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Suprajit Engineering Ltd
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Good morning, ladies and gentlemen. Welcome to the Q1 FY '23 Investor Analyst Conference Call for Suprajit Engineering Limited hosted by Anand Rathi Shares and Stock Brokers. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vijay Sarthy from Anand Rathi Shares and Stock Brokers. Thank you, and over to you, sir.
Thanks, Razan. On behalf of Anand Rathi, I welcome you all to the First Quarter '23 Conference Call of Suprajit Engineering. From the management side, we have Mr. Ajith Kumar Rai, the Chairman; Mr. Mohan, MD Group CEO; Mr. Akhilesh Rai, the Director and Chief Strategy Officer; and Mr. Medappa Gowda, the CFO and Company Secretary. And we will start with the initial review about the results, and then we will proceed to Q&A.
Over to you, Mr. Ajith. Thank you.
Yes. Thank you, Vijay. Thank you for hosting us, and thanks to Anand Rathi as well. Good morning to you all. Welcome to the first quarter results of Suprajit Engineering. This has been announced yesterday. We have with us, as he said, our MD, CSO as well as CFO. I will ask them to make a general commentary on the results. Then I will add up my last little bit of a brief, and then I will let the questions to come.
With that, I'll ask Mohan to start the presentation on the operations. Mohan?
Yes. Thank you. A very good morning to everybody. Let me just say it would be an understatement if I say it has been both interesting and a challenging quarter for us. What I'll do is I'll take you through each one of the divisions.
Now let me start with the general market position in India. You all know that the 2-wheeler industry is still not out of the woods. It's still struggling. The passenger car vehicles obviously did better despite all the supply chain constraints that they have had. For us, both at DCD and PLD, both at the OE and the aftermarket segment levels, we did very well. In fact, we had a very robust growth.
Europe, we face the European -- Ukrainian war impact, and we also had a muted demand for our products by our customers. In U.S., the nonautomotive segment showed good growth despite all the kind of inflationary pressures that they have been going through. The toughest part for us during this quarter was to pick up the baton from Kongsberg and start running the new LDC business.
So what I'll do now is I'll just go division by division and give you an update as to what's happened. Let me start with our Domestic Cable Division or DCD as we call it. Like I said, the performance has been good, both in the OE and aftermarket segment. We have been able to pass on the material cost increases despite that kind of small lag that will always be there between what we give to the vendors and what we get from the customers.
Our Narasapura plant has been commercialized, and the customer audits have been completed. Our electronic SMT line and the assembly lines for instrument cluster -- electronic instrument clusters are in place. Trial production is on. We will be commercializing it in September. But having said that, we have already started deliveries to some of the customers with the outsourced boards. We have multiple launches scheduled for instrument clusters for some of the key 2-wheeler EV players.
Moving over to PLD or the Phoenix Lamps Division. The revenues showed a reasonable upward tick. But as you would have noticed, the margins continue to be under pressure. Here, it has taken us some time to get the price increases from the OEM. We have concluded the negotiations with most of the customers, and some of them are pending. With one of the major OLMs or other label manufacturers as we call it, we are in discussion, and we expect that to be concluded shortly. Moving over to the overseas portion of PLD that is Trifa and Luxlite. It continues to be a challenge, and we are working on measures to address this area.
Now I'll move on to what I call as Suprajit controls division. This is a new word that you would be hearing from now onwards. The Suprajit controls division is headed by Jim Ryan, who joined us as the President in the U.S., and this SCD or Suprajit controls division comprises of our plants in Mexico, Matamaros and Juarez; Novi in U.S.; the Siofok in Hungary; Lonestar in China; Wescon in Texas -- in Kansas; SEU and also the [indiscernible] in India, that is SAL and Unit 9.
So let me start with SAL, SEU. Like I mentioned earlier, the uptick has been less. However, having said that, we defended our margins very well. We got our price increases. And one major customer we -- it's already in effect, and the other one has agreed. And it is procedural to get this price increases effected for us.
