Detailed Rationale

Crisil Ratings has upgraded its rating on the long-term bank facilities of IAC International Automotive India Pvt Ltd (IAC India; previously, Lumax Integrated Ventures Pvt Ltd [LIVE]) to ‘Crisil AA/Stable’ from ‘Crisil AA-/Positive’.

 

The rating action reflects a similar action on the parent, Lumax Auto Technologies Ltd (LATL; Crisil AA/Stable/Crisil A1+), on account of better-than-anticipated improvement in LATL's operating performance during the current fiscal year, as reflected in the revenues which has grown at a strong double-digit rate of approximately 38% over the nine months of fiscal 2026 while maintaining the operating margins at healthy levels of 13.2%. This follows revenue growth of 29% in fiscal 2025 and 53% in fiscal 2024, driven by healthy growth in standalone performance, strong contribution from acquired entities, and the ramp-up and maturation of various subsidiaries and joint ventures. This momentum is expected to sustain over the medium term, supported by established relationships with key customers, a diversified product and customer mix across most segments, and a conscious shift towards electric vehicle (EV) agnostic and alternate fuel products.

 

Crisil Ratings has also taken note of the announcement by LATL about acquisition of remaining 25% stake in IAC India, making it a wholly owned subsidiary; LATL had acquired 75% stake in the company at an enterprise value of Rs 587 crore, with the acquisition value of around Rs 435 crore in March 2023. With this, LATL has secured full control of its largest revenue-contributing business division to boost free cash and better leverage. This will enable LATL to go for future inorganic steps. LATL has also filed for a merger of IAC India with itself to unlock operational synergies, subject to regulatory and legal approvals.

 

During nine month of fiscal 2025, IAC India registered healthy double digit on-year revenue growth reaching Rs 1,123 crore on the back of strong demand from original equipment manufacturers (OEMs), especially its key customer, Mahindra and Mahindra Ltd (M&M; rated 'Crisil AAA/Stable/Crisil A1+'), which witnessed on-year volume growth of ~20% in its passenger vehicle segment. The passenger vehicle segment comprises most of its revenue, with more than 85% share. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin stood healthy improving to ~18% for nine month of fiscal 2025, as against, 16.5% in fiscal 2025. IAC India is expected to grow ~12% per annum over the medium term, driven by new model additions from existing customers, addition of new clients and higher penetration within existing models. Strong order book of over Rs 500-600 crore from the key customer for its newer platforms shall support overall growth. The margin is expected to sustain at ~17-17.5% over the medium term.

 

Debt (including leases) as on March 31, 2025, stood at Rs 268 crore (Rs 319 crore as on March 31, 2024) against adjusted net worth of Rs 465 crore (improving from Rs 379 crore), resulting in adjusted gearing improving to 0.58 time from 0.84 time. Despite acquisition-related debt, the debt protection metrics are expected to remain comfortable on the back of gradual repayments and continual accretion to reserve driven by improving profitability, which will result in net cash accrual to adjusted debt ratio gradually improving to over 1.0 time. Also, adjusted gearing is expected to remain comfortable at 0.2-0.6 time over the medium term.

 

Liquidity is also expected to remain adequate, with estimated annual net cash accrual of over Rs 150 crore, which will be sufficient to meet annual debt obligation of Rs 45-75 crore and capital expenditure (capex) of Rs 70 crore. Liquidity continues to be aided by expectation of need-based support from the parent, LATL. Furthermore, IAC India had unencumbered cash surplus of Rs 86 crore as on March 31, 2025, and fund-based bank limit of Rs 50 crore that was moderately utilised as on date, thereby providing adequate cushion in case of any exigency.

 

The ratings reflect the established market position of the company and synergies in terms of integration post-merger, along with strong timely support from its parent. These strengths are partially offset by customer concentration in revenue and exposure to cyclicality in the auto industry.

Analytical Approach

Crisil Ratings has considered the business and financial risk profiles of LIVE and IAC India. The latter stands merged with LIVE with the name of LIVE changed to IAC International Automotive India Ltd. Subsequently, as on March 31, 2024, IAC India was merged with LIVE and the company’s name changed to IAC International Automotive Pvt Ltd. Crisil Ratings has also applied its parent notch-up framework to factor in the strong operational, financial and managerial support from LATL. The infusion by LATL into IAC India of optionally convertible redeemable debentures carrying 0.01% interest per annum and convertible at the option of LIVE within 10 years of allotment has also been considered as equity. Goodwill arising from the acquisition of stake in IAC India has been amortised over five years. Other intangibles arising from the acquisition have been amortised over 10 years.

Key Rating Drivers - Strengths 

Established market position and strong relationships with key customers

IAC India has been designing, developing and manufacturing auto interior components since 2008, mainly for M&M. It also caters to Maruti Suzuki India Ltd (‘Crisil AAA/Stable/Crisil A1+’), Volkswagen India Pvt Ltd and Volvo Eicher Commercial Vehicles Pvt Ltd. Over the years, the company has added new customers and tapped various growth opportunities. IAC India generates 80-85% of its revenue from the passenger vehicle segment and 10-15% from commercial vehicles. It has reported sequential double-digit growth in operating performance, benefiting from the simultaneous growth in the volumes of key customers. IAC India is expected to continue the growth momentum in the current fiscal at 10-12%, driven by strong order book and new model launches by the key OEMs. Furthermore, major expansion plans by key OEMs will drive operating performance over the medium term.

