Onward Technologies Ltd. — Investor Presentation 2019

Oct 24, 2019

Onward Technologies Limited BSE: 517536, NSE: ONWARDTEC

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Q2 and H1 FY20 Earnings Presentation CREATING A STRONGER FUTURE TOGETHER

Engineering Services Product Sales & Support

IT Consulting Services Staffing Services

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// About Us

www.onwardgroup.com

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Onward Technologies: At a Glance

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• Established in the Year 1991

▪ One of the Pioneers in Engineering Design Services and IT Consulting from India

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Legacy

Founder of Onward Technologies, Mr. Harish Mehta , co-founded NASSCOM , the leading trade association of Indian IT and BPO Industry

Execution Capabilities

8,500+ Projects Delivered

50 Million Hours of engineering work

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Flexible Business Model

Engineering excellence centre Customised solutions Onsite consultancy

Client Pedigree

Fortune 1,000 companies

ISO 9001:2015 ISO 27001:2013

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Employee Strength

+2,500 employees

~50% Mechanical engineers

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Key Financial Metrics

• 5 year Revenue CAGR: 9% 5 year PAT CAGR: 167% FY19 ROE: 18.3%, ROCE: 20.8%

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3

Mission, Vision and Core Values

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Mission Vision Onward delights the customers by relentlessly To achieve sustained leadership position driving technological advancements and in providing superior engineering innovation that become essential to stay services to global manufacturing ahead of the competition at affordable cost. companies cutting their time-to-market, with substantial cost savings.

Core Values Onward has 4 core values, Trust, Confidentiality, Accountability, Integrity that are embedded in its DNA, providing quality service to its customers or employees.

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4

Business Snapshot

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What we do

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Engineering
Services
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Digital
Transformation
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IT Services
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Industries we serve Growth Opportunities Product Lifecycle Management (PLM) Automotive Aerospace Internet of Things (IoT) Analytics Off - Highway Industrial Artificial Intelligence (AI) Auto Electric Heavy Engg. Robotic Process Automation (RPA) Machine Learning Consumer & Locomotive Healthcare

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5

Global Footprint

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USA UK Germany India
Chicago, Detroit Mumbai, Pune
Birmingham Frankfurt
and Cleveland and Chennai
Onward Technologies Offices Presence
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INFRASTRUCTURE

• Secure Environment

• Over 100,000+ sq. ft. of Design & Delivery Centers

• Business Continuity and Back-up Redundancy

• Strong Ecosystem for Scanning, Prototyping, Testing and Manufacturing Support

• Dedicated Line for Data Transfer

• Video Conferencing Facility

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Pune Office
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6

Key Clientele

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A leading American
Heavy Equipment
Manufacturer
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A Global
Digital Leader
and Supplier to
Heavy Industries
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A leading
German Auto
Carmaker
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A leading
British
Equipment
Manufacturer
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A leading Manufacturer
of Engines and
Generators for
Automobile Sector
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A major Swiss
Manufacturer of
Escalators and
Elevators
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A leading
Global Pharma
Company
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A leading
British Luxury
Carmaker
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12 offices worldwide, 15+ excellence centres catering to Fortune 1000 companies

7

Board of Directors

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Jane Doe Jane Doe Jane Doe
HARISH MEHTA JIGAR MEHTA PRANAY VAKIL
EXECUTIVE CHAIRMAN MANAGING DIRECTOR DIRECTOR
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Jane Doe
NANDKUMAR PRADHAN
DIRECTOR
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Jane Doe Jane Doe Jane Doe
PRACHI MEHTA RAHUL RATHI PARISH MEGHANI
DIRECTOR DIRECTOR DIRECTOR
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8

Management Team

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Jigar Mehta Experience: ~17 years Education: B.B.A. (Boston University)

Managing Director

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Vignesh Kumar Experience: ~25 years Education: B.E., M.B.A. EVP and Head - EDS

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Satish Ramanan Experience: ~31 years Education: M.Com., M.B.A.

