Salzer Electronics Ltd. — Call Transcript 2020

Feb 10, 2020

Ealzar'g

"Salzer Electronics Limited Q3 & 9M FY20 Earnings Conference Call"

February 07, 2020

MANAGEMENT: MR. RAJESH DORAISWAMY — JOINT MANAGING DIRECTOR, SALZER ELECTRONICS LIMITED MR. S. BASKARASUBRAMANIAN — DIRECTOR (CORPORATE AFFAIRS) & COMPANY SECRETARY, SALZER ELECTRONICS LIMITED MR. MURUGESH K.M — ASSISTANT COMPANY SECRETARY — SALZER ELECTRONICS LIMITED Ms. SAVLI MANGLE — BRIDGE INVESTOR RELATIONS MR. SMIT SHAH — BRIDGE INVESTOR RELATIONS

• M0derator: Good day ladies and gentlemen and welcome to the Q3 and Nine Months FY20 Earnings Conference Call of Salzer Electronics Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a remind all pa1ticipant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance dun'ng the conference call, please signal an operator by pressing ""* then "0" on your touchtone phone. Please note that this conference is being recorded. ^I now hand the conference over to Mr. Rajesh Doraiswamy, Joint Managing Director of Salzer Electronics Limited. Thank you, and over to you sir.
• Rajesh Doraiswamy: Thank you. Good afternoon, everyone. And thank you all for joining our earnings call for the third quarter and nine months ended December 2019. ^I have with me, Mr. Baskarasubramanian, Director (Corporate Affairs) & Company Secretary and Mr. Murugesh, Assistant Company Secretary, Ms. Savli Mangle and Mr. Smit Shah from Bn'dge Investor Relations.

We have already shared our results update presentation and ^I hope you all must have received it and gone through the same. As you all are aware, our company started as a single product manufacturing cam operated rotaIy switches in India. And over the years, we have evolved from a single product manufacturer, to a company that offers total complete and customized electrical solutions to our customers. Though we are operating under the electrical and electronic product group, for ease of our analysis, we have classified our businesses into four divisions namely, Industrial Switchgear Business, the Wire and Cable Business, the Building Segment Business and the Energy Management Business.

Now coming to the developments that happened dun'ng the nine months of the financial year:

As it has already been intimated to you all, I would again like to share that we have completed the acquisition of 74.8% of equity shares of Kaycee Industries Limited, which now becomes a subsidiaIy of Salzer Electronics Limited and have also appointed Mr. Raman as Vice President Finance and Operations at Kaycee Industries Limited. Now, coming on to our quarterly and nine months financial and business performance. Our financials for the current and past quarters have been restated as per IndAS accounting guidelines. During the quarter, our revenues declined by 6.1% to Rs.134.7 crore from 143.5 crore in the corresponding period. This was mainly on account of lower cont1ibution from wire and cable segment due to the slowdown in demand. In fact, the Wire and Cable Division dun'ng the quarter declined by 19% year-on-year.

Our revenue for nine months ended 31st December 2019. Stood at 434.7 crore compared to 404.7 crore in nine month FY19 that is a year-on—year growth of around 7.5%, mainly driven by expotts and higher cont1ibution from Industrials Switchgear Business. During the quarter and nine months, our exports cont1ibuted 20.7 and 16.7% respectively towards our revenues, mainly driven by increasing demand for our products under the Industrial Switchgear segment. The EBITDA for the quarter, stood 16.7 crore as compared to 16.1 in the corresponding previous

quarter, which is ^a growth of 3.8%. The EBITDA margin for the quarter was at 12.4%, which is an increase of 119 basis points over last year. This increase in EBITDA margin is backed by higher exports of Industries Switchgear products. The EBITDA for nine months FY20 grew by 8.8% year-on-year to Rs.50.9 crore from 46.8 crore last year. Dn'ven by increase in cont1ibutions from business of IndustIy Switchgear and Wire and Cables. The nine month FY20 EBITDA margin stood at 11.71% which is an increase of 15 basis points as against 11.5% in nine months FY19 on account of change in product mix. The profit after tax was at Rs.5.5 crore in Q3 FY20 as against 5.4 crore in the corresponding previous pen'od of Q3 FY19 which is ^a growth of 2% and for nine months of FY20 PAT grew by 10.8% to Rs.17 .3 crore compared to 15.6 crore in nine month FY19.