At Wescon, the financials were in line with our expectations. Volumes were good, and we are bidding for more aggregates like Seeder gear box and electronics apart from our traditional cable areas.
Moving on to the LDC portion of the K, what we acquired from K. We have put out a detailed announcement, and I would not be going through that. But I can just say that it has been a great strategic fit. It has given us muscle power in the marketplace worldwide. Both the scale and reach is helping us, and we have already started realizing it. We also have a good but what I would call as an insurmountable -- a marked and insurmountable change in front of -- challenges in front of us. We have started to address these challenges in a systematic manner.
The first and foremost was to get price increases from the customers. Because the material cost increases had already been given, committed and implemented by the previous management, so we had to go and stand in front of customers and start asking for price increase, and that's already started. We put a strong management team in place both at Matamaros and Siofok. And in this interim period, we held the fault by depleting our own people from both Suprajit Europe and SAL. Having the boots on ground is important. Therefore, both of them were at work at Siofok in Hungary. Jim Ryan has taken an active role in integrating all these SCD entities.
Staying on the same LDC portion, Siofok, which is the Hungarian plant, had a compounded problem. The Hungarian currency, forint, has got devalued against both dollars and euros. Therefore, that has been very substantial. This particular issue is now being addressed by our finance teams. In China, Lonestar, being in the Shanghai area, many of you know had COVID restrictions. But what is very important to note is that quite many of our critical employees literally camped inside the plant and supported our customers. That showed a kind of commitment to the business. So that gives you an overview as to what has happened at the divisions.
Moving on to our technology center. We are, right now, focused on the upcoming launches while simultaneously spreading our wins to support business in U.S. also. We have had multiple customer visits to STC to demonstrate our capability because we feel that it is very important to show our technical capabilities and get our customers onboarded for the new customers. The work is progressing on various products like electronic spirometers, solar net actuators, electronic throttle controls and also braking products. So this is in line with our strategy of growing beyond cables while consolidating on cables.
So that gives an overview and an update from my end. Thank you.
Thank you, Mohan. Akhilesh will give you a quick brief on probably some of the matched teams, et cetera, on LDC.
Yes. Sure. So of course, this is in addition to the comprehensive disclosure on LDC on the 25th of July that was made. I think the key challenge is -- like Mohan said, is the price increases not being passed on to customers by the previous management. I think the lockdown in Shanghai was a significant effect and the deterioration of the euro to USD for our Hungarian operation, where a lot of the purchasing is done in euros, and that is also that.
Regarding the matched team integration project of LDC, this integration was very different from what we have done with Wescon, which was generally a stand-alone entity. Our matched teams have been working very hard. I'm confident that they will deliver the kind of synergies we need in all departments. Just to give you a few examples, our sales matched teams are completely focused right now on approaching customers to get some of the price increases needed to pass on the inflationary cost. I see that our purchasing matched team has already been able to renegotiate some of our key contracts with our global suppliers, and this technical nature of the cable product will mean that this will continue. We'll continue to find improvements, and it will take time to certainly get it into our P&L. The process matched team has been working on getting -- deploying some of our best practices in India. And also, we've been able to pick up some of their practices and bring them back to India as well. So it's a 2-way process that's been very -- working very well.
The IS&T matched team is really working on the -- moving the LDC ERP and [ SaaS ] to the Suprajit environment and taking the necessary knowledge transfer to support LDC in the long run. This is obviously supported by K as a parent, and now we will be supporting it going forward from India. Apart from that, HR and quality have been working hard towards this integration as well towards a kind of a one Suprajit and one control division -- Suprajit control division that we're working towards.
Lastly, I just want to appreciate the work done by our accountants and finance teams towards consolidating the LDC numbers within a quarter and presenting it to our valued shareholders.
That's it for some update from me.
Thank you, Akhilesh. Medappa?
Yes. Good morning, everyone. We announced the quarterly financial results for June 2022 yesterday. The consolidated revenue, including the LDC for the quarter ended June '22 was INR 645 crores as against the INR 362 crores for the last year, with a growth of 78%. The consolidated operational EBITDA for the quarter ended the 30th June 2022 was INR 57 crores as against INR 49 crores last year, recording a growth of 15%.