SVP and Head – IT Services

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Pratish Mehta

Experience: ~14 years Education: B.E. (Electronics and Telecom.) SVP – US Operations

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CA Devanand Ramandasani Experience: ~15 years Education: Chartered Accountant

Chief Financial Officer

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Sujata Singh Experience: ~21 years Education: M.B.A.

SVP and Global Head - HR

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9

Investing in Talent

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Job
Ownership
Optimize Workforce Agile
Re-skill
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• ✓ Focus on bringing on board top experts with diverse and rich experience across domains

• ✓ Business heads and team members to take

ownership of deliverables

• ✓ Agile workforce to meet dynamic needs of clients

• ✓ Re-skill to tap into lucrative business opportunities

• ✓ Optimize teams to build a lean and productive organization

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10

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// Industry Trends

www.onwardgroup.com

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Digital Transformation Market

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Digital Transformation Market Size (USD Bn.) Technology End User Industry
665
Robotics
Automotive
IoT
Aerospace and Defence
18.1% CAGR 3D Printing
290 Pharmaceuticals
Advanced Human Machine
Consumer
Interface (HMI)
Healthcare
Big Data and Analytics
Electrical and Electronics
2018 2023 Machine Learning and AI
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Digitalizing business operations >> Addressing evolving customer preferences >> Higher Operational Efficiency

Key Drivers >> Rise in Mobile devices and Apps , Higher IoT penetration, Cloud services, Need to improve operational performance to gain competitive benefits

Source: "Digital Transformation Market by Technology, Deployment type, Business Function, Vertical (Retail, Education), and Region - Global Forecast to 2023",published by MarketsandMarkets

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12

Global Engineering R&D Spend Landscape

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Global ER&D Spend (USD Bn.)

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2013 2018 2023E
15%
24% 37%
63%
76%
85%
1,058 1,228 1,722
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Digital Engineering spend drivers:

• ➢ Customer Experience led Software Platform deals

• ➢ Digital Product Development (Connected Asset

Management/Predictive maintenance)

• ➢ IoT Platform Engineering and Integration

• ➢ API Economy

• ➢ Legacy migration and modernization

Digital Spend

• ➢ Operations/Product Support ( Analytics, V&V , etc.)

Non- Digital Spend

Digital Engineering Spend to account for ~37% of ER&D spend by 2023

Source: Zinnov Z1000 database, Zinnov Research &Analysis

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// Business Overview

www.onwardgroup.com

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Our Offerings

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Engineering Services
New
Value Manufacturing
Product
Engineering Engineering
Development
CAE Sustenance Electrical and
Simulation Engineering Electronics
Product Embedded
Technical Systems
Lifecycle
Publication (ADAS, DIS,
Management
Autosar)
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IT Services
Enterprise SW/Application Embedded Products and
Development and Systems (HW, SW,
Maintenance Realtime)
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Data Science &
Data Management &
Transformation
Analytics (DW/BI, Big
Technologies (AI/ML, IoT,
Data, Open Source)
Cloud, RPA)
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Enterprise Managed
Services (Platforms, Infra,
Apps, DB)
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Objective >>> Leverage Core Engineering + Advanced IT Capabilities >>> Digital Transformation for Clients

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15

Core Engineering Capabilities

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1
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Auto-embedded/ Electronics

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2
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Product Design

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3
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Manufacturing

• Navigation & Connectivity

• HMI, Head-Unit & Infotainment

• Lighting, Seat, Keyless entry

• EMS/BMS

• EV-Motor/Gen./ Trans. Control

• Project Scoping

• Benchmarking

• Concept design engineering

• Design Feasibility

  • BIW Fixture design

  • Weld Fixture design

  • Line Automation

  • SPM design

  • Robotics Engineering

• Prototyping

• ABS, ESP, ESC, Suspension/ Steering,

EPAS

• Manufacturing drawing

• Industrial Engineering

• Process Optimization

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4
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FEA/CFD

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5
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Technical Publications

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6
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Should costing and VAVE

• Product Costing

• Meshing

• Structural & Thermal FEA

• Durability & Fatigue

• Crash Analysis

• NVH Analysis

• CFD Analysis

• Technical Authoring

• Illustrations

• Animation

• App development

• Translations

• Part Redesign

• Weight Optimization

• Alternate Material

• Process Re-Engineering

• Reverse Engineering

• Standardization

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IT Services Capabilities

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App Development & Maintenance

