Ladies and gentlemen, good day and welcome to Suprajit Engineering Q2 earnings call hosted by Anand Rathi Share and Stock Brokers Limited. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mumuksh Mandlesha. Thank you, and over to you, sir.
Thanks, Trisha. On behalf of Anand Rathi Share and Stock Brokers, I welcome you all to the Suprajit Engineering Q2 FY 2026 conference call. I thank the management for taking time out for this call. From the management side, we have Mr. Ajith Kumar Rai, the Founder and Chairman, Mr. N. S. Mohan, MD and Group CEO, Mr. Akhilesh Rai, Director and Chief Strategy Officer, and Mr. Medappa Gowda J, CFO and Company Secretary. I request Ajith sir and team to give an introduction review about the results, and then we can follow up with the Q&A session. Over to you, sir.
Yeah. Good morning. Thank you, Mumuksh and Anand Rathi for hosting this call. Good morning, everybody, and welcome to Suprajit's Q2 FY 2026 results call. As you all know, the automotive industry grew by about 5.8% during the first half. Passenger vehicles had 3.8%, and two-wheelers had something like 5.8%. Of course, since the change in GST, there has been a gush of new business. October has been good. However, we have to see how the whole thing pans out for the balance year. Global business environment continues to be challenging with continued geopolitical issues, tariff issues, rare earth export restriction issues, et cetera. Even shipping condition in Europe has become an issue. But having said all this, the company has performed, I think, pretty well.
In that background, I will now hand over to our teams one by one to give some few and key financial items and operational and other items to brief you all. Following that, we'll have a Q&A. I'll first hand over to Medappa for the key financial items. Medappa?
Thank you, sir. Good morning, every-
Sorry to interrupt, sir, but your voice is breaking, Medappa, sir.
Yeah. Now?
Now it's proper, sir.
Yeah. Good morning, everyone. The consolidated revenue, excluding SCS, for the half year ended 30th September 2025 was INR 1,605 crores as against INR 1,508 crores for the corresponding previous year, recording a growth of 6.4%. The consolidated operation, EBITDA, for the half year ended 30th September 2025 was INR 215 crores as against INR 184 crores for the pre- according-
Sorry to interrupt, sir. Your voice is still breaking, sir.
Are you on mobile?
Yeah. Now okay?
Yes, sir. Now it's good.
The standalone revenue for the half year ended 30th September 2025 was INR 877 crores as against INR 827 crores for the corresponding previous year, recording a growth of 6%. The standalone operational EBITDA for the half year ended 30th September 2025 was INR 145 crores as against INR 145 crores for the corresponding previous year, recording a growth of-
Medappa sir, your voice is still breaking. Hello?
Now?
Yeah, go ahead. But I think the results numbers have all been with the investors, so it should be okay.
Yeah.
No, Medappa, you are still breaking. I suggest you log off and then probably ask them to reconnect on a landline for questions. I will pass it on to Mohan for your highlights, Mohan.
Yeah.
Yeah, thank you very much. Am I audible and clear?
Yes.
Great. Okay. Gentlemen, very good morning, and let me start with the business divisional highlights. The hero of the day is our SCD or the Suprajit Controls Division, which is a global cables and controls. When I am talking about it, I would want to exclude SCS, which has been our latest acquisition. Sans SCS, the operational revenue grew by around 7% year-on-year. What is very interesting is that the operational EBITDA grew strongly. It is almost by 50%, and we have achieved a double-digit EBITDA of 11.6%. This, of course, reflects the underlying operational improvements that our team has been working hard, like insourcing of populated PCBA to our own SCD or labor productivity improvements, et cetera.
Another major area that we worked on, which is paying off for us is the tariff-related costs are being passed on, and most of them has been done, and whatever little are absorbed and also reflected in our results. In terms of outlook, SCD is expected to perform pretty well despite all the uncertainties that our chairman was talking about in terms of geopolitical issues and so on and so forth. Restructuring remains on track. That is very important for us, and we expect that to be completed by December 2025. This includes majorly moving the operations from Juarez plant into the Matamoros plant. Therefore, Matamoros and Brownsville have been strengthened adequately. The evolving tariff situation is a moving target, as we all know, and it is being mitigated through many proactive alternate delivery solutions. We have made mitigation proposals to our U.S. OEMs. We will be qualifying our Wichita facility.
That is Wescon with IATF certification, which would allow potentially for transit into the MAGA or Make America Great Again. That's overview on SCD and moving on to the Domestic Cable Division. The operational revenue grew well by around 10+% on a year-on-year basis, and EBITDA margin contracted very marginally, but nothing very substantial there. Aftermarket, beyond cables and new braking system projects continue to gain very good traction, and our capacity expansion with additional building at Chakan has been completed. This is primarily catering to the passenger car vehicle segment. In terms of outlook, I would say a strong second half is expected with better sector growth because generally automotive industry in India in second half is better. We also expect aftermarket traction. Both beyond cables and multiple braking projects are also coming up and will be ramped up.
