Ladies and gentlemen, good day and welcome to Suprajit Engineering Limited Q4 FY 2024 earnings conference 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 from Anand Rathi Share and Stock Brokers Limited. Thank you, and over to you, Mr. Mandlesha.
Thanks, Renju. On behalf of Anand Rathi Shares and Stock Brokers, I welcome you all to the Suprajit Engineering Q4 FY 2024 conference call. I thank the management for taking time out for the call. From the management side, we have Mr. K. 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.
Yeah. Thank you, Mumuksh, and thank you, Anand Rathi, for hosting this Q4 quarterly call. Good morning, everybody, and welcome to our fourth quarter discussion on the numbers as well as for the year. I will, as usual, start with our team, and then I'll give a quick brief to cover before we go on to the question and answer. I'll start with Mohan, our Group CEO. Mohan?
Yeah, thank you. Very good morning, everybody. I'd like to give some general overview of the economic and the business situation in the territories that we are operating. The big trends that I'm seeing in the economic world, if I can say so, one is the interest rates, the second is the political shifts that are happening more towards the rightists, which is again leading to trade barriers, protectionism, nationalism, and also regionalism. The third big impact that I'm seeing is obviously, that we all talk about, the EV impact. I would say as Suprajit, we are well and also uniquely positioned to handle these kind of effects. One is, of course, on the onshore, nearshore, and offshore model that we have, be it for U.S. or for the European market, augurs well for us.
The second thing is in the EV area, I think our positioning with various players, both I talk about the new players and also some of the established players, also augurs well for our business on the long run. I would like to just move on to the specific divisional updates. Starting with Suprajit Controls Division. We had announced that we have what's called as MAX teams, which are, in my opinion, doing a splendid job in integrating and cross-pollinating ideas across the globe and also within the various divisional facilities. We continue to work on long-term restructuring of the division for both revenue and the margin growth. Our order wins continue to be strong with Automotive Division. The ACD recently won a largest single contract from a U.S. customer.
This will be produced in SAL, that is Suprajit Automotive Limited here in India, warehoused in Brownsville, U.S.A., and supplied to the customer in U.S.A. Interestingly, this contract was won on no China content, and this was a requirement from the customer, and I presume this contract was a fallout of this China Plus One strategy of the customer. Overall, if I look at what's happening in U.S. and Europe, I think that markets are subdued, and I think this is putting a lot of pressure on the OEMs and the Tier 1s to find alternatives, I would say. This interestingly is putting a lot of financial stress on the pure local cable players, which I think would possibly lead to more consolidation in the cable business within the larger world of cable space with players like us. Let me now drill down to specific facilities within ACD.
I would like to start with the China facility, the Shanghai Lone Star Cable Co., Ltd. On April 24, we relocated ourselves into a larger and more modern facility, and this plant was inaugurated by the mayor there and in the presence of our chairman. This showcases our commitment to grow in China and demonstrates our intention and seriousness of not just being, but growing in the Chinese market. Moving to Europe, Hungary showed volume growth. What's very interesting is the ownership assumed and the operational improvements made by the Hungarian team. This is very much akin to our Indian Suprajit model. The local team has assumed complete responsibility, and we are now confident of showcasing the Stropak plant to customers in Europe more as our onshore facilities in the EU region.
Moving to North America, we have identified projects and products which were not greatly profitable out of Mexico, and we are in the process of moving them into India, into SAL. The focus will be given to good margin products being manufactured out of Mexico. The labor arbitrage is becoming more and more between Mexico and India due to the increased wage rates in Mexico. We will further focus on Mexican operations to make that more economically successful. We had talked about this earlier, the China tariff. We have drawn an appeal, and we are hopeful of a favorable decision from the U.S. tax authorities. In terms of non-automotive business in U.S., it has stabilized at lower levels.
But I would say we are making inroads into the rotary sensors and other non-cable products which are made in Suprajit Electronics Division and also our Unit 9, which is here in Bommasandra in Bangalore, and that would be supplied out of this group. Suprajit Europe and Suprajit Automotive Limited has had a solid growth and profitability during the year, and we have also continued to win significant global contracts. Moving on to Domestic Cable Division, the India cable business has performed well both in two-wheelers and the four-wheeler market. The aftermarket business was muted. After a long period of lull due to the GST and COVID effect, suddenly we see the gray market operators have raised their antics. We are seeing them cannibalizing the market with our brand, that is what we generally call as spurious, and also lookalike.
