Ladies and gentlemen, good day and welcome to the Suprajit Engineering Q1 FY 2026 earnings conference call hosted by Anand Rathi Shares and Stock Brokers Ltd. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mumuksh Mandlesha from Anand Rathi Stock Brokers Ltd. Thank you, and over to you, sir.
Thanks, Anushka. On behalf of Anand Rathi Shares and Stock Brokers, I welcome you all to the Suprajit Engineering Q1 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. 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.
Good morning, everyone, and thank you, Mumuksh and Anand Rathi, for hosting our quarterly calls as always. I welcome you all for the Suprajit's Q1 FY 2026 results presentation. The focus for, of course, the quarter as has been in the past remains unchanged, the global scale, local focus and technology-driven. We have briefs from Medappa, Mohan and Akhilesh, and then I'll do a final wrap. After that, we'll have a question and answer. With this, I'll hand it over to Medappa for his initial remarks. Medappa?
Yeah. Thank you, sir. Greetings to all. The consolidated highlights as per the SCS. Q1 revenue came in at INR 7,733 million, up 5.2% year-on-year. EBITDA was INR 993 million, up 15%, with margins improving 100 basis points to 12.8%. Stand-alone highlights. On a stand-alone basis, revenue was INR 3,900 million, up 3.5%. EBITDA was INR 605 million, down 6.5%, with margins at 15.5%. Group debt and investments. Our debt stands at INR 6,735 million, INR 2,018 million long-term, and INR 4,717 million short-term. Investments in mutual funds and bonds were INR 2,568 million versus INR 2,513 million in March. Thank you. Mohan sir, over to you.
Thank you, Medappa. Very good morning, everybody. I will walk you through the general business scenario. I will also take you through the performance of some of our divisions. Let's start with the Indian automotive industry. I am sure that you all know about it. We had a pretty muted growth in this quarter. Passenger vehicles just went up by 3.5%, and two-wheelers were around 0.7%. Global conditions obviously remain pretty challenging. A lot of geopolitical risks. We have all heard a lot about Chinese rare earth issues. Of course, the super-hot topic is now tariffs. Against this backdrop, I would say the consolidated revenue and the EBITDA of Suprajit Group. Let me now start with each one of the divisions and starting with the Suprajit Controls Division, which is the global cables and controls division.
SCD delivered a very strong quarter, both from revenue and EBITDA perspective. When I am talking about this, I am talking about SCD without the recent acquisitions of ACS. The restructuring projects that we have already disclosed over the last few quarters like the Germany rightsizing, Hungary warehouse setup, Mexico operation consolidation, new organization structure with regional emphasis, all are progressing well and as we have planned. We continue to win new contracts across geographies, despite all these uncertainties. The biggest discussion, obviously, is tariffs, and we are very actively engaged with our customers. I was there in the U.S. last month and visited quite a few customers along with Mr. Jim Ryan. Customers understand the various and also various mitigation plans were discussed because ultimately it is not just the passing of the tariff burden, but how to reduce the tariff burden both on mid- and long-term basis.
While we are doing this, we are also seeking relief on a near-term basis. We are seeking support from the customers. We will need to see how this and where this tariff lands, and our biggest concern here is the effect on OEM and end customers, particularly how it will affect the U.S. economy and the global economy. Moving over to the Domestic Cable Division, DCD reported a very strong revenue growth outpacing the industry. The business also continues on a strong wicket in terms of EBITDA also. Particularly after market growth was very good and our Beyond Cables initiative continues to gain traction in the industry. While optically it looks as though EBITDA on a year-on-year basis is more down, it looks mainly because due to higher IT costs, R&D costs, and corporate costs, which all gets bucketed into this particular area of DCD.
Moving on to Phoenix Lamps Division. Phoenix Lamps had a soft quarter, both on revenue and EBITDA terms. The main driver, that is the Middle East conflict, impacted Trifa brand exports. India business remains steady, but we expect the softness to continue in the few quarters, mainly because of the uncertain global market. With this, I would like to hand it over to Akhilesh for an update on the other divisions. Akhilesh?
Thank you, Mohan, and good morning to everyone. I'll take it up from slide 10, where we're talking about Suprajit Electronics Division. At SED, our revenue and EBITDA was down. This was mainly driven by conditions outside our control, because a major EV customer was struggling in the market last quarter. This drop, which was quite significant, was actually partly offset by a ramp-up of requirements from our global controls division, and also the launch of a very important throttle sensor project with a top three-wheeler OEM, which ramped up very quickly. We see that there are multiple opportunities for growth at SED, and this will help with the utilization, which should improve as new projects load our second assembly line, which was recently commissioned.
When it comes to our latest acquisition of SCS or Stahlschmidt Cable Systems, in Q1, we finally completed the second tranche of the acquisition, which was adding the profitable side of the business, the China and Canada side. The quarter includes one month of revenue from these assets. SCS losses as a whole was generally significantly reduced. This was because of a lot of hard work that our team has been doing with multiple projects now completed. We moved the Germany warehouse completely to Hungary, and now the Hungary warehouse that we have set up close to our plant is stabilizing. But still, of course, there is room to improve. In Poland, we have completely closed down the entity there. This has completed this quarter. Moroccan operations, which had significant issues with productivity, have now been improved and streamlined.