Now, moving on to the breakup of revenues as per the business division, the Industrial Switchgear Division cont1ibuted 50% of the total revenues in this quarter and 44% in nine month FY20. This segment has grown by 6.7% year-on-year in Q3 FY20. Dn'ven by increase in exports and demand across products especially uptick in three phase dn've tech transformers.

For the nine months, the Industrial Switchgear Division has grown by 14% year-on—year. The Wire and Cable Division contributed 41% to our revenues this quarter, declining 19% year-onyear on this quarter. Mainly an account of lower demand in the domestic market. This division contributed 47.3% in nine months FY20 with ^a growth of 5% year-on—year.

Moving to the Building Products Division, this business is the only B2C business that we have. During the nine months of the financial year the real estate market has been on a slower side and we are yet to see pickup in demand that has impacted the overall industry. We hope that this changes in the coming quarters and will help us to increase our cont1ibution from this segment to the overall revenues. This division has contributed 6.8% this quarter and 6.4% in nine months.

The fourth is the Energy Management Division, contributing 2.2% revenue in this quarter and 2% in nine months FY20. This is an order book driven business and revenues have been driven from annual maintenance contracts. This financial year so far has been a very challenging year due to the prolonged slump in the industrial activity in the count1y. For us, extended monsoon has affected the agri cable business and the severe slowdown in demand in real estate sector has affected the building segment business. In spite of the headwinds we have grown in the Industrial Switchgear Business due to our constant push in the market and our long term relationship with various customers. We expect that our enhanced manufacturing capabilities and brand Visibility among our customers will enable us to scale our business and customer connect.

Besides strengthening the revenue drivers, improving ROCE and working capital cycle also form ^a pan of our core strategy. We are also working on the system and process management to grasp a better Visibility and orders. Based on which we can plan our inventoty levels. The collaborative efforts taken internally will lead us to improve efficiency reduce working capital inventoty levels, we expect with these initiatives our ROCE to improve from the current levels to around 18% within the next three years.

	in place we of achieving the milestones we With a very competent team are confident have set for ourselves. We the lookout for new are also constantly on opportunities for technical associations to strengthen and increase our product offerings.
	our side for now. I would This is all from once again like to thank everyone for your time and attention. We can now take questions.
Moderator:	very much. We will now Thank you answer session. The begin the question and first question is from the line of Sanjay Shah from Alphaline Wealth Advisors. Please go ahead.
Sanjay Shah:	we Sir canyou which have achieved in Switchgear, from highlight about the growth this vertical, gave us such a nice jump which in our Industrial Switchgear Business was products which it our transformer business how can you elaborate on transformer or anything else and it' s panning out?
Doraiswamy: Rajesh	we I think three phase transformer business is definitely panning out well, for nine months have achieved a turnover of around 20 crore in three phase transformers. And I think our wire harness we business also is turning out to be extremely well, in nine months have achieved a turnover of around 15 crore in that. So, these two have contributed together around 35 crore out of the 195 crore that we in nine months have done so far.
Sanjay Shah:	And how is the fiiture Visibility?
Doraiswamy: Rajesh	at around 50% to last year. And I think these two businesses are growing year-on-year compared then we see a good Visibility in wire harness particularly with various customers both in India as well as exports. And is we another reason for Industrial Switchgear Business growth have got some additional business in railways, which has contributed to this growth and also exports. I at around 20% we think exports in this quarter grew year-on-year compared to last nine months around 16% And are in exports we say to USA. are up particularly to I would by that is also one of the reasons that the EBITDA margins are a little better.
Sanjay Shah:	Right. So, USA we are supplying to our distribution channel or directly to the DES?
Doraiswamy: Rajesh	USA majority of our business is to distribution, we small business to OEMs. also do some But I say 90% would is to distribution our dealers in US.
Sanjay Shah:	tell us how much we much how Sir value wise can you have done business with railways and in exports?