So there are some things which is exactly Suprajit or something which is called as Suprajit or Superajit or something like that. There have been multiple raids that have been organized by us through the local authorities, and we see this trend not just in cables but also in the halogen bulbs. Therefore, I think it is an industry pain. Sticking to cable division, the Beyond Cable projects mantra is catching on. The tech shows that we conducted last year has generated a lot of interest, and now it is getting translated into new business beyond cables. Phoenix Lamps Division continues to grow despite all the LED penetration. We have made strong inroads into the aftermarket, direct exports, and also through our arm in Luxembourg, that is Luxlite. Market improvements have been pretty solid.
A fantastic team effort, not just to contain, but also reducing costs by our operations team. The restructuring of Trifa has almost been completed. The last tail of it is remaining, and this Trifa would be closed in a few months, in my opinion. Ms. Saliha, she has taken over as the new managing director at Luxlite. Talking about future in terms of investments, we are looking at a CapEx of about INR 180 crores covering all divisions and all over the globe. Out of which, we are looking at ballpark 45%-50% being earmarked for new products, new projects, or infrastructure build-up, and the rest is for the normal CapEx spend that we would generally do. CapEx primarily for modernization, EHS, capacity build-up, quality, productivity, automation, those kind of things.
This gives a general flavor, and I would like to hand it over to Akhilesh to talk about Suprajit Electronics Division and STC.
Thank you, Mohan. At Suprajit Electronics Division, we've seen a solid growth and margin improvements. We had a good double-digit EBITDA margin in both the last two quarters. The delivery increased for actuators, digital clusters, and throttle position sensors from both Marquee EV and ICE two-wheelers, as well as three-wheelers and our five-way segments. Internal manufacturing also started supporting Phoenix Lamps for their LED retrofit lamps as well as for SED for exports of controller boards. This is expected to ramp up significantly in the coming year. After certain reorganization from Q1 onwards, we will be including mechanical speedometers also in the numbers of SED. We see a robust outlook with clear visibility of growth both internally and externally, so expansion CapEx has been budgeted.
SED continues to support the company's transition towards a more sophisticated electronic and a global actuation platform, crucial for premiumization in both EV and ICE vehicles. At Suprajit Technology Center, the core purpose is to develop platforms for actuation, focusing on digital clusters, actuators and sensors and braking systems. STC is the source of multiple new order wins at various divisions and has multiple products under customer evaluation, showcasing innovative solutions tailored to Indian customer needs. We are also working with global customers along with our teams in the U.S. and Europe. Plans are in place for a larger premises to accommodate our growing teams at STC, ensuring that there'll be sufficient space and resources for ongoing and future projects. The technology we have built at STC is wholly owned and globally applicable across geographies, industries, and our large customer base.
With that, I hand it back to chairman for some general updates and closing.
Okay. Thank you, Akhilesh. Mohan Medappa, will you give a quick update as well?
Thank you. Good morning, everyone. We have announced the financial results for the year ended March 31st, 2024, yesterday. The consolidated revenue for the year ended March 2024 was INR 2,896 crores as against INR 2,752 crores for the corresponding previous year, with a growth of 5%. The consolidated operation EBITDA for the year ended March 31, 2024, was INR 326 crores as against INR 319 crores during last year, with a growth of 2%. The standalone revenue for the year ended March 2024 was INR 1,537 crores, as against INR 1,431 crores last year, recording a growth of 7%. The standalone operational EBITDA for the year ended March 31st, 2024, was INR 276 crores, as against INR 250 crores for the corresponding previous year, recording a growth of 10%. The total debt level was INR 624 crores as on March 2024.
The surplus cash balance was INR 513 crores as on March 2024, invested in mutual funds and bonds. For further queries, if any, you may approach me directly. You don't have to recall. Thank you very much.
Thank you all. Just a quick summary, the sum and substance is that the three divisions, Domestic Cable Division, Electronics Division, and Phoenix Lamps Division, did well. Suprajit Controls Division had a challenging year and probably slightly improved quarter. This is largely considering for various points that Mohan has raised. I would say that operationally they are doing well, and in fact, we think that they had a decent quarter and year. Again, I believe that the worst is behind us as far as the Controls Division is concerned. Looking at the Q4 number, which I think has been a good quarter for us, I get a feeling that the worst is not only behind us, and we will continue to improve on that performance going forward. The outlook for the year is pretty good. We have given outlook as well for various divisions.