Finally, we announced it this quarter that we reached an agreement in Germany to rationalize headcount further. This will be completed in the next quarter or so. Of course, the integration story continues. Till now we have been focusing on a lot of firefighting. Now we are focusing on things like logistics projects, purchasing improvement projects that are now ongoing and we continue to target turning consolidated SCS EBITDA positive by Q4 in this year. When it comes to the technology center, Suprajit Technology Center or STC, as we call it, is working very closely with BluBrake at a feverish pace on a two-wheeler ABS product, which is a timely development considering the announcement of mandatory ABS recently made by the government.
The new STC facility is also on track for an inauguration in 2026, and we look forward to host you to see this new facility, which will house almost 200 engineers. STC remains focused on supporting our divisions with braking, actuators, electronics, and global back office engineering support projects, and it has been very successful in these. Finally, some general updates. We are doing a very big project of SAP S/4HANA implementations. We've already completed implementations across five entities and seven plants that go across four different countries. Very complex SAP implementations that we have rolled out. We plan to roll out across 15 plants over the next 12 months, which also is across at least five countries. Soon, all Suprajit plants will be talking one language with the centralized support system based here in India.
We are also focusing a lot on talent development to support our global operations and the new technologies that we are bringing to India. As part of that, there is a Chairman's Club led by me, which continues to expand to bring the best talent of Suprajit to the top. Finally, a good announcement that we marked Suprajit's 40-year anniversary with a celebration in May. It is a milestone for a story started by our Chairman and made possible by our people, customers, partners, and cherished investors like yourselves. Some pictures are in the press release as well from this global Sambhrama. With that, over to you, Chairman, for closing remarks.
Thank you, Akhilesh, Mohan, and Medappa. As a concluding summary, I would say that we continue to outgrow industry business growth in terms of operational metrics and operational efficiencies, continue to go to new levels. Our international operations are in line with our targets internally.
Phoenix Lamps and Electronics division are slightly sluggish due to market factors, but I am pretty sure in the next one or two quarters it should get back to normalcy as we see it. Domestic Cable Division, if you look at their own individual performance without some of these overheads, has continued to perform absolutely strongly. I think the real story this quarter and even probably to some extent last quarter is the turnaround happening at the Controls Division. You might have noticed that the EBITDA of Controls Division has grown from 8% to 12%, which is a very pleasant, internationally acceptable levels of margins there. Of course, except SCS, which as Akhilesh mentioned earlier, we should be a bit positive by the fourth quarter of this year. We are well-placed to resolve customer concerns with tariffs. I think quite a bit of them have been resolved.
Some of them are yet to be done. The important part is that with our multiple opportunities to change the footprint over the medium term, gives us a unique position to satisfy customers' requirement, which probably our competitors do not have. I believe that the tariff actually offers a good opportunity for us in the medium to long term than many of our competitors have. With that, I will ask Anushka to open the floor for questions, and we are happy to answer the questions. Thank you, and over to you, Anushka.
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 touchtone 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. We take the first question from the line of Viraj from SIMPN. Please proceed.
Yeah, hi. Thanks for the opportunity. Just a couple of questions. First is, if you see the quarter gone by, we've seen an increase in gross margins, and at the same time, we've seen a material increase in employee costs. Can you give some breakup in terms of the addition we would have seen in terms of senior level or STC versus the restructuring or winding up of operations in SCS? How is that mix between the two when it pertains to employee costs? Similarly, the reason behind increase in gross margins.
I think, basically on the employee side, you must realize we took the entire hit of German reduction in people in one quarter. That's I think about EUR 1.2 million. I'm just giving you 1 or 2 points. Secondly, of course, the STC and corporate, there are multiple numbers are adding. STC numbers have now probably is 100, 110 now. At the corporate also, some senior level people have joined. President has joined in the last quarter. We have another couple of other senior people joining at various places. I think these things add to the overall cost, but they are all long-term plans for the company. Yes, from that point of view. Of course, the SCS employee costs keep adding on as a normal cost because we also had a one-month cost from SCS Canada and SCS China, which is now, of course, a project entity.
These are the reasons for that. Obviously, I think our other costs have been on good control, so the gross margins have improved. As I said, I think the real part of it is the turning around of SCD happening very nicely. I think a lot of operational efficiencies have improved. I think the projects have added to bring our margins up at SCD significantly. If you really look at it on a consolidated basis, despite our standalone business margins having slightly a difficult time, the consolidated margins have improved by 100 basis points. That's basically the SCD performance.
Just one follow-up on this part. If I look at the quarter gone by, would it be right to think that in terms of, say, restructuring another one-off cost, either in OpEx or employee, we would have incurred to the tune of INR 15 crores-INR 20 crores? Similarly, the investment in STC. One has to look on an annualized basis. We will be investing somewhere around INR 20 crores-INR 25 crores at least in terms of P&L investment. The benefit of that-
First part I got it, and you are right. I didn't understand the second part of the question. You're talking about STC?
