumax’s exposure in this space and what would you tap-in in the future? What the electric vehicle growth will mean to you and how will you leverage that?

A: I think, India will be very clear that the future of mobility will be electric. But there are several trends in electric and it will be seen and they will basically on electronics, light waiting and also on connected vehicles. All of our current customers may they be from two-wheelers, four-wheelers or commercial vehicles, all are working on electric strategy and we are engaged with them. On our current product portfolio and also the new product portfolio that we are bringing. We want to increase our share even in the electric segment. When it comes to the new players for example in two-wheelers Ola and in the four-wheelers as well, I think, we are already engaged with them for how we can support them. The good thing about this is that the current product portfolio of the Lumax Group is technology agnostic. Because, if there is an EV then also, we do not have any threat under the current products they will continue with that and they will smoothly transition to EV. Also, if EV is coming then as I said in the case of lighting, the adaptation of the LEDs will be more because they are more energy-efficient, they are also more safety-related. Because of that, I think our technology curve will be adopted at the earliest on EV. Even on gear shifters, we have already got the technology to shift by wire, which is necessary on electric vehicles.