Conference Call      
          Suprajit Engineering
Capacity expansion to 150 million cables per year to be ready by Dec 2012


Suprajit Engineering held conference call on 1st Feb 12 to discuss its performance for the quarter ended Dec 2011. The meeting was presided over by Mr. Ajith Kumar Rai -Managing Director and Mr. Medappa Gowda – Chief Financial Officer

Key Takeaways from the call

Expects Q4 FY 12 performance of the company to be fairly good, despite the lukewarm trend of auto industry.

The direct aftermarket sales grew by 50% in nine month ended Dec 2011 and the same growth momentum is expected in FY 13. The direct aftermarket sales will account for 10% of sales in FY 12. The margins of direct aftermarket sales are 5% higher than that in OEM.

The aftermarket is largely in two wheeler and three wheeler space due to its exposure to weather compared to cars. The replacement period for cables in two wheelers is 2-3 years.

The expansion of total cable capacity to 150 million per annum is on track and is expected to be completed by December 2012. The balance capex to be spent for this expansion is Rs 30 crore.

It supplies cables to M&M's XUV 500 and Bajaj's RE60.
Despite the slowing down in export volumes in Europe and US, the company is receiving new orders of higher values. The production of these will be initiated in 2013-2014 with product development and approval taking place currently. Among these, it will be supplying to BMW's mini and series 1 cars which would be launched in 2013-14. Thus the exports are expected to grow by only 3-5% in next 6 months and pick up thereafter.

Non auto sales accounted for 6-7% of sales in Q3 FY12. Godrej, Whirlpool are among its non auto domestic clients while John Deere among its non auto clients abroad.

The tax rate for next 2-3 years will remain at current levels i.e. 28-29%.

Liberal dividend policy to continue.

It supplies cables to Maruti through Tier1 auto parts player.