Moving on to the Phoenix Lamps Division. This is the elephant in the room. The revenues declined at PLD leading to an EBITDA margin reduction. Now it is at around 12.7%, [audio distortion] 15% what we used to be. So quarter was largely muted due to the steep reduction in exports to Middle Eastern countries and very specifically for brand and direct sales. While this has been the past in terms of outlook, we expect second half to be better. We expect some amount of headwinds to continue in Europe, but we expect that to be overcome by local business. Very important is one of the global competitor has filed for Chapter 11. Therefore, we are already receiving multiple inquiries at PLD for exports and also from the domestic OEMs. Therefore, we expect that to gain traction in the next few quarters.
With that, I would like to hand it over to Akhilesh. Akhilesh, over to you.
Thank you, Mohan. Just as a point of information, I'm on the road, so might have some issues with network. Please let me know if I break off. I'll take up from the Suprajit Electronics Division, where we supply a lot of clusters and sensors and some actuators. Revenue grew well at 36% and EBITDA also increased well by 251% from 5.2% last year to 13.5% this year. So good, strong double-digit EBITDA performance. The significant slowdown of a leading EV customer was overcome by new order execution from other customers, especially our throttle grips gained a lot of traction in the last few months with record sales from multiple customers.
Order ramp-up with new customers will certainly de-risk the business, and we see a strong growth trend with multiple projects for both EV two-wheeler and three-wheeler players all going into production in the coming quarters. Next, we move on to SCS, the acquired entities from insolvency that were based, headquartered in Germany. Revenue grew to about INR 109 crores, and the EBITDA loss reduced to INR 6.7 crores. It's an important point that this is the first quarter where the entire all SCS assets, that means Germany, Morocco, Canada, and China, are all now integrated and we've had a full quarter of their business under Suprajit. The integration process of these assets is well underway with Canada already moved to a larger site and the Jackson operations which were having certain struggles earlier are now streamlined.
On the Europe side of SCS, all European production is fully relocated to Morocco now. The Poland plant has been completely closed. We also set up a new Hungary warehouse close to our Hungary plant, literally 15, 20 minutes away by road, and that has replaced the old German warehouse. This will also support us because we are having a significant German headcount reduction in December, which is also as planned. When it comes to Morocco, their top priorities are streamlining operations, input cost reduction, overhead controls. We have a team from India supporting them, a team from Hungary also supporting them, and things are working well and going as per plan. There's a smaller restructuring going on also from Germany, where we're moving a German tool room also to Morocco to further support our right-sizing in Germany.
This is all, of course, aligned with our master plan, which we have been talking about since the acquisition of SCS, where we expect to turn EBITDA- positive by the fourth quarter of this year. I think that is well on track. Coming to STC, our Technology Center continues to assist all our divisions in launching multiple programs with focus on the homegrown products that we have developed ourselves, but also with strategic collaborations for ABS with BluBrake and sunroof cables with a partner in Germany. This collaboration for ABS is also perfectly apt because of the current situation with the ABS mandate, and we're also working now with a lot of more complex brake systems to support our customers as they look at ramping up their ABS projects within their product line.
The BluBrake ABS has now been sized for two customer requirements and is under validation. We're quite happy with the speed and the kind of performance that we're looking at, but we will need to go through the complete validation process. Program pipelines in clusters, throttles, grips, and actuators continue to be strong. The new STC Technology Center building, which will house more than 200 R&D engineers, is progressing as per plan. Some other updates from the quarter, more general. We have a big one SAP initiative, where we hit another milestone with our U.S. and Mexico plants going live on SAP. The DCD 16 plants and SCD's plant in Bangalore will now follow suit in Q4. This will take us over the 50% mark in terms of SAP implementation, with almost six implementations already completed.
We have applied for an additional land in AURIC, in Bidkin, near the Aurangabad industrial cluster. This is for various customers who have requested us to plan a presence in the future. Suprajit also participated for the first time in EICMA 2025. This is the largest two-wheeler expo in Milan, Italy. We were very pleasantly surprised by the kind of response we had, because customers were very impressed by both our technology focus and our homegrown products. With that, I hand over to Chairman for closing remarks. Chairman?
Yeah. Thank you, Akhilesh, Mohan, and Medappa. I think Akhilesh may have to drop off the call as he has some other earlier commitments. He will answer as many questions if he is on. Otherwise, Mohan and I, along with Medappa, will deal with any questions that you may have. As a summary, I think, excepting a slightly muted PLD performance, rest of the divisions have done well. They have performed ahead of the industry. I think what Mohan has mentioned, the Controls Division margins have consistently been in double digit in the last two quarters. And even if you look at consolidated numbers without SCS, it is at 14%, which is the top end of our guidance. And even with the SCS, we are at about 11.5%. So it has been a good quarter and a good half. The integration is going pretty smoothly and as planned.
By end of December, I think most of the major heavy lifting will all be done and dusted. At the same time, we are also very focused on mitigating the tariff-related impacts and giving alternate options to customers, et cetera. And the operations streamlining across various global units of ours. And also presenting our portfolio that has been developed at STC to our customers. I think we expect second half would be better than the first half. With this, I will hand over to the moderator to take the questions, and we will answer as we go along. Thank you. And over to moderator, Trisha.
