Elecon Engineering Co.Ltd. — Investor Presentation 2022

May 11, 2022

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o,
TheManager(Listing),TheBSE Ltd.Mumbai	TheManager(Listing),NationalStockExchangeofIndiaLtd.Mumbai
Company'sScripCode: 505700	Company'sScripCode: ELECON

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Investor Presentation | FY 22

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Safe Harbor

Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", seek to", "future", "objective", "goal", "likely", "project", "should", "potential", "will pursue", and similar expressions of such expressions may constitute "forward-looking statements", These forward looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include but are not limited to our to our ability successfully implement our and obtain our strategy, growth expansion plans, regulatory approvals, provisioning policies, technological changes, investment and business income, cash flow projections, our exposure to market risks as well as other risks. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

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Company Overview

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About Us

• Established in the year 1951, Elecon is one of the largest manufacturers of Industrial Gears and Material Handling Equipments in Asia.

• First in India to manufacture sophisticated equipment for bulk Material Handling and a product range that caters to almost every industrial sector in India.

• Expertise in the manufacturing of custom-made Gearboxes for Steel/Cement/Rubber/Sugar Mills, High Speed Turbines, Marine Applications, Plastic Extrusions, Satellites for ISRO, Naval Aircraft carrier, etc.

Key Segment

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Helical/Bevel Helical Worm Gearboxes Couplings High Speed Gearboxes Gearboxes Planetary Gearboxes Wind Turbine Gearboxes Marine Gearboxes Custom Built Gearboxes Loose Gears

High Speed Gearboxes

• Largest gearbox manufacturer in Indian subcontinent.

• State of the art manufacturing facility with product portfolios like EON / EOS Series Standard Gearbox, Vertical Rolling Mill (VRM) Gearbox, Marine Gearbox for Warships, Sugar Mill Planetary gearbox, Rolling Mill Pinion Stands etc.

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----- Start of picture text ----- Feeders Crushers Stackers/Reclaimers Cable Reeling DrumRaw Material Handling Magnet/Weighers/Metal Specialized ConveyorsSystem DetectorsIdlers/Pulleys Wagon Tippler & Associated Port EquipmentEquipment----- End of picture text -----

• Expertise in Bulk Material Handling equipment and systems

• Successfully completed Design, engineering, manufacturing, supply and commissioning of various projects

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History

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----- Start of picture text ----- Acquisition debtrepaid inoverseas entity Substantial reductionEstablished in Goregaon, in debt on standaloneMumbai by Ishwarbhai Patel basisEstablished Successfulseparate Gear execution of Highest profits in theForay into manufacturingconveying equipment Listed on Bombay division defence (Indian history of CompanyNavy) projectStock Exchange1951 1960 1962 1963 1976 2010 2022Foray into bulk materialElecon Engineering Largest gearhandling plantsCompany wasmanufacturerAcquired Benzlers andincorporated as PrivateRadicon, manufacturers of in Asia and aLimited CompanyHeadquartered to screw jacks, shaft mounted prominent MHEVallabh Vidyanagar, gearboxes and industrialreducers playerGujarat in May 1960----- End of picture text -----

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• August 2021 Proud & historic for ELECON ENGINEERING as reincarnated #Vikrant ( Indigenous Aircraft Carrier or ‘IAC’) returned after sea trials. Wishing # Indian Navy & # CSL “The Best” for achievement of this. With the delivery of Vikrant, India would join a select group of nations with the capability to indigenously design and build an aircraft carrier. It will also provide thrust to Government’s 'Make in India' initiative. Delivery of IAC would also strengthen India's position in the Indian Ocean Region (IOR) and its quest for a blue water Navy.

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Elecon is manufacturing assembly and completed no load testing of one of the Biggest “ VERTICAL ROLLER MILL DRIVE “ for one of the Indian’s reputed cement manufacturer.

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Financial Performance – Q4 & FY22

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Standalone Performance

Full Year In Rs. Cr

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----- Start of picture text ----- Sales EBITDAIn Rs. CrSales EBITDA184.2884.4796.1143.8273.2245.857.550.7----- End of picture text -----

Quarterly In Rs. Cr

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----- Start of picture text ----- FY21 FY22PBTQ4FY21 Q4FY22PBT123.658.339.337.2----- End of picture text -----

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Consolidated Performance

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----- Start of picture text ----- Full Year In Rs. CrFY21 FY22Sales EBITDA PBTQuarterly In Rs. CrQ4FY21 Q4FY22Sales EBITDA PBT1203.61044.3 246.4 170.5185.381.3350.1329.7 73.553.868.547.1----- End of picture text -----

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Gear Business – Standalone

Synopsis

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Largest gear manufacturer in Asia

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• Most comprehensive range of industrial gears under one roof in the world

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• Successfully completed one of the most complex & sophisticated defence gear box, as a part of “Made in India” initiative

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• In Gear business, the orders on hand is Rs. 410 Crores

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• The orders inflow during the quarter was Rs. 212 Crores

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• The orders inflow for the month of April’22 is Rs. 134 Crores

Revenue (Rs. Cr)

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----- Start of picture text ----- 749.0656.9----- End of picture text -----

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----- Start of picture text ----- Gear Business----- End of picture text -----

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----- Start of picture text ----- FY21 FY22----- End of picture text -----

Key Financial Highlights

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• Revenues declined by 4.3% to Rs. 208.5 Cr in Q4FY22 as compared to previous year.

