Nitiraj Engineers Limited — Investor Presentation 2019

Nov 20, 2019

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Nitiraj Engineers Limited Result Update Presentation H1 FY20

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Disclaimer

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This presentation has been prepared by Nitiraj Engineers Limited (the “Company”) solely for information purposes and does not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.

Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.

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Table of Contents

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Consolidated Financial Highlights

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Company Overview

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Business Overview

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Way Ahead
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Way Ahead

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Consolidated Financial Highlights

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Financial Highlights – H1 FY20

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101 bps EBITDA Margin 8.64% 62%

57% 78%

Revenue from Operations EBITDA Rs. 26.00 Crore Rs. 2.25 crore 65%% 21 bps

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65%%
Net Profit
Rs. 1.14 crore
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Net Profit Margin Basic EPS 4.39% Rs. 1.39 vs. Rs. 0.86 H1 FY19

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Financial Highlights – H1 FY20
Rs. Cr H1 FY20 H1 FY19 Y-o-Y(%) H2 FY19 H-o-H(%)
Revenue from
26.00 16.57 57% 19.95 30%
Operations
•
Revenue from operations
Raw Materials 15.72 9.33 11.23
grew 57% YoY driven by
Employee Cost 2.28 1.85 3.24
higher number of
Other Cost 5.75 4.13 4.28
machines sold and new
Total Expenditure 23.75 15.31 18.75
government order
EBITDA 2.25 1.26 78% 1.21 86%
received in H1 FY20
EBITDA Margin% 8.64% 7.63% 101 bps 6.04% 260 bps
Other Income 0.05 0.41 1.44 • EBITDA margin improved
Depreciation 0.56 0.62 1.04 101 bps on back of
Interest 0.18 0.04 0.02 higher efficiencies and
Profit Before Tax 1.56 1.01 1.59 benefits from bulk orders
Tax 0.38 0.28 0.55
•
In addition, benefit from
PAT 1.17 0.73 1.04
recent corporate tax cut
Add: Share of Profit/
(0.03) (0.03) 0.00 contributed to PAT
(Loss) of Associates
Net Profit 1.14 0.69 65% 1.04 10% growth
Net Profit Margin% 4.39% 4.18% 21 bps 5.20% (81 bps)
EPS in Rs. 1.39 0.86 62% 1.27 9%
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Revenue Break Up - Segmental
H1 FY19 H1 FY20
Non - Govt. Sales,
Non - Govt. Sales,
55.43%
37.00%
Govt. Sales,
Govt. Sales,
63.00%
44.57%
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Executed sizeable Government orders in H1 FY20 for recently launched products – Infantometers, Stadiometers and Dial Type Scales

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Revenue Break Up – Geographical
H1 FY19 H1 FY20
North, North,
7.06% 7.19%
Central,
Central,
South,
17.20% South,
19.03%
8.68%
10.13%
West,
East, West,
31.78% East,
33.83% 28.81%
36.29%
Accounts for Non-Government sales
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	Balance Sheet	Balance Sheet	Highlights	Highlights
	Rs. Crs		As on 30th Sept’19	As on 31st Mar’19		Rs. Crs	As on 30th Sept’19	As on 31st Mar’19
	Shareholders Funds		67.94	66.80		Non-current Assets	41.87	35.69
	Share Capital		8.20	8.20		Property,Plant and Equipment	28.41	23.54
	R&S		59.74	58.60		Intangible Assets	4.20	3.26
	Non Current Liabilities		0.14	0.19		Goodwill on consolidation	0.00	0.00
	Financial Liabilities					Capital work inprogress	0.00	0.00
	Borrowing		0.00	0.00		Financial Assets
	Other Financial Liabilities		0.00	0.00		Non-current Investments	0.00	0.00
	Provision		0.00	0.00		LongTerm Loans & Advances	9.27	8.89
	Deferred Tax Liabilities(Net)		0.14	0.19		Current Assets	36.99	37.10
	Other Current Liabilities		0.00	0.00		Inventories	15.99	17.46
	Current Liabilities		10.78	5.80		Financial Assets
	Financial Liabilities					Investments	1.90	1.93
	Borrowing		5.83	0.00		Trade Receivables	16.97	15.39
	Trade Payables		4.95	5.80		Cash & Cash Equivalent	1.54	1.60
	Other Financial Liabilities		0.00	0.00		Bank Balance other than above	0.00	0.00
	Provision		0.00	0.00		Other Financial Assets	0.00	0.00
	Other Current Liabilities		0.00	0.00		Current Tax Assets	0.00	0.00
	Current Tax Liabilities(Net)		0.00	0.00		Other Current Assets	0.59	0.72
	Total Equities & Liabilities		78.86	72.79		Total Assets	78.86	72.79
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Financial Highlights – FY19