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2
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Enterprise Manged Services

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3
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Embedded Products and Systems

• Developing New Applications

• Full Fledged ERP for the Primary

• Agricultural Society (PACS)

• ERP for Textile Industry

• Web Centric Application for Financial Services

• Point of Sales

• Production Management System

• Customer Relationship

• Microsoft

• Management (CRM)

• Oracle

• AP ▪ Supply Chain

• ▪ Open Source Management (SCM) ▪ Infosys - Finacle ▪ Data Warehousing

▪ Business Intelligence Services

• Hardware Engineering

• Firmware & S/W Engineering

• New Product Development

• Obsolescence Management

• Engineering

• S/W - Health Monitoring System

• Custom Software development

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4
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Social Mobility Analytics Cloud (SMAC)

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5
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Digital Transformation (Internet of Things)

• Infrastructure Management Services

• Consulting

• Cloud

• Software Development /

• Mobile Apps Development

• Connected Products

• ▪ Connected Healthcare ▪ Digital Manufacturing

• Remote Monitoring

• Smart Cities

• Software Testing

• Big Data Analytics

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Digital Platform for Clients

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ENTERPRISE
PRODUCT
PLM APPLICATION
ENGINEERING
DEVELOPMENT
IoT
ENTERPRISE
MANUFACTURING
ANALYTICS, AI MANAGED
ENGINEERING
SERVICES
RPA
ADVANCED
ENTERPRISE
ENGINEERING EMBEDDED
DIGITAL SERVICES
(FEA)
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Convergence of Engineering and IT Capabilities >> Transformational Digital Solutions across the spectrum

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18

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// Strategy and Outlook

www.onwardgroup.com

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Growth Drivers

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New Capabilities

Higher Revenues

Margin Expansion

International Business

• Focus on newly established capabilities in Digital

• Transformation, Industrial IoT, and Industry 4.0

• Build capabilities in sector agnostic practices

• Increase wallet share of existing clients

• 70% revenues from Top 20 clients. Balance from new deals

• Technical collaborations & partnerships

• Higher margin paying ▪ Increase share of practices in EDS and overseas business Digital ER&D suite from well established

• ▪ Strict focus on further US, UK, and Germany offices

• Strict focus on further improvement of bottom line

• Robust pipeline for new deals with Global 1000 companies

• M&A – capability acquisition strategy

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20

Onward Technologies: Key Differentiators

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Right size organization to provide Stability as well as

responsiveness with executive attention

Exclusive focus on design thinking, digital transformation and product engineering

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Proven expertise in delivering
Engineering Services and
IT Solutions to
Global 1000
companies
A capable leadership to
guide | mentor
provide maturity
and ensure success
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Ability to ramp-up on-demand across the globe on a short notice

Flexible business and engagement model to provide agility and cost effectiveness

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21

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// Quarterly Highlights

www.onwardgroup.com

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Consolidated Financial Summary – Q2 FY20

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Operating Revenue EBITDA PBT PAT
684.0 674.7 687.9 12.2%
11.9% 5.0%
7.0%
6.8% 4.4%
8.4%
5.4%
2.8%
84.1
80.1 46.0 48.0 33.6 30.0
57.5 37.0
18.9
Q2FY19 Q1FY20 Q2FY20 Q2FY19 Q1FY20 Q2FY20 Q2FY19 Q1FY20 Q2FY20 Q2FY19 Q1FY20 Q2FY20
EBITDA MARGIN PBT MARGIN PAT MARGIN
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In Rs. Million

Focus on Improving Profitability >>> PBT up ~30% and PAT up ~59% Year on Year (YoY) in Q2FY20

*EBITDA = PBT + Interest + Depreciation – Other Income

Note: Post transition to INDAS 116, Depreciation and Tax Expense for this quarter is not comparable to previous periods. Refer note on slide number 25