The consolidated revenue, excluding LDC, for the quarter ended June 30, '22 was INR 486 crores as against the INR 362 crores, with a growth of 34%. The consolidated operational EBITDA for the quarter ended the 30th June 2022 was INR 64 crores as against the INR 49 crores, a direct growth of 30%.
The stand-alone revenue for the quarter ended the 30th June 2022 was INR 337 crores against the INR 209 crores last year, with a growth of 61%. The stand-alone operational EBITDA for the quarter ended the 30th June 2022 was INR 51 crores against INR 32 crores of last year, recording a growth of 61%.
The overall debt level was INR 537 crores as on 30th June 2022. This is with the acquisition and funding of Suprajit team for LDC acquisition, and we have surplus cash balance of INR 271 crores as on 30th June, which is invested in the mutual funds.
For further queries, you can approach me as usual after this call also. Thank you.
Thank you, Medappa. I just want to sort of conclude saying that in this quarter, for the first time, we have done -- as we have taken over the LDC from Kongsberg from the beginning of April, this is the first consolidation effort of the LDC. We have given a detailed LDC update a few weeks -- a couple of weeks ago, which gives the full insight as to how we look at it, the LDC at this moment. Just to give you the clarity to the investors, we will be declaring during the course of this year a stand-alone, consolidated excluding LDC and consolidating with -- including LDC and a separate note on the LDC performance quarter and every quarter for the next 3 quarters.
And next year, as Mohan said, this entire integration will evolve into a domestic cable division at DCD and in SCD, Suprajit cables division, which is our global business, so -- which is headed by Jim Ryan. So that's how the next year's numbers will pan out. So this is a precursor to that.
With that, I will let the questions to come in, and we're happy to answer the questions as they come in. Thank you very much, and over to the moderator. Thank you.
[Operator Instructions] The first question is from the line of Deepak Lalwani from Unifi Capital.
Sir, what led to the lower margins in the nonauto business? So is there any one-off in that number?
Yes. No, no, you are talking about the quarter-to-quarter, right? Correct? Yes, I think it's probably a timing issue. There are probably a couple of one-off issues also in terms of maybe certain freight elements, which has been added on. But I think in the longer term, I think, it would be in line with the past only.
All right, sir. And any acquisition-related cost and ForEx loss which has been accounted here?
Yes, there would be some -- you're right, I don't know, Medappa, where exactly -- it comes within Suprajit U.S. All the acquisition-related costs has gone to Suprajit U.S. because these entities will come under the Suprajit U.S. You are right.
Yes. Yes.
If you could give that number, sir, it would be useful.
It's an internal number. You can probably talk to Medappa afterwards. I mean it's -- there's also one-off expenses there, yes.
Yes, sir. And sir, my second question is on LDC. Given that it looks like a temporary issue on taking price hikes, are there any permanent faults within the company where any drawbacks where you think you need more time -- more than 2 quarters to come -- to bring back this business to normal margin and normal revenue run rate? And while doing your due diligence, did you see if there's a need for any provision on inventories and debtors in this business?
I don't go into the great detail. All I would say is that the due diligence was done based on 2020 numbers. The entire valuation exercise was done on 2020 numbers. The impact of material costs happened in 2021. I mean we are talking about calendar year because they operate in a calendar year. So that has -- what has impacted the numbers there. And I think the -- with due respect to the previous management, I think they went on -- when we are actually struck the deal with them almost 9 to 10, 12 months, at least, informally, they were -- to make sure the supply chains are not affected, they were giving the price increases and -- but not really going like everybody else did. I mean we have also gone to the customers and got the price increases, which they have not done. So that is what is a major challenge we have.
So that will take some time because, as you know, Mohan just mentioned that now for our own international OEM customers, it took almost 10 to 12 months to get a price increase. But however, we expect it to be not that long for this case. It will probably be earlier because they've already given the price increases for other custom -- suppliers. So -- but still, there is a lag effect on that. So that's number one.