Sanjay Shah:	My regarding the balance sheet. We second question was have not disclosed December 19 balance sheet so, will it be possible for you to share some on numbers debt side what is the total debt right now, short term and long term separately?
Doraiswamy: Rajesh	Yes, I think the long term debt has increased by around 10 crore mainly on account of the data cable proj ect that we are implementing. Apart from that there is no change in the long term debt. So, overall long term debt is around 15 crore right now. On the short term borrowing also has increased by around 10 crore, currently it's around 145, 150 crore.
Sanjay Shah:	So total around 165 crore to be?
Doraiswamy: Rajesh	Correct.
Sanjay Shah:	Just my last question, can we through the fiiture how do you run up see it panning out next year. We go this year as it is, how will be the next year?
Rajesh Doraiswamy:	Current year itself we estimated that we had will reach a topline of around 630 crore this year. But unfortunately, I think the markets have been extremely challenging and the industrial a demand slowdown scenario has been too tight. There" s been across sectors, which has actually nevertheless I think we will, we not allowed us to grow at that pace. But are still hopeful of of I would crore in the topline this year, which is still a growth reaching 600 to 605 say around close to 10% 10% year, I think we I would to 12%, say. Next hope the situation definitely has quite long that we in this kind of situation. So we to change because it's been have been expect to pick up. That happens, I think we the industrial scenario to change the economic are looking at close to around 720-7 30 crore next year.
Sanjay Shah:	of around 20%? means Okay, 720 growth
Doraiswamy: Rajesh	18% to 20.
Moderator:	Thank you. The next question is from the line of Kirti Jain from Sundaram Mutual Fund. Please go ahead.
Kirti Jain:	In terms of EMS businesses, how how we is the ordering pipeline and see the business for this year and next year?
Doraiswamy: Rajesh	EMS On we business, I think this year for nine months have got a revenue of around 8.8 crore is mainly the yearly maintenance that we are doing. And which this will continue for one more the pipeline we haven't got any order so far, we this, on year. Apart from have actually quoted of tender. So, we in Punjab, which for a tender a couple of days back is a 40 crore worth are we will know expecting the results to come out in the coming week, and what is the status of we that. So that's the only tender that has come out in Punjab and have quoted for that.
Kirti Jain:	cost we Sir in terms of finance have been able to reduce sequentially finance costs. So, what is the key reason sir it's rate reduction or it's aided by say lower average borrowings?

Rajesh Doraiswamy: Kirti Jain: Rajesh Doraiswamy: Kirti Jain: Rajesh Doraiswamy: Kirti Jain: Rajesh Doraiswamy: Kirti Jain: Rajesh Doraiswamy: Moderator: Chirag Patel: Rajesh Doraiswamy: Chirag Patel: Rajesh Doraiswamy: Lower utilization of working capital. Okay. Then in terms of the other expenses, like say topline is still slightly come down sequentially, but other expenses had gone up 2 crore on a sequential basis and lower topline on a year-on-year basis, other expenses have increased by 10%. Any particular reason sir? Other expenses you are looking at year-on-year December? Year-on-year December and also sequentially both have gone up sir? Actually year-on-year December if you see, I'm not looking at quarter on quarter ^I am looking at nine monthly bases. Nine monthly bases we are almost in the same levels like last year nine months. ^I don't have this figure exactly for the quarter which, if you give me some. Yes, on the nine month basis you are right sir. 39.2 - 39.4. 39.2 and 39.4 yes correct. On the quarter basis ^I will check and then come back to you on this. Sure sir. Sir given that the copper is coming off slightly. So can we expect like at least for a quarter or two near term the benefit seen are switchgear business? Yes the copper price drop will definitely benefits will accrue for the Switchgear Business. On the Wire and Cable it will get passed on because there is no effect on the copper price for us, we pass on, on a monthly basis to the customer. But for the Switchgear Business yes, we will definitely see an uptick in the margins. Thank you. The next question is from the line of Chirag Patel from Adinath Shares. Please go ahead. First of all, we taken a 74 something acquisition of Kaycee Industries right, so with respect that are the plans for FY21 for standalone Kaycee Business and operation. So we can get benefit out from the nitration of this particular entity? Thank you, ^I think ^a good question. We are actually already seeing the benefits by way of acquisition of Kaycee. Kaycee topline last year FY19 was 25 crore, FY20 they are going to be flat at 25 crore but definitely we are seeing an uptick in the margins improvement in the margin percentage. For FY21 we are seeing, we are looking at a 30 to 32 crore of revenues in the topline and a 10% PAT. 30 to 32 topline you are expecting? Yes, 30 to 32 crore in topline. Looking at ^{a 9} to 10% PAT levels. So, apart from that the benefits that we have already seen is the increased railways business to Salzer, that ^I already mentioned to you because only Salzer and Kaycee are the two major competitors in railways, we have