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39%

130%

Revenue from Operations EBITDA Rs. 53.88 Crore Rs. 8.66 crore 98% 333bps

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Net Profit
Rs. 6.02 crore
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Net Profit Margin 11.17%

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637bps EBITDA Margin 16.08%

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98% Basic EPS Rs. 7.34 vs. Rs. 3.71 FY18

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Financial Highlights – Annual
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Rs. Cr FY19 FY18 Y-o-Y(%) Revenue from Operations 53.88 38.83 39% Raw Materials 26.59 20.24 Employee Cost 4.15 5.65 Other Cost 14.48 9.17 Total Expenditure 45.22 35.06 EBITDA 8.66 3.77 130% EBITDA Margin% 16.08% 9.71% 637 bps Other Income 1.19 2.27 Depreciation 1.26 1.75 Interest 0.11 0.05 Profit Before Tax 8.48 4.24 Tax 2.41 1.17 PAT 6.07 3.07 Add: Share of Profit/ (Loss) of Associates (0.05) (0.03) Net Profit 6.02 3.04 98% Net Profit Margin% 11.17% 7.84% 333 bps EPS in Rs. 7.34 3.71 98%

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• Growth in Revenue from Operations of 39% mainly driven by increase in sale of number of machines during the year from 1,09,215 in FY18 to 2,44,615 in FY19 • Higher capacity utilization and operational efficiencies led to 130% YoY increase in EBITDA

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Revenue Break Up - Segmental
FY18 FY19
Non - Govt. Sales,
Govt. Sales,
43.79%
19.01%
Govt. Sales,
56.21%
Non - Govt. Sales,
80.99%
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Revenue Break Up – Geographical
FY18 FY19
North, North,
6.03% 6.18%
Central, Central, South,
South,
18.85% 20.13% 9.32%
9.92%
West,
East, East,
West,
27.73%
37.47% 36.86%
27.51%
Accounts for Non-Government sales
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Rs. Crs	As on 31st Mar’19	As on 31st Mar’18
Non-current Assets	35.69	19.38
Property,Plant and Equipment	23.54	10.50
Intangible Assets	3.26	2.00
Goodwill on consolidation	0.00	0.00
Capital work inprogress	0.00	0.00
Financial Assets
Non-current Investments	0.00	0.00
LongTerm Loans & Advances	8.89	6.88
Current Assets	37.13	44.68
Inventories	17.46	12.36
Financial Assets
Investments	1.96	25.90
Trade Receivables	15.39	4.19
Cash & Cash Equivalent	1.60	1.41
Bank Balance other than above	0.00	0.00
Other Financial Assets	0.00	0.00
Current Tax Assets	0.00	0.00
Other Current Assets	0.72	0.83
Total Assets	72.82	64.07

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Balance Sheet Highlights - Annual
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Balance Sheet Highlights - Annual

Rs. Crs As on 31st Mar’19 As on 31st Mar’18 Shareholders Funds 66.83 60.78 Share Capital 8.20 8.20 R&S 58.63 52.58 Non Current Liabilities 0.19 0.29 Financial Liabilities Borrowing 0.00 0.00 Other Financial Liabilities 0.00 0.00 Provision 0.00 0.00 Deferred Tax Liabilities(Net) 0.19 0.29 Other Current Liabilities 0.00 0.00 Current Liabilities 5.80 2.99 Financial Liabilities Borrowing 0.00 0.00 Trade Payables 5.80 2.99 Other Financial Liabilities 0.00 0.00 Provision 0.00 0.00 Other Current Liabilities 0.00 0.00 Current Tax Liabilities(Net) 0.00 0.00 Total Equities & Liabilities 72.82 64.07

