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Suprajit Engineering Ltd
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Ladies and gentlemen, good day, and welcome to the Suprajit Engineering Limited's Q4 FY '22 Earnings Conference Call hosted by Anand Rathi Share and Stock Brokers.
[Operator Instructions] Please note that this call is being recorded.
I now hand the conference over to Mr. Vijay Sarthy from Anand Rathi Share and Stock Brokers. Thank you, and over to you, sir.
Thanks, Rutuja. Good morning, all. On behalf of Anand Rathi, I welcome you all to the fourth quarter and full year conference call of Suprajit Engineering. On 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, the CFO and Company Secretary. As always, we will start with the brief about the results, and then we will follow it up with Q&A.
Thank you. And over to you, Mr. Ajith.
Yes. Thank you, Vijay, and good morning to you all. Welcome to this results con call for the fourth quarter, as well as the annual results of Suprajit Engineering. I would like to thank Anand Rathi for hosting this for Suprajit.
I would, as usual, start with our team to make a brief comment on the year's performance. and then I'll conclude with my few comments, and then we will have the question and answer.
With that, I will hand over to Mohan to start his brief on the operational performance of the group overall. Mohan?
Thank you. Very good morning to everybody. What I will do is, as usual, I'll give you kind of a general overview of the business. Then I'll shift with [indiscernible] to give you an update on our divisions.
First of all, as you are all aware, the chip shortages continues, and there has also been a strong uptick in the commodity prices. So overall supply chain area continues to be a challenge with also container and shipping costs being higher. And this also adds in terms of the uncertainties that have built and the delays that are happening.
On the domestic front, the entry 2-wheeler segment is extremely tepid, and therefore, it has got some amount of bearing. Well, despite all these kind of headwinds that we have at Suprajit, I think we have done well on the domestic front. And the U.S. market has shown some growth. EU market has been affected both from supply chain, Ukraine and also the demand issue. So there are 3-pronged, I would say, problem at EU.
Now let me get into the individual divisions. Let me start with SENA, our Suprajit Engineering Non Automotive, which is Wescon and our Unit 9. Like I mentioned, we have good market presence in U.S. market, U.S. market is doing good. We have a strong order book. And the issue there has been more a supply chain issue, and we have had order backlog with our customers. labor availability at our Wichita and Juarez plants have also added to the complex, what I would say, resource management.
However, the order book is pretty good. We have been able to successfully claw back on some of the cost overruns that we have had. And with some of the customers, we have already got the price increase, and with some, we are still negotiating. So that gives you kind of an update on SENA, and I will move to our automotive exports.
Here, like I was saying, there was a huge amount of uncertainty in the European region and from all our major customers, both OEM and Tier 1s, primarily because of the Ukrainian war and risks associated to follow outside what I would say. But mainly, we did better due to our new programs, which we had won, which had started getting delivered. But obviously, the volumes were not yet to the levels that we expected.
There have been inventory management challenges between our Slovenia warehouse and our plant Suprajit Automotive at Narasapura. But having said that, I would say that we have maintained that track record as a reliable vendor for all our customers in it, and we haven't had any issues in making supplies, too.
On the pricing front, we got some price increases with some of the Tier 1 vendors, Tier 1 customers. And we are also in discussion and negotiation with some of the major OEMs. It is taking time, but I'm confident that we are seeing the light at the end of the tunnel. We should be able to wrap it up in this quarter.
Moving on to Phoenix Lamps Division. This was the most affected division in our last year, and more so in the last quarter of the year. However, we still managed a growth in revenue, but at the price of profitability. If I remember right, I had mentioned this that due to certain strategic reasons, we did not pass on the price to the market in the previous quarter, when I was talking in the last quarter. However, now that is on the agenda, we have already raised the prices in the Indian aftermarket in this quarter. We have also got certain price increases from some of the OEMs and some of the Tier 1s, and with the others, the negotiations are still on.
Moving on to Phoenix Lamps, but aftermarket of Phoenix Lamps. This continues to be our mainstay business, and it has shown, I would say, very good traction. If I can recollect what was at around 60% contribution to our domestic sales 5 years back, now has become about 75% of our sales. With the advent of LED into the OEMs, I would say that this was expected and it's happening as we had planned and expected.
Our drop in LED solution has also been very well accepted in the aftermarket, and it has got very good traction there. Very specifically on PLD, the commodity prices are still not benign. The increases are very steep, and we are testing the price elasticity in the marketplace for our products. So we will see to what extent we should be able to move our prices up. Luxlite and Trifa continues to have a headwind. And there, again, we have asked for price increases with our customers.
So with that, I move on to the Domestic Cable Division. Domestic Cable Division continues on a path of good profitability and also with a reasonably good growth in what I would call at this tepid market. This has been primarily due to our good product mix, strong aftermarket and also growth with certain customers and new added programs. Just to add to that, our aftermarket sales also grew very smartly in our Cable Division.