From what we see today, unless of course the global scenario changes for the worse, we expect to have a decent and satisfactory year. The basic model of our ability to meet the customer, both with onshore abilities, nearshore abilities, and low-cost destination like India, is making us a preferred vendor with most of the customers. I think that's why we have been winning contracts, multiple contracts, and we have been talking about it. Mohan just mentioned about the largest one with no China content. I think these are the things that are really the ones which are giving us wings to take Suprajit Controls Division to the next level, I think. So that's in sum and substance of the quarter as well as for the year from all of us.
We are now ready for questions, and I ask our moderator to start collecting the questions and directing to us. Thank you very much.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question, press star and one on your 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. The first question comes from the line of Ravi Purohit with Securities Investment Management Private Limited. Please go ahead.
Hi. Thanks for taking my question, and thanks for a detailed update on what has been happening at Suprajit. Just two questions. One was, I think we have mentioned couple of times in our press releases and also on various con calls in the past about FY 2024 having a lot of one-off issues, be it wage increases, be it duty levying. Can you generally quantify in terms of how much of expenditure we would have had to make in this year in terms of, let us say, percentage of revenue? That was one. The second question was, we have given a guidance of about INR 180 crore CapEx. Could you just kind of break this down in terms of where, in what areas are we looking at this CapEx? How much of it is maintenance, how much is actually growth and greenfield CapEx?
If you could just give a little more insights into this INR 180 crore CapEx, that would be very helpful. Thank you.
I think in terms of the one-off, let me address that first. I think the really one-off is the relocation of China plant. That would be the only one that I would call as one-off. Others are ongoing challenges that you mentioned about, whether it is Mexico wage cost, which has been going up in the last two years in excess of 20% every year. That will continue to be there on the balance P&L. Things like China tariff that is happening in U.S., which of course, we are fighting it, but at the moment, that's another major cost. So they are an ongoing cost. They're not exactly one-off.
So one-off is technically, I would say, is only of some significance for a balance sheet of China sizes from the China, which is probably, I don't know the number it's in X, it's probably less than a million, in between a half a million to a million USD, I think. Now, in terms of CapEx, I would say that 50% is for maintenance CapEx, various units having minor replacement changes, changing of layouts, blah, blah. Another 50% is probably more on strategic. When I say strategic, I would say this, for example, we are setting up a greenfield technology center in Bangalore for AFDC. We already are 100+ now, and it's expected to go to 200 in the next couple of years, whatever timeline. So we need to house them in a more modern, more spacious space. So that is one investment decision.
We are also trying to buy some additional land and industrial building within Bangalore for some of our ongoing projects. That's the other expenditure that is not maintenance CapEx. We are also setting up an additional floor in our Chakan plant. So that's an additional CapEx. I think these are things that are coming additionally. So I would say 50% is for ongoing operational maintenance kind of related, and balance 50% is towards these one-offs, which will be there for our improved future performance for new products as well as strengthening our team.
Okay. I have a few more questions, but I'll probably get back in queue and come back once, maybe later in the call. Thank you.
Thank you. Next question comes from the line of Amit Hiranandani with SMIFS LIMITED. Please proceed.
Yeah. First of all, congratulations to the team for the very good set of numbers, considering the challenging macro situations in the exports. Sir, I joined a little late. My first question is on the Suprajit Controls Division. Here we are observing-
Coming.
Suprajit Controls Division, my first question.
Yeah.
Here we have been observing a gradual quarter-on-quarter improvement in the margins. Now things are getting in a better shape for this division as the company is winning large contracts. Hence, we believe that double-digit growth is for sure in FY 2025. We want to understand, what is restricting this division to reach double-digit EBITDA margin. Are we observing now any kind of tailwinds, and how soon we can achieve this level, sir?
Okay. Thank you, Amit. Yes, I think we actually touched an EBITDA margin of 3% also, I think in the second quarter, if I remember correctly. Whereas from there it has improved. Last quarter was 7%, and for the year it has been 6%. It is difficult to give a guidance because we still are little struggling with the global macro situation at various places and the economic scenario. But I am pretty sure that margin 6% will improve. Now, when will it go to 10% is difficult to say. But our aspiration and interest that this year we may be able to cross the 8% EBITDA kind of a number, consider if things are what it is, and that's what we see today at our end. I think there will be an improvement.