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Revenue from Operations (Rs. Crs)
56.39
53.49 53.88
38.83
FY16 FY17 FY18 FY19
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Financial Highlights – Annual

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Revenue from Operations (Rs. Crs)

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FY16 FY17 FY18 FY19
EBITDA excluding Other Income (Rs. Crs) / Margin (%) Net Profit (Rs. Crs) / Margin (%)
10 15.63% 16.08% 18% 7 11.17% 12%
14.86%
16% 9.90%
6 8.60%
8 8.81 8.66 14% 10%
7.84% 6.02
7.95 9.71% 12% 5 5.58 8%
6
10% 4
6%
8%
4 3 4.60
6%
3.77 4%
2 3.04
4%
2
2%
2% 1
0 0%
0 0%
FY16 FY17 FY18 FY19
FY16 FY17 FY18 FY19
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Key Financials Ratios
ROA (%) RoCE (%)
12.36% 21.18% 20.67%
8.26%
7.06%
12.86%
4.75%
7.07%
FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19
RoE (%)
17.65%
9.00%
7.99%
5.01%
FY16 FY17 FY18 FY19
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RoA = Net Profit/Total Assets; RoCE = EBIT/(Shareholders fund + long term borrowing + short term borrowing-Non current investment); RoE = Net Profit/Net Worth * Company raised Rs.22.10 cr via IPO of 22,00,800 equity shares of face value of Rs. 10 each in March 2017

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Company Overview

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Company Overview

Leading manufacturer of Electronic Weighing Scales & Systems and Digital Fare Meters

• Incorporated in 1989

• Develops and sells products under own registered brand ‘PHOENIX’

State of Art Integrated Manufacturing Facilities & R&D

center

• Factory : Parwanoo, Himachal Pradesh

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Strong Geographical Presence

• Installations across 5 countries

• Middle East, SAARC and African Countries

Experienced Management Team

• Strong Management team with over 30 years of experience

• Backed by skilled & experienced team

• Head Office : Dhule, Maharashtra

• R&D Centre in Dhule, Maharashtra

Diversified Product Portfolio

• Electronic Weighing Scales and Systems

• Electronic Currency Counting Machines

• Digital Fare Meters

• Home and Hotel Automation

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▪
▪
▪
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Efficient Sales and Distribution Network

• 18 branches across Maharashtra, Odisha and Chhattisgarh

• Over 430 dealer network across India

• ▪ Tailor-made ERP Software for efficient management and real-time reports

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Timeline

• Ventured into Government

• Supplies (State as well as Central government)

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2006-
2009
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• Additional Expansion at Parwanoo Unit

• Launched health range products including BMI machine

• Launched fare meter range of products

• Started as a partnership firm in small town of

• Maharashtra i.e. Dhule with registered Trademark

“PHOENIX’

▪ Awarded with “ Best Entrepreneur Award” by

Government of Maharashtra

• Started manufacturing unit at Silvassa (UT of

D&NH)

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1989-
1994
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2018-
2019
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2011-
2017
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▪
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• Setting up new plant in Dhule with land area of 8 acres – completed installation of ‘Automatic Pick & Place’ machineries

• Developed and installed CGMS and MAA in Aanganwadis all over India to control malnutrition amongst children - huge orders under WCD department of Govt. of India

• Launched Currency Value Counting Machine, EMFR (Analytical Weighing Balances), Infantometers, Stadiometers, Dial Type Weighing Scales, RFID Access Control & Person Weighing Scale - fat & total body analysis with Bluetooth App

• Sponsored state level table tennis tournament as ‘PHOENIX CUP’

