Suprajit Engineering Limited (NSE: SUPRAJIT) Q3 2025 Earnings Call dated Feb. 13, 2025
Corporate Participants:
K. Ajith Kumar Rai — Founder and Chairman
Medappa Gowda J. — Chief Financial Officer and Company Secretary
N. S. Mohan — Managing Director and Group Chief Executive Officer
Akhilesh Rai — Director and Chief Strategy Officer
Analysts:
Mumuksh Mandlesha — Analyst
Amit Hiranandani — Analyst
Kashyap Javeri — Analyst
Viraj Kacharia — Analyst
Mihir Vora — Analyst
Gokul Maheshwari — Analyst
Ravi Purohit — Analyst
Apurva Sharma — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Investors Conference Call of Suprajit Engineering hosted by Anand Rathi Share and Stock Brokers Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Mumuksh Mandalesha from Anand Rathi Share and Stock Brokers Limited. Thank you, and over to you, sir.
Mumuksh Mandlesha — Analyst
Thanks, Ali. On behalf of Shares and Stock Brokers, I welcome you all to the Superjit Engineering Q3 FY ’25 Conference call. I thank the management for taking some time for this call. From the management side, we have Mr Ajit Kumar Rai, the Founder and Chairman; Mr NS Mohan, MD and Group CEO; Mr, Director and Chief Strategy Officer; and Mr Gauda, Jay, CFO and Company Secretary. I request Ajit Sir and team to give an introduction review about the results and then we can follow-up with the Q&A session. Over to you, sir.
K. Ajith Kumar Rai — Founder and Chairman
Thank you,, and good morning, everybody. I would like to thank Amand Rathi for hosting this call — Q3 call. And thank you all for joining this. As we do normally, we will go through the operations of the company through our key executives. I’ll give you a quick and summary in the end and follow that with questions from all of you. I first will hand over to to shortly give — to give a short brief on the numbers followed by Mohan and then by and then I will have the final words. So I’ll hand over to. Go-ahead, please.
Medappa Gowda J. — Chief Financial Officer and Company Secretary
Thank you, sir. Good morning, everyone. The consolidated revenue excluding HCS for the nine months ended 31st December 2024 was INR2,290 crores at against INR2,113 crores for the corresponding previous year, recording a growth of 8%. This consolidated operational EBITDA for the nine months ended 31st December 2024 was INR295 crores as against INR231 crores for the corresponding previous year, a recording a growth of 28%. The standalone revenue for the nine months ended 31st December 2024 was INR1,283 crores at INS INR1,124 crores, recording a growth of 14%. The standalone operational EBITDA for the nine months ended 31st December 2024 was INR226 crores as against INR200 crores for the previous year, recording a growth of 13%. The consolidated revenue, excluding SES for the quarter ended 31st December 2024 was INR782 crores as against INR724 crores, recording a growth of 8%. The consolidated operational EBITDA for the quarter ended 31st December 2024 was INR11 crores against INR87 crores, recording a growth of 28%. The total debt level was INR627 crores as on 31st December 2024. The cash surplus invested in the mutual funds and bonds was INR276 crores as on 31st December 2024. With this update, I’ll hand over to Mr Mohan, our Group CEO and Managing Director for further updates. Thank you.
N. S. Mohan — Managing Director and Group Chief Executive Officer
Thanks,. Thank you. Very good morning, everybody. I’m Moham speaking from Morocco this time to you. So it’s very early in the morning. So I’ll start with the general market update and then move on to some of the business divisions, update both I will share in informing you what’s happening. Let me start with the Indian automotive growth. We all know that it was not up to the expectations and there was a flat passenger vehicles and moderate two-wheeler growth. Industry grew by around 10% for the nine months as of December 2024. Moving on to the international markets, starting with USA, like I said last-time, we have political stability and this has led to some clarity like Maga, make America great again, tariffs, border controls and tighter immigration laws. But having said that, it leaves a bit of questions still hanging there. The first and foremost, particularly from automotive industry perspective is, will ICE take the lead or you know what I’m talking about a leading electric car maker will make it recede. The second thing is these big OEMs who moved to Mexico and also had these purchasing offices out of China, will they be punished? Therefore, how will this tariff game going to be played. So these are some of the haunting questions in the rubber industry and that has led to a flat sentiment in the US market and also kept the industry on wait-and-watch mode. Europe continues to flounder, it contributes its political and lack of economic stability. We have all been hearing about huge manpower cuts at OEMs, production cuts, Tier-1s, economic brintmanship at the, the smaller niche vendors it’s pretty apparent and stark reality. China too continues its own battle inside. You know I have been talking about this, but very importantly it marches on with its market expansion with its strides that it is making in Europe. Red Sea and Panama can all — still continues to bulk the industry and us. Well, with this backdrop, superior performance remained satisfactory. And we had good growth both on a standalone and on consol basis. Both EBITDA on standalone and consolidated basis, and I really mean excluding SES and that’s pretty correct. Our Indian cable exports saw a fantastic 35% growth. Now this shows the underlying strength in our global strategy as to how we have moved literally almost I would say, conquering the Western world. However, please note this consolidated results reflects one-time expense from ACF Germany and also some of the restructuring costs at ACD and we had a small customer receivable write-off at PLD. Now I’ll move to the divisional updates and I would start with the SCD or the Control distribution. Now despite all these kind of and headwinds that I talked about, I would say that SAD has performed well. We had a 5% revenue growth and very importantly, EBITDA showed in March. Revenue at SED grew by 5%, EBITDA by 100% plus. It. It was driven by new contracts and better plant performance and also of course the restructuring that we are doing. SAL that is the export-oriented unit in India and also the U9, which is again a EU in India, SEU, Hungary, the CFO facility,, China, all these are clocking new businesses, new wins and showing good operational performance also. Moving on to in Mexico, it still continues with the two challenges. One is being tariff, obviously and the other one being the labour cost. On the tariff front we have gone to the court, as you know, and like any courts in any part of the world, you know justice moves very slowly. So having said that, we have not kept quiet. We have been engaging the customers, both the final end-customer and also our immediate customer Tier-1 and trying to clawback and have some sort of a compensation. But in the meantime, we are also doing our part of the job, try to develop alternate motor source to avoid the motor duty issue and that would be from India. We continue to restructure in stages, particularly in Americas, it’s very specifically in to synergize, consolidate and also repurpose our team there. Our US team also continues to win great business like Europe. But what is very important is in the last quarter, we saw them winning business for the electronic products, at least for our SED division like various sensors throttles from two of the major off-highway OEMs. And another important update is that we saw the first consumption of our in-house electronic boards from ACV. That means we used to buy these populated boats, for our plant and that we switched the source to India, that is SED. Therefore, we in-sourced it within the — within the group. Moving on to the domestic cable division, as we have, I think put out in the detailed press release, continues to grow very profitably and it is expanding both in the aftermarket and also the other theme beyond cables. And to be more specific, the STC products and commercialization of the braking projects has been the keystone of what we have been doing out there at DCD. Moving to Phoenix Lamps division, Phoenix PLD did very well on its margin. While the top-line obviously remained a bit and mainly the exports at Lux light has been a kind of a roller-coaster ride for us. However, we are starting to see more of traction in the global market with some marquee customers coming back to us. So this is a general update on the market DCD, PLD and SED and I will hand over to for the rest., over to you.