Yes, sir. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Viraj from SiMPL Investments. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just a couple of questions. First is, if you look at the gross margin for the quarter, we are seeing one of the highest ever contribution margins we have seen in [SCD]. But at the same time, if you look at our OpEx costs and employee costs, it still remains elevated. Were there any further restructuring charges or any other write-offs further we are seeing in the quarter? That is the first one to start with.
Yeah, you are right. Our gross margins have been one of the best, I think. Where the OpEx and employee costs are there will be continuing hits that will happen till end of December. Because for example, in Germany, the employees have a clear plan of being reduced from whatever the X number to X minus. They have certain timelines when they will be leaving the organization. So when that happens, their separation costs have to be paid. So that will continue to hit. OpEx, yes, there is some continuing work that will be done in this quarter because the operations from Juarez have been moved to Matamoros. That operational movement, relocation, reestablishing it, will continue to be there. As we also mentioned, the tool room is being moved from. Again, these are all cost reduction plans for the next year, I would say.
It is moved from Germany to Morocco so that there is a better operational control also on all the tooling requirements. All these are some of them. At the same time, this last couple of months, we have been moving our Canada operations to a new location, larger location, for more efficient management of the inventory and also the workflow within the organization. So these things are ongoing. That is why I said, these hits will continue to happen till end of December. I think that is when we will all be done.
If you look at Q2 or maybe H1, would it be right to say that this restructuring or this additional OpEx cost would be in the tune of INR 15 crores-INR 20 crores at least?
For the period, I think it would be. I think if I write our cost for the, what is that? Employee separation in Germany itself is about EUR 1.1 million or EUR 1.2 million. I think it is more than that.
Got it. On the gross margins, what explains such a high gross margin? How should we understand the drivers and sustainability?
Sorry, I did not get the last part of it.
How should we understand the drivers and sustainability of high gross margin?
I think the gross margins will be good, whether it will be exactly the same or little plus minus, I do not know. The reasoning is simple. The restructuring is leading to a much more optimal, and much more cleaner operation across the group. I would expect that we will have a good gross margin. I don't want to hazard a guess on the future, but I think you have seen it how in the last four quarters we have improved. I think there is one last leg left, so I would think it would continue to be good.
Okay. Just two questions, then I'll come back in queue. First is on the Phoenix Lamps. You talked about one of the global players filing for bankruptcy. Marelli, they have filed. But if you look at the portfolio, they are still quite heavy on the LED portfolio and newer technologies. So I'm just still trying to understand from our point of view, how does it really benefit us? Any color you can give into the demand supply dynamics now in lamps.
I don't want to comment on specific names. I think I am not talking about Marelli. But at the same time, all I'm saying is that we are being rushed with new inquiries for Phoenix Lamps, both out of Luxlite and also from India itself. This is, as I said, I've been saying all along in the last two, three years is that there is a consolidation of the business and consolidation of vendors, and the strongest last man standing will gain with this. I think that's what we are seeing now again. That's why, yes, this quarter, last two quarters have been slightly muted on top line, and hence the margins have probably had a couple of hundred basis point reduction, but still at 13%, whatever, 13.5%, we have always been that 13%-15%. We are at the lower end.
I think that will also change with time. So we are quite clear that business, there is going to be more consolidation and some more business will come. Although the overall business mixing, our business is not expected to be disturbed.
Okay. The last question was on the view of the land acquisition which we announced. What products is this for? Any color you can give?
That is for the range of Suprajit's domestic product. It is a domestic plant. It is certainly cables and beyond cables.
Okay. I will come back in queue. Thank you.
Yeah.
Thank you. The next question comes from the line of Gokul Maheshwari from Awriga Capital Advisors. Please go ahead.
Thank you for the opportunity. Just on Phoenix, we had, in the past, associated with some retailers overseas to sell our products. What is the update on that?
Mohan, will you answer?
Yeah, sure. When we talk about retailers, we are talking about basically a couple of areas. One is the Russian area, another is more in the African continent, and the third portion of that is North America. Those are the relationships that we are holding, but it is going to take time. We are working on it, but we are pretty sure that it is going to fructify in the near future.
I think to add to what Mohan said, Gokul, we are working with one of the global majors for the North American market, and the initial deliveries have been made. He is the largest retailer, I would say. I think they are again coming for another assessment. What we have done actually is only a pilot testing of the North American market through this chain, and I think post this December visits, I think we would get more clarity on what next in terms of launching in multiple, their own outlets in the U.S.
Fair. Okay. On SCS, sir, you have mentioned in the PPT that you are looking for a breakeven by Q4, but what would be the estimate for the full year revenues for SCS, given the sales which were there around $40- odd million at the time of the acquisition?
The quarter has been very clear, Gokul. That quarter is a full quarter. This quarter, the revenue has been mentioned, I think, in our business. One easy way to do it, multiply it by four for the next year.
Okay.
I think there will be some variation, but I think that is the rough figure for you.
Okay, fine. Just lastly, on your domestic business, given the changing of the festival season during the month of September quarter, will Q3 reflect the strong sales with respect to what the OEMs have experienced in their retail sales even for you, with higher sales growth for the domestic business in Q3?