• Started new range of products – Currency Counting Machines

• Listed on “NSE SME “ Platform

• Launched Bluetooth technology and Android apps with various weighing scales

• Started branch offices in Maharashtra – Aurangabad, Ahmednagar, Parbhani, Solapur and Pune

• Implemented tailor-made ERP – improving productivity, efficiency & GST compliant

• Issuance of Bonus Equity Shares in ratio 1:4

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1998-
2003
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• Awarded with Jamanalal Bajaj Uchit Vyavahar Puraskar for fair trade at national level

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• Certified by American Quality Assessors as ISO 9001 Company

• Registered as “Private limited Company”

▪ Started new Manufacturing Unit at Parwanoo, Himachal Pradesh

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Management Team

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Mrs. Shakuntala R. Bhatwal

Mr. Rajesh R. Bhatwal

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Women Whole Time Director

Chairman & Managing Director

• Over 27 years of experience in Electronics Weighing Scales

• Over 28 years of experience

• Responsibilities include overseeing manufacturing activities, sourcing of components, administrative work, etc.

• Strong business acumen, ethical, perseverant approach towards business & focused visionary personnel

• Strong experience in designing, approving & establishing, manufacturing set up, short term & long term business goals and quality management

• Good Strategic planner with strong business development skills

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Mr. Hung Sin Chung Huanyi

Mr. Ajay Bhatwal VP Marketing

Whole Time Director

• 25 years of professional experience in business management

• Over 15 years of rich experience in marketing & 10 years in finance

• Responsible for production planning, marketing, liaison with government agencies and sourcing of raw materials

• Responsible for system development

• Chartered Accountant shouldering responsibility of developing and handling dealers network

• Strong experience in relationship development

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Mr. Kailas Agrawal

Chief Financial Officer

• Over 18years of experience in finance

• Responsible for statutory compliance of the company with NSE

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Key Strengths

Diversified Product Range

Experienced Management Team

• Chairman Mr. Rajesh Bhatwal is engaged in weighing scales and other electronic products’ business for around three decades

• Offering entire range of Electronic Weighing Scales catering to jewelry, commercial, industrial, health and household markets

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• Well equipped & dedicated personnel with expertise in development, manufacturing, sales and administration - ensures smooth functioning of organization

• Currency counting machines with counterfeit note detection and value counting machines

• Taxi/ Rikshaw fare meters

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• Home and Hotel Automation

• Marketing approximately 232 products in Domestic and overseas market with continuous innovations

High Quality Assurance & Service Support

Strong R&D

• In-house R&D Center at Dhule, Maharashtra

• ISO 9001 : 2015 certified by American Quality Assessors

• Strong team of ~ 15 expert engineers – continued focus on knowledge & skill upgradation

• Awarded with quality certification from bureau of Indian Standards

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Scalable Business Model

Competitive Rates

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• Customer centric and market driven

• Continuous development and sourcing along with in-house manufacturing strengthens

• Optimum utilization of resources assuring quality products that enable to achieve economies of scale

• Development of new market and products by exploring customer needs, marketing expertise by maintaining quality output

• Our Motto “Quality products at reasonable price”

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Business Overview

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Domestic Industry Opportunity

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▪
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Weighing Scales

Currency Counting Machines

• Almost every transaction involves process of weighing, due to which weighing scale plays mandatory and important role in day-to-day life

• Cash counting and counterfeit note detection is process widely required with high speed and accuracy

• Weighing solutions starting from milligrams to tons including :

• ✓ PLNC 3|4 – Currency counting machine with counterfeit note detection

• ✓ Person weighing scales

• ✓ PVC-101 – Mix note value counter with counterfeit note detection

• are demanded from market

• ✓ Jewellery scales with 10 mg accuracy

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• ✓ Tabletop scales upto 30 kg capacity

• ✓ Platform scales upto 5 ton capacity

▪ Banks, jewellers, retailers, wholesalers, commercial establishments, petrol pumps, hospitals and health centers, cinema halls, educational institutions; Government segments: post offices, railways; form major part of market

• ✓ Crane scales upto 20 ton capacity

• ✓ Weigh bridge upto 100 ton capacity Are demanded from the market.