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23

Consolidated Financial Summary – H1 FY20

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Operating Revenue EBITDA PBT PAT
1,362.6 12.1%
1,313.7
4.7%
6.9%
8.4% 5.3%
3.0%
164.2
94.0 63.6
109.7 69.0
39.9
H1FY19 H1FY20 H1FY19 H1FY20 H1FY19 H1FY20 H1FY19 H1FY20
EBITDA MARGIN PBT MARGIN PAT MARGIN
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In Rs. Million

Focus on Improving Profitability >>> PBT up ~36% and PAT up ~59% Year on Year (YoY) in H1FY20

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*EBITDA = PBT + Interest + Depreciation – Other Income

24

Consolidated Profit and Loss Statement

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Details (Rs. Mn.)	Q2 FY20	Q2 FY19	YoY	H1 FY20	H1 FY19	YoY
Income from operations	687.9	684.0	0.6%	1,362.6	1,313.7	3.7%
Purchase of traded goods	0.1	25.4		2.8	41.7
Employee Benefit Expenses	514.8	472.8		1,017.7	925.2
Other Expenses	88.8	128.3		177.8	237.1
EBITDA	84.1	57.5	46.3%	164.2	109.7	49.7%
EBITDA Margin (%)	12.2%	8.4%	383 bps	12.1%	8.4%	370 bps
Depreciation and Amortisation	28.7	14.8		57.6	28.8
EBIT	55.5	42.7	29.7%	106.6	80.9	31.7%
EBIT Margin (%)	8.1%	6.2%	181 bps	7.8%	6.2%	166 bps
Finance Costs	9.0	6.0		18.4	13.2
Other Income	1.6	0.2		5.8	1.2
Profit Before Tax (PBT)	48.0	37.0	29.8%	94.0	69.0	36.2%
PBT Margin (%)	7.0%	5.4%	157 bps	6.9%	5.3%	165 bps
Tax Expenses	18.0	18.1		30.4	29.1
Effective Tax Rate (%)	37.4%	48.9%		32.4%	42.1%
Net Profit	30.0	18.9	59.0%	63.6	39.9	59.2%
Net Profit Margin (%)	4.4%	2.8%	161 bps	4.7%	3.0%	163 bps
Basic EPS (Rs.)	1.9	1.2	56.7%	4.0	2.6	56.5%

Note: Due to transition to INDAS 116 the nature of expenses in respect of operating leases has changed from "lease rent" to "depreciation cost" and "finance cost" for the right to use assets and for interest accrued on lease liability respectively, and therefore these expenses for the current period are not comparable to the previous periods disclosed.

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25

Consolidated Balance Sheet Statement

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ASSETS (Rs. Mn.)	H1FY20	**FY19 **	EQUITY AND LIABILITIES (Rs. Mn.)	H1FY20	FY19
Non-current assets			Equity
PP&E	86.2	97.8	Share Capital	159.8	158.0
Intangible Assets	53.4	56.6	Other equity	495.2	452.1
Intangible Assets under Development	0.0	1.8	Sub total - Shareholders' fund	655.0	610.2
Right of use asset	187.8	-	Non-current liabilities
Financial Assets			Financial Liabilities
Loans	31.1	28.6	Borrowings	-	6.5
Deferred Tax Assets	18.2	17.0	Lease liabilities	129.2	-
Income Tax Assets	158.2	158.1	Employee Benefit Obligations	26.3	22.7
Other Non-current Assets	4.5	6.2	Deferred Tax Liabilities	5.7	5.2
Sub total - Non current assets	539.4	**366.1 **	Sub total - Non current liabilities	161.1	34.4
Current Assets			Current liabilities
Financial Assets			Financial Liabilities
Trade Receivables	463.9	489.1	Borrowings	127.1	154.5
Cash and Cash Equivalents	46.5	43.4	Trade Payables
Bank Balances other than above	12.8	8.3	a) Total Outstanding Dues of Micro Enterprises and Small Enterprises	6.9	4.4
Contract Assets	137.3	85.5	b) Total Outstanding Dues of Creditors other than above (a)	56.3	56.2
Other Financial Assets	4.2	10.6	c) Other Financial Liabilities	5.1	26.6
Income Tax Assets	0.2	19.4	d) Lease liabilities	60.0	-
Other Current Assets	47.7	44.2	Employee Benefit Obligations	19.9	20.9
			Income Tax Liabilities	1.4	-
			Contract Liabilities	-	0.6
			Other Current Liabilities	159.0	158.7
Sub total - Current assets	712.6	**700.6 **	Sub total - Current liabilities	435.9	422.0
TOTAL	1,252.0	**1,066.6 **	TOTAL	1252.0	1066.6