Yeah. In terms of STC, because once we look at the DCD margins, obviously, that's where bulk of the expense would be happening, correct me. But would I try to think that if one just thinks of investment in STC on an annualized basis, we will be investing somewhere around INR 20 crores-INR 25 crores at least in terms of P&L?
In STC, you mean?
Yeah, STC.
But I think the cost is not only STC. I think Akhilesh Rai just mentioned about our One Suprajit initiative. There is significant IT costs are also being incurred because we are rolling out global SAP S/4HANA. That is also another significant cost. So those are the three significant costs are sitting on DCD is STC, rolling out of global One Suprajit, and also on the corporate overhead. So I will not be able to give a breakout separately, but you can probably have a chat with Medappa Gowda J on that.
Sure. Just two more questions. One is in terms of brake business. We had seen a very good traction building up with CBS and also we were talking to customers about mechanical disc brake. Now with the EV regulation coming in, I understand we have a tech tie-up with BluBrake, but given where the regulation are supposed to be starting somewhere from, say, January 2026, correct me, do we still have a play in terms of participation to ABS business and riders just put to the CBS orders which we are supplying?
I will ask. Mohan, will you take the question or Akhilesh? One of you can answer.
Yeah, I can take it.
Okay.
Sorry.
Yeah. I think first on the regulations, I think we need to wait for the final notification to come out. Our guessing is that there will be certain delays because the industry is just not ready to ramp up to the kind of requirements of ABS that will be there if they really plan for January. We do think there is going to be a bit of a delay. However, we are pretty much on track that we think we can productionize our ABS by January. It will be very tough, but we're working, like I said, very feverishly towards getting this product online. When it comes to CBS, yes, there might be certain effects. Look, the ABS is required on the front brake, but CBS is a balance between the front and the rear brake. CBS may still be sometimes even preferred by OEMs and riders.
We'll have to see how these new models, how they will launch them, with CBS or with CBS plus ABS. This is something that we will have to look at. On our side, we're quite confident that we have a good CBS product, regardless, and we have a great ABS technology, which should be lower cost by design, which is ideally placed for this market.
When you say CBS, will that still be offering relevant if the market moves completely to ABS?
It depends on the decisions OEM takes. For example, maybe some OEMs will say that they will just have ABS in the front brake and brake, a separate cable to the back brake. But the safest method of having the brake system is having, if you are going ABS in front, you also have CBS for the back so that you also balance the braking between the front and the back.
Okay. But the regulation doesn't mandate, if at all, to have a full ABS system, both front and back.
Right now, that's what. So we need clarity on what that means, right? So, with the ABS regulation, how does it affect CBS? Is CBS still mandatory? This, we need to get the final notification.
Okay. Just one question, I'll come back in queue. With regards to the Phoenix Lamps, we bagged an order from a large U.S. departmental store. Can you give some more perspective? What's the size of business? What's the kind of store coverage of the customer and initially, what kind of coverage we would have?
Mohan, will you take that question?
Sure. Well, this is one of the large chain stores, I cannot name it right now, which we had been approaching for quite a long time. This is going to be launched in their brand. It will not be launched obviously in the Phoenix brand. In terms of the volume of business, et cetera, I would not be able to disclose it right now for specific reasons that we have agreed with them. Once it is much more concrete and we start shipping out, it becomes more obvious and transparent.
Sure. I will come back in queue. Thanks.
Thank you. We take the next question from the line of Jinal Sheth from Awriga Capital. Please proceed.
Good morning, Suprajit team. Am I audible?
Yes.
Yes. This is in regards with the Chairman's interview on TV, where he mentioned that around 30%-35% clients are ready to take hikes. My question here is that today, Suprajit plant locations are spread across. Obviously not everybody's buying from India, and considering since you're spread out, you would be less impacted compared to your competitor, as you already mentioned. I'm just trying to understand when you say that 30%-35% clients are ready to take hikes, what is it that you are trying to indicate out there?
As I was telling, I think our exposure to U.S., let's put it to. But this exposure is not just from India. India, China, Canada, Europe, and from Mexico probably, into U.S. is about $100 million-$110 million, of which 70% is USMCA compliant. We are only talking about tariffs for the balance. That will be coming from all over the place, right? Our conversation so far with the customer is that about 30%+ have agreed to accept the increased tariffs. Another 30% or 35% are sort of in principle agreed, but the formality is how do we bill, how do we account, how do they account, and how do we make the payment and what is the timing of that? This is under a discussion. Another 30%-35% are still negotiating, saying that, you take some, we take some, and that kind of stuff.
The 30% that is non-USMCA compliant are the ones that is being debated. I hope I answered the question.
Sure. Okay. Thank you. Thank you so much.
Thank you. We take the next question from the line of Santial from ithought PMS. Please proceed.
