Salasar Techno Engineering Limited — Investor Presentation 2021

Jun 1, 2021

Dated: 01.06.2021

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To,

The Manager – Listing The Secretary National Stock Exchange of India Ltd. Corporate Relationship Dept. Exchange Plaza, BandraKurla Complex BSE Limited Bandra East P.J.Tower, Dalal Street, Mumbai – 400051 Mumbai – 400001 Symbol – SALASAR Scrip Code: 540642

- Sub: Investor Presentation

Dear Sir/Madam

Please find attached herewith Investor Presentation of the Company w.r.t. Financial Results of the Company for Q4&FY21, for your record and further dissemination.

Kindly take the same on record.

Thanking You,

Yours Sincerely

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Investor Presentation Q4 & FY21

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Disclaimer

This presentation and the accompanying slides (the “Presentation”), which have been prepared by Salasar Techno Engineering Limited (the “Company”), have been prepared solely for information purposes and do 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 whatsoever. 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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Contents

01 | Q4 & FY21 Highlights

02 | Company Overview 03 | Industry Opportunities 04 | Growth Strategy 05 | Historical Financial Performance

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Q4 & FY21 Highlights

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Q4 & FY21 consolidated P&L statement

Particulars (INR Cr) Q4FY21 Q4FY20 YoY Net Sales 211.5 108.6 95% Cost of Goods Sold 168.8 80.7 Employee Cost 9.8 9.8 Other Indirect Expenses 13.6 8.4 Total Expenditure 192.3 99.0 EBITDA 19.2 9.6 100% EBITDA Margin% 9.1% 8.9% 26 bps Other Income 5.0 0.9 Interest 5.4 4.6 Depreciation 1.5 1.3 Profit Before Tax 17.4 4.7 274% Provision for Tax 7.5 0.9 Profit After Tax 9.9 3.7 163% PAT Margin% 4.7% 3.4% 121 bps	Particulars (INR Cr) Q4FY21 Q4FY20 YoY Net Sales 211.5 108.6 95% Cost of Goods Sold 168.8 80.7 Employee Cost 9.8 9.8 Other Indirect Expenses 13.6 8.4 Total Expenditure 192.3 99.0 EBITDA 19.2 9.6 100% EBITDA Margin% 9.1% 8.9% 26 bps Other Income 5.0 0.9 Interest 5.4 4.6 Depreciation 1.5 1.3 Profit Before Tax 17.4 4.7 274% Provision for Tax 7.5 0.9 Profit After Tax 9.9 3.7 163% PAT Margin% 4.7% 3.4% 121 bps	Particulars (INR Cr) Q4FY21 Q4FY20 YoY Net Sales 211.5 108.6 95% Cost of Goods Sold 168.8 80.7 Employee Cost 9.8 9.8 Other Indirect Expenses 13.6 8.4 Total Expenditure 192.3 99.0 EBITDA 19.2 9.6 100% EBITDA Margin% 9.1% 8.9% 26 bps Other Income 5.0 0.9 Interest 5.4 4.6 Depreciation 1.5 1.3 Profit Before Tax 17.4 4.7 274% Provision for Tax 7.5 0.9 Profit After Tax 9.9 3.7 163% PAT Margin% 4.7% 3.4% 121 bps	Particulars (INR Cr) Q4FY21 Q4FY20 YoY Net Sales 211.5 108.6 95% Cost of Goods Sold 168.8 80.7 Employee Cost 9.8 9.8 Other Indirect Expenses 13.6 8.4 Total Expenditure 192.3 99.0 EBITDA 19.2 9.6 100% EBITDA Margin% 9.1% 8.9% 26 bps Other Income 5.0 0.9 Interest 5.4 4.6 Depreciation 1.5 1.3 Profit Before Tax 17.4 4.7 274% Provision for Tax 7.5 0.9 Profit After Tax 9.9 3.7 163% PAT Margin% 4.7% 3.4% 121 bps	FY21 FY20 YoY	FY21 FY20 YoY	FY21 FY20 YoY
Net Sales	211.5	108.6	95%	596.6	526.3	13%
Cost of Goods Sold	168.8	80.7		473.0	415.1
Employee Cost	9.8	9.8		30.9	31.0
Other Indirect Expenses	13.6	8.4		35.7	28.3
Total Expenditure	192.3	99.0		539.6	474.5
EBITDA	19.2	9.6	100%	57.0	51.8	10%
EBITDA Margin%	9.1%	8.9%	26 bps	9.6%	9.8%	(29 bps)
Other Income	5.0	0.9		10.2	1.7
Interest	5.4	4.6		17.6	20.6
Depreciation	1.5	1.3		5.6	5.0
Profit Before Tax	17.4	4.7	274%	43.9	27.9	57%
Provision for Tax	7.5	0.9		14.0	5.6
Profit After Tax	9.9	3.7	163%	29.9	22.4	34%
PAT Margin%	4.7%	3.4%	121 bps	5.0%	4.3%	76 bps