Number two is that, yes, there are certain deteriorating operational performance in the last 1 year, which requires some time to again set it right.
Also thirdly is the fluctuations in forint. I mean just to give you an example, which we have disclosed, I think, in the last business update, particularly Hungarian operations, they buy in U.S. dollar, all the import because they were nearly 40% imports in USD. And their billing is all in euros, whereas when you convert euro into forint and then come out back into dollars, the forint for 30% depreciation is a big hit, which is something like a 10% extra margin hit.
So these are the things that -- these happened in the last 8 months. So these are the things that we are facing today. But it will be addressed. I mean these are all challenges of any operational issues. We don't think that on a long-standing basis, we have an issue at all. As I said very clearly in my earlier update as well, over the next couple of years, I think the margins in double digit is we are certainly clear about, which you have seen. For example, in Wescon, we have the same issues, right? It took a couple of years for us to get back to where we are. So in any acquisition, I think that too particularly when the diligences were done remotely without actually visiting the plant.
There are always certain gray areas, which we have found, but none of them is, at most, insurmountable. We are all cable people, and Jim is the one of the fantastic cable guys we can find in the world, along with him and our team here because I visited some of those plants in [indiscernible]. I'm fully confident that it's just a question of time. And the first year may have these disturbances, but I think given that time, I'm pretty sure things will be what we said in the beginning itself.
Sure, sir. Well noted. And sir, your commentary in the press release on the margins, excluding the LDC business would be lower compared to last year. This sounded a little contradictory when logistic costs and raw material costs are falling. So..
One thing is very clear. Even if there is a logistics or material costs coming, customer will come back to us for a price reduction. So what we are seeing is that there is an amount of people -- customer passes on a clear material cost increase, okay? But they don't give an index for an inflationary issue because that's what we are facing today, right?
So that is where the challenge is. I'm not saying that we won't meet our guidance of 14% to 16% even if we miss maybe 100 basis points a year or so. It was more, I would say, the cautionary thing. We are still aiming to do what we have done. I must say that some of our divisions are doing pretty well actually. We still feel that, that is a possibility. But we have been very conservative in our projections. So we just wanted to give -- it's not a cautionary quarter. It's a very mildly kind of an indication that it could happen subject to how these pricing scenarios actually settle down in the next 6 to 9 months. So I think we'll get more clarity when the second quarter or third quarter will come. We still aim to do what we have said.
Sure, sir. And sir, lastly, the tax rates for this quarter look a bit higher. So any reason and guidance there?
I think the deferred taxes are a very difficult calculation. The auditors do it, and we just announce it. So I don't have any comment to say on this, but I think they are all deferred tax adjustments. I mean you can have a different conversation with Medappa later on that.
The next question is from the line of Abhishek Kumar Jain from Dolat Capital.
Sir, despite quarter-on-quarter, the growth in your core cable business, EBITDA was around 15.5%, and going ahead, steel prices is going down...
Mr. Jain, I must correct you, there is no degrowth in our cable business. In fact, our...
Quarter-on-quarter -- I'm talking about the quarter-on-quarter, sir.
I think you know how automotive is a cyclical business. I think if you compare only with the previous quarter of the same year. That's how the cycles of automotive work.
So as the steel price is going down, how much benefit do you see in the margin? And if a large part of the RM cost is unabsorbed, can we expect the earlier margin of 17%, 18%?
Sorry, I missed the question a little bit.
So how much benefit do you see in the margin as the steel prices has gone down?
Okay. I think I answered that question, [ Abhishek ], because to the earlier person that if there's a price down in the material price, customer also comes back. When the material cost goes up, we go to the customer. Similarly, they come back to us. So I don't -- I think it will be margin-neutral, actually.
But still a large part of the RM cost was not passed on. So once the prices will go down, we will get the benefit, and earlier margin was around 18% to 19%.
Yes. It is a lag of a quarter here or there, but that will not be a sustainable thing.
So what would be the sustainable margin? Because the earlier sustainable margin was over 17% in your core cable business.