Good morning, sir. Just one question from my side. With the recent SCS acquisition being completed, how do you plan to deploy the company's future cash flows? Will you be focusing on de-leveraging or any plans to do buyback or returning capital to the shareholders? So a broad insight on this will be helpful. Thank you, sir.
I think as you know, last year we did a buyback, so I probably would assume that buybacks may not happen immediately. We just did one. In terms of cash flow, obviously, we are in a major consolidation phase with our recent acquisition. So we will watch carefully what is required within the group in terms of all these restructuring activities. We have talked about the restructuring earlier and elsewhere. And also within domestic, we are putting up a new STC technology center business infrastructure. We are also expanding some capacity. There is certain monies being spent on breaking division. I think at the moment, I am not able to comment on the deployment of the cash. But I think at an appropriate time, we will discuss with our board as to see what needs to be done.
We also given a clear dividend or distribution policy to all the shareholders and investors. I think that still holds. I would say that we will continue to manage to reach those ranges of distribution over a period of time, yes.
Sir, just a follow-up on that. Usually, we find opportunities when there is a lot of macro-level strengths and such things in it. In cables, we have consolidated a lot globally. In other products also, do you have any plans to do global acquisitions and then consolidate our position globally?
I think at the moment, we just completed one acquisition. I think our focus for the next short and medium term is to make sure that whatever we're committed to do with these acquisitions turn out to be what it is, and that we deliver on our commitments to ourselves and to the investing community. I think that is our focus. What happens when something come on the table is different, but at this moment, we have no such plans of any new acquisitions.
Thank you, sir.
Thank you. We take the next question from the line of Amit Hiranandani from PhillipCapital. Please proceed.
Yeah. Thanks team for the opportunity. Sir, can you please help us understand how much was the tariff impact in Q1, and how much more can come in balance part of the year?
The question of timing, Amit, of tariff is difficult to say. We may pay this quarter and customer may reimburse in the next quarter. So the timing is an issue. So that we need to deal with. In terms of the overall impact, I would say, as I said, I've given the breakup of 30%, 30%, 35%, another 30%, 35%. That holds. So there will be a timing issue. So that does not mean that we'll be absorbing something. Will there be a marginal, maybe 1% or 2% here and there, overall, we will absorb, it's a different matter because it's a question of how we present to the customer and what is the final negotiation turns out to be. As in the first quarter, we haven't had any impact of tariffs.
Okay. And sir, secondly, on the SCS division. Here, sir, 70% revenue comes from Europe and which remains generally soft. In addition now, Canada and China are most likely to report a single-digit growth. So considering this situation, how company aspires to grow this SCS revenue. Additionally, if we will not be getting the required scale for this division, so how margins will improve in this division?
Mohan, will you take the question? I can also add on later on.
Sure. See, it is always the question of how you integrate the whole thing. First things first, you have to understand that there was one particular customer who was not very big in our scale of things. Now through this acquisition, we have got that big customer in the fold. This is an American customer, a U.S.-based customer. Second thing that has happened is that we have got another European customer where we already had a significant, I would say, exposure. But with this, that became much more cemented as a critical supplier for them, or important supplier for them. So these acquisitions help us to build the scale that we want to be. Therefore, individually, will that in itself grow? Obviously, it will grow. That growth would be based on the market growth. Therefore, this acquired growth is going to bring us what I would call a scale.
These individually will have their own overheads to manage. Now, once we consolidate it and work together, the operational overheads comes down, therefore, the overall profitability of the business unit starts becoming better. Therefore, that is what it brings, A, to the industry, B, to ourselves as when we go ahead and consolidate these businesses.
Akhilesh, you want to add anything?
Yeah, I think, in terms of growth, you have to understand that Morocco has the lowest tariff from day one, liberation day tariff. Till now, they have had the lowest limit of tariff. This is clearly one location, which is about seven days from U.S., which there is a great potential of growth to support the U.S. and North American requirements. Similarly, with Canada being part of USMCA, there will be potential to bring in product through the USMCA, which is looking like the strongest way to get into the North American market today, and most of our customers are interested in that. These will bring these two channels towards our customers. Then, with our STC bringing new actuation technologies, actuation and electronic and sensor technologies, these new products will open a lot of new things for all our customers in Europe and U.S.
These production locations are perfectly located to integrate into larger assemblies and supply into either Europe or U.S. So I think they are very well poised for organic growth as well.
I think the sum and substance of what we are trying to do here is simple. The supply chain in automotive industry is becoming a lot more complex today. That too added the dimension of tariff. What we are currently being able to offer, as Akhilesh said, a 10% base out of Morocco, not just for the SCS customers, but for everybody. In fact, we are in discussion on that. So ultimately, what is happening is an integrated Suprajit Controls Division. We are positioning ourself as the most robust cable supplier with multiple locations to deliver products to customers, which will work best for the customers, whether it is tariff related or otherwise. I think this is where the whole thing fits. So after a year's time, I do not think, like we are today not talking about Wescon separately or LDC separately.