	also we are seeing better business to Salzer flowing already got a price increase with railways and in.
Chirag Patel:	we Okay and sir earlier participant asked and are expecting a turnover of around 720 crore, is about to 18% in FY21 which particularly. So, I just want to know, topline growth in this 720 crore guidance are we we have now? including this 32 crore topline of Kaycee Industries which
Doraiswamy: Rajesh	mentioning so far in my No, all the figures that I have been presentation is standalone.
Chirag Patel:	We the consolidated EBITDA to know we still want margin is what are expecting for?
Doraiswamy: Rajesh	Sorry say that again?
Chirag Patel:	My EBITDA we second question is on consolidated level what are expecting from margin Salzer as well as Kaycee both together?
Doraiswamy: Rajesh	On EBITDA Salzer I think we 12% between will end up 11.75 and margin for the full year. a similar lines, to be 11% I think it will be on Kaycee not 12 but 11%.
Chirag Patel:	And it is for FY20 right?
Doraiswamy: Rajesh	FY20-21
M0derator:	Thank you. The next question is from the line of Trisha Sarang an Individual Investor. Please go ahead.
Trisha Sarang:	19% Sir you Cables Business has declined by have mentioned that our Wires and in this quarter, So do we if you you compare year-on-year basis and said this is due to decrease in demand. see this continuing in the future or can you elaborate on that?
Doraiswamy: Rajesh	Cable Business that we Actually, the Wire do are majorly contributed from and the agri segment. cable majors, we Unlike the other wire and do very less of real estate building wires and industrial waves. So majority of our business is agri segment. So the reason for the decline in the agri season picks up this quarter is because of the extended monsoon. Normally during season, if you October, November, and goes until June. So that's the peak always see extremely well in Q3, Q4 historically, we Q1. That's the three quarters that we have done and Q2 do extremely well and is always down. But unfortunately because of the extended monsoon, well. And we this Q3 are seeing the same also has not done situation even in Jan. Hopefully, get better. We from February onwards, February until June things should change and expect that to happen.
Trisha Sarang:	Okay. My next question is, what is the contribution of Salzer branded Wires and Cables?
Doraiswamy: Rajesh	say 65 to 70% Said 30% we is still white labeled to various parties including L&T. I would will crore that we be doing Salzer direct business out of the 205 have done.