So that completes all the updates on the divisions. Now I'll just give you a very quick update on what's happening at our technology center. The work here has been extremely good, and we have come out with products that interest the market. We have got significant interest in our digital and electronics space, and also for our braking products. As you noticed that both electronics area and braking products that we are looking at are powertrain agnostic, therefore, that is where we are focusing on. And our strategy to be growing beyond Cable, I would say, is silently taking shape within Suprajit.
So moving on to the investments. Board has approved our plan to invest in electronics. So now a new [ assembly ] line with new digital cluster assembly and new process control lines are being invested in, and we will be commissioning it in July. We are on track with our expansion at Narasapura. This is basically to serve a customer with additional lines. And we are also on track with our, what we call, an aftermarket fulfillment center at Bommasandra.
Last year, we had made some amount of capacity enhancement at peak. But now with the completion of that additional capacity at Phoenix, we have kept the CapEx at a very, very minimal level at Phoenix. And in the Automotive Cable Division and also in the Domestic Cable Division, our journey on automation and also the introduction of Industry 4.0 and digitization continues.
So with this, I complete my update. I hand it over.
Thank you, Mohan. Akhilesh, will give you a quick update on LDC?
Sure. As you know, on 6th April, Suprajit successfully closed the acquisition of Kongsberg's light duty cable division. Of course, LDC has been facing similar global headwinds, both in terms of commodity price and slightly muted demand and customer price increases will play an important role this year.
The China plant has also had to run at reduced capacity during the lockdowns in Shanghai, but the team are confident that there will be a strong rebound with a lot of pent-up demand seen from customers.
The immediate finance and IT integration of LDC is going well and should be completed on time. We expect all key IT systems to be integrated into Suprajit in the first half of this year. Further, we have also kicked off longer-term integration projects and called it Project Max. Across all departments, this will help extract synergies between LDC and Suprajit. This should bring a strong focus to the LDC organization and business alignment with the Suprajit way and opportunities to better serve our global customer.
All customers of LDC are working closely with Suprajit, and we're happy that they are purely seeing Suprajit now as a preferred global control cable supply, which is one of those key goals that we were looking at when we decided to acquire these companies.
So with that, I'll hand it back to you, Chairman.
Thank you, Akhilesh. Medappa?
Good morning. Good morning, everyone. We announced the financial results for the year ended 31st March 2022 yesterday. The consolidated revenue we have recorded a growth of 12%, with INR 1,840 crores for the year against INR 1,641 crore for the previous year. And consolidated EBITDA was INR 260 crores against INR 237 crores for the previous year, recording growth of 10%. And the standalone revenue was INR 12,271 crores against INR 11,112 crores, with a growth of 14%.
The stand-alone operational EBITDA was INR 213 crores against INR 181 crores, recorded a growth of 18%. The overall group debt level was INR 312 crores, which reduced in effect from INR 327 crores from the previous year. And we have a cash balance of INR 261 crores, in which are in the form of mutual funds as on 31 March 2022. And any further queries, you can approach me even after the call. Thank you.
Thank you, Medappa. Just to add that you all know the tough year we had, not just with the, in the beginning, the COVID situation, but subsequently, the commodity issues and global headwinds in terms of some kind of a down trend in the automotive business.
With that background, I think Suprajit performance of growing at about 13% and EBITDA still above 14%, I would think it's a very satisfactory outcome. We continue to have these headwinds in this year, but I'm pretty sure that our team is working as usual to ensure that we'll get optimal results.
So with this, I will give it back, hand it over to the moderator to start collating the questions, and we will answer them as it comes.
Thank you. Over to you, moderator.
[Operator Instructions] The first question is from the line of [ Ashi ] Modi from Equitas.
Congratulations on the numbers and on completion of the acquisition. Sir, my first question would be regarding your -- the new products, which you were developing at STC. We were testing them. We had them on testing. So could you give us a color on the current order book of STC and which are -- and now that since you are setting up a new line for each quarter in digital cluster and how is the orders over there?
I'll just give you a quick answer, and then ask Mohan to give a little more detail. I think we did make an announcement that some time ago that we have received significant orders in excess of INR 100 crores for the STC products. And based on that kind of comfort, we have now are setting up a small division of electronics. And that will go into production in start product. I mean, we are already doing a small production in the industry, but it can probably get streamlined in the next couple of months.
I would say that there has been a significant progress, and we are making a fairly decent financial investment in terms of putting up this new division. So Mohan, can you please add on some of the products and our plans on STC?
Sure. Sure. Sure. Primarily, there are 2 specific areas where we have focused on. One is the digital instrument cluster area. And here, I think I did mention it in one of the earlier calls that we are going in for what we call it as a platform approach. Therefore, we have developed what is called Supra 1.0, 2.0, 2.5 and 3. These are different generations of instrument cluster, which would be available for the customers, depending upon what level of technology they want to adopt into their own vehicles.