In a year's time, we will not be talking about SCS separately. This year we are talking it because to make sure that it is in green before we talk on a consolidated basis. The SCD as a footprint for products, our products, not just cables, Beyond Cables from STC, will offer this footprint. I think that is our strength in this business.
Right, sir. Sir, just on the midterm margin aspiration for SCS, if you can help us understand, sir.
Yeah, I think, we have said that the SCS should turn around by fourth quarter. We are still very much on that. I think first quarter, of course, SCS new acquisition had only one month's impact. I think this quarter it will have the full quarter's impact. We have always said that is a profitable business, which is so. The challenge is SCS, the European entities. As been just mentioned, the one warehouse in Germany, high cost, has been closed. Hungary is being established. Poland is closed. A lot of our Phoenix projects in Operation Phoenix in Morocco is going well. Given the next two quarters, I think these will all fall into place. German, of course, headcount reduction is being announced and it is happening. All that is taking the next two quarters.
As we said then, I think we are still standing by it, that by Q4 we should be a bit positive at SCS.
Great. Sir, lastly, one question on the Suprajit Controls Division. We really appreciate the margin turnaround happening over there. But sir, revenue run rate is ranging between INR 360 crores- INR 380 crores per quarter, despite we are winning new orders globally. Sir, year-on-year growth, if you look at it since last six quarters, remain muted around 4%. Just wanted to know about the outlook for this division and where do you see the SCD's top line for in the next three years and sustainable margin le`vel, please?
I think, if you look at the automotive industry, I think any project that is granted has either five, six, seven years of life cycle. You must understand every fifth or sixth or seventh year, a project that was awarded to us five years ago drops off the table. So when you say 6% growth, which is what I think Controls division has done in this quarter, it actually means something like a 15% growth. You must realize also what has dropped off from the table. The new business that has been won is more than substituting the business that is getting dropped off. That is a very important point. Secondly, you must realize whether it is Europe or U.S., they are basically businesses. Automotive industry is on a kind of a negative trajectory.
Where when we are talking about a growth, I think that itself is quite satisfying to us. But having said that, can we have a higher growth? I think the answer is yes. I think some of these uncertainties are slowing down businesses and customers are either delaying, changing, launches are getting delayed. These are the uncertainties of the world. So when, let us say, in a quarter or two, when let us assume that all these uncertainties are behind us, I think we will see a clearer picture. And I am still hopeful that by end of the year, we will have a double-digit business at Controls division.
All right, sir. All the best. Thank you so much.
Thank you.
Thank you. Before we proceed with the next question, a reminder to the participants. In order to ask a question, you may press star and one. I am so sorry. The next question is from the line of Viraj from SIMPN . Please proceed.
Yeah. Thanks for the opportunity again. On Phoenix Lamps.
Sorry, Viraj.
Yeah. So when you acquired, right? That business had a lot of created sourcing from a lot of vendors in China and Korea. So fast-forward 2025, and even with this order to U.S. departmental store, is that more driven by insourcing rather than outsourcing?
Mohan, you want to take that question?
Sir, what was your question? Your question was on sourcing that we were getting from Korea and China, right?
How is that overall sourcing? Has that moved to captive over a period of time? How is that mixed now for us? That is one question.
Well, when we started off at that point in time itself, we had done a very quick review on what needs to localize or what cannot be. By and large, we have not disturbed to a great extent the supply chain. We definitely have moved in some areas from European sources to China and Korean sources. To that extent, we have brought it down. Now, from there to bring it in India, we don't have that kind of flexibility, and the number of components itself is not too many. Therefore, there is a limited flexibility to the extent of flexibility that we have, we have already flexed it. I don't think we can do beyond this now.
Okay.
I think the last point, I think probably, Viraj, you are trying to attempt is that, in terms of our business, when we first took over 10 years ago, it was 70% OEM and 30% or so of aftermarket. Today, the whole thing has changed. Our game plan, our strategy has changed. We are more in the aftermarket today to up to the level of about 70%. I think that's where we were able to sustain, despite everybody questioning our reasoning of acquiring. It continues to be very profitable because we have changed the whole business model itself in terms of how we enter the market beyond OEM.
No, I think that's really appreciated, and you've done a very good job in turning this around. So thanks. I mean, congratulations to you and the team for doing this. Just two more questions, sir. One is on the SCD. I think when we acquired LCD, we were also looking to shift some of the incremental or the existing business of LCD to the India operations. While we have seen a good amount of order wins, large order wins from MNCs, which are incremental new businesses, but any of the LCD business, has that also moved to the India operations? Any color you can give? How much of that has already flown through or yet to flow through?
No, I think now it's all customer-driven, Viraj. When we first acquired controls or LDC entities, some business we did move from Hungary to India. I think some small business was moved from Matamoros to India. But today it's all customer-driven because we need customer to be agreement with us because I think the global scene is changing. When we acquired maybe three years ago, the close shoring, onshoring was not such a big talk, but today is a very big talk. The idea of moving a lot of business out of wherever we are operating to India is not really the issue. But the new contracts are being won. I think more of it is being won out of India. That's what I would like to say.