Trisha Sarang:	Okay. Also my you last question is, our exports have increased during this quarter which said is said that it is mostly, 90% And you due to the supplies to US. is to our dealers?
Doraiswamy: Rajesh	Yes.
Trisha Sarang:	if you So any plans of expansion in that area and can share the top customers?
Doraiswamy: Rajesh	I think US is turning out to be a potential market for us mainly because of the trade tensions that with China. We US we have seen quite a lot of new had inquiries, which are working on. We're with a couple of large OEMs, which the names also working I won't be able to mention right see a lot a lot of potential with US until we we come now, to a conclusion with them. But in the the increase in business is, to directly to our existing dealers with whom of now years. As coming we for several years, that is the business increase that we have been working have seen as of going forward, we see a lot of potential in supplying many other products from now. But our product portfolio into US.
Moderator:	Thank you. The Sundaram next question is from the line of Kirti Jain from Mutual Fund. Please go ahead.
Kirti Jain:	Sir next year, can we expect the tax rate to be at 25%?
Doraiswamy: Rajesh	Which one?
Kirti Jain:	rate currently is at 30% Tax range, tax rate?
Doraiswamy: Rajesh	We did work out to see with our Chartered Accountants to which rate to adopt whether to go for 25% avail the exemptions. So we tax rate or continue with the existing tax rate and found it advantage to continue with the existing tax rate and avail the exemptions because our effective to around 24% if we if we go for the new tax rate after the exemptions is coming today. Whereas tax rate it is 25 plus SEZ we to around 28.5% other things it comes and and will not be able to avail any exemptions. So we thought we will continue with this, though on the books it will be 33% effective cash flow basis we'll be paying 24% on tax because of the deferred tax. But real tax.
Kirti Jain:	It's 22 plus actually?
Doraiswamy: Rajesh	No, Ithink it's 25 .
Kirti Jain:	No, sir with all put together it's 25.12 sir.
Doraiswamy: Rajesh	then, I will have to really check because so far as per discussions we I think we Okay worked had out around 28.5%.
Kirti Jain:	Sir with regard to finance costs, we will be flat next year sir with despite detail, given the working are taking. How we initiative you capital improvement should see this first?

Doraiswamy: Rajesh	to last year. And First year, this year also I hope we will continue to be flat compared it will continue to be flat even next year.
Kirti Jain:	Sir 21, 22 crore kind of?
Doraiswamy: Rajesh	I think we would like to bring it lower than 20, around 20 crores.
Kirti Jain:	So, effectively interest cost as a percentage of sales will come up very nicely sir?
Doraiswamy: Rajesh	we Yes, will drop. Currently it is around 3.6%, 3.5% expect this to definitely drop.
Kirti Jain:	of PBT So, we we will come 3 so, 0.6% around 3%, less than 3, 21 upon would improvement be able to see?
Doraiswamy: Rajesh	that's why we Yes, that's definitely the plan and are driving our team also to work.
Kirti Jain:	years forward 2% finance costs can we Okay sir. Sir like in two aspire for that, given that our in the business, 2% fund will be getting circulated back finance cost as percentage of sales can we aspire for that sir?
Doraiswamy: Rajesh	1% Another reduction, yes definitely possible.
Moderator:	Thank the line of Rohan Mehta you. The next question is from an Individual Investor. Please go ahead.
Rohan Mehta:	to ask you I just wanted mentioned earlier that the benefits from Kaycee are already showing up. So, have you also started using the distribution network for our products?
Doraiswamy: Rajesh	yet. I think we Not are just starting to sell our products through their distribution. That business is just starting to right now that is not still released. What benefits you have already seen is, wherever we competing with each other directly we have been have stopped competing on we have started raising prices in those areas, that is the benefit we pricing and are already seeing.
Rohan Mehta:	Okay. And can we sir the new data cable facility when expect that to start?
Doraiswamy: Rajesh	We have already started trial production submitted samples to various customers. Sample testing also is going on middle of March at third party lab. So, fiill-fiedged production should start from or first week April.
Rohan Mehta:	Okay. So, we can see revenues from there also coming in in the next financial year?
Doraiswamy: Rajesh	Yes.
Rohan Mehta:	Okay. And sir what is the current capacity utilization?