Mohan, will you answer generally what is happening in the GST scenario also, I guess?
Okay. Let's keep it this way. In terms of the overall market, we have seen that, I am talking about the OEM market. We see an uptake both in terms of festival season and also because of the pent-up demand after GST, coupled with the rural market economy looking upbeat. Now obviously it is going to trickle down to us. Therefore, from a sales to OE perspective, we definitely would look at a higher uptake going forward. But in terms of aftermarket, also we are looking at a positive tailwind coming in primarily because of GST and there was some amount of muted growth. I think now it is going to become much more better. Particularly control cable, we were at around 28% GST rate, now we are at around 18%. Same thing with the speedometers, 28% reduces to 18%.
Some of the tractor parts, for example, comes down from 18% to 5%. Overall, I would say it is more benign to us. On the lamps portion, it is not going to be a GST impact. It is 18%, continues to be 18%. No change.
Okay, great. Thank you so much and all the best.
Thank you.
Thank you. The next question comes from the line of Yash Agarwal from Nirmal Bang. Please go ahead.
Good morning, sir. Thank you for this opportunity. I have just one question related to U.S. tariff issues. What is the kind of negotiation we are having with the customer? Are we passing off the entire cost or is there a sharing of the tariff cost related to our products?
Yeah, I think we have also mentioned that in our business update. I think in essence, I would say most of the tariffs have been passed on. I will tell you a little background to this. In terms of, we were talking about these 25% and 50% or whatever, it is not just India. We also look at China because in terms of our global operations, we look at the impact of tariff from multiple countries into U.S. because our operations are happening in Canada, in Mexico, China, India, Morocco, and in Europe. Instead of going into that detail, I think it is a very complex scenario. All I can say is that the tariffs have been passed on to customers. What is being difficult to be passed on is some of these smaller impacts. I will give an example.
For example, we are importing in, let's say, our U.S. operations as well as in Mexico operations. Let's say steel inner wire from China. That is a very small part of the entire cable assembly. In a $5 cable, it may be $0.25 or whatever. So that steel tariff has an impact on this particular material, which will be just a $0.01 or $0.02 , which on the $5 may be nothing, but when you add on multiple millions of these products, it makes some effect. When you are approaching the customer for these big tickets, 25%, 50%, they listen to. But when you are trying to present this $0.01 , $0.02 , it is difficult to convince them. That is where we get some small hits. I think it's absolutely not a material for us, but there has been some little effect.
All I want to say is that most of the tariff impact has been passed on.
Thank you, sir. The second question is on ABS regulation. What is the current update like we have as of now?
I think your guess is as good as mine. Mohan, anything that you want to comment?
Yeah. The latest is that there has been a pushback from the OEMs. Obviously, the kind of due date that has been stipulated by the government looks to be almost impossible, primarily on two fronts. Number one is the supply chain is not ready. Second thing is this is a product which needs to be homologated, proven on the vehicle. It cannot be introduced at such a short notice. Therefore, there has been a representation made by the OEMs, and incidentally, as a Tier 1, we have also put in our representation to the government. We have given our opinion. Well, I'm not able to disclose the entirety of the opinion, but definitely we have given our opinion. So will it happen? The answer is yes. Will it happen tomorrow? The answer is no.
Yeah. Just to add, I think it's also a question of the timing of that, and also whether it will be for the entire range or certain range of two-wheelers. I think there's a lot of discussion going on at various levels. So I think we'll have to wait and see, but I don't see, as Mohan said, it getting introduced on 1st of January for sure.
Okay. Just one last question on the gross margin. Since we had a very good gross margin, one of the highest in the history. So can we expect it to sustain in the medium term, like this kind of levels for?
I think there was a question on the same earlier also. I think the answer is same. I think the restructuring that we have been doing internally, particularly in our overseas entities, are showing these numbers being really improving over the period, and it has been consistently improving. As I said, there is one last leg to be done in this quarter, and I do believe that we will have good gross margins, but I don't want to speculate a number on that. But as we are saying, the consolidation is still to complete. The end result of all this consolidation is further improvement, but the exact numbers would be difficult to say.
Thank you, sir. That is very helpful. That is all from my side.
Thank you. The next question comes from the line of Tanmay Jhaveri from Finterest Capital. Please go ahead.
Hi, sir. Good morning. Sir, I have a couple of questions. The first one is from the accounting point of view. Our effective tax rate remains relatively high compared to the standard 25% corporate tax. I just wanted to understand the factors behind it. Is it due to subsidiary mix or deferred tax? What is the reason behind this?
Medappa, will you answer that?
Basically, including deferred tax and considering the console profit, that percentage is changing. Other effective tax rate is 25%-27% only. There is no change.
Okay. Thank you. Sir, I went through last few quarters, like we have seen a good growth in our company. If you could just share what kind of growth trajectory do we see over the next few quarters or maybe a year or two years? What kind of momentum are we expecting in this industry and our company?
