Suprajit Engineering : - Mid year Letter (2023-24)

19th December 2023.

My Dear Shareholder,

I have the pleasure of presenting you with a mid-year review, half-yearly financial highlights, and the recent update on your company. While the outlook for the medium term looks exciting, short-term challenges, as elaborated in the business update, persist in the Controls Division.

Domestic Cable Division (DCD) delivered a commendable performance during the first half, aligning with the Indian automotive business. The passenger vehicle segment exhibited decent growth, but the two-wheeler segment and aftermarket continue to face challenges. DCD is in the process of commercializing a few products, 'beyond two-wheeler' and 'beyond cables'. I am sure that you will appreciate how this will further mitigate our dependence on cables, aligning with our motto "De-risk & growth profitability," while maintaining a strong focus on our core cable business.

Phoenix Lamps Division (PLD) experienced a positive turnaround in accordance with our previously forecasted plan. The EBITDA margins reached double digits, accompanied by growth in the business. Upon the completion of the ongoing restructuring at Trifa/Luxlite by the year's end, we anticipate further consolidation in both growth and margins.

Suprajit Controls Division (SCD) faced challenges in the first half, as detailed in the business update. Nevertheless, I believe that over the medium term, this division is poised to generate good growth and reasonable profitability. I would like to emphasize the strategic long-term importance of SCD to Suprajit, strengthening our position as a preferred cable supplier of global standing.

Suprajit Electronics Division (SED) has continued its robust growth since its inauguration just a year ago. It achieved a positive EBITDA in Q2, within a year of its operation, reflecting positively on the business. This division will be the fastest- growing, with several significant new businesses expected to commence production in the coming quarters.

Suprajit Technology Centre (STC) is maintaining momentum in product development. Multiple products have been deployed at the customers' end for evaluation and testing. Our plan to expand 'beyond cables' is in a clear and strong implementation phase, encompassing electronic, electrotechnical, and braking-related products. We have recently acquired a new industrial property near Bangalore to facilitate the implementation of some of these products.

Despite short-term disturbances in the global business outlook, our new business wins across all divisions have been robust. This instills confidence in me that the medium and long-term prospects remain strong, both in terms of business growth and profitability. Our continued focus on customers, strong new business wins, a diversified product range, new product development capabilities, and operational excellence are the hallmarks that will establish us as a sustainable and formidable player in our industry.

I take this opportunity to extend my warm wishes to you and every member of your family for a 'Happy, Healthy, and Prosperous New Year'.

K. Ajith Kumar Rai,

Founder & Chairman.