Suprajit Engineering reported a good second-quarter despite the challenges. It witnessed revenue growth of 13 percent and the margins went up to about 70 basis points year-on-year.
Discussing the outlook going forward, Ajith Rai, Chairman, Suprajit Engineering said currently, the Indian automotive business is undergoing stress simply because of the significant chip shortages. In addition, there are significant headwinds in terms of material cost increases, the global supply chain issues relating to port congestion and shipment issues on containers etc. Therefore, the problem exists, he explained.
Leading car manufacturers had to cut down the production due to chip shortage, he said, adding that the problem is not going to go away this quarter, or even the next quarter. However, for Suprajit Engineering, the impact hasn’t been big as its business has been robust, said Rai.
“We had won lots of new businesses. So overall, we have had good growth with a stable market. As far as the industry is concerned, on the OEM side, there are certain headwinds but we are doing pretty well in the aftermarket business, which has been quite robust both at the cable division as well as at the phoenix lamps division level,” Rai told CNBC-TV18.
When asked about margins, he said the company has been able to manage them by optimal operational efficiencies, and by being able to pass on some of them to domestic customers.
“Suprajit has historically guided that on a consolidated basis, it will continue to outbid Indian automotive performance by at least 5-10 percent and our EBITDA margins on a consolidated basis would range between 14 to 16 percent. Despite these significant headwinds, at an operational level, we believe that we will continue to deliver these to our shareholders,” said Rai.
For the full interview, watch the video