I think the guidance that we have given in the beginning of the year is that ultimately today we will have to benchmark ourselves with the global industry growth. With all the uncertainties globally, the industry is not really growing. Of course, India is a growth market at this moment. The overall global market, we do not know where it will be. It will be in a low single digit, maybe 1%, 2%, 3%. What we have guided is that we will continue to try to grow 5%-10% ahead of that global industry, because now we are a global company in terms of the product mix. In terms of margin also, we have said that we will be without, I mean, excluding, of course, for this year, SCS being a drag. We have said excluding SCS will be between 12%-14%.
If you really look at it at this moment, although the top-line growth has been slightly below the target, from the target of global industry, we still are probably 5% ahead. But from our own double-digit expectation, we are slightly below that. Our margins without SCS, I think as of second quarter, we are already at 14%, which is at the higher end of our own guidance. The guidance remains the same. In the second half, we expect to do better. But if you look at the overall next year number, I think it is little difficult for us to project this time. But our overall guidance of growing 5%-10% ahead of the global automotive industry still holds. I think that is where I will leave it, as these uncertainties of global growth will always be there for us.
Okay. Thank you so much, sir. Sir, if you could just throw some light on new products or technology initiatives that are currently in the pipeline. Any new launches or applications which we are excited to launch in near term?
Akhilesh, are you online? Otherwise, I'll ask Mohan to answer that question.
Akhilesh has dropped out. I will take it.
Mohan, please take the call.
Just to give you a flavor what's happening. We went to EICMA, which is a very premier motor show, particularly on motorbikes and two-wheelers, scooters and motorbikes. Where we have the Ducati, the Panigale, the Aprilia, and of the world, Harley-Davidson of the world come and present. From Indian perspective, TVS, Hero, Royal Enfield, all participated. We also participated for the first time, and we had put all our showcased technology products. Just to give you a flavor as to what happened there, that will be very interesting. What attracted a lot of attention were three major areas. Number one is our throttle control. As you know that industry is going through issues of rare earth and that's neodymium, which is being used in the permanent magnet. Therefore, any sensor which uses permanent magnet is under threat now.
We have got two solutions for throttle controls on that. One is without neodymium, without rare earth, rare earth magnet. The second solution is non-magnetic solution. What attracted a lot of these players, including some of the world players, is when they were looking at our non-magnetic sensors. That's attractive. It is a completely pathbreaking technology that we are coming out with. Obviously, it will take time for them to get convinced, and we need to prove it on their vehicles. Some of them have asked us to put it on their vehicles and prove it to them. But they are excited. The second area is, along with the sensors, is the actuators. Again, actuators, there are some actuators which used to be used using, I would say, more of motors, but we are looking at solenoid-based actuators.
That has again attracted a lot of attention. Third area, obviously, is ABS and braking system. In that, the pathbreaking technology that we thought it is not really up to the mark in terms of a global standard, but actually that became a big hit. That was our MDBS, our mechanical disc brake system, that is more used for parking brake for the heavy vehicles. Therefore, I would say from a technology perspective, we came back pretty much convinced that what we are doing is right. We are on the right path. We are going on to coming out with good technology products, not just for India but for the world. I'm pretty proud of what we did.
Thank you so much, sir, for such a detailed answer, and I wish you all the best for future.
Thank you.
Thank you. The next question comes from the line of Ravi Purohit from Securities Investment Management Private Limited. Please go ahead.
All my questions have been answered. Thank you.
Thank you, Ravi.
Thank you. The next question comes from the line of Senthil Kamaraj from ithought PMS. Please go ahead.
Good morning, sir. Just two questions from my side. First is on the braking side. If you can share some numbers, it will be very helpful, sir.
Mohan, will you answer our current status, what we are doing, and what are the plans?
In terms of specific numbers, I am not able to share with you, Senthil. All I can tell you is there has been traction on definitely the lever side. It is already translated into revenues. Second is our Combi Brake System. That is again translated into revenues. Where we need to translate into revenues is our MDBS and our—mainly MDBS, I would say. Because the rest, be it hydraulics or our ABS, is still under development. The other areas where we have been able to commercialize it. But specific numbers, I am not able to give it to you right now.
Okay, sir. Second question is broadly, since now SCS will also be getting to the EBITDA breakeven by December. At the management level, for the next three to five years, what would be the focus areas for the whole company and whether we will be more and more focused on expanding the product portfolio? Some insight on this will be very helpful, sir.
First of all, I think we have talked about EBITDA breakeven in Q4, not by December, at SCS. In terms of the thing, I think once it is all done by end of this financial year, SCS also will be fully integrated into Suprajit Controls Division. In fact, next year we will be giving only a single number of a consolidated Controls Division numbers. In terms of focus, I think in the international business, I think Controls Division will continue to focus on making sure that we have that global footprint which will meet customers' requirement, not only for control cables, but also control cable systems, in terms of adding on to things like an actuator or a foot pedal or a push button, whatever it is that it takes. I think that would be one major growth area.
