|
Suprajit Engineering hosted a conference call on Aug 24, 2020. In the conference call the company was represented by K Ajith Kumar Rai, Founder & Chairman; N S Mohan, MD and Group CEO and Medappa Gowda J, CFO & Company Secretary.
Key takeaways of the call
Q2FY21 should be a pretty good quarter as the numbers for first two months stay good. Customer off-take in July-August 2020 period was about 90-95% of the level in same period of last fiscal.
Domestic after market has picked up very well, during the month of June & July the aftermarket sales have shown growth on YoY basis. The domestic sales to OEMs are coming close to previous year's levels in July & August 2020.
Wescon: Operations of both plants at Wichita and Juarez operated below the capacity in Q1FY21 due to plant shutdowns at customers' end. Now at Wescon, the business volume have started to pick up during the months of July and August to near last year's level.
Automotive exports through SAL/SEU are approaching last year's levels.
The company has let go about 8-10% of employee largely in lower and middle level. Once the business is back to normal the salary will be restored back to normal from current salary cut. So while the benefit of reduced manpower will stay back the salary cut will not sustain once the normalcy returns back.
PLD (Phoenix Lamp Division) is fully loaded at the moment. Started to run the PLD plant on 3rd shift. Halogen lamp will be in demand in after market for long time given the current vehicle population with Halogen lighting systems. So any shake out in the industry by existing top player will be beneficial for the company to expand market share. Philips once a leading player has become the customer of the company.
Halogen Lamps, the company is strong in OEM market in India, but in developed market of US & Europe, the company largely focuses on after market segment. The company has no plans to get into OEM segment of the market in US. However the company is to supply to OEMs in China and Brazil through tier I Suppliers.
Got cable supply order from Ford & VW for their EV range which are scheduled to be launched in next couple of years.
More business from existing customers is happening pretty good.
Capex for the year will be kept at minimum, mostly towards maintenance and completion of few essential projects. No major capex is planned for FY21 & FY22. But maintenance capex will be carried out which will be about 2% of its revenue.
In cables the company has a share of 70% in two-wheeler segment and in 4-wheelers its share was about 35%. In case of some clients it share will be about 80% and in some other cased it is 60%.
The company has 55% market share in Honda motors.
Consolidation of warehousing in Europe is completed. The European Warehouse at Koper, Slovenia is now fully operational.
Performance of Suprajit Engineering Group will be much higher than overall automotive industry. So which business is contributing what is immaterial.
Overall outlook for the current quarter looks encouraging although the impact of Covid 19 for the whole year is difficult to assess at the moment. If there is no further lockdowns the company expect to turn in good numbers from Q2FY21 onwards.
|