In the core cable business, I mean, I look at the consolidated number. I don't have the number in mind. But I think, as I remember, it was more around 16%, I think, on the core cable business, which I think is sustainable.
That will be sustainable. And sir, in LDC business, there were multiple factors, as you mentioned, that lockdown in the China plant and depreciation of Hungarian currency were the key regards. So can you quantify the impact in terms of the gross margin, negative operating usage, increase in other expenses for the LDC business? And how would we...
I think on the LDC business on individual units and their margins and how it impacted, it is really difficult for us to present it because there are so many levers in that. So it will be misleading also. So we give overall commentary, and we'll be -- at least for this year, we'll be only giving you consolidated LDC numbers on a quarter-to-quarter basis and giving commentary on where the challenges are, where the highlights are and what we are doing for it. Probably for the next year, whether we give a separate commentary, we will see because, as you know, we have just taken over this large division for us. And I think the challenge today is to make sure that they operate and sort of reorient its journey in line with our expectations. So going into specific details, as I said, for example, forint, I mentioned the numbers also. It's almost affected 10% margin effect on Hungarian operations. So -- but there'll be -- that's not only the only one. There are other issues relating to purchasing in terms of how the purchase costs have changed from unit to unit. Going into that specifics, we probably wouldn't do it at this moment.
So how much impact from the [indiscernible]? How much revenue lost? How much impact of the lockdown in China plant? How much revenue loss because of it?
The China plant probably operated at about 50% during those 2 months, probably less than 50%. We ran it because some customers we were a single source. So we had to do -- so what we did was some 20, 30 operators were made to stay inside the factory. We've had them -- made them to sleep over in the factory itself and make sure that the customer lines don't stop. But nobody was able to come into the plant and operate, so we had to put people inside and run it because also Shanghai was a complete shutdown.
So as the China lockdown is over, so can we expect that revenue can clog the -- around [ INR 2 billion ]?
Certainly, that will -- [ indeed ], that will be back into normal production, and the margins will improve there for sure. Yes.
Okay. Okay. So can we expect that this LDC margin will be turnaround projects in the coming quarter -- I mean, from the second quarter onwards?
I think we have very clearly said the first 2 quarters will be EBITDA-negative, I think, in our last correspondence. If we do any better, it's a big kudos to our team, which is working really hard on it. And slowly then we'll recover from there to black in the following 2 quarters of this year. That's what we have given in our LDC business update. That still holds good. I think at this moment, that's all we could say about it.
Sir, next question is related with the Wescon where the order backlog is very strong, and we have seen also improvement in the revenue on quarter-on-quarter basis. But the margin was hit significantly. And you mentioned that this is because of the one-off related to the freight rate and the increase in the energy prices. So just wanted to understand, what are the key regions? And what is the impact of each one? Like that lower exports on the Unit 9 and availability issues, labor availability issues from the Wichita and Juarez plants and the one-offs. So can you quantify more in terms of this?
I won't be able to quantify. I will generalize the point. I think you are right. There is a good backlog of orders on Wescon in general. I think we are in a position where we have orders to execute, but to -- unfortunately, we are unable to execute. I'll give you the reasoning for that. One is availability of manpower also in the U.S., for example. U.S. unemployment ratio is -- rate is one of the lowest today. Particularly, to people to get to work in the shop floor is a big challenge. So let's say, we are short of 20, 30 people. That also affects the numbers there. That is number one.
Number two is that there is also a lag in terms of price increases and price decreases that happens in terms of what we give to the suppliers and what gives the customer. To some extent, that effect also is there.
Thirdly, as I said, there are certain accelerated dispatches from India, air fleet, et cetera, et cetera. That also has had some effect. But I would like to just say that to our investors that don't go by the quarter. We are still confident of the numbers there. I think the numbers will be comfortable in the double digit as we go forward. It's just a question of a couple of quarters adjustment of the things. But if you look at a sustainable basis, I think we are still in a very good [indiscernible].
Okay, sir. And my last question is related with the underperformance from the aftermarket in this quarter. What is the reason?