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• EBIT stood at Rs. 53.0 Cr in Q4FY22 as compared to Rs. 66.5 Cr in Q4FY21.

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• EBIT margin at 25.4% in Q4FY22 vs 30.5% in Q4FY21.

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• Q4 FY21 is not comparable as FY21 was impacted by Covid-19 pandemic induced restrictions.

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----- Start of picture text ----- 217.9208.5----- End of picture text -----

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Gear Business Q4FY21 Q4FY22

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Material Handling (MHE) business

Synopsis

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Our strategy to focus on pursuing product & spare parts supply resulted in improved liquidity and significant reduction in losses.

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In MHE business, the orders on hand is Rs. 127 Crores

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The orders inflow during the quarter was Rs. 114 Crores

Key Financial Highlights

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Revenues declined to Rs. 37.3 Cr in Q4FY22 as compared to Rs. 55.3 Cr in the previous year. EBIT stood at Rs. 0.5 Cr in Q4FY22 as compared to loss of Rs. 15.1 Cr in Q4FY21.

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Key Initiatives

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Continued focus on improving profitability and liquidity

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Project completion status – Pending work of all three legacy projects out of which balance amount for one project already received. Documentation for balance two projects are under progress and expected to be cleared in FY23 Arbitration award worth Rs 63+ crores granted in company’s favour, against which customers have pursued further appeal. Recently, the Company has received a favourable judgement by the Court for one of the appeal. The Company is exploring new growth avenues to augment capacity utilization

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Revenue (Rs. Cr)

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----- Start of picture text ----- 139.2135.4MHEFY21 FY2255.337.3MHEQ4FY21 Q4FY22----- End of picture text -----

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Overseas Operations

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All overseas entities have made profits despite the impact of Covid-19 pandemic. Fully repaid debt and other facilities in overseas entity to the tune of Rs. 95 crores in FY22.

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Improved market reach in USA, Canada and Latin America.

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Witnessing positive momentum in the order intake and revenue in the US, Latin America and Canada operations The Company plans to invest in marketing and business development as part of the strategic initiative towards establishing global brand identity and enhance business growth across all overseas entities.

Outlook

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Economy Outlook

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The Indian Engineering Industry

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The Indian Engineering sector is well poised to return to its growth path supported by favourable government policies and revival in economic growth

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Investment in sectors like power, steel, mining, infrastructure, oil & gas, etc., have been driving growth in the engineering industry

Economy

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According to International Monetary Fund (IMF), growth in Indian economy is expected to moderate to 8.2% in FY23 due to ongoing geopolitical crisis which has aggravated supply chain issues and inflationary pressures.

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Sizable investments in infrastructure sector and core industries is likely to revive growth engine and boost demand in the long run.

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Budget -

Government Initiatives

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Proposed increase in the outlay for capital expenditure by 35.4% from ₹5.54 lakh crore in the current year to ₹7.5 lakh crore in 2022-23 augurs well for the engineering industry

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Both Gears and MHE segments are expected to gain from robust demand from mining, steel, power and other infrastructure industries.

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The government announced Rs 1.45 trillion worth of Production Linked Incentive (PLI) scheme in manufacturing industry with an aim to make it globally competitive

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Future Growth & Strategy

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The Company continues to strengthen the balance sheet by way of reducing debt and other liabilities and is working towards becoming a net debt free company by 2023.

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The Company is taking efforts in expanding footprints like Latin America, Africa and other countries by pursuing global branding and other marketing and business development initiatives.

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Demand environment continues to improve, and Elecon continues to focus on strategies to create long-term value for shareholders. The Company has set a revenue target of Rs. 1,500 Crores by FY24.

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• The Company has formulated strategies to improve exports contribution with a target to reach 50% of the overall revenue by FY30.

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Considering the long lead time for key machineries, the Company has initiated Capex plan of Rs. 100 Crores over a period of two years.

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Enhanced capital expenditure announced in the recent budget is likely to have a multiplier effect on the core sector industries and thereby act as a growth engine for the Company.

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• The PLI scheme by Government is going to boost the domestic manufacturing output and in turn provide tremendous growth opportunities to the Engineering industry. As such, the Company is confident of improved performance going forward.

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Multiple Growth Drivers

Scale Elecon is the largest manufacturer of gears in Asia, ~38% market share in India Scope Encompasses both catalogue and engineered products for all the core industries Size Its MHE business has the capacity to address cross industry solutions Skills Over 7 decades of industry experience with best of the infrastructure Synergy Backward and forward integration of products and services established Sustainability A sustainable business model with robust outlook based on economic growth and scale

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