Salasar Techno Engineering Limited — Investor Presentation 2021

Oct 31, 2021

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Dated: 31.10.2021

To,

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

Sub: - Investor Presentation

Dear Sir/Madam

Please find attached herewith Investor Presentation of the Company w.r.t. Financial Results of the Company for Q2-FY22, for your record and further dissemination.

Kindly take the same on record.

Thanking You,

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Investor Presentation Q2 FY22

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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 | Q2 FY22 Highlights

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

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Q2 FY22 Highlights

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Management Comment

Commenting on the result, Mr Shashank Agarwal, Joint Managing Director, Salasar Techno Engineering Ltd . said,

“I am pleased to inform you that the company has delivered a strong performance during the quarter with a revenue of Rs 200.2 Crores and EBITDA of Rs 21.5 Crores which is 10.7% of the revenue. The operations of the company are back to normal post the Covid disruptions, which is reflected in the results. The stellar performance was driven by contribution from each of our business segments along with our approach to diversify and enter newer segments. All our business verticals offer significant headroom for growth and operating leverage as they scale up. Railways’ electrification continues to remain a key growth segment and focus area for us. Further our new vertical of Heavy Steel Structure Division has gained impetus with a steady flow of orders along with increasing our customer base with reputed brands. “The entire team of Salasar Techno Engineering deserves special acknowledgement for their untiring efforts in contributing towards the Company’s performance as we continue to strive for growth opportunities in the future.”

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Q2 FY22 consolidated P&L statement

Particulars (INR Cr)	Q2 FY22	Q2 FY21	YoY	Q1 FY22	QoQ	H1 FY22	H1 FY21	YoY
Net Sales	200.2	147.6	35.7%	132.8	50.8%	333.0	210.7	58.0%
Cost of Goods Sold	160.7	119.2	34.8%	102.2	57.2%	262.9	169.0	55.6%
Employee Cost	9.4	7.5	25.1%	8.3	12.9%	17.8	12.9	37.6%
Other Indirect Expenses	8.6	5.8	47.4%	7.5	14.3%	16.1	9.0	79.1%
Total Expenditure	178.7	132.5	34.8%	118.0	51.4%	296.7	190.9	55.4%
EBITDA	21.5	15.0	43.3%	14.7	45.8%	36.3	19.8	82.8%
EBITDA Margin%	10.7%	10.2%	57 bps	11.1%	-36 bps	10.9%	9.4%	147 bps
Other Income	-0.6	1.2	NA	2.1	NA	1.4	1.8	-18.4%
Interest	5.4	4.2	29.9%	4.7	14.0%	10.2	7.8	31.0%
Depreciation	1.8	1.4	28.3%	1.8	0.7%	3.5	2.7	28.7%
Profit Before Tax	13.7	10.6	29.1%	10.3	33.0%	24.0	11.1	116.2%
Provision for Tax	3.7	2.4	50.7%	3.0	24.4%	6.6	2.7	143.3%
Profit After Tax	10.0	8.2	22.6%	7.3	36.4%	17.4	8.4	107.4%
PAT Margin%	5.0%	5.5%	-53 bps	5.5%	-52 bps	5.2%	4.0%	124 bps

• On account of nation-wide lockdown due to COVID 19 pandemic, Q1 FY21 performance was severely impacted

• Operations of the Company were impacted on account of Covid related restrictions during the quarter ended 30th June 2021

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Order book position as on 30[th] Sep 2021

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Particulars Value
Orders EPC outstanding as on 30 [th] Sep 2021 Rs. 560.5 crore
+ L-1 EPC orders for which LOI awaited Rs. 110.4 crore
+ Manufacturing orders outstanding under new manufacturing plant as on 30 [th] Sep 2021 Rs. 60.8 crore
+ EPC orders under execution in Salasar Adorus LLP (51% JV) as on 30 [th] Sep 2021 Rs. 235.3 crore
Total Rs. 967.0 crore
In addition, the company normally has regular monthly orders of telecom towers of approx. Rs 30 to 35 Crores
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Segmental revenue breakup

Manufacturing - Steel Structures and Others

EPC - Power Transmission EPC - Railway Electrification

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13%
4%
83%
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H1FY21 Revenue by Segments

Manufacturing - Steel Structures and Others EPC - Power Transmission EPC - Railway Electrification

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20%
7%
73%
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H1FY22 Revenue by Segments

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Company Overview

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Diversified product portfolio

50K

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Telecom Towers

• 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

Telecom Tower

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Transmission Line Towers

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

475KM

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Railway Electrification

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

Power Transmission lines

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Solar Structures

• Manufacturing, fabrication and deployment of solar module mounting structures

217TKM

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Utility Poles

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

Railway Track Electrification

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Heavy Steel Structures

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

• 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:

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1,00,000 MT of Steel Galvanizing 15,000 MT of Heavy Structure Division

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2
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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

Board of Directors:

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Chairman & Managing Director

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

• Wide experience spanning over 4 decades in trading, manufacturing and fabrication of iron & steel

• Driving force behind groups commitment of timely delivery with superior quality

• Mr. Mukesh Kumar Garg

• 4 Non-Executive Independent Director

1 Mr. Shalabh Agarwal Director

Mr. Sanjay Chandak 5 Non-Executive Independent Director

Ms. Tripti Gupta 2 Director

Mr. Vijay Kr jain

Mr. Anil Kumar Jain 3 6 Non-Executive Independent Director

Non-Executive Independent Director

Key Management

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Joint Managing Director

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

• First generation entrepreneur with 25+ years of experience.