Also, what is happening now is that with the integration of SCD complete, we will be also able to present to the world our ability on some of the new products that [STC] is doing. That is one side of our growth strategy. Within India, of course, both Phoenix Lamps and Domestic Cable Divisions will continue their journey the way they are. But I think Electronics Division certainly will be growing faster with all the new products that they are currently working on and launching. I think that would also get significant additional momentum going forward, not only for domestic, but also for exports. Some of our exports have been very successful from Electronics Division. That is the other area. Of course, the Braking Division, as Mohan just said, it is in the starting phase as a new division.
Eventually within India, when you look at it will be Cables Division, there will be a Lamps Division, there will be an Electronics Division, and there will be a Braking Division. I think within this, there are enough levers for us to grow, and I think that is what the focus is. Of course, actuator will act as a kind of an icing on the cake because it goes into multiple segments. So, it will probably be there in multiple places being produced. That is the strategy as far as the company is concerned.
Thank you, sir.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Mumuksh Mandlesha from Anand Rathi. Please go ahead.
Mumuksh?
Yeah. Sorry, I was on mute. Sorry. Yeah. Sir, firstly on the SCS Canada, China, would it be fair to say this quarter we did about INR 20- odd crore revenues and something like double-digit EBITDA margin, sir?
We do not really say this, but we have always said the SCS China and SCS Canada are the profitable side of the business, and the rest are the ones that needed attention. I think that is what has turned out after we acquired also. I do not want to give specific numbers. I think your sales are more or less in line with what I think has actually happened. Margins are certainly positive there, EBITDA margins, but I do not want to go into numbers on that. Yes.
Got it, sir. Over the next two years or so, post the December, I think most of the restructuring part would be done in SCS. What kind of range of margin SCS can generate? Today, the overseas cable part is doing around 12%-13%. Something similar, can we see for the SCS also?
See, what will happen is, Mumuksh, SCS will get integrated into SCD . SCD will have an overall strategy for our international business. Going forward, this SCS, Kongsberg, LDC, Wescon, all will vanish. In fact, if you have seen, Wescon's one plant has been now merged with the LDC's plant. It is very difficult for us to, within Controls Division, to subdivide that, because business can be won anywhere but it can be delivered from anywhere. It is difficult to say that. All I want to say is that the Controls Division, expecting to have a double digit in the global business, it will be the target, because I have always said that international automotive business is 6%-10% EBITDA business, and our aspiration was to be in that range.
But now today, our aspiration has even increased to see why it cannot be a double-digit business, even with the SCS integration. I think that is the target for us. I think that we should be able to meet in due course.
Got it. Understood, sir. Just any update on that motor, that input case for the China which was earlier importing? Any update around that?
Yeah, I know that Section 301 case. Nearly we have got a large money stuck in that process. We thought only Indian courts are slow, but I think U.S. doesn't seem to be any better, frankly. It is stuck in the courts. They are not giving us dates for a hearing and disposal. We are confident that we will get that money back. But of course, it has been fully provided for, as you know. But that will be a super bonus when it comes and if it comes. And we are confident, but you know how these courts act. It is still in the courts.
And sir, you were also mentioning about some alternate sourcing from India also. How is that progressing, sir?
For what? Sorry.
The motors.
I think, Mohan, we will give an update on the motors. I think we are doing that anyway. Yeah.
Sure. We have already completely transitioned from China to India motors. Instead of sending it from China to Mexico, now it is all being sent from India, Indian source, to Mexico. That is completely switched over. The other portion, probably what you are alluding to is when I was mentioning the insourcing. That is, there was a company which used to do another SMT process, Surface Mount Technology, populating the PCB. That we insourced it to SED, or Electronics Division. That is also been streamlined now. It is being manufactured in the Doddaballapur plant near Bangalore and sent to U.S. and from there to Mexico for assembly.
Just to conclude that point, I think we are in two, three major issues, and we are incurring significant losses in the Matamoros plant with this actuator project with the two customers. Now with these change of sources and change of strategy, all those risks have been completely mitigated, and I think that project is back to where it should be in the first place.
Great to hear that, sir. This is both to Mohan, sir. Just on the domestic cable market, if we have to understand how the aftermarket is doing there, and also just on the OEM side, how are you seeing the market share change happening? Also in terms of content per vehicle, in terms of cable side, there are new opportunities opening like sunroof cables. Are we participating in those such opportunities?
Mohan, will you answer?
Yeah. There are multiple questions here. Let me try to take one question at a time. Let me start with the OE. As you know, by and large, we have been in the pole position with all the OEMs in terms of cable. Therefore, any, I would say, increase in the share of business, share of wallet, the OEM would not want that to be done. Therefore, I would say we are in the pole position. We should be happy that we are in pole position. We need to defend the pole position. That is important for us, and that we have been doing. So that is on the OE front. Now I move on to the aftermarket. Aftermarket, we have been traditionally pretty strong in the southern segment, and we are trying to now spread our wings more towards western and more so towards the northern region.
That is happening. That is a slow process so that it gets accepted as a brand out there. But we are moving in that direction in terms of aftermarket. And last portion in terms of new businesses that is being won. In most of all the OEMs, whether we are talking about traditional OEMs or the new startup OEMs that we are talking about, we have got significant presence, and very important, they understand us as a technology player. So that pivot has happened inside the industry. Suprajit is no longer just looked at as a cable provider. We are being looked at as a technology provider. That pivot has happened in their mind. It has to translate into business. It will happen. Now, coming to the last portion that you talked about is the flocked cables or sunroof cables.