Akhilesh Rai — Director and Chief Strategy Officer
Thank you, Mohan, and good morning to everyone. I’ll start with the Superjit Electronics division, SED. As you know the EV market in India last quarter is quite tumultuous and there were quite a few changes in the volumes of many players. This meant that revenue grew but some of the margins were impacted by-product mix changes. However, I’m happy to say that we won a very good total project for from our key leading EV two-wheeler customer. And we also secured global off-highway projects in electronics from — from these off-highway customers that Mohan mentioned and also the first supplies of our seat actuator PCB, which went to. To cater to the growing needs of our customers, we also installed a new SMT production line, which is now fully operational and will help us fill capacity and manage capacity going-forward. In the Superi Technology center, we had a great showcase in Bharat Mobility Expo this month. It attracted a lot of very good interest from all our OEMs and also Tier-1s, especially seating Tier-1s who are looking at our actuators with strong interest because this is a product that was a premium product in the US and we are doing almost 500,000 of these actuators in the US and in Europe. But in India, this is a market that is a lagging market and now there is a lot of interest to develop these kind of actuators in vehicles due to the premiumization trends and expectations from the end-customers. So a lot of good interest in our actuator product-line as well as our braking and sensor product lines, which we do from tech center and electronic solutions. HTC continues to support new product launches. A lot of them have been launched already, especially braking products, which are going-live in this quarter and across other divisions as well. Next, I’ll talk about this SCS acquisition, which is now in the integration phase and the turnaround phase. As you know, one thing that we didn’t foresee was the significant shrinking of the European market. This affected SCS’s revenue and their forecast significantly as explained in the press release that you’ve seen. We mentioned last-time that some of these restructurings will take a few quarters. So these first two quarters, we expected to have some restructuring costs. And these costs incurred were due to some one-time restructuring expenses, but also due to significant operational inefficiencies due to the very complex move from Poland and Germany and Hungary all into a single plant in Morocco in very short period. However, we have deployed our operational excellence team from India, including, as you know, who is now talking from Morocco who is leading this effort as well. And pushing to improve the Moroccan operation. I can see — I can tell you that we see some good green shoots of this operation Excellence project where we have, for example, moved, moved from a three-shift operation, we are moving to just about a one-shift operation, which shows the kind of productivity improvement that we could have done on the same revenue and sales. We are happy with the Moroccan team, very strong energetic young team who are very quickly picking-up the expectations and the requirements of Suprajit and we hope to see the fruits of this turnaround project in the coming quarters. Poland plant will soon be closed. It’s already dwinned down to a few team members-only in the Poland plant, but now will be completely closed in the coming two quarters and the Germany warehouse will be shifted to location very close to Suprajit Hungary. So the team will take a lead-in supporting those operations rather than that it sitting in Germany. This will of course reduce significant costs of German operations and headcount. The next key milestone will also be the cost-reduction exercises. This will come most probably in the next year only as we start looking, focusing on material cost as well, both with local Moroccan suppliers and as well as own suppliers, which are quite common with SCS as well. The second tranche, as you know, this was the first tranche was completed, which was mainly the Morocco and German operation and Poland, which will be closing down. But the second tranche was China and Canada and that is under discussion. As you know, we’ve set-up the entities to make these acquisitions in both Canada and China. But this is expected to close-in Q4, early Q1 of next year. This has been a legacy profitable business of SES. We had acquired the loss-making business, which went into insolvency, but this has been running on its own for the last few months and will be continuing to be a profitable part of the business going-forward when they come over to Suprajit. With that, I hand back to Chairman for closing comments any other chairman? Yeah. Can you hear me? Yeah, now we can hear. Okay. Again, good morning to all of you. Just to summarize, Indian automotive growth was below expectations and global markets have been challenging. What’s I think interesting is that performance, whether it’s domestic or international has been solid across all the divisions, particularly Superi Controls division had a good turnaround in this quarter. For the first time, it has declared a double-digit EBITDA margin of 12%, 11.8%. I think that has been a solid performance due to the restructuring and operational excellence that we have been able to achieve in most of the plants. So all-in all, I think we had a good quarter, I would think in this Q3. So with that, I will let the moderator to take control and let’s get all the questions from you. We’ll be able to answer as much as possible. Thank you very much.