But let me also say this, the global business, technically in all auto component industry that we have seen now is that they are typically single digit in auto components space. They are all single-digit margin businesses. I think we will be there by end of this year in a comfortable way. But the aspiration is certainly go to double digits, and I think it will take little more time.
Great, sir. My second question is on the PLD division. The PLD's magical 52% margin in Q4 was a commendable job from you guys. I want to understand the core reasons of this improvement and how much of this is sustainable. What was the one-off cost associated with the restructuring of Trifa slight? I wanted to understand continuously, how much is the LED retrofitting retrofit contribute here, along with margin difference between the halogen and the LED retrofit product.
I think LED retrofit is still small compared to our overall business of whatever INR 350 crores, INR 400 crores, I think. Mohan, do you have a number on LED retrofit? Maybe INR 20 crores, INR 25 crores?
No, I don't have it offhand.
Okay. I think that is the kind of number there is on that. It's not more than that in any case. In terms of margin improvement, I think it is the way operationally we improved in India and the restructuring in Luxlite and 3435. Although it is not technically closed full, it's basically closed. I mean, there's some paperwork to be completed. I think it will be done. In the process, I think Luxlite, of course, the previous managing director also is no longer with us. The cost structure in Luxlite itself has come down significantly. And then there are improvements in terms of the way we work together between Luxlite and Phoenix Lamps has improved significantly in the last couple of quarters. Beyond that, I think it is the way the team has performed operationally that has been responsible.
In the first half of the year, there has been certainly some one-offs up to, I think December, there have been one-offs. But we are very comfortable that this year there will be a good growth despite whatever LED penetration concerns, and margins will be comfortably in the double digits.
Sir, any more juice left in this?
Pardon?
Like any more juice left in the improvement in the margin?
Of course, we always believe that we want to think that there is always juice left in any business. But I think doing 10%, 12%, 14% margin EBITDA is pretty good for this business. Which is technically, a lot of people have been asking, why are we doing this business and why are we still having this business? We have always said that, this is a last man standing strategy, and we will prove that that strategy works, and that is what we have done. I think it will continue to be very profitable. Further improvement in margin, I cannot comment at this moment.
Okay. Sir, my last one question is basically on the Suprajit Electronics Division, which has been showing exceptional numbers in the first year of operation. Sir, which products are driving the growth, and what is the growth outlook for the year? Within this Suprajit Electronics Division, there are a few products, digital instrument clusters and indicators.
What products are gaining traction?
What are all the products? I will ask, maybe Akhilesh, you can answer, because you know, what are all the products and things that we are doing at ED.
This year the growth was driven mainly with the growth in digital clusters, and these are your TFT and LCD clusters and actuators. So various actuators like steering lock actuators, charging gun lock actuators, seat lock actuators, these kind of actuators. These would be the two main products that drove growth this year.
Sir, with this question only, what are the top three customers we have, and is this 13% margin level peaked out or there is something more here in this thing?
On the margin, we always aspire to improve our margins without any question. It all depends upon the product mix. As you know, we are scaling up. There are more products coming into production. What the product mix will be there? From when it will start production? There are a lot of unanswered questions. I think end of this year, we will see probably a more, what I would say, steady state margin understanding of electronics division. As we said, double-digit margins is quite comfortable. I must, of course, sort of forewarn all of you that this year we are also adding our old mechanical speedometer, which is actually a lower margin business, into this division because it all operating out of the same premises. Just to keep the accounting and monitoring easy, we have combined it under the same division.
The growth will be still very good. I think margins will be double digit. I think this will be another good year for electronics division.
All the best, sir. Thank you so much for the opportunity.
Thank you.
Thank you. Next question comes from the line of Mumuksh Mandlesha with Anand Rathi Share and Stock Brokers Limited. Please go ahead. Mr. Mandlesha, please go ahead with the question.
Yeah, sorry. Thank you. Mr. Akhilesh, sir, continuing on the last question, sir. On the SED business, how do you see the growth trajectory ahead? Can you update what would be our annual order book size, sir? Just a little more on the recent wins on the new customers.
Akhilesh?
Yeah. I think we had disclosed them. We did a one-time disclosure of order book. We do not really disclose order book for our divisions. I can say that same order book looks strong, and certainly there have been even more wins on top of that in this year. I think our forecast that we made in that release is still valid, that I think in the next few years, this will be a significant part of Suprajit's Indian revenue stream.
Okay. Can you mention what could be the revenue for this mechanical cluster business, sir?