The board has approved issuance of bonus shares in the ratio 1:1. Declared dividend at Rs. 1.00/- per equity share of face value Rs. 10/- for the financial year

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Consolidated balance sheet as on 31[st] Mar’21

Particulars (INR Cr)	Mar-21	Mar-20
EQUITY & LIABILITY
Share Capital	14.3	13.3
Other Equity	238.4	193.9
Non- ControllingInterest	0.3	-
Shareholder's Funds	253.0	207.1
Non-Current Liabilities:
Secured Loans	33.9	5.2
Deferred Tax Assets/Liabilities	5.0	3.1
Other LongTerm Liabilities	0.1	0.1
LongTerm Provisions	3.1	2.3
Total Non-Current Liabilities	42.1	10.7
Current Liabilities:
Trade Payables	31.3	21.4
Other Current Liabilities	60.7	54.2
Short Term Borrowings	162.6	159.1
Short Term Provisions	0.4	0.3
Other Financial Liabilities	1.8	0.6
Current Tax Liabilities(Net)	1.5	-
Total Current Liabilities	258.3	235.7
Total Liabilities	553.4	453.5

Particulars (INR Cr)	Mar-21	Mar-20
ASSETS
Non-Current Assets:
Net Block	112.4	91.1
Capital Work in Progress	0.1	0.3
Intangible Assets	0.3	-
Other Non Current Assets	15.4	14.2
Total Non-Current Assets	128.1	105.6
Current Assets:
Inventories	120.0	93.5
Current Investments	10.2	1.4
Sundry Debtors	240.1	214.1
Cash and Bank	5.2	10.6
Other Financial Assets	14.7	11.8
Other Current Assets	35.1	16.3
Current Tax assets (Net)	-	1.6
Total Current Assets	425.3	349.3
Total Assets	553.4	453.5

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Commissioning of new manufacturing unit

 Successfully completed planned capex to setup new manufacturing unit for large and heavy steel structures

• Applications: railway over ridges (ROB), pre engineered building (PEB). power plants, process plants, high-rise building, warehouses, airport hangers, metro stations, etc.

• Capacity: Installed capacity of 15,000 metric tons per annum, one of the largest in northern India

• Capex: Incurred ~Rs 20 Cr funded through issue of convertible warrants and internal accruals

• Timeline: The new unit has been commissioned in the last week of March 2021 and is expected to generate ~ Rs. 100 crore

revenue to the topline annually from next year onwards

• Orders Received: As on date company has already secured orders under this vertical to supply 8,400 metric tons of fabricated structures worth Rs. 70 Crore

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Key developments during the year

• Export foray - Entered into 2-year supply agreement with American Tower Corporation (ATC)

• For supply of towers in African countries like South Africa, Kenya, Uganda, Nigeria and Ghana

• During FY20-21 executed orders worth Rs 27 Crores under this agreement to supply telecom towers to different African countries

• Benefits in increasing international presence and increase in export contribution

• New opportunities - Incorporated Salasar Adrous LLP, a joint venture with Adrous Advisors Pvt. Ltd.

• To undertake infra related works such as track laying for railways and tramways etc.

• Secured first order from Texmaco Rail and Engineering Ltd. worth Rs 252 cr for Bangalore Metro Corporation ltd for design, supply, installation, testing & commissioning of ballastless track of standard gauge

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Highlights of key orders secured during the year

1 Secured 6 tenders from Prasar Bharti - Scope: Design, supply, erection, testing and commissioning of 100M self-supporting lattice steel tower

• Value : Rs 13.45 cr

Won EPC order for Railway 2 Electrification at Pratapgarh & Janghai stations of Lucknow division

• Scope : Design, supply, erection,

• testing and commissioning of 25 KV AC single phase OHE in connection with yard remodeling

Secured order from Delhi Metro 3 Rail Corporation - Scope : Design, supply, installation, testing and commissioning of 25 KV flexible overhead equipment and SCADA systems - Value : Rs 23.97 cr

Secured orders from Model Economic 4 Township Ltd. - Scope : Construction of 33 kv overhead circuit line on monopoles - Value: Rs 10.25 cr