What underperformance you're talking about? Where is the underperformance?
See, earlier, the revenue contribution was around 25%, 26%. Now it has gone down to the 17%, 18%.
Okay. You're talking about the pie chart, I think, right?
Yes, yes. Aftermarket.
Okay. Okay. Okay. I know what you're saying. There's no underperformance of aftermarket. By the way, aftermarket is performing absolutely strongly, both at the PLD as well as at the DCD. When you suddenly see the quarter number, the quarter is consolidated with the LDC, so LDC is doing only nonautomotive business, automotive business and a little bit of 2-wheeler business. So what we are seeing is that because the LDC's large number is added on, which is almost 30%, 40% of the sales, this percentage seems skewed. That 17% is actually higher than the 26% in terms of value, if you look at it.
Okay, sir. And sir, in other income, there is a sharp jump in this quarter. What is the -- other income, there is a sharp jump in this quarter.
Medappa, can you answer that?
ForEx gain.
Pardon? ForEx. Okay, sorry. I know. ForEx gain. It is based on ForEx gains, U.S. dollar appreciation, I suppose.
The next question is from the line of Nikhil Kale from Axis Capital.
My question was, if I just look at the consolidated numbers and before we're looking at the reported numbers, so on the employee expenses, other expenses, which is around INR 142 crores and INR 64 crores for Q1, are there any one-offs or restructuring charges or anything like that for this quarter? Or should we consider that this would be kind of the quarterly and is going ahead as well?
I didn't get your question properly, Nikhil. Can you just repeat it?
I'm saying the consolidated employee expenses of around INR 142 crores and other expenses of INR 64 crores for Q1, are there any restructuring charges or any one-offs in this quarter? Should we consider that this could be kind of the broader base going forward?
Medappa, is there any one-off in this -- in the consolidated employee and other expenses?
Attrition-related cost is incurred at the U.S. It's included in the other expenses.
Okay. Yes.
Okay. Would it be possible to talk about the quantum of that? Is it meaningfully higher?
[indiscernible] to you off-line.
Sure. No worries. And then I just wanted to understand the product CapEx perspective, what kind of number are you looking at for this year, considering now that LDC is on board. Is there any meaningful expense -- CapEx requirement there or anything like that?
I think we have announced in the last meeting that -- last business update that for our India operations, we are looking at about INR 140 crores of CapEx for the India operations. There has been very only -- very marginal in other units. Now the LDC is in place, we are still assessing the rare requirements. I think there would be some CapEx for the year between LDC and Wescon to some extent, which probably will be USD 2 million, USD 3 million, not going to be much more than that. If it is anything beyond that, we'll certainly make an announcement in the next update. As of now, it is not significant.
Okay. So then just last question on the new products that are being developed by STC. So we've already gotten very good orders, and we've also started supplying some of these products. Just wanted to understand, I mean, what is kind of driving market share gain for us? Is it coming at the cost of pricing? Are we more aggressive than competitors in terms of pricing? Or is it just because of, say, products being better than competitors'? What is the right for win -- right to win for us in some of these products?
On the STC products you are asking, right?
Yes. That's right.
Mohan, will you answer that?
Sure, I can. Well, what happens is depending upon the type of product, it changes. There are some products where it is -- literally, we have a patent, so it is technology-driven. Because it is technology-driven, we have been able to position that product, with all its, I would say, superiority in functionality. So that drives a better margin, obviously, so -- because they are new products, literally new products. There are some where very little, I would say, of these 2 products are being done out of, I would say, STC. Most of the products are very tailor-made. Therefore, we have been able to get reasonable margins there. But to answer your question, are we fighting in a dog-eat-dog market and trying to garner a share there? No. We want to have a different rules for the game. It is a technology game, and technology is going to command a premium.
Got it. Right. And just last one -- one last part from my side. Now with LDC also in the fold, how are we looking at our market position in the domestic PV segment on the auto cable side? Do you think that...
Nikhil, you're talking about domestic EV?
No, domestic passenger vehicle cable.
Passenger. Okay.