Rajesh Doraiswamy:	It's around 70% on average, on different facilities
Rohan Mehta:	Alright. And kind of revenues can we at peak utilization what expect?
Doraiswamy: Rajesh	Without major CAPEX now we on from can go up 1000 crore.
Rohan Mehta:	existing without further CAPEX? And
Doraiswamy: Rajesh	Without major CAPEX, we have to do some maintenance and small capacity additions, but that we do very dynamically on yearly basis.
Rohan Mehta:	also mentioned that US Okay. Sir you export markets for us. So what is one of the key kind of USA trend can we see over the next few quarters like revenues from and if there are any other foreign markets that are growth opportunities for our exports?
Doraiswamy: Rajesh	We will not see big difference in our US exports in the next few quarters, but I think starting middle of next year, we we expect this traction to improve fiirther. Right now, are doing around, Which was I would say close to around 4 crore per quarter as exports to US. around 2, 2.5 last year. We expect this to double starting from middle of next year.
Rohan Mehta:	So that will be the main driver of our exports?
Doraiswamy: Rajesh	Yes.
Rohan Mehta:	Sir do we have any sourcing or any sort of business from China as well?
Doraiswamy: Rajesh	China we Of course nobody in the world can live without sourcing from are definitely sourcing China, but not very major. We some from do source some raw materials and components raw China. We materials and components from are sufficiently taken care for our stocking because of all these issues. So there's no major issues that we are looking forward right now.
Rohan Mehta:	going to ask that only if we Right, I was are going to get affected because of these recent developments in China. So we are sufficiently safe on that front?
Doraiswamy: Rajesh	in for holidays, January, February we Yes, because anyways the Chinese went actually got it stocked until April. We of our suppliers are resuming work the most don't see major issues and from 15th of February.
Rohan Mehta:	Alright. So sir our current ROCE achieve around ROCE is at around, when will we of, can we expect around 18, 19% sometime in the future?

Rohan Mehta:	have to sort of increase ROCE we kind of strategy would Next year, okay. So if I can ask what in that?
Rajesh Doraiswamy:	Basically, there's no major CAPEX now on, so that utilization will help. Secondly, we from are capital efficiency. Inventories are quite high, we looking at the working are still rum1ing at around 140 days networking capital. That we to actually cut downby have room around 30 days. things will definitely help us bring in the ROCE So, these two benefits.
Rohan Mehta:	this will be over the next two Okay, to three years?
Doraiswamy: Rajesh	Yes.
Moderator:	the line of Chirag Maroo Thank next question is from you. The an Individual Investor. Please go ahead.
Maroo: Chirag	kind of CAPEX to know have we Sir I just wanted what plaimed for Data Cable Business and when what kind of production size for the same and will it start?
Doraiswamy: Rajesh	I said, the trial production already started, we As started submitting samples, fiill-fiedged April. Total CAPEX production, we first week expect to start from will be around 17, 17 .5 crore with the current machineries that we have installed we can go up for this project and to around edition of around 3 crore machinery at that point of time, we 55, 60 crore topline and with an can actually take this to around 85, 90 crore levels.
Maroo: Chirag	You have taken 10 cr debt for the same and 7 cr internal accruals and the fiiture 3 cr will it be internal accruals or we are going to take some debt?
Rajesh Doraiswamy:	Internal accruals. We expect to add 3 crore machinery maybe after one year, not now.
Maroo: Chirag	EBITDA margins for FY21 have said that you Okay. Sir you are looking at Kaycee around 11 PAT about 10% but you mentioned that you're looking at Kaycee to 12%, have even margin for I am not able to understand how FY21. you're releasing that quarter margins?
Doraiswamy: Rajesh	finance cost is very low. So, the EBITDA At Kaycee, the depreciation and margin actually translates into PAT.
Maroo: Chirag	so you are expecting any kind of increase in maintenance cost for the same Okay, because the machine is a bit old one?
Doraiswamy: Rajesh	No.
Maroo: Chirag	to tap the EV Okay. Sir earlier we segment then, we a talk like, you wanted are taking some had R&D on expenses for the same, any development the same?