As you know that we just got, I do not know whether I mentioned it, but we got all our machines very recently. Installation is going on. We have already approached all the major players, and we have demonstrated that we have already got the machines here. So we will be literally first off the starting block to start manufacturing flocked cables in India. Therefore, this is going to be a major, I would say, turning point for us in terms of giving a high-tech cable product inside India. So that is happening. We have already engaged the customers, machines have arrived, installation is going on.
Just to add to what Mohan has said, just also you talked about content per vehicle. Technically, you would actually look at both Domestic Cable Division, where we are also doing certain beyond cables, and also Electronics Division, which is what is doing for the two-wheeler. If you add the two numbers together, and you will find yourself, we are certainly much ahead of the industry growth. That means what? That our content per vehicle is continuing to be increasing.
Mohan, sir, just a follow-up on the sunroof cable. Can you just give more flavor how many cables are used in that sunroof cable? Any content? How big is the content for that?
I can take it offline and take you through it, both from the tech standpoint of view and a commercial standpoint of view.
Sure, sir. Thank you so much for the answer. Just lastly, sir, to Medappa, sir, just for this first half, we have seen the working capital going higher by INR 70 crore. Is it partly due to the SCS Canada getting added, and also any other reason for the increase in working capital?
No, it's mainly due to SCS Canada and China inventory and the receivables.
Got it, sir. Thank you so much for the answer. Thank you.
Thank you. The next question comes from the line of Jinal Sheth from Awriga Capital Advisors. Please go ahead.
Good morning to the Suprajit team. In your presentation in the SCD outlook, you have mentioned about certain launch postponements and programs being shelved. But despite-
Sorry, I am missing you, Jinal. Can you repeat?
Am I audible?
Yes.
In the presentation, in the SCD outlook, you have mentioned about certain launch postponement and programs being shelved.
Yes.
Despite that, your outlook is firm. What I wanted to understand is where is the confidence coming from?
See what is happening with the customer, just to the first part of the question is that, customer with all these kind of uncertainties are stretching the existing products and projects and not really launching the new products because that would also mean significant cost. What they have done is basically postponing some of the new projects, which we actually won, but they are saying, "Don't supply as 1st of September, we will start from 1st of January," or whatever the new dates. The postponements are facts, and that technically has reduced the timing in terms of volumes from a timing point of view on an immediate time point, but it will not change the longer term. Eventually, they will launch, whether it is after six months or nine months. But the reason why we are growing ahead of the industry is simply because the number of project launches have been so many.
Some of them are still on time, so that has added to our growth trajectory. Some of them have been delayed. Ultimately they will all get into the line. Yes, there is a delay, but yes, we will continue to grow the business.
Lastly, with some of the large clients and uncertainties, is there any development in conversations there, including the EV passenger cars and normal books? Are we seeing any increase from a point of view where they believe that business share and market share is there? Do you have a lot of scope out there further?
I think the general view on EV is that, of course, its traction has been slower than what has been expected across the world, actually. Some of the OEMs have slowed down some of the launches of EVs also and continued their existing ICE projects. It is ongoing. For us, I think, all I can say is, on the Controls Division, there have been so many conversations are going across the world with our business development guys. To some extent, it got a little stalled because of these tariff issues, because the same guys are also fighting the tariff pass on. I think now that has been more or less settled. I think the focus will come back on business development. Some of these projects, for example, we received RFQ, let us say, six months ago, but it has been held on abeyance for six months.
Now they are again reopening those things to continue. Project launches have been delayed, but it has not been denied in that sense. Also the new inquiries have started coming pretty strongly now. We are sitting on some really interesting large volume contracts which basically a resourcing plan because our competitor does not have the footprint we have and is not able to give the flexibility that we are able to give. I think we are really, if you look at a three to five-year position, again, it would be something like consolidation that has happened in Phoenix Lamps, is also going to happen in cables business. The guys who have the best footprint will be the ones who will win more and more business. I think that is what we look in the next three to five years.
Thank you, and we wish you the very best.
Thank you.
Thank you. The next question-
It's 12:00 P.M., Trisha, so we'll take one more question, of course. Are there many questions in the pipeline?
Sir, there are two questions.
Okay, we'll take the two questions.
Okay. The next question comes from the line of Ritesh from Girik Capital. Please go ahead.
Yeah. Thanks for the opportunity. Sir, just wanted to understand, the company is the largest in control cables. I wanted to understand whether we now cater to all the applications, or still there is a product expansion gap needs to be filled?
I would say we are making all the cables, capable of making all the cables, but do we have a market share of the same with every one of these products? I would say there is a varying degree. The only place probably we are not very. It's actually not true. In sunroof cable, okay, we are getting into production, as Mohan said here, but we are already making in our global plants and supplying to customers. So I would say our capability is there in every place, but in terms of market shares, it will be varying.