I don't have the number with me, Mumuksh, but I think you can certainly get it offline with Medappa later on if you want to.
Got it, sir. Sir, coming to the non-auto overseas business has been muted this year because of weak market. Can you help us understand what kind of fall we are seeing in that part of business? And can you indicate how the margins have been suppressed there? Because if the, say, market rebounds in next one to two years, then we can again see the margins coming also back. So SCD business margin profile can improve from that level.
Yeah.
Can you indicate about the-
Got it. Mohan, probably can make a comment and a commentary on non-automotive a little bit.
Yeah, sure. When we talk about non-automotive, basically we are talking about two portions. One is what is happening at Wescon. What we used to call as Sena earlier has got two portions. One is the Wescon portion in the U.S., and the unit nine, which is the India portion. India portion has traditionally been at a good EBITDA margin of 30%-plus. We look at Wescon would be somewhere in the single-digit number. So mix all put together, we would be looking at a decent margin profile both as Sena. Specifically, in terms of what is happening is that we are trying to push into Beyond Cable in the non-automotive segment, which would mean two things. One is the share of wallet with the customer will go up because highly priced products goes in, and it also leads to a better margin profile there.
This is the transition that we are going to go through, and we had one of the customers recently visiting our Suprajit Electronics Division to validate our plan. They have gone back confident, and we are pretty much confident that we would be able to land up with some good business with this customer, which is a U.S.-based customer. Net-net, to answer your question, do we see a margin improvement? Definitely, yes, as the wins catch the sales.
Just to add to what Mohan said, just to give a little more color. Last year, non-automotive business in U.S. dropped by something like 30%. It dropped and it is sort of stabilizing at that lower level. But we are still expecting to grow despite that drop is purely because of also some of these new business wins, what Mohan mentioned. We recently won, after much wait, I think, on the gearboxes with one of the customers. We also won, in the final stage of winning a rotary sensor, additional business with another customer. They are all going Beyond Cable, actually. While we are also winning certain contracts on cables in the non-automotive space, we are also winning contracts in the non-cable space. I think going forward, despite this weakness in the U.S. market, we are comfortable to grow the business and also improve the margins as Mohan said.
Sir, lastly, on the aftermarket side, there is a little meeting group for some time, and you talked about the gray market has grown up. Can you indicate how that should shape up next year, sir?
I think last year, just to be clear, I think in the Phoenix Lamps division, the aftermarket did grow, whereas in engineering or rather DCD, it did not grow. I suppose it is much easier to probably do a, making a cable in some little space and doing a packing and selling spurious products is much easier. But spurious products which sort of were on the sidelines for almost three, four, five years, suddenly last year we have seen that it is growing its ugly head. We had, I think, at least had a more than a dozen or at least half a dozen raids conducted. Recently, we did a major raid in one of the North Indian states, and we have been able to find people manufacturing and packing exactly our cables with the exact pack.
There is a collusion not just in manufacturing, but also with the packaging industry and also the dealers and distributors. It is a bit of, I think people are still trying to avoid the GST and that kind of stuff. I suppose those old habits die hard, as they say. That still seems to be there. It had been sort of noticed last year significantly because when we were assessing why there has been some kind of a drop, we realized that this is what's happening. It is there. It is difficult to quantify it, but with these raids, I think they also get little smart and alert and probably again go into the shadows a little bit, but it's always a shadow boxing, I guess. But this year we are expecting a growth. Having said all that, we do expect the aftermarket to grow this year.
Thanks so much.
Thank you.
Thank you. Next question comes from the line of Gokul Maheshwari with Awriga Capital Advisors LLP. Please go ahead.
Yeah. Hi, thank you for the opportunity. Sir, two questions. One is that you mentioned in your note about the tariff on foreign Chinese products in the North American market. Can you give a context in terms of how big are Chinese in the American market? If this were to come through, how does it really benefit us?
Mohan, will you answer the tariff-related point?
Yeah, sure. This is a legacy product. When we acquired the Kongsberg LDC, the Light Duty Cable division, this product came along with it. This problem also came incidentally along with it. The issue is very simple. There is a specific motor which comes in from China, which is imported from China, and there is a very substantial value addition which is done in Matamoros. In Matamoros, our plant buys a lot of things like the PCB, populated PCB, completely assembles, tests, and then supplies it to a customer in U.S.A. Now, the U.S. customs have classified the entire thing as something which has come from China. Just to give you an analogy, let us say the lace is coming from China. I am making the boots, and I am assembling the lace onto it and selling the boots.