Okay. Just last query on the SCD, Suprajit Electronics. Can you give some color on the mix between global supply to SCD and domestic customer supply? What kind of a capacity this new, suppose the second line come again, what kind of a scale we can cater to?
Akhilesh, you will take the question?
Yes, sure. Right now, I think our global exposure is quite small at SCD. Whatever the internal procurement that has happened, it will be in single digits of what contribution it is making to the electronic division. But what is positive is the kind of response our customers have had. I think we disclosed also that we won a major digital cluster contract for export business in the U.S. And we have also got a lot of customers to come visit us. Multiple off-highway customers have already certified our plant for production. So we see a good pipeline there. But right now the export is quite small.
Having said that, I think what is also important here is the strategy of the electronics division. As you know, this is a homegrown division, work of Suprajit Technology Center. We have no restrictions on whom to supply and where to supply and how to supply. A joint venture would have probably led to a specific customer, specific area, specific region. We do not have any of that. That is why what Akhilesh said, non-automotive customers are showing lot of interest. So that is a very interesting part for us because they are also probably a better margin business than the automotive business. So I think that also adds. Unfortunately, of course, due to a significant drop in volume from one customer, it took a couple of quarters for us to recover from that. But with these non-automotive businesses and also some of the internal requirements of controls division, I think from this quarter onwards, our de-growth will probably be arrested, and I think that will also help in improving the margins going forward.
That is all so much. Thank you very much.
Thank you. We take the next question from the line of Gokul Maheshwari from Awriga Capital. You may please proceed.
Yeah, thank you for the opportunity. I just wanted first is the data point on the SCS business now. Since the acquisition is now complete, what is the estimated revenues which you would be billing in for FY 2026?
Mohan, will you take the question? Mohan, are you on?
Sorry, I was on mute. So basically, if I look at it, we would be looking at three quarters of the Canada and the China business and the full four quarters of the earlier Morocco and the German business. So put together, I would put a ballpark number of somewhere around close to $30 million-$35 million.
For the current year, I think it would probably that number, but for the full year, I would say it will be around $40 million actually. Yeah, USD.
Yes.
Okay. This is U.S., right? $40 million.
Yeah, USD. I think probably it will be a little more, but that's what it is. Yes.
Okay. Secondly, on Phoenix, I am just a bit confused when the Q1 was weak. Mr. Mohan, sir, in his opening comments said that this weakness could continue for a while Mr. Ajith sir, you mentioned that it could turn around in one of the quarters. At the same time, we won some export order for U.S. retail chain. If you could just give that, will Phoenix business grow this year, will be declining or will be flattish for FY 2026 and perhaps an outlook for 2027 also?
Okay. I think what's happening is that particularly in the Phoenix Lamps business, I think a lot of the business is outside of India now in the aftermarket. Of course, this U.S. new chain is a big positive for us. Having said that, these uncertainties are difficult to say. For example, one of our big market for Trifa was Middle East, where the distributor would buy not only distribute in Middle East but also supply to Africa. That has come to a big kind of a block in the last quarter, which I think will continue at least for this quarter also. From the original estimate, I think we probably are slightly behind on Phoenix Lamps Division. But these aftermarket businesses don't go away. They might be sort of distributing the existing quantities and cleaning up their shelves.
But when the business comes back, it also comes back in big numbers. So I would say this quarter would be weak at Phoenix Lamps, but second half is anybody's guess. We will get to know in another month or so how this whole thing will pan out actually.
Okay. But where you have done very well is that in the last seven, eight quarters, the margins for the Phoenix business has been in a double-digit trajectory. That broadly should continue.
Yeah, I think double-digit margin in Phoenix Lamps will continue. The revenue growth is because of this kind of a little setback. We are in a global scenario, so it is very difficult to say how it works out. But certainly, I think the second half Phoenix Lamps Division should do better. Please also understand, our aftermarket was somewhat weak in this quarter also. But the new scheme starts, they all work on schemes from August 15. So it goes on till, I think, January 26. That is a very critical period for Phoenix Lamps Division in the aftermarket as far as India is concerned. So I think we will certainly expect that would be the one that would probably could turn very positive for us if, let us say, Trifa brand sales continues to have some challenges.
Great, sir. Thank you so much and all the best.
Thank you.
Thank you. We take the next question from the line of Amit Hiranandani from PhillipCapital. You may proceed.
Sir, just two bookkeeping questions. What was the reason for higher other income in Q1? Secondly, the CapEx outlook for the next two fiscal, including the SCS division.
Sorry, what was the second question?
The CapEx outlook, including the SCS.
The CapEx outlook.
Yeah.
The other income is probably just basically relating to our investments. I think Medappa can give an offline answer for it, but I think it is basically improvement in those investments returns, I think. In terms of CapEx, I think we talked about INR 150 crores-INR 160 crores, but it is probably spread out between this year and the next year to some extent. The major portion of it is, of course, some of them is relating to restructuring under SCD. The other major one is Suprajit Technology Center and some of other infrastructural projects that we are doing in India. That is a range, but it is not just for this year. It will also spread over to next year.