Questions and Answers:
Operator
Thank you, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star N2 participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. The first question comes from the line of Mr Mumuksh from Anand Rathi Share and Stock Brokers Limited. Please go-ahead.
Mumuksh Mandlesha
Thanks. Sir, congrats on the strong operating performance, sir. Sir, firstly, just on the improvement in the SCD margins, which has increased to 11.8%. Can you help us understand what has led to the increase? Can you share more details around that? And particularly when we see the P&L statement, the major changes come in other expenses, which has fallen almost 30% Q-on-Q.
K. Ajith Kumar Rai
Sorry, I get that last part.
Mumuksh Mandlesha
Yeah. So sir, I was saying basically in the, the main thing is the costs and other expenses down 30% Q-on-Q. So just can you help us understand what has led to the improvement? And just going ahead, do you see this as a sustainable margins?
K. Ajith Kumar Rai
I think as you rightly said, controls division had a good improvement in margins. You must realize if you look at the total picture, the key plants of ours has performed very well, that is ESAL and the HCU as a combination. Our China Lone star has performed — again, if you compare to last year when they were under movement from a different plant to this plant, there was expenses. So loans are by itself has performed very well. Hungary was again a turnaround quarter in the last two quarters. They have turned around. And of course,, although the non-automotive business had a degrowth, the operational excellence has led in both the Wescon as well as our Unit 9 together performing very well. Except, all other pieces of the puzzle have been performing well compared to last year. I think that is why the margins have improved for the quarter. Is it sustainable? I would believe so that it is sustainable. I think the operations continues to be pretty good going-forward. The reduction in other expenses for the quarter could be because last year, in the last probably quarter, we had a lot of expenses relating to acquisition also and also probably there are more expenses of the restructuring across the group. So that probably was the reason for that. So yeah, overall, I think things are settling down. Actually, I’m very happy that I would probably think of this as a turnaround quarter for SCD controls division, I mean.
Mumuksh Mandlesha
Got it, sir. And sir, you mentioned in the opening comments about sir, you mentioned about the shifting the sourcing of the motors to India and that could be key further even the metaphor profit-improvement. Just want to understand by when do you see that shifting and how do you see that impacting the margin sir.
K. Ajith Kumar Rai
Mohan will you answer that question?
N. S. Mohan
Yeah, sure. Just to give you a background, there was a friend, France-based supplier who was creating a lot of problems for as a part of the supply-chain. There were quality issues, there were delivery issues, there was inflexibility in cost adjustments and this had been the pain. And when I visited a year back or so, we just decided and took the decision that we need to move it to the Indian operations and we can also fill-up and sweat our own assets. So with this, we started this project last year and I’m glad to say that already the supplies have started. Now will it reduce the overall cost? The overall cost of acquisition definitely, definitely will come down, because that’s the main reason we have done it. And very important, we will be able to get rid of a pain point in our supply-chain and also move it in-house and keep the profitability inside. So both accounts, it is going to be beneficial for us as a group.
K. Ajith Kumar Rai
I think. I think just to add two-parts to it. One is the electronics board that was what he mentioned, which will also bring our cost-down of this particular product. There are two issues. One is the electronics board and second one is the motor. We are in the process of getting that particular product also in the process of being approved, it is with customers. So once it is done, I think we will have a two-pronged cost-reduction happening in that project, which would be a significant saving going-forward.
Mumuksh Mandlesha
Understood, sir. Understood. Sir, just for this quarter, was there any ForEx gain in the Q3 quarter and how was this for the Q2 also?
K. Ajith Kumar Rai
I think in our business update is — is not been impacted by that because we don’t take the forex variation. But on the results in, I don’t have an answer. Overall, was there a gain or a loss in.
Mumuksh Mandlesha
For this quarter and for Q2, it was a loss of gain, sir.
K. Ajith Kumar Rai
Actually, maybe to answer.
Medappa Gowda J.
Q4 gain was less not much for the quarter.
K. Ajith Kumar Rai
Your your voice is breaking up. You have to use.
Medappa Gowda J.
You can hear now. Yeah, yeah, overall game.
K. Ajith Kumar Rai
Overall game in Q3, he is asking about Q2.
Medappa Gowda J.
I’ll get back and check and update you later.
Mumuksh Mandlesha
Got it, sir. And sir, lastly, sir, on the SCS losses this quarter also got impacted by the demand in Europe. I just want to understand, sir, based on the restructuring what we are doing and now the plant is getting shifted to Moreco, just anything visibility we have to see the EBITDA posit — positive for this business? And sir, just on the global context, Moreco is also closer to US market. I just want to understand how if any scenario comes, can that plant be used to supply to the US marketplace.
K. Ajith Kumar Rai
Yeah, thank you. There is multiple questions. I think I’ll answer the important point in this is Morocco is very strategically located and Tangier, where we have our plant is the fixth largest I think port in the world with just few hours to Europe and probably less than a week, maybe four, five days to US to East Coast of US. So it’s a very strategically positioned and it is not, you know, how do I say, is not a target list of our current President in the US. So we have multiple options, which we could utilize to make Morocco as our strategic positioning for some of these geopolitical uncertainties and tariffs. So from that point-of-view, I think actually Morocco becomes a lot more important today than it was in the past. The plant is large and we can produce, as I said, from — for producing our current volume from I think some or Mohan made a comment that we have some many shift we are coming to one-shift and that means to say that we got significant capacities available. So we will be utilizing that as and when needed, as and when required from the customer to make sure that their requirement in terms of costs are met when these tariff issues are resolved. So we have multiple opportunities there to use that plant. In terms of current operations, obviously, it has been set-up for the European business and European business for some of those projects are down by 30% 40%, 50%. So obviously, that will have its effect. But you know, in terms of turnaround, it will take few quarters, but the issue is that it’s got a very good team and a very good plant, brand-new. So we are all cable experts and I think as Mohan said, he is sitting there, along with our operational excellence team, the idea is to bring the same operational efficiency that we have in India and elsewhere there as well as bring the cost of inputs down. Currently, their purchase prices on various components that goes into cable. They make very similar cables to what we make. So their cost cannot be more than us, but it is by 30% or so. So with time, I think all that will be changed. So I think it’s a question of time just the way we turned around controls division. I think we feel that we have a very good opportunity to change that in the near-future.