• Jewellers, homes, retailers, wholesalers, hospitals and health centers, post offices, banks and paper industries, logistics, dairies, mills and industries, building and construction, Government segment form major part of market

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Diversified Product Portfolio…

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Automobile Household Range Range ▪ Personal Weighing ▪ Electronic Fare Meters for auto Scale ▪ Kitchen Scales rickshaws and taxis

Industrial Commercial Jewellery Range Range Range ▪ Electronic Weigh ▪ Currency Counting ▪ High Accuracy Machine Weighing Balances Bridges ▪ Tabletop Weighing ▪ Crane Scale Scales ▪ Pallet Scale ▪ Platform Weighing Scales

Healthcare Range ▪ Baby Weighing Machines ▪ Body Mass Index

(BMI) Machines ▪ Adult Weighing Scales

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…Catering to various sectors

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Product Name	Product	Description / Application
Jewellery Scale		▪Used in Jewellery Shops & Laboratories / Paper Industries ▪Highest accuracy of 10 mg ▪Carat counting, percentage & GSM functions
Table Top Scale		▪Used by Departmental Stores, Grocery Shops, Packaging Industries etc. ▪Various models and platter sizes are available. ▪Accessories suiting various customer applications
Price Computing Scale		▪Used by Departmental Stores, Grocery Shops, Sweet Shops etc. ▪Data of 500 commodities can be entered using keyboard or can be downloaded from computer ▪Bills and reports can be printed directly from weighing scale
Piece Counting Scale		▪Used by Industries like Spare parts weighing and Automobile Industry ▪Displays Weight, Unit, Unit Weight & Count ▪Accessories like 3-LED are widely demanded for packing application
Platform Scale		▪Used for all heavy duty applications ▪Rugged construction with stainless steel / MS platform ▪Hi-tech and wireless displays available

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Product Name	Product	Description / Application
Hanging Scales		▪Used at Steel Plants, Dockyards, Fabricators, Vehicle Junk Yards, Construction Sites, Foundries ▪IR Remote Control Operation ▪Pocket scale is widely used for weighing gas cylinders and at airports
Industrial Scales		▪Very sturdy Pallet Truck with weighing mechanism used at industries, warehouse, godowns and dockyards. ▪Milk weighing systems are microprocessor based fully electronic weighing systems used by Dairies and Milk Product Manufacturers ▪Weigh bridges are used for Truck Weighing
Baby Weighing Scale		▪Ideal for maternity hospitals, Pediatricians, Aanganwadis & Health Care centers etc. ▪Portable and sturdy design with baby bowl designed as per Govt. norms ▪Child Growth Monitoring System (CGMS) gives result of a child comprising of growth charts namely UNDERWEIGHT, STUNTING and WASTING. It gives the CATEGORY of Underweight, Stunting and Wasting as well as shows the amount of Underweight and stunting of a child
Adult Weighing Scale		▪Ideal for Clinics/Hospitals/ Fitness centers ▪Heavy duty, stable platform made up of cast-iron ▪Unique design ensuring easy readability of display
Portable Adult Scale		▪Ideal for Clinics, Hospitals, Fitness centers and households ▪Available in LED and LCD display with low power consumption ▪BMI and Bluetooth app features are available

Product Name	Product	Description / Application
Kitchen Scales		▪Specially designed to weigh recipe items accurately ▪Light weight, Portable
Body Mass Index (BMI) Scale		▪ Ideal for Hospitals, Clinics, Schools, Health clubs, Physical examination centers, Gym etc. ▪Automatically measures weight, height & body mass index. It also displays, how much over / under weight a person is ▪Available with GSM (SMS), printer options
Currency Counting Machine		▪Used in Banks, Malls, Hospitals, Shops ▪In-built Counterfeit Note Detection System ▪Value counting machine
Electronic Fare Meter		▪Compact, rugged, designed to be adaptable to diverse range of working locations and environment ▪Separate display fields for fare, waiting time and distance travelled ▪Approved by RTO Department
Home Automation		▪Video door phones, audio door phones and electronic locks for home security and convenience ▪Wired as well as wireless models are available
Hotel Automation		▪Hotel RFID locks, Room number plates and power saving switches