Yes, because the market share there is much lower than what we garner on the 2-wheeler side. So what areas are we focusing in? What kind of products are you looking at? What is the strategy over there?
The strategy for passenger vehicle with the LDC is in the bag. Is that what your question is?
Yes, yes. So will we be more aggressive in kind of looking at gaining market share in the domestic passenger vehicle side as well now?
Mohan, will you answer?
Sure. I think you hit the nail on the head. In fact, this is one of our key strategies in the Indian market. What we are doing is what we call it as we have identified a few units which are going to go beyond 2-wheelers. We call it as unit beyond 2-wheeler. That's the strategy name that we have given actually. And we have put together a complete comprehensive package, be it from the marketing perspective, be it from the R&D and application engineering perspective or be it from the manufacturing perspective. And we would like to leverage our acquisition and acquisition entities and try to get into the local passenger car vehicle market.
We have made some progress even without that already, like for example with Tata Motors. We have been doing well with Mahindra, but there are a few customers who are not yet being kind of very willing. I think this is going to tilt the scales because we will be showcasing our global capabilities and ability to support everyone. The answer is yes to your question.
The next question is from the line of [ Vivek from Nortek ].
My question would be that what would be the revenue percentage of the total cable in the business right now?
Sorry, I didn't hear the question clearly.
Yes. Sir, what would be the revenue percentage of total cable in the cable business?
In the cable division, is it?
Yes. The percentage of total cable.
In the DCD, I would say about 15%.
15%?
Yes.
Okay. And the...
In some role, I mean this is -- this will -- I don't have it off, but I would roughly think that would be the number.
And on the total revenue side also, it will be the 15% only?
Yes, I'm talking about on the revenue on cables. I mean on a revenue basis, not on a numbers basis, I would say.
[Operator Instructions] The next question is from the line of [ Vignesh Iyer ] from Sequent Investments.
Sir, I wanted to ask, in last call, if I'm not wrong...
Can you please speak a little louder, please?
Yes. Is it audible now? Hello?
Yes.
Yes. In case of Phoenix Lamps Division in quarter 4, I remember that you were negotiating for a price increase with some big customers. If you could give us an idea of how has it panned out like if there would be a price increase in Q1, Q2, anything that we expect because overall, I think, that the margin is still under stress for Phoenix Lamps Division.
Yes. I think your point is well taken. I think Mohan will answer the question generally on our approach to customers and price increases. Mohan?
Yes, sure. I had mentioned this last time also. You see this market -- in this market, the customer has not seen any price increase at all. So we had an uphill task in convincing the customer particularly because we don't really share like another product where we share what is the steel content, what is the material content. And we take each material commodity-wise, either linked to LME or otherwise, we show an increase. And therefore, we go and naturally take a claim for an increase, whereas in bulb as a commodity, it has not been done traditionally. It has never been done. Therefore, we faced an uphill task.
Having said that, I would say that our teams have been able to bring that convincing argument and get the price increases, like I said this time, except for 1 or 2 customers. Most of the customers have already accepted at the OE level. Aftermarket, I had already mentioned it last time also that we would be going in for a price increase. And we did this in, if I'm not wrong, in March of 2022, we have already made an increase of -- in the marketplace. OLM -- on OLM -- key OLM, that is what we're spending, and we expect it to be wrapped up faster.
So you mean to say the pricing has already kicked in, in quarter 1 or it would kick in, in quarter 2 as in the realization part?
These would be kicking in over time. Not everything has kicked in. The answer is everything has not kicked in. Like what I said, one of the OEMs and OLMs still, it has not even happened. Therefore, it should happen in the future.
Okay. But in [indiscernible], I wanted to understand, considering we have -- [indiscernible] has a market share of roughly around 60%, domestic. And many of the retailers will sell it -- who buy from us and probably sell it again. So I remember you're saying we possibly have even more market share than this. But overall, it is 60%. So as things stand in that way, we should have some pricing power, right? We cannot be in a position where we are on a defense, if I can put it that way.
I'll take that question.
Yes. Go ahead.
