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Suprajit Engineering has posted a strong Q1 with income growing 64 per cent and profits up almost 43 per cent. Speaking to BTVI , Suprajit Engineering Chairman and Managing Director Ajith Kumar Rai says the company is seeing good orders from its top clients that includes BMW, Renault-Nissan, TVS Motors, Bajaj Auto, Hero MotoCorp and Honda Motorcycles. The company is also on the verge of completing its capex for Phoenix Lamps and Suprajit, he says.
Both Phoenix Lamps and Suprajit have posted strong Q1 numbers. On a consolidated basis, there has been a growth 64 per cent; even on a standalone basis, both have done pretty well. The EBITDA margins have improved by about 150 basis points and the EBITDA on a consolidated basis has increased nearly by 75 per cent, from ₹33 crore to ₹40 crore. The business has been good.
We have been able to gather some momentum in terms of market share and new businesses. So overall I think we have been able to do better in the export market both at Suprajit and Phoenix. It has been a good strong quarter for us considering the fact that the commodity prices were fairly stable, and the interest rate were somewhat low. We have been able to do better compared with our competition in terms of our margin profile.
Can you elaborate on the client revenue contribution? What are the major driving factors there? What are you counting on for further expansion?
We have a strong presence in the two-wheeler as well as the automotive segment. Our top 5-6 customers include TVS Motors, Bajaj, Hero MotoCorp, Honda Motorcycles, BMW and Renault-Nissan. The customer profile is fairly diverse. We have been able to get better share and newer business with some of the customers in each one of the segments. So that has been responsible for our increased revenue growth compared with the industry.
Do you expect this growth run-rate to continue for the rest of FY17? Can we expect a similar trend in numbers now that your integration with Phoenix Lamps is complete?
The integration with Phoenix is in the process of completion. We have just got the SEBI approval for the merger. The process for getting the High Court approval is on. So it will take few more months. But yes, integration has resulted in good synergies between the two companies.
In terms of the growth going forward, our stated philosophy on how a business will perform is that we will grow 5-10 per cent better than the industry growth and our margin profile will be within 14-16 per cent in terms of EBITDA. So we continue to stand by our guidance. We are confident that will deliver by the end of the year.
What is your capex plan?
There are two capex plans — one for Phoenix and the other for Suprajit. Phoenix has a capex plan of about ₹30 crore, which will be completed by December. With the implementation of a new production line for one of our lamps, the Phoenix capex will be complete.
At Suprajit, we have had a larger capex outlay of nearly ₹150 crore, over the last two-three years. The last part of it is getting completed. We just commercialised our new plant at Oragadam near Chennai. That has started commercial production. So has our plant in Anand in Gujarat.
With that, we probably have a left over of ₹10-15 crore worth of capex to complete. But most of the capex were done in the last 18 months. Now, we are preparing ourselves for a good economic growth.
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