• Involved in every aspects of business and has been the driving force in creating the brand and image of Salasar

Mr. Pramod Kumar Kala 1 Chief Financial Officer

Advisor

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1
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Mr. Uttam Prakash Agarwal Advisor to Board

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Strong client base

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Approved vendor for Power Qualified to bid for rural Grid Corporation Ltd. electrification projects

Power Sector

Telecom Sector

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Qualified by CORE (Central Organization for Railway Electrification)

Others/ EPC

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Industry Opportunities

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Industry opportunity - Telecom

India is the second largest telecom market in the world with a subscriber base of 1.17 billion

Cumulative industry capex and yearly growth of towers and base stations (BTS) (‘000s)

Tower

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2,206.1 2,211.6
BTS 2,000.1
1,713.0
1,371.9
775.0
581.1 630.8
439.0 440.4 461.4 500.8
Dec'15 Dec'16 Dec'17 Dec'18 Dec'19 Nov'20
Growth drivers for the telecom tower companies
Increase in data consumption led Tower sharing leading to Increasing tele-density in largely
Launch of 5G
by 4G increase in revenue of telecos untapped rural market
Development of IoT for
Monetization of tower in Creation of robust digital
Smart city opportunities manufacturing and services
emerging business streams communication Infrastructure
sector
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Increasing tele-density in largely untapped rural market Creation of robust digital communication Infrastructure

Source - Ministry of Communications, TAIPA, EY analysis

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Industry opportunity - Power Transmission

Robust growth outlook driven by strong policy support

India’s electricity consumption can continue to grow at >5% on a low base

Estimated INR 6 - 8 trillion market opportunity in transmission till FY2029

At a conservative avg. GDP growth rate of 5% over next decade power demand estimated to rise by 1.6x Schemes like UDAY, 24x7 Power for All, Village Electrification etc. strengthening the value chain

Historically generation and transmission investment

Transmission line capacity (ckt km)

% Growth in Generation Capacity (MW) % Growth in Transmission Capacity (ckt km)

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64%
51%
24% 22% 26% 26% 22%
17% 15%
12%
FY'92-97 FY'97-02 FY'02-07 FY'07-12 FY'12-17
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230/220 kV 400 kV 765 kV HVDC 500/800 kV

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27
21 106
16 69
39 291
9
229
7 11 177
3 126
80
118 145 172 204 241
FY09 FY14 FY19 FY24E FY29E
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Source – CEA, BOB Power Sector report

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Industry opportunity – Railway

Growth of railway electrification (Route Km, RKM)

Budget allocation for railway electrification (Rs. crore)

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29,201
13687
2150 3038
2004-09 2009-14 2014-19 2019-24 (Planned)
6,886 RKM already commissioned till Jan’21
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7,542
6,960
6,601
6,302
3,396 3,457
2,163
1,206
830 1,005
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
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Robust growth opportunities for railway track electrification

• Mission 100% route electrification

• Need for electrification – to eliminate pollution and India’s dependence on imported fuel

• Highest ever budget allocation of Rs. 7,542 crore for electrification projects during 2021-22

• Sub-station capacity to enhance leading for opportunities for transmission & distribution utilities

• Engineering procurement and construction (EPC) contractors shall have multitude of opportunity in terms of infrastructure creation for railway electrification

Source – indianrailways.gov.in

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Growth Strategy

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Growth strategy

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 Expanding tower designs and leveraging on their tie-ups with Ramboll to provide value to the clients 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. 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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Consolidated P&L statement

Particulars (INR Cr) FY21 FY20 FY19	Particulars (INR Cr) FY21 FY20 FY19	Particulars (INR Cr) FY21 FY20 FY19	Particulars (INR Cr) FY21 FY20 FY19
Net Sales	596.6	526.3	654.9
Cost of Goods Sold	473.0	415.1	526.0
Employee Cost	30.9	31.0	28.0
Other Indirect Expenses	35.7	28.3	27.5
Total Expenditure	539.6	474.5	581.5
EBITDA	57.0	51.8	73.4
EBITDA Margin%	9.6%	9.8%	11.2%
Other Income	10.2	1.7	0.8
Interest	17.6	20.6	16.3
Depreciation	5.6	5.0	4.6
Profit Before Tax	43.9	27.9	53.3
Provision for Tax	14.0	5.6	20.0
Profit After Tax	29.9	22.4	33.3
PAT Margin%	5.0%	4.3%	5.1%

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Consolidated balance sheet

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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Key financial highlights

Sales Volumes (MT)

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74,993
58,619 58,776
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

Christensen Advisory Lokesh Pareek- +91-8424955935 Lpareek@ChristensenIR.com Vikash Verma VVerma@ChristensenIR.com

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