Secured order from Northern 5 Railways Delhi - Scope: Design, supply, erection, testing, commissioning & modification of 132kv DC Tr. line - Value Rs. 2.85 cr 6 Secured order from Ircon International Ltd., New Delhi - Scope: Design, manufacture & supply of hot dip galvanized OHE steel masts, portals, SPS, etc. - Value: Rs 3.63 cr

• Value : Rs. 10.56 cr

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Order book position as on 31[st] May 2021

Particulars	Value
Orders EPC outstanding as on 31st March 2021	Rs. 262 crore
+ Orders EPC received after 31st March till date (LOI received)	Rs. 326 crore
+ L-1 EPC orders for which LOI awaited	Rs. 80 crore
+ Manufacturing orders received under new manufacturing plant	Rs. 70 crore
+ EPC orders under execution in Salasar Adorus LLP (51% JV)	Rs. 250 crore
Total	Rs. 988 crore

In addition, the company normally has regular monthly orders of telecom towers of approx. Rs 25 to 30 Crores

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Segmental revenue breakup

Manufacturing - Steel Structures and Others

EPC - Power Transmission EPC - Railway Electrification

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15%
1%
84%
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FY20 Revenue by Segments

Manufacturing - Steel Structures and Others

EPC - Power Transmission EPC - Railway Electrification

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14%
6%
80%
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FY21 Revenue by Segments

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Company Overview

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Diversified product portfolio

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Transmission Line Towers Manufacturing and deployment of transmission towers for EPC business, Turnkey Projects, supplying structures to other EPC contractors

Solar Structures Manufacturing, fabrication and deployment of solar module mounting structures

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Railway Electrification Design, supply, erection, testing & commissioning of railway electrification including normal height OHE, High Rise OHE & TSS Works

Utility Poles

Telecom Towers

Production of custom-made poles of the highest quality equipped with technologies like LED lights, CCTV cameras, pollution sensors, Wi-Fi routers

Production of towers and monopoles that are designed as per time-tested Ramboll designs, in-house IIT certified designs, or tailored as per customer design

50K

Telecom Towers

475KM

Power Transmission lines

217TKM[*]

Railway Track electrification

• Track Kilometres

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Technology driven facilities

3 State-of-art Steel Structure Manufacturing and Galvanising Facilities

Total Area:

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1
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Location: District Hapur (UP) Unit-I, Jindal Nagar Unit-II, Khera, Pilkhuwa Unit-III, Khera, Pilkhuwa

1,50,000 Square yards Installed Capacity: 1,00,000 MT of Steel Galvanizing 15,000 MT of Heavy Structure Division

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Raw Materials: 4 Machinery: Steel Shape and Section CNC Machines Zinc (for Galvanising) Industrial Machinery Nuts and Bolts Hydra & Cranes

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Technical Tie-up with Ramboll, Denmark

To manufacture lighter and lower costing tower structures and high mast poles. Their designs reduce the cost by 20% compared to conventional angular towers.

Client Implications:

Ramboll Telecom is a world leader in designing telecom and high mast Poles. With the experience of designing towers for last sixty years, their designs are time-tested and proven for performance

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Experienced management team

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Mr. Alok Kumar B.Sc from Punjab University, Chandigarh

With experience spanning over 4 decades in trading, manufacturing and fabrication of iron & steel, Mr. Kumar is behind the group's spirit and commitment to deliver products and services of uncompromising quality and integrity

Mr. Shashank Agarwal B.E. (Mech.) from MIT, Manipal

With 25+ years of experience, Mr. Agarwal is a first-generation entrepreneur who has been instrumental in building Salasar into one of the leading players in the sector. He is involved in all aspects of business and has been the driving force in creating the brand and image of Salasar

Board of Directors:

Key Management:

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Shalabh Agarwal
Director
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Tripti Gupta
Director
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Anil Kumar Jain

Non-Executive and Independent Director

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Mukesh Kumar Garg Non-Executive and Independent Director

Sanjay Chandak

Non-Executive and Independent Director

Vijay Kr jain

Non-Executive and Independent Director

Pramod Kumar Kala 1 Chief Finance Officer

Advisor:

Uttam Prakash Agarwal 1 Advisor to Board

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Strong client base

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Telecom Sector
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Power Sector
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Approved vendor for Power Grid Corporation Ltd.