Mumuksh Mandlesha
So got it, sir. Thank you for this.
Operator
Thank you. Thank you. Thank you. The next question comes from the line of Amit Hiranandani from PhillipCapital. Please go-ahead.
Amit Hiranandani
Yeah, congrats, sir, for the superior margin at the SCD level. It’s a commendable job. Congrats to the team. Sir, my first question is basically the bookkeeping question. Can you please help us understand why the effective tax-rate was so high in Q3?
K. Ajith Kumar Rai
On — I’m sorry,, can you answer that? Effective tax-rate is asking.
Medappa Gowda J.
Yeah. I mean, basically in this quarter, the tax on the redemption of mutual funds and bonds, that was included. Was showing more actually.
Amit Hiranandani
What would be sir for the year, what would be the effective tax-rate we can assume?
Medappa Gowda J.
Around, 26% 27% that will continue. There is no change in that. But in the quarter this was an exceptional item. I as well as to you on later call.
Amit Hiranandani
Sure, sure. And sir, on the SCD, basically wanted to understand how much sales happens in the Europe and in the US. I just want a geographic breakup of this segment, please.
K. Ajith Kumar Rai
Europe and US, is it? Between do you have an answer for it? I don’t have the exact number actually.
N. S. Mohan
I would say if I include SAL portion and, as total SED, I would almost split it into 50-50.
K. Ajith Kumar Rai
Yeah, I would think so.
N. S. Mohan
Because is — yeah, because would be more supplying to.
K. Ajith Kumar Rai
Probably a little more in North-America, maybe 60, 40 more on I suppose maybe.
N. S. Mohan
Probably, yeah.
K. Ajith Kumar Rai
Maybe 55%, 45, I think that would be the number. But we can find that out and give it to you later, if you like.
Amit Hiranandani
Sure, sir. And sir, just on the, which is recently-acquired, looks to be in deep pain. We understand that on these restructuring and complete shifting operation takes time. So are we reading it correct that it will take three to more — three or four more quarters to have a table or a breakeven EBITDA level for?
K. Ajith Kumar Rai
I think there are two portions to it. SCS Germany, which is the first part of our acquisition was an insolvent company. Obviously, was making losses. So that continues. And as I said, now that we have information on the product and the current situation and their current cost structure, we have a clear roadmap internally that we could turn this around in the next few quarters. As Akelesh was mentioning earlier, when the second tranche closes, the China and Canada part, that is actually a profitable part of that business. So when you look at together as the SCS, let’s say, from 1st of April onwards, I think the numbers should look slightly better. And of course, the work-in SCS Europe continues for at least two to 3/4.
Amit Hiranandani
Right, right is helpful. And sir, secondly, how much is.
K. Ajith Kumar Rai
Continuously an improving situation? It is not that it is going to be deteriorating going-forward. So I think you have seen the worst of it already.
Amit Hiranandani
Great, great, great. And sir, how much was the one-off cost we have incurred in Q3 and 46 months and which is non-recurring in that.
K. Ajith Kumar Rai
I think you have to checked with offline. We don’t have — there are multiple issues right from cost of acquisition charges and in advisors and investment bankers plus the restructuring part itself of paying out the people, et-cetera, etc. I think there are multiple heads. So you can have a conversation with.
Amit Hiranandani
Right. Sir, my second question is on the — what all business segments can impact due to tariffs on China?
K. Ajith Kumar Rai
What business segments like our China, I think we already have discussed now. I think in we have that one big issue. That’s it.
Amit Hiranandani
Okay, okay. And sir, for the —
Operator
So private therapy, Amit, I would request you to rejoin the queue as there are many participants and the management would like to address as many as possible. Thank you so much.
Amit Hiranandani
All the best.
K. Ajith Kumar Rai
Thank you. Thank you.
Operator
Participants, please restrict yourselves to two questions. If you have any more, I would request you to rejoin the queue so that the management could address as many questions and participants as possible. Thank you. The next question comes from the line of from Emkay Investment Managers. Please go-ahead.
Kashyap Javeri
Thank you so much and congratulations for reporting great numbers and really multi-quarter high EBITDA margins number. My two questions are, one, within you — Suprajit INC US, we have this one operation which is in Mexico, which contributes about $23 million of revenue. So again, the same question on tariff, how much does that impact if at all later on these tariffs are reinstalled, then how much does this impact our Mexico sub? Second question is about the margins. In SED comments, we have mentioned that the new contract negotiations have started reflecting in better margins for overall SED division, including Unit 9. So across all the subs, you know, are the — are we now sort of EBITDA-positive? That’s the second question.