Now that has played out well, and we have got good amount of, I would say, orders also, and a lot of them we have already fitted and it has also been tried out at [indiscernible] for accommodation. So this is 1 stream that we are looking at. And here, we are looking at both IC engines and also more heavily improved EV also. So both areas we are focusing on. Other than that, we are also developing one for a nonautomotive segment, which is not here, option in this country, which will be exported out.
The second area where we are looking at is what we call it as a rotary sensor. This is a holistic sensor, which will be integrated with a specific mechanisms for what is called as the e-product control. E-product controls are what gets replaced with the throttle cable. Therefore, that's the reason that we are focusing on that, which incorporates rotary sensor.
So these are the 2 major areas. Purposely, we did not put in our investment sales aspect, we get some traction from the marketplace and see how the market accepts these products because we have developed these products, but commercialization of the product is when we put our lines there. Now that we are confident that the market is accepting this and there is a good amount of interest generated in the market, we have decided to go ahead with our investment.
And to add to what Mohan has said, I think it's a very clear vision of our group that the STC will be a very focused product development center for us. The idea is simple, in the next 3 to 5 years' time, Suprajit's intention and our clear aim is to ensure that our content per 2-wheeler will be a lot more than what it is today. I think that is our intent.
Second question is regarding LDCs. So you said LDC operations are right now affected by this. So could you quantify the effect? And also, sir, on LDC, if you could talk about who are our global major competitors and what are their sizes, if we can talk about this?
Our competitors, you mean, you're talking about...
In the global market.
In the global market, okay. In terms of the business, I think the same headwind that we faced and what Mohan elaborated, it applies to Kongsberg coming to LDC also. It's the same problems everywhere in the world. So their business had, last couple of years, have had its own effects for whatever reason. And they probably had a business of about 80 -- around USD 80 million last year. And I think we have sort of guided that in the next 2 years, this year between this year and next year, we should close to USD 100 million kind of sales. I think that's what we have projected in our last statement.
In terms of the competition, I think the global major is the HI-LEX from Japan. I think probably HI-LEX and Suprajit are more or less in terms of at least the number of cables were in the same levels. And then, of course, there are other guys like there is Starsmith, there is DURA, there is GRC, there is WR Controls. There are couple of cable players out of China. They are all in the range of, let me say, anywhere between USD 40 million to, let's say, USD 100 million, USD 120 million kind of a size. So that is the competition, if you were to ask.
The next question is from the line of Mumuksh Mandlesha from Emkay Global.
So just on my last question for the STC business. So what the new revenue, incremental revenue was the last time you mentioned INR 100 crores. So what would be now the new basis in order wins?
Yes. I think these orders are for the futuristic like from the day it starts commercial, the development time is there. Just to give you a rough idea, I think, Mohan correct me if I'm wrong, I think we did about INR 10 crores, INR 15 crores of business from the LDC products last year. I think we are hoping to do maybe about INR 30 crores, INR 40 crores in this year. And it probably doubles next year when our Digital Electronics division goes into full stream. So that's the kind of a roadmap I would like to give.
Sir, what will be the new outlook for FY '23 or FY '22 for LDC business on account of [indiscernible] in China like lockdown...
Very sorry, can you please repeat. I can't hear you properly.
Sorry. So what's the new outlook on LDC business for FY '22 on account of consulting accounting standards in China...
I see. Okay. so in terms of business, I think I just mentioned that our aim is to cross $100 million in the next 2 years. In terms of the margins, I think I would probably give you a clarity in another quarter or maybe 2 because we are still trying to assimilate different countries, accounts, standards, et cetera, et cetera. So it's a little premature to say.
But what I've mentioned in our last business update is that the aim was to get into a double-digit EBITDA over the next 2 years' time. As we hit $100 million, we also want to hit 10% EBITDA. That is our target. Currently, we have -- you must realize that this acquisition is done with a lot of remote diligences, et cetera, et cetera. Travel was completely ruled out. So we need to see in terms of the stock, what is there, how is the kind of operating systems, what are the rates and data situation. A lot of things will be sort of absorbed over a period of time.
And there could be -- I have to accept that there could be one-offs in this current year, but that's normal in any acquisitions. But our guideline is going forward in the next 2 years to hit double digit at LDC.
And, sir, SENA has done well in FY '22. So can you explain what drove the growth? And what is the outlook for FY '23, sir?
I think, we don't really give you a forward-looking number. All I said, yes, SENA has done an excellent job last year of a good growth as you would see the SENA between Unit 9 and Wescon has done nearly 20-plus, I think, percent of growth. This year also, we are expecting certainly a growth, a double-digit growth is expected. Margins, as Mohan was mentioning, again, global commodity is a big challenge. But we have been able to talk to our customers and able to pass on some of them at least. So we continue to believe that the margins that we have been sort of clocking in the last couple of years is doable going forward as well.
The next question is from the line of Abhishek Jain from Dolat Capital.
And congrats on the decent set of numbers in tough times. My first question is related with the automotive cable business. So what are the reasons...
Sorry?