Somebody comes and tells me that the boots is imported from China, therefore, I am going to slap additional duty on that. That is the issue. We have represented ourselves, gone on an appeal to the U.S. customs. We have gone with detailed video shoots showing that what is being done in Matamoros, what is the part which is coming out of China, and therefore, it doesn't qualify to be penalized to that extent. That is the status.
Okay, great. And just on your Wescon business, that business caters mainly to the lawnmowers, et cetera, the non-automotives, which has seen a big decline. The industry has seen a decline. Would it be fair to say that the industry or the revenues from that Division can come back in the next two years, that you can achieve what you achieved in FY 2023?
I would say yes. Maybe not necessarily with the volume revision in the North American market, but probably with the additional products that also we will be introducing to the same customers. Let me also say, it is not only in Wescon, even in the old LDC entity, that means the Matamoros plant, also supply to the same or similar segments in U.S. That also had a major downtrend. In fact, Matamoros didn't grow last year not because of the automotive. That side grew, but the non-automotive didn't grow. So it has been affecting both these plants, actually, both these places. Having said that, in two years' time, will we go back to where we were? That certainly is what our aspirations and plans are, and I think it is possible.
Okay. Lastly, can you give an update on the braking business? You had put in a press release saying that you are putting up a facility for that. So what is the-
Sorry, I didn't get that, Gokul.
The braking products.
Braking products. Okay.
Yes. You had put in a press release that you are putting up a specific facility for it. What's the progress of it, and in terms of off-take, whether that's already started with any of the OEM customers?
Akhilesh, will you give a status update on braking products?
Yes. We are currently working with one of our marquee customers to introduce various braking products. We have actually gone live with systems like the CBS mechanism and the related braking systems that are now going to at least 3 OEMs, all in both ICE and EV. Related to a more advanced braking system, we have got the land in place. We are now working on the plans for putting up a standalone facility for braking and for the braking division that was announced recently. We are seeing traction. Of course, this is a safety-critical product, and this is quite a big innovation in the industry for braking. For the advanced braking system that we have, we are working very closely with one of our ICE customers to productionize. We are hoping in the next two quarters that we will productionize and start production of that braking system.
Just to add to what Akhilesh said, I think, electronic division, everything is done and set up the place and started solid traction. Whereas the braking product is a little longish game because, as Akhilesh said, it is safety critical as well. Customer is also very careful in assessing our abilities. We have done good strides, I would say, and I think this is the area where we want to invest to make sure that we give a true alternative to some of these global competition in this space, completely homegrown wherever it is possible. The aspiration is to give a complete braking product to the customer. There are multiple things that we are working within the space. I think this is the space to watch.
I think in the next couple of quarters, I think there will be a lot more developments, hopefully, and we will be able to also update better. The fact that we have earmarked one entire recently acquired property for a braking division means that we have a very clear longer term perspective and ambitions to be there in full strength. That is it.
Okay. Outstanding. Thank you so much, and all the best for that. Thank you.
Thank you.
Thank you. The next question comes from the line of Senthil Manikandan with iThought PMS. Please go ahead.
Good morning, sir, and thanks for the opportunity. Sir, my first question is with respect to the initial comments on the global slowdown enabling possible inorganic opportunities. If you can just share a little more detail in terms of-
Sorry, I cannot hear you properly, Senthil. Can you just repeat what you said?
Sir, my first question is with respect to the inorganic opportunities that may come due to the global slowdown. If you can just share some more insight on that.
Yeah. I think what we are seeing in the marketplace is that it is important to have geographic reach, it is important to have geographic size, and also it is important to have financial stability and strength to survive this marketplace, particularly where there are many players trying to take the same business away from each other. There has been a price, how would I say, price competitive bidding happening with some of our customers. And there are players who, if they lose that particular business as an incumbent, they will have a much bigger challenge. So they have been trying to fight tooth and nail to make sure that they retain the price at any cost. And that is actually putting them in a greater financial risk.
I have always said this in many previous conferences and calls, that consolidation leads the way forward, and it is the key for success in this business. We do see stress in certain incumbent players in this market space, and some of them are very interesting Geographical locations, very interesting customer profile. So I think it is important for us to see what fits us best, and if something fits us best and gives us this onshoring, nearshoring, and low-cost opportunity of manufacturing. And if it best centers with such opportunity, I think we will be seriously looking for it. So that is the statement that we are making.