K. Ajith Kumar Rai
First of all, I think the SCD had I think in this quarter-specific, we had 11.8% EBITDA, which is — for the first time, we are crossing a double-digit, so we are status of turnaround. Now in terms of your other two questions, I think Mexico tariff, tariff will have been — what has been introduced has been held back. Now what happens if they again reintroduce? I think that is the question I think you’re asking. And so if that is the case, please understand we are not the only company auto components who all moved at the instance of US way back, I don’t know, goes back to decades to Mexico, including the major automotive manufacturers themselves. So it is that everybody will be in the same boat. The question is how the boat will fail is the question. I mean, all the auto component guys, I’m pretty sure will lift their hands up and go to the customer and say that, look, we can’t buy this cost. You either take it or leave it. I mean that’s the way it would be approached, not by not only by us but everybody else. So it’s going to be a general issue. So we need to see how — how much of this threat is actually transforms into actual words. Please also understand that in terms of these tariffs, some of the suppliers and customers have multiple entry into US and entry into Mexico and exit back into US. A component goes four times Indian out of US as it transforms into a, let’s say, a large part. Now the tariff going to be every time, there are so many unanswered questions here. So I think we are all on a wait-and-watch mode. We’ll be similarly affected that everybody else because I think it’s a huge market. And I think ultimately, it is a customer who will have to pay and eventually the consumer who will pay it leading to inflation. That’s our view on that matter. Now coming to margin improvement, I think that is the other question you had. I think one is, as the capacity utilization goes up, the margins improve. Secondly, the newer contracts that we have are always-on a slightly better margins. So this is what is happening. The legacy old products where we have bad pricing when we acquired, let’s say, LDC, they are slowly going away and the newer contracts are getting in. So it’s a process. You’re seeing the transformation happen here. I think that will continue to happen. But of course, there will be ups and downs in the process. As I mentioned, I think in my last in the last con-call, in the international auto component market, I think 6% is acceptable, 10% is very good. I’m very happy we have exceeded that. So in a sense, we are in a good wicket. But of course, our journey to further improve and consolidate this what we have achieved so in this quarter is paramount importance for us.
Kashyap Javeri
Yeah. But the question is, sir, are all the subsidiaries EBITDA breakeven now or there is still some.
K. Ajith Kumar Rai
Okay. Yeah. Let me give a larger picture. I think if you are — if you are trying to ask whether every piece is profitable? The answer is no. Okay. Let me be very clear on that. Let me also give an answer for that as to why. I think today, as we restructure our entire group’s global operations, it is not the question of individual piece being profitable or not profitable. What is the best-value to customer, what is the best-value to? I think that’s what we asked. In the process, we may be moving, let’s say project from to India, which is what we are doing now, bringing the volume further down in and maybe it will add more loss there, but it will double the profit in India. So if you look at individual piece, the answer some pieces may have a problem. But for us, we look at the controls division as a single entity on performance. So that performance should keep improving. I think that is the trajectory and outlook that we are taking.
Kashyap Javeri
Sure, sure. Thank you so much, sir and congratulations again and best of luck for the future.
Operator
Thank you. The next question comes from the line of Viraj from Simple. Please go-ahead.
Viraj Kacharia
Yeah. Yeah, hi. Thanks for the opportunity. Just three specific questions. First is on SED. If we look at your — am I audible?
Operator
I’m sorry to interrupt, you’re not quite audible.
K. Ajith Kumar Rai
You are — there’s some more eco in that. Yeah.
Viraj Kacharia
So is it better now?
K. Ajith Kumar Rai
Yeah.
Viraj Kacharia
Yeah. Just a couple of questions. First is on SCD. So you see.
K. Ajith Kumar Rai
The current division?
Viraj Kacharia
Yeah, Control division.
K. Ajith Kumar Rai
Yeah.
Viraj Kacharia
The current quarter, we still had impact of US duty. There were some restructuring operations. The overall utilization in some of the entities were still lower. Still we did a 12% kind of EBITDA margin in this business. So were there any one-off? And added question is, in the past always communication was that on a blended basis, SCD should eventually move to 10% to 12% margin. Now with the restructuring, which we are talking about and also the change of source for motors, how are you looking in terms of the structural margins for SCD, ex of SCS going-forward?
K. Ajith Kumar Rai
Yeah, I think we always talked about our aspiration to go to double-digit, which you have done. But then 1/4 is not the story, right? I think we have to consistently perform. There is always a product mix variations and things like that happen in a quarter. So as long as we stabilize in the next two couple of quarters in the range that we are, it would only mean that we are strengthening our pace. And then when the newer projects come in, it will further improve. I mean, we feel that there are opportunities to improve from where we are now. Please also understand not that every new contract comes at the best of prices, sometimes the competition also is there. So overall, I would say the current quarter’s performance is good, but sustaining that is the challenge for us.
Viraj Kacharia
But in terms of the restructuring which we did in FCD and also there is a negative impact of Viscon non-auto business and the end-market not doing that well. What kind of a cost-saving we would have arrived or underutilization we would have seen in SCD? Just to get an idea of the kind of either the savings we see going-forward or the negative hit from a non-auto business we are seeing?
K. Ajith Kumar Rai
, maybe you can answer a little bit of how we are bringing our MAX teams into all these things and how we are doing some operational improvements, etc, etc. I think that question.
Akhilesh Rai
So I think firstly, of course, like you said, the off-highway segment has been a bit sluggish, mainly because of also the housing market in the US being a bit sluggish and the agri market being sluggish. But the positive is that Wescon is doing very well as given in the update. So they have restored some of the good margins that they’ve had in the past and that was because of a lot of operational excellence projects done at Shop by our team in Wescon under Jim. And so that was one positive contribution. And like Chairman said, we have this concepts of Max teams where we worked closely together to make various improvements across all our plants. And this is everything from, you know, our China plant supplying various components to our Matamorris plant, which Matamoris is buying at a much higher-cost from local suppliers, whereas our China plant, for example, already had the same part developed in China. Similarly, we talked about some of the projects in — that we are exporting from India, whether it’s the electronics, parts and also various other parts also for WestCon, for example, we’ve done synergy projects with Wescon, so that a lot of their parts are bought from India where we have our Unit 9 also sitting. On-top of that, between LDC and Wescon, the erstwhile LDC, the Matamorris plant and the plant. And Wescon, there were a lot of synergies in terms of procurement of cable, wire, raw materials. And this also brought a lot of synergies. And the last very important project we did was actually move a lot of Wescon injection molding that they were buying from a US supplier to Matamorris where we had spare capacity. And this also added to both our team. So these are the kind of synergies that within SCD, we have been able to materialize over the last year. And going-forward, we do see a lot more opportunities with the — through these MAX teams and this is a constant work that we are working on. So some of the, let’s say, what we call zebras or low-hanging fruits have been picked, now it’s a bit more, let’s say, we have more complex synergies to try to take-up and that’s what the ongoing restructuring will be addressing. And this is a constant effort.