First question is related with the automatic cable business. What is the reason for the margin expansion in the core cable business? Is it because of the better revenue growth from the 4-wheeler and export?
You are talking about the automotive margin increase, is it?
Yes. Yes. Yes.
I mean, it's from 15.9% we have grown to 16.3%, a 0.4% increase on operational level, which can be due to any timing effect of a price increase, supplier price decrease or increases or decreases, whatever it is. So I would solely say that there is not really an increase in margin. It's a stable margin.
Okay. So how was the growth in the 4-wheeler side, especially for the export?
Yes. I think, simply, one of our main business is also in Europe. We grew our automotive exports by about 10% -- 10%, 11%. And then I think when the Ukraine war hit, Ukraine was a big supplier of, I think, some of the components to the automotive industry in Europe. There's a lot of disruption has happened. It is slowly starting to stabilize now. There's still some disruptions happening because customers had to relocate the suppliers into other parts of the world. So the general feeling, I mean, our own view is that this year, global automotive, I'm talking about a very general term, it will not grow, if at all, it will probably degrow this year also.
But having said that, I think because we have won businesses with customers and they're all getting into production, we will continue to grow our automotive cable business as well. Our overall guideline of saying that we will outperform Indian automotive industry by 5% to 10%, which we have done by 10% this year. I think that is still very much the guidance that we would like to give.
So as the export business will be under [indiscernible] that will impact the overall margin of core cable business in the coming quarter?
No, I think global. I think typically, automotive exports, particularly global automotive customers, don't really are easy to give any price increases, which is a very acceptable point. I think that's what you are driving it. But we have been able to convince some of our customers, and they're in the final stages of convincing another 1 or 2 key customers that these price increases are not normal. They are much beyond the inflationary trend.
So they have to index those prices. I think they have been able to -- they have listened to us. And some of them even try to do some test marketing to see whether somebody else can supply. But there's nobody else to supply. So the fact that we have been so strongly entrant player in cable, and we've been able to deliver wherever they want. I think we are heard in the right manner. And I think in the next couple of months, some of the price indexations will happen. And if there is any -- going to be any further, let's say supplier price increases, we'll be able to offset.
So we are fairly comfortable to say, I mean, overall, we feel that there could be a timing effect of price increases and decreases at various places. But I think we will be able to do it. Having said that, if there's a major difference, we have made a comment in our press release that there could be some marginal pressure, but that is not going to be 5%, 6%, I mean, maybe 0.5% here and there, 1% possible. We don't know. But our aim is to still guide what we have guided in the past.
Sir, how is the outlook for the domestic core cable business as rural demand is picking up well and there is a recovering the entry level and scooter segment, which have a higher number of cables. So how do you see the budget in our domestic core cable business?
You must realize that in the last year, the 2-wheeler industry actually degrew, as you know, because of the entry level vehicles were not in demand. I'm not sure whether that scenario will change this year, and this is very judgmental, but I think that flatness, that tempered offtake in the market continues.
So we are not really seeing a huge growth for 2-wheelers per se in this year also. I mean, we also believe that the trend was similar in China, where it grew stupendously and went to something like, whatever, 35 million, 40 million 2-wheelers. And now it has dropped off completely in the last few years.
So having said that, I think we will continue to grow Indian cable business, whether it is through our ability to penetrate more into the 2-wheeler customers, our ability to penetrate more into 4-wheelers. And of course, the strong returns we have in the aftermarket. So our belief is that we'll still grow our domestic cable business pretty well. As I again said, if industry grows at 5%, we should be able to grow at 10%.
So in domestic core cable business, have you won any business in the 4-wheeler side, especially from the large OEMs like Maruti and others?
Maruti have always said, I think we are not really talking about Maruti at all these days because our focus is not really -- I mean, our focus is there. But as a Tier 1, we continue to supply to multiple customers, but not as a direct supplier to Maruti so far.
But there is other businesses that we are winning as Tier 2s, as other customers like Mahindra, Tata, et cetera, et cetera. And even as a Tier 1 of some of these Japanese and Korean suppliers. So we have had -- have our own strength in those areas. That's why I'm saying, I mean, in terms of going into specific customers, we do believe that we'll grow our domestic cable business based on whatever the market conditions are.
My next question is, from the Phoenix. Phoenix is a...
Sorry?
Phoenix Lamps Division. So as you mentioned that you have taken a price hike in this quarter. Despite that, the revenue growth and the margin is quite muted. Just wanted to know what is the outlook...
No, I think you are looking at last year's quarter. I think what Mohan mentioned was in this quarter. That means the current year only, we have got the price increases.
So how it will reflect in the first quarter number, sir?
What -- we have got some price increases, and we have increased the prices in the aftermarket. There's always correct. But still quite a few of the major customers are yet to give the price increases. So it will take a little time. I think it will be happening this quarter and next quarter. And I'm pretty sure it will claw back some of the lost margins. As Mohan said earlier, I think it was a strategic decision not to ask for a price increase because we wanted to keep our market position intact. And that having been done. Now we are looking at it.