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26

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// Financial Overview

www.onwardgroup.com

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FY19 Consolidated Financials Snapshot

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FY19
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Revenue
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EBITDA
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EBITDA Margin
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PAT
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PAT Margin
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Rs 2,595.0 mn
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Rs 208.9 mn
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8.1%
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Rs 101.3 mn
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3.9%
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Long- DSO: 62 days
term debt Improving
free Trajectory
Leverage Dividend
Fixed
Rs. 1.5
Costs
(up 50% YoY)
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28

Quarterly Consolidated Financials Trend

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Revenue
687.9
684.0
674.7
656.8
624.5
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
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EBITDA and EBITDA Margin
12.2%
11.9%
8.4% 8.3%
5.4%
80.1 84.1
57.5 54.3
33.9
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
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PBT and PBT Margin
6.6% 6.4% 6.8% 7.0%
5.4%
46.0 48.0
41.0 42.0
37.0
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
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PAT and PAT Margin
4.9% 5.0%
4.7%
4.4%
2.8%
29.4 32.0 33.6 30.0
18.9
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
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In Rs. Million

29

Annual Consolidated Key Metrics Trend

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ROE (%) Net Debt/Equity
0.7x
20.7%
18.3%
14.7%
0.5x
0.4x
10.5%
10.0%
9.4%
0.2x
0.2x
0.1x
FY15 FY16 FY17 FY18 FY19 H1FY19 FY15 FY16 FY17 FY18 FY19 H1FY19
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30

Investor Snapshot

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Last One Year Share Price Performance
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80
75
70
65
60
55
50
45
40
Oct-18 Dec-18 Feb-19 Mar-19 May-19 Jul-19 Sep-19 Oct-19
Onward Technologies 24.8% BSE IT 5.6%
Shareholding Pattern (%)
38.26%
61.74%
Promoters Public
Rebased to Onward Technologies price
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Market Data	As on 23.10.2019 (BSE)
Market Capitalisation	Rs. 1,069.7 mn
Market Capitalisation Free Float (~38%)	Rs. 409.3 mn
Price	Rs. 67.0
No. of shares outstanding	15.98 mn
52 week High – Low (Current Price % of high)	Rs. 79.0 - 45.6 (~85%)
FY19 P/E Multiple (x)	10.6x
Promoter Pledge	Nil

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Promoter Shareholding Trend (%)
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61.7%
57.8%
55.6%
H1FY18 H1FY19 H1FY20
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Disclaimer

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This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Onward Technologies future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Onward Technologies undertakes no obligation to publicly revise any forward-looking statements to reflect future / likely events or circumstances.

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// THANK YOU

Investor Relations Contact: Prasan Abichandani – VP (Corporate Finance and IR) Email ID: prasan_abichandani@onwardgroup.com Rohan Rege – Churchgate Partners Email ID: onward@churchgatepartners.com Contact No.: +91 22 6269 5988

Onward Technologies Limited is a global player in Mechanical engineering design and IT consulting services. Onward offers a range of engineering design services including product design, engineering analysis, engineering documentation and maintenance, and manufacturing solutions, and training for automotive, off highway, aerospace, industrial equipment and consumer goods. The Company has its footprints with operations in India, North America, Germany & UK. Its global design & delivery centers are present in Pune, Chennai, Mumbai & Bangalore. OTL has grown to 2000+ employees globally servicing Fortune 1000 companies.

Onward Technologies Limited 2nd Floor, Sterling Centre, Dr A.B. Road, Worli, Mumbai – 400018 CIN: L28920MH1991PLC062542

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www.onwardgroup.com