Viraj Kacharia
Thank you, Akhilesh. Just two questions. One is on SCL.
Operator
Viraj, I have two questions. Could you please rejoin the queue yeah.
Viraj Kacharia
Okay.
Operator
Thank you. The next question comes from the line of Vora from Equirus. Please go-ahead.
Mihir Vora
Yeah, hi, thank you for taking my question. So my first question is on the business. So basically, margin at have been around 5% since past few quarters and we are seeing growth in the segment.
K. Ajith Kumar Rai
So given what you’re talking? Sorry electronics.
Mihir Vora
So, electronic business. So like what is?
K. Ajith Kumar Rai
Yeah.
Mihir Vora
What is impacting the margins here? Basically the revenue has been growing, we are seeing good growth here. So can you throw some more color on it?
K. Ajith Kumar Rai
Or you’re talking about electronic divisions, margins and business. Mohan, will you answer that?
N. S. Mohan
Yeah. As you know, one of the key things in the electronics business is its investments, you know, and also the fixed-cost. The kind of labor that we employ, the employee cost that we have will be the same. So what we are doing is we are setting up this division. When we set-up the division, there is going to be a basic set of things that we would be leaving, what I Call-IT as a hygiene factor, like I need to have an a very good-quality control guy, a very good engineer — engineers there. They obviously cost more than what we would have done probably for electronics. Therefore, this is a parent shift for us in to do something of this kind of a business. So for me, it is going to be volume sensitive, it is going to be utilization sensitive. And as the utilization builds up and we start sweating the assets, I’m sure that we should be able to get back to the double-digit.
K. Ajith Kumar Rai
I think to add to what Mohan said, I think just for the information, we had — we started the entire electronics division with one S&P line. We have set-up a — another top-line SMT line, which went into production recently — I mean in that quarter. But the point is we also set-up the overheads to set it up balls as well. But the volumes have not picked-up because you know some of these EV players whose volumes have been projected and who have been pushing us to set-up the second-line, suddenly the volumes have all collapsed. So it’s a portion of, I think readjustment for a quarter or so. I think as the time builds up and the capacities gets filled up, these overheads gets covered. So it’s just the question of a growing pain and issues of a brand-new division, I would say, and it’s only a short-term.
Mihir Vora
Sure, sure. And sir, my second question was that you mentioned that there is around a 34% growth in exports in the export unit. So like I wanted to know that how much of it would be attributed to be shifting the production from, say, our overseas subsidiaries to India in terms of cost-benefit for customers and how much of that would be to our internal group companies also? Like is the growth organic to our new orders or how we see it?
K. Ajith Kumar Rai
I think the 35% growth what we talked about is in cables. I think out of which the one that we have done inter-divisional and let’s say, reshuffling and into India is not very large. They are all brand-new businesses, one in India. I think just for the matter of record, Suprajit Automotive has been winning some significant, significant large contracts and you will see in the upcoming week quarters, the growth of SAL, Suprajit Automotive will be even more exciting as we have won multiple new contracts, which will all go into production in the next few quarters, starting now. I mean, it has already started, but it will start taking more momentum. So the winter company ships are — for example, we are doing some electronic chipsets and some sensors at the FCD, the PCB for our Metamora plant. Those kind of things are happening to improve the internal efficiencies from India. And some cables, of course, SAL is exporting something to Hungary plant, for example, to improve for some of the BMW projects and we are in the process of doing something for. So that is also their part of our restructuring. But the real thing is that we are winning significant new contracts from — for SAL, that’s what is the number that you showed you.
Mihir Vora
So sure. Okay, sir. Thank you.
K. Ajith Kumar Rai
Thank you.
Operator
Thank you. The next question comes from the line of Gokul Maheshwari from Orega Capital Advisors LLP. Please go-ahead.
Gokul Maheshwari
Yeah. Congratulations on a very resilient performance. My question is, did you see any impact of any pre-buying in anticipation of tariffs where your customers would have stocked up more inventory than normal?
K. Ajith Kumar Rai
No. Answer is no. Nobody stops up to this thing. Yeah.
Gokul Maheshwari
Okay, great. Second is just on your — the business, the market has been fairly sluggish for a while now. What is the outlook with WestCon — WestCon business?
K. Ajith Kumar Rai
Yeah. Okay.
Gokul Maheshwari
Yeah. Could you just give an overview of how you’re seeing the business shaping up over the next 12 months, particularly where there has been a tariff on China and I think so there is a lot of China element in US for product range — in-product range. So if you could just give an outlook on that.
K. Ajith Kumar Rai
, the answer is talking about the sluggishness at in terms of business growth. Of course, margins are good.