So in the next 2 quarters, we'll get certain price increases, which will, to some extent, certainly will offset the margin pressure that we have seen in the PLD, which is one instance where our margins have actually decreased.
Can we see a double-digit sort of the margin in the PLD, sir?
I don't want to say anything about the double digit. I think we want to move forward from where we are now. I think probably by next quarter results, we will know clarity as to what price increases we are getting and how much we have got it. I think based on that, probably we can comment.
And sir, [ RN ] prices has gone down -- is going down, especially for the steel prices. So it's a positive impact on your margin in the coming quarters because 50% of total raw materials base is the...
See, I think there's a lot of new item in the last 1 week, thanks to all these uncertain curves put by the government. But we have to see in the -- practically, we have to see in the operations of these companies how they are reducing the prices. If you ask me, have I received a price reduction from the steel suppliers? Not yet. Because there's already a price increase of the past spending with us for settlement. So probably it will get set up to some extent.
And let me also say this, if customers, the moment the price reduction actually happens, customer is at our doorsteps to ask for price reduction, too. So I don't think it will be margin accretive. I think it will be margin neutral. If the prices come down, just as we got the price increases when it was going up, we'll also are bound to give the price reduction to customers as it goes down.
The next question is from the line of Nikhil Kale from Axis Capital.
My question was on the aftermarket side. Can you just talk about your market share on the aftermarket, both on the cable and the halogen side. And also, I mean, what is the pricing differential between us and the peers?
So you mentioned that due to operative reasons, strategic reasons, you did not take the price hike. But have peers also been aggressive and they have also kind of replaced from taking prices? So just some more color on the aftermarket segment.
Mohan, will you give some color on the aftermarket?
Sure. Let me start with Phoenix. Phoenix -- before I get into the aftermarket and the share of aftermarket, I think if I tell you the capacity in India, then I lead to the aftermarket share. That would be an interesting way of looking at it. Today, we are having about 110-plus, almost about 112 million, 115 million bulb capacity. Okay. And as against this, our nearest competitor would be at around 45 million bulbs. So you can see the stark difference between the capacity that we have.
So which means what other things can happen, other things is imports. Where do these imports happen, there are 2 areas that you can get bulbs coming into India. One is obviously China and other is Korea. Now with all the kind of container shortages and rate issues and also the price increases that are happening there, I would say that there has -- and very, very important is the government's effort to streamline the economy, to make it more, I would say, clean economy, to that extent, I would say it is all playing in our favor in the Indian aftermarket for bulbs. That means capacity is in our favor, and the reduced imports in our favor.
So now I come to the market share as you are talking about. Market share, when I talk about market share, if I look at relative market share and an absolute market share. Related market share is with my brand, my brand of Phoenix. If I talk about my brand of Phoenix, I would be telling that probably I would be at around 60% market share, ballpark number I'm talking about.
So if I look at the absolute market share, there are other players selling in their brands, but I am the guy who is supplying it to them. So back ended, it is my revenue. Of course, there's an added margin up there. Therefore, to that extent, when I look at an absolute market share, it is really, really very, very high. So this gives you a color into what is the kind of market share.
Now moving on to the price differential between the peers. Again, here, what happens is, that's why you remember, I told that I'm testing the price elasticity in the market. The reason I am able to test the price elasticity is because of my market position in my market. Because if I didn't have that position in the market, I always have to look behind and run ahead because somebody is going to [indiscernible] me in the fray.
Now today, the gap is so much that I think I can set my own pace and running forward. And that's what is happening. But having said that, there will be a level of pricing at which the market stops picking up the goods. They will say, okay, let me do without that kind of stuff. Therefore, that is the reason I'm testing the pricing elasticity. Comparatively, if you look at the [indiscernible] order, Philips would win #1. Phoenix, we have moved up the ladder in terms of value chain, we are #2. Osram is #3. Then comes the rest of the other players. There are some niche players at both the top end and at the bottom end, but they are very small quantity players. Have I answered your question?
Yes. Yes, sir. But then, sir, just -- I mean, just to take you 1 forward, given that we have such a strong market share position, I would have imagined that we would have had the ability to take price increases at a maybe faster pace given that we are the leaders here?
Point well taken. Like I told in the previous call, last quarter call. We were running a scheme. This run -- aftermarket scheme, which starts from 15th of August, and runs all the way up to 26 January. That means Independence Day to the Republic Day for easy remembrance, okay?
So what happens is when I'm running the scheme, if I'm going to go and touch the price, it upsets the market in a very big way. Therefore, I purposely did not want to touch the price in the aftermarket till 26 January. Now once 26 January got over, I move ahead and I make those corrections. Again, when you are taking corrections, what happens like what I said testing pricing, a price elasticity in the market. How much are you going to increase it by? Are you going to increase it by 5%, 10% 20%, 50%? So that is where some business judgment should come in where we will have to make certain moves.