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Qualified to bid for rural electrification projects

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Qualified by CORE (Central Organization for Railway Track Electrification)

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Others/EPC
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Industry Opportunities

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Industry opportunity - Telecom

Mobile and Internet penetration

• The proportion of unique mobile subscribers to the total population is expected to reach around 63% in 2025 from 58% in July 2018

• With the increase in the mobile phone penetration and reducing data costs in India, it is expected that the current internet user base that stands at 687 Mn might get doubled in the next 5 years

5G Rollout Plans & 4G Penetration

• Increase in the 4G penetration to provide 4G access to ~80%[*] of India’s mobile subscriber base by 2024

• 5G rollout likely to attract ~USD 30 Bn[^] in collective capital expenditures over a period of next 5 years by the top three telecom operators in India

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Increased Demand for Telecom Tower Infrastructure pan India

• With the positive outlook of the telecom sector it would be lucrative to move beyond traditional telecom business to wider digital consumer space like content and mobile banking solutions

Government Initiatives that will provide a boost to the Telecom Infrastructure Segment

• The Government of India planned to roll out a new National Telecom Policy 2018 in lieu of rapid technological advancement in the sector over the past few years. The policy intends to attract investments worth USD 100 Bn in the sector by 2022

• The Department of Information Technology intends to set up over 1 Mn internet-enabled common service centers across India as per the National e-Governance Plan

*Ericsson Mobility Report November 2018

^UBS Report

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Industry opportunity – Power & Railway

Increased demand for power transmission infrastructure development

• Power consumption is estimated to reach up to 1,894.7 TW in 2022

• Increased demand for power transmission infrastructure development due to increasing inter regional power demand - supply gap

Government Initiatives

• The Union Budget 2020-21 has allocated USD 2.27 Bn to the Ministry of Power

• Additional USD 786.95 Mn to Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) to provide power transmission infrastructure for rural electrification.

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Increasing Demand for Electricity
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Growth in Renewable Energy

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2509
10% CAGR 175GW
2022
1697
1252
87GW
2020
Yearly capacity addition of
2020 2022 2027 15-20GW
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Railways Electrification orders are on a rapid growth; aiming to double their capacity

• The railways have set a 100% electrification target by the next four years

• The Government is going to come up with a ‘National Rail Plan’ to enable the country to integrate its rail network and develop a multi-modal transportation network. Current Railway capex for 2020-21 is INR 1.5 Lakh Cr. expected to grow at CAGR of 18% for the next 10 years

• Electrification of 6,000 Km route is targeted, with wiring of the entire broad gauge network now envisaged for completion by 2023-24

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Growth Strategy

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Growth strategy

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New business of manufacturing of heavy structures such as ROB, PEB, etc.

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Tapping industry opportunities by expanding product portfolio and optimal utilization of existing capacity

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Expanding tower designs and leveraging on their tie-ups with Ramboll to provide value to the clients

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Strong focus on the export market to increase its share in the foreign market. Increasing market share domestically by targeting new customers and expanding relationships with the existing ones.

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Innovating and manufacturing differentiated products like camouflaged towers, monopoles, etc. to provide for the evolving infrastructural needs of the society

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Historical Financial Performance

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Key financial highlights

Sales Volumes (MT)

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74,993
62,069
58,619
55,657
51,956
FY17 FY18 FY19 FY20 FY21
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EBITDA (Rs. Crs) / Margin (%)

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10.9% 11.2%
80 12%
10.1% 9.8% 9.6%
10%
60
8%
40 6%
73
54 52 57 4%
20 39
2%
0 0%
FY17 FY18 FY19 FY20 FY21
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Revenue (Rs. Crore)

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655
597
526
495
384
FY17 FY18 FY19 FY20 FY21
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PAT (Rs. Crs) / Margin (%)

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40 6.0% 7%
4.9% 5.1% 5.0% 6%
30 4.3% 5%
4%
20
33 3%
30 30
10 19 22 2%
1%
0 0%
FY17 FY18 FY19 FY20 FY21
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Key financial ratios

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RoCE ROE
22% 23%
24% 23% 23% 19%
19%
15% 11% 12%
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
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Debt to Equity

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0.8 0.8
0.7 0.7 0.7
FY17 FY18 FY19 FY20 FY21
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RoCE – EBIT/ Average Capital Employed, ROE – Profit/Average Shareholders Funds, D/E – Average Debt/ Average Equity

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Thank You

Salasar Techno Eng Pramod Kala - CFO pramod.kala@salasartechno.com investor.relations@salasartechno.com

Pareto Capital (Investor Relations) Pooja Dokania pooja.dokania@paretocapital.in Smit Shah smit.shah@paretocapital.in

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