Thanks, sir. Second question is on the actuator side. What could be our share of sales coming from the passenger vehicle segment? Is it predominantly from the PV side or?
I think I will let Akhilesh or Mohan to answer. I think it is more international in PV, I think, as a MOST. Mohan?
Yes. Can you just repeat? I could understand that it is something to do with passenger car vehicles.
Where we are in actuators in the car, passenger vehicles is the question.
The actuators are primarily for two-wheeler when we are talking about Suprajit Electronics Division. Whereas when we come to cables, that is into electric passenger cars. Cables are going into electric passenger cars, be it in
No, I think Mohan is talking about EMA, that what we do with the LDC entities, I think so.
That portion is more going into passenger cars, not electric vehicles, but ICE engines, primarily. These are more into like, for example, the headrest has to move or the seat has to move, those kind of actuators.
Yes. I think what we have done with the EMA is that actuators, particularly the passenger vehicle, is what has come from the Kongsberg acquisition. Basically, we are in the headrest and seat folding moment. That is where the EMA that we do under those. We are also trying to present that to Indian customers today. But on the two-wheeler, I think Akhilesh has already answered that FZD is doing actuators for various applications like lock, latch, et cetera. So that is where we are.
Okay, sir. Thanks. Last question is on the E-throttle. If you can, just any update on the-
Akhilesh, any thoughts on the electronic throttle controls on the two-wheelers that we are doing for this?
We are getting traction on the electronic throttle. Probably not as it is overshadowed by the kind of interest in the digital clusters and the actuators. On E-throttle, there is a significant amount of, let's say, competition from both import components and local suppliers who already have this technology. I think over there, the traction is not as quick as in these other areas. But certainly there are at least two businesses that are ramping up in E-throttle for India. Globally, I would say we have a very good position because we are already supplying, let's say, E-throttle is a type of rotary sensor. In fact, we use our rotary sensor that we are supplying to our U.S. customers, we use that for India. So globally, there is a lot of potential for these rotary sensors.
In fact, two of our marquee off-highway customers both audited our FZD location this year. Also we have one orders from them for their rotary sensors and electronic sensor businesses. So it is a good start for us. But certainly the traction has not been as fast as the other products like FZD.
Just to wrap it up also, just to say this, that electronics division, one focus is on the two-wheeler related digital actuator kind of a thing. Second one is also to see how we can address through our North American marketing and business development team in the non-automotive space. That's where rotary sensors, electronic throttle controls, and few other even digital balance are all being under made, gearboxes, for example, are all in the major stages of discussion and conclusion. So that is what gives us comfort saying that non-automotive business also will grow with a year or so.
Okay, sir. Thanks a lot.
Thank you. Next question comes from the line of Shubham Sehgal with SiMPL. Please go ahead.
Hello, sir. Am I audible?
Yes, you are.
Yeah, sir. My question is regarding the Domestic Cable Division. If we compare our growth versus the end two-wheeler production growth, we seem to have underperformed. Even if we adjusted for the muted aftermarket sales, has there been any share loss?
No, I don't think there's any share loss at all. As we have said, particularly with the EV coming up, some of the content in the EV has come down. That's number one. The aftermarket last year for us, unfortunately, which has been a big business for us, I think there has been no growth there. Obviously that sort of mutes it. But if you look at the Q4 number, we are at a 21% growth on the standalone business. That gives you a clear picture of a 15% in the DCD level itself.
I think it's just a question of By the way, you should also not forget that last year is a year of price reduction. Because of the commodity price dropping, we also had most of the customers who had given a price increase for 2022, 2023, have also clawed back quite a bit of it. There is a multiple effect of it. Certainly, there's nothing to do with the market share, I think.
Okay, sir. Got the idea. Next, how is this spread in terms of our product mix and customer mix based on the current order book? Compared to two, three quarters back, how has the order book evolved?
For the Domestic Cable Division?
Yes, sir. For the domestic cable.
Yeah, pretty strong. I think we have also made a clear outlook saying that we are comfortably expected to have a double-digit growth.
Okay. Lastly, in terms of margins among the products in the DCD division itself, can you give any color on how do margins vary in your products? What could be the share of non-cable products also, if both of these pieces address on?
I am missing you on the question. Margin profile where?