And I know, to a certain extent, I, as a leader, would have to make the first move. Followed by me, I would be expecting others to make that move. But whatever happens, there would be a lag between me and other followers making those price increase. During that period, there could be an erosion in volume for me. So I need to balance all these factors before making that decision.
Yes. Got it. And sir, similar color maybe about the automotive cables aftermarket?
Yes, automotive cables, again, we have a good full position out there. Having said that, we can still definitely do much more. We are extremely strong in the southern region. To a certain extent, good in Western region. In the northern region is where we need to kind of get into a much more stronger position.
And one of the reasons that when we go ahead and do these things is the way you are able to fulfill your dealer and distributor order positions. You will be able to get the order, but the question is how fast we react to the market. And that's the reason where we have put in our aftermarket fulfillment center. This is going to be a state of art with technology involved in it, where we'll be able to send goods across to various parts in India very quickly.
Therefore, right now, if you ask me on the market share, I would say there are, I would say, cottage industry players, to a certain extent, it has come down. But I would very safely put my number at around 60% there.
Got it. Got it. Sir, my second question was on -- you mentioned in the opening comments that there was some successful claw back on some cost over [ Argentina ]. So can you just throw some more light on that?
Yes. See, there are -- when we classify the customers, there are different types of customers. You have the "Bara" customers and "not-so-Bara" customers and the "Chota" customers, right? So what we do with all the Chota customers, we literally go and increase the price. We say that, well, come such a date and onwards, our prices revised and our new pricing that's just so and so. That we did at the first around.
Second round is the middle volume customers. With them, also, we have been able to get the price increases. Our sales and market entry has been such a full. Now it comes to the Bara customers. With the Bara customers with some, we have what we call as an LTA, or long-term trade agreement, or long-term purchase LTA, long-term purchase agreements. With them, it needs some amount of scheduling and convincing to tell them that this is what has happened, and therefore, in the best interest of keeping the supply chain alive, we would want you to support us in terms of price increase. And that is happening.
Got it. And just my last question. I think CapEx, you've guided for INR 140 crores for this year. So if you could just maybe break it down for us, what would be the spend on the project CapEx and the maintenance CapEx details?
Yes. Mohan, will you answer the question as well.
Sure. CapEx, I generally classify into 3 major categories. One category I'll call it as land and building, again split probably into land and building. But that ballpark is going to be -- because last year, if you remember, I had brought in about INR 110 crores, which I said that it would be spread over 2 years. Therefore, there is a spillover of that INR 110 crores, which has come into this year. Therefore, optically, it looks as well as INR 110 crores of last year, plus INR 140 crores, no, it is not.
It is a spillover of last year, INR 110 crores, a top-up, which is going to happen this year. Top-up primary is coming because of my electronics area, where I'm putting up the clean room whether has already come up now. The clean room is ready, and I have -- the machines have already come, the assembly line has already come. The assembly lines have already come.
Now they are being, as we speak, are being installed. Therefore, my major, I would say, top of line item this year is probably, we might be looking at some land assets from that, which will aid our, I would say, land banks to expand. Other than that, it is going to be into electronics for it.
The next question is from the line of Chirag Shah from Edelweiss.
Sir, I would...
I'm sorry to interrupt you, Mr. Shah, but we are unable to hear you. Can you please speak louder?
Am I audible now?
Yes.
Yes.
Yes. Congrats on a good set of numbers. Sir, 1 question I had was on SENA. If I look at this quarter, Y-o-Y revenue growth is single digit. Is there anything to read into it? Because generally, the recovery was reasonably well in the nonautomotive market in U.S. So is there a base effect or anything else to look into it?
No, I think the answer for that is simple. I think we have, I think, mentioned in quite a few of the past conference calls, Wescon business is cyclical because the seasons of the green season and snow season, the products are spread out in different times. So I think the effect of that happens in certain quarters. So I think that is the reason why you see that difference. And I think there's nothing more to it actually. The business is growing there actually.
I was more looking at Y-o-Y, because seasonality will be taken care of when you look at...
Yes, because what has also happened is that the start of the green season, for example, start sometimes much earlier or it gets built into the next year. So I think that's what is also happening. For example, the summer season or the green season, let's say, if it is starting a little late because if they had last year's unsold stocks in their warehouses, they will first sell it and start leasing the orders a little later. So it gets built into the Q1 of ours, which is Q2 of theirs. So that is also the possibility that the reason of it. It's just a timing issue, I think.
The second question was on the new E-throttle product that you were mentioning. I couldn't catch it properly, sorry if you have to repeat. So it is a replacement of the throttle cable, right? That is what your intent is? And if I understood it correctly, India...
Yes, E-throttle -- Sorry, go ahead. Complete your question.
Yes. So how does the component mix look like? Is it more bought-out components involved over there? And also the value content, is it similar in pricing or initially it will be expensive and is at all how expensive?
E-throttle is probably 10x the throttle cable. I mean, E-throttle comes both with the cable and without the cable, the electronics mechanism. So I'll probably ask Mohan to elaborate a little more on this.