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Some New Products

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• Newly launched product - specially designed as per guidelines of Integrated Child Development Services (ICDS)

• Stadiometer Designed to Measure Height of Adult and Children aged 24 Month and Above in Vertical Position, with measuring length of 200cms

• Infantometer - Portable Board designed to measure length of baby in Recumbent Position, with measuring length of 100cms

• Weighing scale for infant Infant Weighing Scale, spring type, designed to Measure weight of child using sling and/or weighing trouser

• Executed sizeable Government orders of over Rs. 13 Crores

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State of art Manufacturing Facilities

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• Installed Capacity - 2500 machines per day

• Tool Room section - equipped with modern facilities like Vertical Machining Centers (VMCs), Electrical Discharge Machining (EDM), Wire-cut, cylindrical grinder, lathe, milling machines, power hacksaw, profile projector as well as sophisticated designing software and double-girder crane

• Molding shop - total 5 molding machines of various capacities for injection molded parts like cabinets of weighing scales

• Other machineries - w ave soldering machine, automatic calibration machines, conveyor belts

• Systematic workflow - departments like material receiving, inward, stores, preparation, production, quality checking, packing and dispatch follow strict procedures as per ISO standards

• Staff – n early 300 skilled workers

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Upcoming Unit - Dhule, Maharashtra

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• Total Area : Land of 8 acres has been acquired for world-class, state-of-the-art manufacturing facility including 4 buildings : ✓ Tool room and molding shop - area of 1,100 sq. meters

• ✓ Main Factory - area of 5,600 sq. meters

• ✓ Canteen building - area of 650 sq. meters

• ✓ Administration Office - 3,000 sq. meters

▪ Production Capacity - 4000 machines per day

• 6 production lines which is covered with epoxy coating

• Expected staff - Nearly about 350

• Versatile and universal set-up - can accommodate production of many other electronic items (planned to be developed over coming years)

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Wide Distribution Network

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More than 10 lakh satisfied customers and counting!!

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Domestic

▪ Pan India presence ▪ 18 branches across Maharashtra, Odisha and Chhattisgarh ▪ Over 430 dealer network across India International ▪ UAE, Nepal, Sri Lanka, Malavi (Africa)

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Strong R&D – ‘Innovation Room’

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• In-house R&D Center at Dhule, Maharashtra

• Strong team of ~ 15 expert engineers – continued focus on knowledge & skill upgradation

• Programming: Hands-on coding and programming in various environments like C language, Assembly language, Linux OS, Android OS

• PCB designing: PCB schematic and layout done on latest softwares & due to our expertise - can design flawless PCBs as per required features and sizes

• 3D product and dye designing: Experienced and trained staff for designing in ‘Solid Edge’ software

• Developed in-house competency for designing elegant

• machines and their required injection molding dyes

Our strong R&D – a key differentiator – keeping us one step ahead always!

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Way Ahead

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Way Ahead

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New Manufacturing Unit:

▪ New upcoming manufacturing facility complete with world-class machineries and facilities in Dhule, Maharashtra – expected to be operational in Q3 FY20

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: Marketing

▪ Enhancing Brand Image through increased spend on advertisements and other promotional activities through different mediums like TV, print, internet, etc. ▪ Appointment of additional Dealers & Agents for marketing new ranges of products

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New products:

• Electronic Cash Registers

• Weighing Solution for APMC Market Yards

• Audio & Video Door Phones

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Thank You

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NITIRAJ NITIRAJ IN For further information, please contact: Company : Investor Relations Advisors : Nitiraj Engineers Limited Bridge Investor Relations Pvt. Ltd. Mr. Kailas Agrawal Mr. Amit Sharma Chief Financial officer amit@bridge-ir.com investor@nitiraj.net Ms. Disha Shah disha@bridge-ir.com www.nitiraj.net www.bridge-ir.com

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