Right. Sir, secondly, if you can help us understand more about this Suprajit's Beyond Cables strategy and products at present, customers and the new likely addition into this, please.
Yeah. Akhilesh, would you take that question? Akhilesh, you are mute.
Oh, sorry. Beyond Cables is split into three different verticals. You have to understand that our mechanical cables are the lowest cost and easiest solution to transferring mechanical actuation in any vehicle. That is why we supply to almost every OEM globally, and every tier 1 also, because this requirement of transferring motion is required in all vehicles. Now, when it comes to our strategy here, we are looking at the electromechanical actuation and the sensor side of the same actuation product. For example, from speedometer cables, we are now doing the digital cluster. From brake cables, we are doing the brake systems. From the throttle cables, we do the throttle sensors.
From various locking cables that we were doing, now we do various solenoid and motor-based actuation to lock your power charging or your charging lid or your fuel lid, or your steering lock or your seat opening and unlocking. These are all now can be done even by actuators. So we give the customer that full range of actuation. If you look at it in terms of a larger perspective, we basically break into three different areas that we are focusing on. One is the brake systems, because brake systems is a big opportunity by itself.
The second is electronics and sensors, which is completely at our SCD division, where we have our own SMT lines. Finally is actuation, which is happening at our cable divisions, because we do these cable-based actuators for things like seats, where seats fold, for example, with a GM or a Ford in big SUVs where you press a button and the seat just folds in front of you.
This happens through our actuators and it is not something that is very popular in India yet, but it is a standard in U.S. and slowly in Europe. We give these kind of actuators to all the global majors. In these three areas, we are focusing a lot of our effort of tech center development, R&D, to become leaders in technology in these areas. It is all, like Chairman Ajith Kumar Rai said, homegrown technologies that are built in India but built for the world. Hope that answers the question.
Yeah, just only follow up on this thing. EMA sensor locking system, brakes and electronics actuators. Presently, what is the revenue we are having it from this, and what is the target for your next three years?
We do not have the breakup of this. We do not publish it. But, still there is a lot of potential to grow. It is probably in the high single digit or low double digit kind of region. But basically, if you look at it, these are things that end up going across divisions, so therefore it will be a little confusing to give a revenue number there for these kind of product line. But these three different verticals go across divisions, where some braking products are supplied in our SCD, some are done in DCD. Similarly with sensors, some are done at SCD, some are done in electronic division. Maybe we can probably disclose it at some point, but right now, this is not a disclosed breakup.
Yeah, just to add to what Akhilesh Rai said, I think the electronics division, you clearly see the number. That is seen and you know it, and that forms the percentage. Whereas the braking product and actuations are currently being disclosed under respective plants where it is being actually manufactured, because this is being manufactured in multiple places. At some point in the future, I think we did talk about setting up a braking division. A smaller outfit has been now getting prepped up for that. Quite a bit of it will be made there, but also quite a bit of that will be done in individual plants. At some point in the future, I think probably the braking division will start reporting a separate revenue and profitability.
Whereas actuation will probably never be separately disclosed simply because I think it truly goes into multiple plants anywhere in the world. Probably we will group it under cables only.
Understood, sir. All the best, sir. Thank you so much.
Thank you.
Thank you. We take the next question from the line of Ravi Purohit from Securities Investment Management Private Limited. Please proceed.
Gentlemen. Sir, two questions. One is on, from the time that we acquired Light Duty Cable, right? It has been, I think, more than three years now. How has the scale-up been like? If, let us say, when we acquired Light Duty Cable and the revenue of Light Duty Cable business would have been X, what would it be today, after, let us say, three, four years of our acquisition? The second question related to, again, Light Duty Cable, is that when we acquired Light Duty Cable, the acquisition was essentially acquisition of technology and a step up in the kind of product that we are providing, which basically mean that the new actuation systems basically, got added to that. Can you share some success stories or something?
If you look at in India, right, for example, over the last six, seven years, while the number of vehicles sold has not grown that much, but the kit value inside a vehicle for certain things like sunroof systems or lights, for example, has seen a significant jump, right? There are a lot of these changes that are happening in the vehicles that are being sold in India today, which basically are increasing. While the number of vehicles on the road do not increase, the TAM for these specific products and kits
I have seen 2, 3, 4, 5x jump. In that sense, can you just share a little more on our experience with Light Duty Cable since the time we acquired till today?
See, I think, Ravi, today, we are sort of keeping SCS apart. Light Duty Cable by itself has, in a sense, lost its identity as such. When you are today, for example, I will give a classic example. When you are offering, let us say, European customer, we will offer from customer what they want. It could be today from either Siegwerk, which is an Light Duty Cable plant. It could be from Morocco, which is an SCS plant, or from India or China, wherever. We see what is the customer requirement.
Asking what is the Light Duty Cable's growth, I think it has got no relevance anymore. The point is, it is up to the customer. If you really look at it, has Light Duty Cable has grown? Maybe a little bit, but not much, if you look at the Light Duty Cable entities by itself. But I think that is not really the issue.