N. S. Mohan
So there are two portions to this question. One is what you asked about the industry scenario. And two, basically with the political stability coming in, I would expect some amount of working up. But again, it is all subject to how the inflation moves and how the interest rates move, because that is linked to the housing market. And if the housing market picks up, then straight away your both ag and carry construction business picks up. Not only construction business picks up, your business for your lawnmowers and all those kind of things, what we generally Call-IT, green products, they pick-up. Therefore, it is all kind of linked to each other. So that’s why I just mentioned it is all a wait-and-watch as of this economic scenario in US. My personal take on this is this is going to be temporary. This tariff is going to be used as a — to make some deals. Therefore, I don’t think they are going to shoot themselves in their foot, but the trade balances would definitely be addressed. There is going to be some corrections, there is going to be some pain in terms of inflation, which could mean interest rates could be marginally moving up in US and that could be impacting some amount of, I would say, housing market. Therefore, I think we are in for some amount of long-haul on not so great roads. We are still on-off roads, I would say there. Now coming to the second part of the question, a significant import content from China and all those stuff. I would say that it’s not very greatly significant for us in Westcom and specifically talking about Westcom. Yes,, we have significant content, but otherwise, I think it should be manageable. I don’t think it’s going to be a back breaker for us in.
K. Ajith Kumar Rai
I think to add to what Mohan said, I think we are in the same boat like most manufacturers who are dependent on China, probably we are less dependent. So I think ultimately, we’ll all be going to customers about all these if there is going to be eventually a tariff for us. That’s number-one. Number two, in terms of important point is what again you asked and Mohan answered, in terms of non-automotive business, not just in, I think we also have non-automotive business out of China or out of. I think we have — we are in the — I think we are in the bottom of the pit. I think in the next one, two quarters, it should stabilize and start improving. The important point is that we have tightened our belt so much, despite these low volumes, Wescon is turning out good margins. And now I don’t see any further downturn in the volumes as such. And I think going-forward, things should only be improving. So that’s what we expect.
Akhilesh Rai
Let me just add to that, Gokul, I think what you said about the end-customer, I think you’re right, there are a lot of these duties that will start hitting things like golf parts and these fully built vehicles that are coming from China. And this will be a possible very positive impact for us because till now that has also contributed to reducing the volumes from our local customers in the US. And the second important point is that even though we don’t see much of growth in the — in the current customer profile for current products, the focus like you said and shown also that things like electronics, things like braking, this is where we are winning a lot more contracts now with the existing customers and existing volume and that’s where there will be a lot of good growth at SCD going-forward.
Gokul Maheshwari
Great, great. All the best and thank you very much.
Akhilesh Rai
Thank you.
Operator
The next question comes from the line of Ravi Purohit from Securities Investment Management Private Limited. Please go-ahead.
Ravi Purohit
Hi, thanks for taking questions. Most of my questions have been answered. Just a couple of things. So I think we had mentioned about a lot of costs because of employees and some costs which we are able to pass to-end customers in the American and European. And.
Operator
Thank you, Ravi. Could you become a little confused. Please come a little closer to your microphone. Thanks.
Ravi Purohit
Yeah, can you hear me?
K. Ajith Kumar Rai
Yeah.
Ravi Purohit
Yeah. So basically just wanted to understand about the some of the labor costs that we had discussed earlier in of the costs which we were unable to pass to our end-customers. Any update on that? Any update on the duty case that is going on in US? Of course, I think you had mentioned that we are trying to diversify the motor supplier. But any updates on those? And lastly, you know, SCS, how much more in terms of restructuring cost that we will have to bear in the coming quarters?
K. Ajith Kumar Rai
I’ll answer the SCS part because I think it’s an ongoing effort because whenever you take something which is from a — from a insolvency situation, it takes a little more time, at least a couple of more quarters is what we are expecting. There would be costs involved to streamlining and cleaning up. Now in terms of the labor and metamoras, labor costs in and also the the legal case, maybe Mohan, you can answer that question.
N. S. Mohan
Yeah let me start with the legal case. Like I mentioned, you know, the else of justice moves very slowly. So we have provided all the relevant documentation and there was an appeal that there was — was — the note has gone — gone through what is called a bench. The bench hearing has to happen and that has to be scheduled. So as of now, it is very, very clear that it is going to take its own time, but we are pretty much confident that they have got a very strong case here. Having said that, we cannot keep quiet. Therefore, we have taken a two-pronged action. One is approaching the customer and trying to claw-back on that. That’s going on. And even as of last week, we were there in front of customer trying to justify it. That’s one thing. Second thing is, now with this additional 10% coming into a picture, if somewhere somebody, one of the OEMs kind of buckles down and starts giving and yields there, then it is going to have a tumbling effect in the entire, I would say, industry. And this is going to make our case much more stronger, right? So that is the second part of it. Like you said, we are also working on look — getting it from India rather than from China, that should also help. Therefore, there are multipronged approach that we are doing, specifically legals, it is going to take time like being in the Indian courts. Now moving on to the second question that you asked on the labor cost and employee costs. Definitely, yes, that is a cost for concern. And the only way we can fight that out is improving the productivity and bringing down both at managerial level, that means the stack level and also at the operational level, the operators. On both the counts, we have been taking action. We have been literally kind of taking the three added and so that the right groups fall down. So that’s what we have done. And I presume that that’s going to help us on the long-run to improve the productivity both at the blue-collar and the white-collar.
K. Ajith Kumar Rai
And I think to add to that, Ravi, the labor cost for the existing projects, it’s not possible to pass-on. But please understand the newer contract that you’re winning, we are winning at the new labor cost. So now even it’s a slow turnaround that’s happened. The whole projects have to die down and the new projects have to pick-up. So I think that’s the way it will work as far as the labor cost, because the customer won’t pass, give it to us.
Ravi Purohit
And sir, just one last question. And I think this is a broad strategy question. I think I have asked this couple of times earlier also. In the sense that are these global M&As that we are doing like unavoidable part of our expansion plan because what we’ve seen in Indian case itself, right, we’ve seen companies like, Holdings, Sundaram in Europe, particularly in Germany and you know some of those countries and eventually after five years or 10 years and burning a few 100 crores you know they have realized it was not worth it in the first-place, although in each of those cases, it was the customer who actually kind of them to kind of acquire those facilities. So again, I understand you know we have — we are global company and we need to kind of have operations across-the-board. But just kind of your own experience for your thoughts so-far, you know, if you could just share.