Yes. In terms of the product value, obviously, it is much, much higher, like the Chairman who was talking about. Let me just explain the product, then I think you will get clarity.
E-throttle is basically a chip, which is there, which is going to analyze the position of the throttle when you twist the throttle grip. The angle with which you twist it is converted into a signal, and the signal is processed and sent across.
Now when you are doing it, there are 2 ways you can do it. Number one, you give IP67 level protection at the handle level -- grip level itself. That means you make it much more robust in terms of its protection towards electromagnetic radiation, towards the weathering effect, et cetera. So you build all those factors at the handle level itself. This is, I would say, configuration 1.
Configuration 2 is you just have a normal grid with a normal cable. The cable runs normally back either near your IC engine or near to your motor controller, and you place this rotary sensor out there because already there is a lot of, I would say, IP67 level protection given there. Therefore, you don't need to have a separate level of protection to be given here.
Therefore, these are the 2 versions that we have developed, and this is what we have taken to the market and shown both the version. In fact, I would not like to name that company, name that brand. A very, very, I would say, state-of-art, well-known EV brand, the CEO of -- the CTO of that was at our [ STP ]. He was there literally on his means checking out all our products, looking at how they fitted and all those things. And he was complementing our engineers and our teams as to the kind of innovations that we have brought about.
And one of them, he talked about was the specific thing when we told that we have these 2 versions available.
The second version would be reasonably cheaper to the first version, right?
Yes. that is correct.
Because it is the integrated one.
Yes.
And sir, is this everything you will be doing on your own, the way you do the cable or initially there will be a lot of amount of bought out components in this?
I think the product pricing will be done such a way that it will be reasonable and in line with Suprajit's thinking of margins. There would be, of course, for example, a sensor would be obviously bought out. But a lot of things are integrated internally itself. So it's a comprehensive product. In some of these products that we have developed, we even have an IP protection. So we expect there's quite a few interesting things to happen in this space.
If I could squeeze in 1 last question. So on the braking products, we have been talking about it since a reasonable time. If you can throw some color, where are we in terms of acceptance of order flows, et cetera and on how you're looking to ramp up the capacity over there?
Mohan, will you answer?
Sure. Look, first of all, we have to understand that we are talking about a safety product, braking being a safety product. For an OEM to switch over to our supplier, it's not going to be very easy. There is a lot of testing that needs to be done, proving which needs to be done, which -- and it has to be extremely rigorous. And that's what we have done because we also, again, don't want to jeopardize our fair name in the marketplace by just being in a hurry to bring something into the product.
So to answer your question, it has been taking a lot of time. The answer is yes, because we want to be WWW sure that a safety product going out of the stable of Suprajit, our brand name, carries the mark of quality that we can really be proud about.
Now getting the customers convinced takes time. There are 2 types of customers. One is the traditional customer who already has got certain supply chain with them, and then you have the newcomers who are coming. Now with the newcomers, we are having some good traction. It is going to take, obviously, more time with the established players.
The next question is from the line of Sri Prasad, an individual investor.
Sir, I just want to ask that what percentage of your product portfolio is EV agnostic? And what percentage of that is not EV agnostic? Can you give a highlight of a percentage on that?
Sorry, EV agnostic? I mean, product, is it?
Yes, the product portfolio percentage that will be impacted if there is a full adoption in EV in the market. The percentage of your parts that will be impacted or the revenue that will be impacted.
I can put it simply this way. In passenger cars, there is nothing that will be affected because of EV, because we have no products there. In fact, it will probably add to our product range as we see it.
In 2-wheeler, we just talked about throttle cable, just a while ago with the -- thing. So for example, throttle cable can be replaced with an electronic throttle control. That is possible. So that is where I think EV and non-EV will come into picture in a 2-wheeler.
The other product changes, for example, if you're going into hydraulic brake systems, obviously, a brake cable will go away if it is preferred to have a hydraulic braking system because it works in a whole system. It has nothing to do with whether it is an EV or otherwise. But that is a different product altogether.
Sir, can you give the percentage of how much is the revenue percentage of these 2 products in your portfolio?
I would say throttle cable is one of the 5 cables, yes. But it's not that all the EVs use electronic throttle by the way. We supply to EV guys who are using usual mechanical cables also. So it is very difficult to give that percentage.
And sir, hydraulic brake also?
Again, hydraulic brake is generally popular beyond 175 CC onwards. Today, the volumes are in the lower level. So again, that depends upon how the markets will change.
So can you...
Higher-end hydraulic brake are there.
Like from 5% to 10%, 10% to 20%, anything in the range?
It's difficult. No, because as I said, how do you say in what cycle, what is hydraulic. Because right now, in the 150 or 175cc plus are having hydraulic brake systems. Not all of them, but some of them. So again, how the adoption is going to there, we don't know.
Okay. So any estimations also you don't have?
We have internal estimation, it is not for the market. That's why we have been working on various other products also.