Yes. Look, what you said is right. Do we have a commanding position in the marketplace? Definitely, the answer is yes. But it has got its own dimensions that it brings in. We are testing the price elasticity in the marketplace, particularly in the aftermarket. But there would be a certain amount of levels after which it goes in elastic and it will start affecting the volumes. So for me, in the aftermarket specifically, the scheme starts now. Sometime in the next month or so, the scheme starts. And when the scheme is not yet there, the people would not be filling up their shelves with our products. I'm perfectly fine with it. I know it is a lean month. That's the reason we went and increased the price in the aftermarket. Therefore, by the time the scheme starts, our price would have got settled into the mind and into the psyche.
Now having said that, there is a limit to which I will be able to do it without my competitors not doing it. Therefore, I'm just waiting for the competitors to do it, and one of the competitors have very recently done it. They have increased the price. Therefore, it's a question of marching ahead with the left and the right and somebody has to put his leg first, and probably, we are going to put that left leg first.
Just to add to what Mohan said further, I think as rightly said, historically, we never increased the prices on -- particularly on the bulbs business of ours because we are doing so much of improvements internally that we thought that we'll not go to customers or marketplaces for price increases because we are improving efficiency so well. So the margin sort of stayed put.
The last 2 years ago -- last year, when we started going back, they said, okay, you come to us now, why are you coming. This kind of pressures were there. That's why it got delayed. Let me give you a simple example. For example, krypton gas, which is -- basically comes from Ukraine, Russia, et cetera, the cost of that today is, I think, something like a INR 7 lakh per kilo, which used to be INR 29,000, INR 30,000 or INR 35,000 a kilo. So it's a 20x increase. That -- as a consumer [ in the bulb ], I don't know the numbers, but maybe it was 10 paisa, 20 paisa, has become something like INR 3 or INR 4 per bulb. The whole bulb is be sold at $40 or $30 or $35. So when you ask, that kind of a price increase is out of [ resistance ]. So what's also happening is that there is also competition. There are Chinese, there are Koreans who are all waiting to see how the equilibrium of Indian market is and they're ready to that. So we need to look for multiple angles.
As Mohan said, we are looking at the elasticity. We are successful in the last increase. And I'm pretty sure when the margins are -- again, the other thing that I would like to make clear in this forum is that this is a question of who survives the longest, and that is the one who will win us for the rest of the year. We have a deep pocket. We are sustaining the market. We have the market share. For your information, Europe, at least a couple of big guys who have shut down. Only in the last couple of months, Tungsram, which is the GE brand, they shut down their plant in -- a huge plant in Budapest. So there will be capacity getting shrunk. We have to fight that war until that capacity has come down, and that is when we get the real pricing power. That is not happening today, but it will happen eventually. But your point is well taken. We are the market leader, and I am sure at appropriate time, we'll keep increasing the prices.
Sir, only one part. From where do you import the gas again?
It comes in various places. I think Russia and Ukraine used to be a big source. It is still coming from there from some route through some intermediaries. We also get something from Korea. Am I correct, Mohan?
Yes, Korea and China.
Korea and China also, but what's happening is that once the major source is having a problem, the prices automatically goes up. The only commodity that has not come down in price is the gases unfortunately. The rest has all come down.
Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Yes. Thank you again, everybody, for joining this con call. We appreciate your continued interest in Suprajit. Again, let me reiterate that we are quite confident that the business that we are in, we are positioning ourselves strongly. With this acquisition of LDC, we will emerge as the global leader in cables. And the LDC will -- in the near term, will get over the issues that they are facing. Once those certain first couple of quarters are done with, we are pretty confident that we will -- the business will be back to normal. And on the domestic and other fronts of our business, all businesses are doing as per our plan and in line with our budgets. We are quite confident that even this couple of years or a couple of quarters of disturbance that we may see on LDC, the rest is business as usual.
So thank you very much, and I hand over to Vijay and the moderator. Thank you all.
Thank you. Ladies and gentlemen, on behalf of Anand Rathi Shares and Stock Brokers, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you. Bye.