The issue is customer would have probably gone elsewhere, and Light Duty Cable business have gone if we didn't have this footprint. If they're not given to Siegwerk, they have gone to given it to India. We still have the business within Controls Division. I think Light Duty Cable is part of a larger game plan that we have had. Now, coming to the EMA part of it, I think what we understood after a year or so of getting into business is that there is only one or two varieties of electromagnetic actuators that they were trying to dish out to customers. I think customers' expectations have changed. The Suprajit controls division today is working with the Light Duty Cable team to completely upgrade the portfolio of actuation and actuators. I think that is where we are able to bring, again, value into the whole system.
With that, I think we are going to represent, because for this actuator, which is currently mostly used in seating and others where we have the presence, is not much required in India. Whereas in Europe and U.S., we continue to get the same businesses again- and- again, but now we are offering certain range of additional actuation. That's why if you look at it today in two-wheeler, for example, because of that background, we are able to go for a seat actuation or lock actuation in the two-wheeler within India. That is an extension of that actuation business. I think that is an area where we are now currently focusing. In fact, we have a senior person who has joined to take that to the next level.
I think that when with the new range of products are ready, we are ready to offer to customers in multiple regions. I suppose I answered most of it. Otherwise, ask me more.
That was great. Thanks a lot, and all the best, sir.
Yeah, thank you. I think-
Thank you.
Anushka, there is 12 o'clock. We will take probably one more question.
All right.
If anybody is there.
No problem. Due to time constraints, we will take this as the last question from Aditya Khetan from SMIFS Institutional Equities. Please proceed.
Yeah, thank you, sir, for the opportunity. Sir, you mentioned to one participant that in mechanical actuators, we are one of the lowest cost. So this benefit of lower cost, is it because of some unique production process or the technological edge, or is it only because of scale?
I do not know that whether Venkanna first said it is we are lower cost, we are as competitive as anybody else is.
Maybe I can explain it since I said that. Basically, this is a technology, what I meant was the technology of cables is lower cost than, say, a technology of pneumatics, which is lower cost than the technology of electromechanical actuation. So it is a technology-related point of cables being the lowest cost. Within that, of course, we have the highest scale and compared to our competitors in cables, we might have certain advantages. But I was just mentioning that the cable is the lowest cost compared to using hoses and hydraulics and these kind of things.
Got it, sir. Sir, any idea, like onto the Wescon control, so in terms of volumes, so where are we standing today? And what are the numbers for this quarter and for FY 2025 in terms of revenue and EBITDA?
I think Wescon is more a non-automotive business. I think, Mohan, you can give some color on what's happening in the non-automotive business.
I am not going into specific numbers. I can just tell you that first things first, there is a clear headwind in the non-automotive business, particularly the lawnmowers and snow throwers, those kind of stuff. There is a clear shift in home buyers. Earlier, home buyers used to go and buy their own lawnmowers, and each individual family used to have their own mowing machine. Now it is going into a level where larger lawnmowers are being sold, but it is being sold to people who contract it and mow the lands for multiple houses. Therefore, there is a small shift that is happening. The second shift that is happening is from ICE engine to the EV-ification out there also. So there are two things which are what I would call as headwinds for us.
Having said that, we always look at it as an opportunity as to what we can do. We have started moving into rotary sensors, throttle sensors. Therefore, we have started working on rotary throttle sensors, which we have already started giving to one of the customer. Also, we are diversifying beyond what we have been doing at Wescon by going into electronics. Therefore, these are the two ways that I can look at. The basic cable-based system over time is going to morph.
I think to add to what Mohan has said, I think Wescon, I would rather like to put it more generalized, non-automotive business hasn't grown. Actually, I would say it's probably slightly regrown within the Controls Division. But Controls Division has still grown because of the automotive growth. Again, a business which is actually not growing, but we have outpaced. On a consolidated basis, SCS has got both automotive and non-automotive. We are still growing the Controls Division business despite non-automotive part of that business actually has de-grown. You must realize that with all that stuff, Wescon has done a very good job of operational excellence, and they continue to perform in double-digit EBITDA margins.
Got it. Thank you for that explanation. Sir, just one last question. In SCS, sir, we have completed the second tranche. Sir, what is the asset acquisition figure, sir, if you can share?
I mean, these are all recently acquired number. I think you may can get that data maybe from Mr. Medappa later on.
Got it. Thank you.
This is two parts, so I do not have the data.
Sir, just a request. Sir, in future quarter numbers, if you can share the segment-wise assets and liabilities, so that would be more beneficial to understand the invested capital in each of the business. Just a request, sir.
Yeah.
Thank you.
We got your point. Okay. Let's see what we can do. Thank you all. We appreciate your continued interest and logging into our Q1 result presentation. I would also like to thank Anand Rathi and Mumuksh and team and Anushka for organizing and handling this call. Thank you very much. Have a good day.
Thank you. Thank you, members of the management. Due to interest of time, we take that as the last question.
Yeah.
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