K. Ajith Kumar Rai
Okay. I think it’s again a very generic answer, I would say. What are we trying to do as a strategy? Is that you know, it is not the question of are we number-one in the world. That’s not really the question. What are we offering to the customer. I think we know all — we all know the geopolitical uncertainties in the world. So what is the customer expecting? Customer is expecting the best possible solutions to their problems of procuring components. So all we are offering to customer today with this strategy is that they have option to buy locally. If they want, they can buy closed shoring if they want. They can buy from low-cost. Now the low-cost has got tariff issue that will again resolve the low-cost going to-high cost or low-cost going to near cost. So there’ll be restructuring. So which supplier has this ability to restructure customers’ requirement based on onshoring, shoring, nearshoring or low-cost, best, he will win more contract because he’ll be able to flexibly offer best solution to the customer. I think that is what we are trying to provide in terms of our current footprint. And I don’t really think that we are — we have any issues in delivering that. In terms of our own, I accept your point of some of the OEMs that you mentioned about had their own trouble. But if you look at our own projects that we have taken-up, I mean the last so many years, right from the cables has becoming one of our best acquisitions today between Guild become Europe and is giving us the best margins ever. And if you look at WestCon, despite the volume of non-automotive crashing from a negative side there into the best double-digit — decent double-digit margins. And when you look at LDC, except for where we are stuck with labor and this motor problem, the rest of it is a completely turnaround. So I think what we are able to do is that we are not entering into a new business or a new product by acquiring. We are going to a product which we know well, we know what it costs to make and we know-how to operationally excel in it. So that’s where we are going. So for us, as long as we are given a reasonable time, which is what has happened. I mean, classic example is the controls division, right. Two years, it is a double-digit margin business. So I think that is the kind of long-term strategy that we have. And we don’t really buy things which we don’t know or we think that we can’t turnaround. I mean, that has been our story so-far. I mean it’s very generic answer, but I hope it answers.
Ravi Purohit
Yes, it’s very much, sir. Thank you so much and all the best, sir.
K. Ajith Kumar Rai
Thank you.
Operator
Thank you.
K. Ajith Kumar Rai
I think it is 12 or two. I’ll take probably one more last question, moderator?
Operator
Sure, sir. So the final question comes from the line of Apourva from Bugal Rock. Please go-ahead.
Apurva Sharma
Am I audible?
K. Ajith Kumar Rai
Yes.
Apurva Sharma
Yeah, hi. Thanks for the opportunity. So this is on the electronics division. You mentioned some of the EV space in the two-wheelers has gone through some transition at the top and volumes are coming in. So this is probably the new-age EV companies — EV-led companies, right? So just wanted to understand what is the — some color on new projects on established ICE players which have launched EVs, right, the older players, any projects with those guys?
K. Ajith Kumar Rai
I mean you’re talking about electronics division business, right?
Apurva Sharma
Yes, yes.
K. Ajith Kumar Rai
You want to answer that question?
Apurva Sharma
Some new projects with the older players.
K. Ajith Kumar Rai
Akilesh?
Akhilesh Rai
Sorry. Yeah. So of course, I think in the last quarter, we actually started delivering and working closely with one of the ICE OEMs on their ICE vehicle for their cluster, the two-wheeler. On the in terms of other products for existing ICE who have launched these EV products using various actuators, this is kind of various actuators. So things like your charge, lock gun actuator, these kind of products that go and work as an actuator. We also of course, you know we continue to supply things like cables and regular products, which even go on these EV product — EV vehicles. And even coming back as these ICE and regular EV OEMs push for lower and lower-cost, they are also pushing to go back to a to mechanical cable-based systems, which are finally the lowest-cost way of doing actuation on a vehicle. So there is quite a bit of push there whether it is our seat lock cables or brake cables or steering lock cables, this is all kind of cables that are coming back a lot as we push for scale in the EV side of current ICE vehicles. So in these and of course, on our braking side as well on various OEMs on their EV — EV platforms, we have been nominated to support with things like CBS and brake lever systems. And going-forward, we’ll be hopefully bringing more of our braking systems as complete products into these vehicles.
Apurva Sharma
Okay, I asked — so on — just a follow-up on this. This we are looking more on exports as an opportunity in the electronics division. Do we see some softness on the domestic side of it, I mean in the electronics division or how — I mean, how are we looking at it in terms of ramping-up this division??
Akhilesh Rai
Yeah. So no, it’s not that there is that much softness. I think, of course, the domestic side of the business will grow well and a lot of our customers have shown a lot of interest in our electronics division to take more-and-more products, both, both actuators and clusters. But we have a great — one of the great advantages of Suprajit is we have access to all the global OEMs and Tier-1s, I mean from off-highway to passenger vehicle to Tier-1s that supply indirectly or directly to these OEMs. And all of them have some kind of electronics needs. So we have a vendor code and they have an interest to come to India. So this is also a low-hanging fruit that we can take advantage of. So I would say it is an addition to our domestic demand, which is also good.
Apurva Sharma
Yeah. Okay. Yeah. Thank you.
K. Ajith Kumar Rai
Thank you. Okay. Thank you everybody. We really appreciate your continued interest in Suprajit. I hope we have been able to answer your questions as much as we could. If there’s any further clarification, please contact for any further clarification. I would like to thank Anand Rathi, Mumuk Sha and his team and also the call team for organizing this call. Thank you very much and have a great day. Thank you.
Operator
Thank you so much, sir. Ladies and gentlemen, on behalf of Anand Rathi Share and Stock Brokers Limited, that concludes this conference. You may now disconnect your lines.
K. Ajith Kumar Rai
Thank you.