In your DCD division, among your different products, where do the margins vary? Could you give some color on that, and what could be the share of non-cable products in DCD?
At this moment, the non-cable is a fairly new entrant to the Domestic Cable Division. As you know, DCD is INR 1,000-plus crore. I think our non-cable is still very small part of it. I think it is not probably worthy of talking about the margins. But generally speaking, I would say the margin of this, in the next two, three years, it will grow to some size, but at this moment it is pretty small. So I do not have an immediate answer, but it is certainly in double digit. But whether it is at 15%, 17%, what DCD is talking, I am not able to answer. But what I am saying, that it is a very small part of our business, but with a clear strategy to grow that future.
Okay, sir. Got it. Just one last thing if I could fit in. So on the CapEx size of INR 180 crore, how is the split between cables, lamps, and new products?
I think cable division is probably around INR 50 crore more. Do we have a color on this INR 180 crore? As I said, 50% of that is for basically maintenance.
Yes, INR 44 crore is what we have marked for.
We have about INR 50 crore for domestic and rest for various other divisions.
That's it.
Okay, sir. Got it. That's all from my side. Thank you.
Thank you.
Thank you. Next question comes from the line of Devesh Kayal with Monarch AIF. Please go ahead.
Yeah. Sir, out of the approximately 820 crores automotive revenue in SCD, if I subtract your non-automotive revenue from approximately 1,400 crores in FY 2024, what would be your exports from India share for the full year?
You mean under the SCD from India exports?
Yeah.
Last year, between unit nine and probably SAL would be about 200+ crores.
Okay. Sir, like the previous participant asked, we are not able to reconcile Domestic Cable Division growth because of this aftermarket revenue. So if you can share exact aftermarket revenue in DCD, that would be helpful for us to reconcile two-wheeler industry growth with that.
I think you can connect with Medappa post-call later on and try to get some data. I don't have it immediately with me.
Yeah, because a similar issue with Asia in the last two, three quarters as well, so that's the thing. Yeah, that's it from my side. I wish you all the best.
Thank you.
Thank you. Next question comes from the line of Amit Hiranandani with SMIFS LIMITED. Please go ahead.
Sir, just two small questions. One, what is the reason for higher other income year-over-year as well as quarter-on-quarter? Secondly, on the inorganic opportunity. Just wanted to understand which location, and this is for the cable product or any other product we are looking for this, and how fast we can see this? Thank you.
I am not able to comment on your second question, Amit. Obviously, we are all on NDA. On the quarter-on-quarter on income, I have answered the opportunity that is available, how it is happening in the marketplace. Obviously, it is in our core business. I do not think we are looking at anything beyond that. On quarter-on-quarter other income growth, I think we had a good run in our investment portfolio of mutual funds, I think. Probably that is the reason. Medappa, is there any other reason why other income is increased?
Additionally, forward contract gain.
There is some forward contract gain. Okay. Those are the two.
Thank you, sir.
Yeah. Thank you. I think it is 11:56. Another four minutes, maybe one or at best two questions.
Yes, we have one question at this point of time.
Okay.
We will take this as the last question.
Yeah, sure.
This question comes from the line of Jinal Sheth with Awriga Capital Advisors LLP. Please go ahead.
Good morning to the team. Firstly, Mr. Rai, I would like to commend you for the detailed press release that you guys come out every quarter. It really helps in how you guys think about all your businesses across. Secondly, just a couple of bookkeeping questions. One is, what would be the effective tax rate in FY 2025 and 2026? And secondly, how much of the mechanical speedometer sales in FY 2024 will get clubbed in SED?
I think our tax rates won't change as I know, because we are in the full tax bracket here in India. I don't think there will be any change in whatever the range that we have been in the last couple of years, we will go ahead. I think in the same way. Sorry, what was the second question?
The contribution of mechanical speedometer sales in FY 2024.
I do not have the data with me immediately, but I think you can get this from Medappa later on.
No problem. Good luck to the team. Thank you.
Thank you very much. With that, I would like to thank you all for the continued interest in Suprajit, and we appreciate your patience in understanding how Suprajit is doing the business. If there is any further information that you need, you are welcome to connect with us, with Medappa and our team, and I would like to thank you all for your interest in Suprajit. With that, I return to I also would like to thank Anand Rathi and Mumuksh Mandlesha for organizing this call. I now hand over to Renju, the moderator, to conclude the call.
Thank you. On behalf of Anand Rathi Share and Stock Brokers Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you.