Okay. Got it. Since a couple of years, we have expanded into the adjacencies like actuators and sensors. So, can we expect that in next three to five years, we will have the same capability as what we have in control cables?
Mohan, will you want to answer that, our ability on actuators and sensors?
Well, that is our noble intention, I would say.
Yeah.
Yeah. Always we would like to be, in whatever we are doing, at least in the top three we need to be there. That's our intention always. But having said that, the very area of sensors and actuators is very vast. Therefore, while it provides us a lot of opportunities, but at the same time, it is for us to mine and take those nuggets of gold out from that. Would we be doing it? The answer is yes. Our idea right now is to focus on specific applications and start getting cornering market shares on those specific applications, and that's what we are out to do. To answer your larger question, do we have higher ambitions of sensors and actuators becoming a large part of our business? Definitely, yes.
Okay. Sir, current market share on actuators and sensors would be very minuscule as compared to control cables?
Yes. The answer is yes.
Okay. Can it be in double digits, say, in next two, three-
I think it is a very futuristic question. All again, just to reemphasize what Mohan said, this is a large businesses, both actuator, sensors. We want to be in specific areas. It is a long conversation, so I do not want to get into that. But in specific areas of actuation and sensors where we feel our superior technology centers have the capability, we feel our global engineering teams can support that initiative, and our business development can push those products into the market, having relation to our ability on cables and other products. This is where we are working on. We are not working on the total landscape of these larger products of actuation or sensing. In that specific area, we want to be in the top three or five in due course. But it is time-consuming. It is all new projects.
STC has done some phenomenal jobs in these areas, so some of them are already in the market and more and more will get into the market.
Great. One last question on halogen lamp business. What will be our current capacity utilization, and with the competitor bankruptcy, what do you think the utilization will be in the future?
Yeah, I think we have enough capacity now. I think our capacity is 110 million or 120 million. I think we last year did, I don't know, 60 million, 70 million lamps. There's enough capacity with us, and we have the opportunity to go into even a night shift if required. As I said, there is on the larger sense, the market is shrinking because LEDs are penetrating. In our interest, we are focusing more and more aftermarket. As I said, it's a last-man-standing business where we are continuing to get businesses from competition, both with the demise or competition not being able to sustain the price pressure. It's a continuing battle in that sense. But what's important that we continue to expect to grow on a shrinking market with a margin which is a comfortable double digit.
That is a very sweet spot to be in at this moment.
Great, sir. Thank you very much.
Thank you.
Thank you. The next question comes from the line of Viraj from SiMPL Investments. Please go ahead.
Yeah. Thanks for the opportunity. Just two questions. First is on the ABS regulation. The related part is that if you see the marketplace right now, you have players like Ather and Ola, who have developed a more localized in-house solution, while companies from incumbent industry go over to more established players. In that sense, how are we positioned and what does it mean for the CBS business which we have commissioned ?
I think you already answered it once, but you can, again, recap it.
I talked about ABS, and I talked about regulations as to how and when it will come, et cetera. Having said that, as you know, specifically in ABS, there are not many players. It is an oligopoly. Given such circumstances, there is a room for another player, and many OEMs have very openly voiced an opinion that they would be looking forward for another additional player who can come with a reasonable cost and good solution. This is going to be a reality, and we want to be participating and be available to these OEMs, and that's what we are working on.
Having said that, that's one of the reasons why we are talking about the legislation not happening overnight, both from a capacity perspective and also from a cost perspective, because ultimately that cost has to be pushed on to the consumer, and I don't think consumers would be ready for that. As an industry, we have gone and asked for a kind of a scheduling in a specific way. Also there are technical challenges when you go for a lower-end two-wheeler being equipped with ABS. We have been in continuous engagement with the OEMs, both the traditional OEMs and the new players who have come in. Now, second part of the question is you talked about the new players wanting to own technology and the established players ready to accept technology. The answer is what you have said is right. Yes, we see that trend.
That's one of the reasons why we are working along with the new players, because they want it that way. It is to be co-developed with them. Whereas with established players, they would like to have a ready solution available, and we are getting ourselves prepared even for that. When we are addressing a larger market, each one of the customer comes with their own flavors that they deserve and want to have, and we as a supplier should give those flavors. We would be ready with them.
What it means for the CBS business?
On the CBS, we would expect CBS to continue, but with ABS integrated into that. Because CBS is a Combi Brake System where you apply one lever, and you apply brake at both the ends. That is one part of the solution that has got nothing to do with ABS. ABS is where you would not allow the brakes to lock, and therefore you will not lose control or skid the vehicle. Depending upon, you lose control when you have locking happening in the front wheel. You will skid when you have a back wheel locking up. Therefore, that is a separate functionality. This is a separate functionality. We don't see a threat there for CBS.
Thank you very much.
Thank you. I think with that, we will close this con- call with all of you. Thank you very much for your continued interest in Suprajit. If there is any further queries or questions, you can connect with our PR or with Medappa. We will see how best we can answer your questions. Thank you very much and have a good day. I hand over to the moderator. Thank you.
On behalf of Anand Rathi Share and Stock Brokers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.