The next question is from the line of Rohit Balakrishnan from ithoughtPMS.
Sir, most of the questions have been answered. And so just 1 question on STC. Are we also, especially on the digital [indiscernible], et cetera, are we also trying to get into 4-wheelers or it is largely for 2-wheelers at this point time?
At this point of time, it is for 2-wheelers, it is for 3-wheelers, it's also for nonautomotive applications. We are not really, at the moment, focusing on passenger vehicles. But obviously, it will be an obvious next step at an appropriate time as we grow this business and its understanding.
And would it be sort of fair to assume that as we get into products which are beyond cables, we will continue to hold on to our margin guidance of 14% to 16% at a consolidated level? I mean, would that be a fair assumption? I'm not talking about this year specifically but...
We are fairly clear with our STC products that it will also generate something similar. There may be an entry strategy different, but eventually a similar margin profile is what we are expecting and aspiring and working on.
Sure, sir. And just last question, sir, on our lamps business, few calls back, we were talking about getting entry into the U.S. market, given the overall sentiment against China, et cetera. Just wanted to get an update if we have moved forward on anything and we would like to share anything?
U.S. entry, of course, we're still working on the U.S. entry strategies. But there has been certain very strongly entrenched players. The global majors are sitting pretty there, and they were a fairly deep connectivity. It's not an easy thing to break in as such, but we continue to make our effort.
What has happened in the meantime is that there are 2 -- I mean, we have had multiple strategies. One of the other strategies that we had was to enter Russia for all the places in this current situation. And we won some businesses. And then the war broke out, of course, and these things happen.
So our export strategy at Phoenix Lamps is taking strong routes, but there are some disruptions. As I said, we are -- we have a few large orders coming from Russia in the last quarter of last year. But then now they are getting into some limbo, and hopefully, we'll find some resolution to that soon. So there's ups and downs. The market is pretty tough, but we will continue to grow. But U.S. -- entry into the U.S. will take more time.
Got it. And sir, sorry, just 1 more extension of [indiscernible] So [indiscernible] and [indiscernible] have been pitching a lot of headwind, I mean, have been fixing a lot of headwinds over the last many years now. So just wanted to get your sense, what is our thinking around that? I mean, you have tried a lot of things when we restructured it, but does the headwinds continue to just keep on...
Yes, I agree. I think it's a valid point. In fact, we are also reassessing the situation again, I must say. But the point is simple. I think it's been a market where there has been quite a bit of competition. The competition was operating without a full presence in Europe, and we are competing with the full presence in Europe. That adds to the cost. So we are trying to see how we can mitigate that. Of course, we have restructured, as you rightly said. I guess there is some more work to do, and I'm sure we will be working on it soon.
And moderator, it is 12:00. We'll probably take maybe 1 more question. It's already 1 hour.
Ladies and gentlemen, this will the last question, which is from the line of Ronak Vora from AUM Advisors.
Sir, on the Phoenix Lamps Division, you said that our market share is 60%. And our capacities are around 110 million to 115 million bulbs, whereas the second player has around 25 million bulbs, correct?
Yes. I think that is the Indian manufacturing capacity. But there are a lot of imports also, you must realize. The India manufacturing capacity is right. Correct.
Okay. So in imports, don't we see any supply chain constraints for the Phoenix Lamps Division?
Yes. I think imports, as I think Mohan mentioned, there is a constraint. It is more expensive. It takes more time. That's why we have augmented our position in the aftermarket in India strongly. I mean, that's also one of the reasons.
But due to these challenges -- wouldn't be a benefit to [indiscernible] you can straightaway take price hikes to mitigate the margin pressures?
Yes. But at some point, the imports become cheaper, no? There is a fine balance, right? So we can increase so much. And after some time, the elasticity doesn't exist. So we've been testing the market as Mohan said. We did -- we have done 1 small price increase last year end, and then we have done 1 more this year. We will see how it is and how -- at what price it becomes easier for people to import. So it's kind of testing the market at the moment. But we have increased the price in this quarter. And it seems to be okay.
Is it like our prices are at par with the import prices or we are at...
We don't want to go into the pricing positioning in the market. It's much more complex than that. So pricing situation, we don't want to disclose -- discuss in the open forum. But...
No, I'd just like to get an idea.
No, but again, it's not only the pricing, it is also brand. I mean, if Philips can bring it and sell it at 20% higher than us, then they can still sell. But somebody else cannot do it. So the positioning also is important.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
Yes. Thank you all for your continued interest and questions on Suprajit. As I said, it has been a tough year, but we still think that we had a good year going forward as well. Our current year expectations also continues to be a decent and a strong growth, and we believe that LDC will bring a lot more new businesses for us and will be a strong integrated global supplier of cables.
And we are working on all the divisions pretty confidently that, despite the difficult times, we'll turn out to be another decent year for this current year result as well.
Thank you all for your interest. And I now hand it back to the moderator. Thank you, and have a good day.
Thank you. On behalf of Anand Rathi Share and Stock Brokers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.