 

Complete integration post-acquisition of 100% stake by the parent

IAC India was acquired by LATL in March 2023 through LIVE and was proportionately consolidated in the books during fiscal 2023. After the merger, LATL holds direct controlling stake in IAC India, leading to high integration between the parent and subsidiary in terms of centralised treasury and implementation of common integrated ERP systems. Furthermore, all the routine operational as well as key strategic decisions are taken by LATL. IAC USA (erstwhile parent), a leading auto interiors supplier with presence in 20 countries and a diversified clientele of over 80 OEMs globally, continues to extend technological support. In May 2025, LATL had signed an agreement to acquire the remaining 25% stake in IAC International Automotive India from the International Automotive Components Group (IAC group) for Rs 221 crore. Following this transaction, IAC India has become a wholly owned subsidiary of LATL. The IAC group will continue to provide technology support to IAC India under a technical assistance agreement. Furthermore, LATL is considering a merger of IAC India with itself to unlock operational synergies, subject to regulatory and legal approvals.

 

Healthy financial risk profile

Debt as on March 31, 2025, stood at Rs 268 crore (Rs 319 crore as on March 31, 2024). Networth was large at Rs 465 crore (Rs 379 crore), resulting in strong gearing of 0.55 time and comfortable total outside liabilities to adjusted networth ratio of 1.57 times (0.84 time and 1.70 times, respectively). With the acquisition-related debt coming in that will be offset by gradual repayment and no major debt-funded expansion plans, debt is expected to remain at Rs 250-300 crore while networth is likely to improve to over Rs 500 crore as on March 31, 2026. Debt protection metrics are expected to remain healthy, with interest coverage ratio of over 7 times over the medium term.

Key Rating Drivers - Weaknesses 

Exposure to customer concentration

Though dependence on M&M has reduced over the years, it still accounts for more than 65-70% of the revenue. The company is expected to leverage on LATL’s strong and wide customer base to increase its client diversification over the medium term. Diversified product profile, along with relationships with multiple OEMs, will help the company expand its customer base.

 

Susceptibility to cyclicality and regulatory changes in the auto sector

Entire revenue comes from the OEM segment, which is inherently cyclical. Slowdown in the Indian economy and the pandemic had adversely affected auto OEMs in fiscal 2021. However, with better demand and recovery in economic activity, the industry’s performance is expected to improve over the medium term, though it will remain vulnerable to economic downturns.

Liquidity Strong

Liquidity is supported by unencumbered cash surplus of Rs 86 crore as on March 31, 2025, along with unutilised working capital limit of Rs 50 crore. Net cash accrual of Rs 150-200 crore per annum is expected to be sufficient against yearly debt obligation of Rs 45-75 crore and annual capex of Rs 70 crore over the medium term. Liquidity also draws comfort from the availability of need-based assistance from LATL.

Outlook Stable

The company is expected to continue to benefit from the strong operational and financial support of LATL as well as technological collaboration with IAC USA. The financial risk profile is also expected to remain comfortable over the medium term, supported by steady cash generation and progressive debt reduction.

Rating sensitivity factors

Upward factors

• Upgrade in the ratings of LATL by one notch or any change in its stance of support or strategic importance for IAC India
• Substantial revenue growth while maintaining operating margin at around 17%, supported by diversification of customer base
• Sustenance of healthy financial risk profile

 

Downward factors

• Downgrade in the ratings of LATL by one notch or any change in its stance of support or strategic importance for IAC India
• Sharp decline in revenue and deterioration of operating margin adversely impacting cash flows
• Weakening of financial risk profile on account of higher-than-expected capex or stretch in working capital requirement; with gearing exceeding 1 time on a sustained basis

About LIVE

Incorporated in fiscal 2016, LIVE is an investment company and a wholly owned subsidiary of LATL. It was earlier the non-auto business. However, this division has been liquidated and the company did not have any material operations till March 2023, when LIVE acquired 75% stake in IAC India.

About IAC India

IAC India was incorporated in 2008 in Pune, Maharashtra. It was earlier a wholly owned, stepdown subsidiary of IAC USA. IAC India's holding company, IACNA Mauritius Ltd, is the ultimate subsidiary and investment arm of IAC USA. IAC India manufactures auto interior components for leading domestic OEMs. It has five manufacturing units, 2 in Pune, and 1 each in Nashik (Maharashtra), Manesar (Haryana) and Bengaluru.

 

About LATL

LATL was incorporated in 1981 as Lumax Auto Electricals Pvt Ltd and renamed Dhanesh Auto Electricals Pvt Ltd in 1988 and Dhanesh Auto Electricals Ltd in 1998; the company got its current name in 2006. LATL has two main divisions: lighting systems and sheet metal components, gear shifters, and moulded parts. Lighting products (head lamps, tail lamps, and blinkers) are manufactured in Pune, sheet metal components (mainly chassis for Bajaj Auto Ltd’s two-wheelers) in Aurangabad and moulded parts (for Honda Motorcycle and Scooter India) in Bengaluru. The company's aftermarket division (domestic and export) trades in auto components such as lightings, accessories and audio and navigation systems.

Key Financial Indicators    

As on/for the period ended March 31	Units	2025	2024
Revenue	Rs crore	1218	886
Reported profit after tax (PAT)	Rs crore	89	61
PAT margin	%	7.1	6.9
Adjusted debt/adjusted networth	Times	0.58	0.84
Interest coverage	Times	7.04	5.18

Crisil Ratings-adjusted numbers

Any other information: Not applicable