• Rajesh Doraiswamy: We have actually completed development of EV chargers and we have actually started them on ^a trial basis. We started deploying that thing in the Coimbatore city at ^a couple of places. We are looking at, we're talking to organizations like EESL, we've also approached a couple of other electric two-wheeler manufacturers to see how we can collaborate with them. So we are looking at various options on that. So, we still see this business growing two years from now. But we are already ready with the EV chargers.
• Chirag Maroo: So, ^I can expect like for FY21 the major focus is on the Switchgear Business plus a bit on building segment as you wanted it to be 10% of our revenue, which ^I don't see it coming in FY20. And some wire segment too like we have come to the data table and all. So, over this is going to our focus and not ED for now?
• Rajesh Doraiswamy: EV is still, this incubation stage ^I would say, it's not that we are not focusing it is still on incubation stage and we don't expect any revenues to come in from FY21 from that segment. But since we expect that to be a fiiture business we just want to be in the business in the initial stages so that we don't miss out any opportunity that comes on their way.
• Chirag Maroo: Okay. Sir on building segment what are your proj ections like how are you going to improve your fields from now. Affordable segment is growing affordable housing is growing but we are seeing a stagnant growth all over India in luxury or middle segment. So, what percentage of revenue do you generate in real estate from South and rest of the India?
• Rajesh Doraiswamy: Currently, we are only present in the South, we are not present in the Western market and Northern market. We are only present in the five southern states and to some extent Maharashtra little bit. This is our area of operation for building segment right now. Last year we actually grew by 80% so, actually the base for us for this year has gone up compared to what it was last year. So, that's why we are struggling to grow in building segment coupled with the dramatical slowdown in the real estate market across the country. Particularly in Bangalore and Chennai, even Kerala market has completely slowed down there are no new projects, extremely oversupply of projects. So in spite of that, ^I think we have not declined too much we have remained fiat compared to last year. And we hope that we will continue to be flat this year compared to last year. And next year we want to double this, this year we wanted to double but unfortunately we couldn't do it but we are looking at doubling this next year. By expanding into Western and the Central India.
• Moderator: Thank you. The next question is from the line of Rohan Mehta an Individual Investor. Please go ahead.

Rohan Mehta: Sir, if you could just shed some light on our current operating cash flow levels and where we can expect them to be at the year end?

Rajesh Doraiswamy: ^I don't have that data right now with me, but ^I can share that with you. This year we are not great on cash flows because of the investments that we made on acquisition. Otherwise we are having positive cash flows. And will have new cash flows to come in next year also.

Rohan Mehta:	how Alright, so any plans currently on it will be utilized?
Rajesh Doraiswamy:	We as I told we don't have major CAPEX. Right now, are only going to continue to improve our working capital efficiency.
Rohan Mehta:	Any plans to finalize a dividend payout ratio?
Doraiswamy: Rajesh	Since the dividend distribution tax has been removed right now. The board is definitely discussing on increasing the dividend also.
Moderator:	Thank you. The next question is from the line of Chirag Patel from Adinath Shares. Please go ahead.
Chirag Patel:	How the find we look at the recent budget and given for the mobile and electronic manufacturing is focusing too much on facilities in India. Specifically, government this particular two thing that are we manufacturing and finding mobile electronic instruments within India. So, the opportunity or fine tune for our products in this particular development?
Doraiswamy: Rajesh	Fortunately we are not present in the electronic manufacturing space, that's the mobile phone we is giving them electronic spaces. So, I don't think that whatever benefit government are going to get it that's not there. Secondly, in the budget we don't see any major positives for industrial quite nothing much growth. I think it has been out I would say.
Chirag Patel:	railway CAPEX, Okay particularly on they have given good and allotment?
Doraiswamy: Rajesh	we going on That has been well and have been benefiting out of that. Railways is one area where we the investments from the government has been good and have definitely been benefiting on that.
Moderator:	the line of Chirag Maroo Thank you. The next question is from and Individual Investor. Please go ahead.
Maroo: Chirag	Sir our capacity utilization at Salzer is 70%, is the capacity utilization at Kaycee what Limited?
Doraiswamy: Rajesh	Sorry, question again please.
Maroo: Chirag	What is our capacity utilization at Kaycee?
Doraiswamy: Rajesh	Kaycee our capacity utilization should be around close to 80%, 75 to 80%.
Chirag Maroo:	plamling about any kind of CAPEX So are you at Kaycee?
Doraiswamy: Rajesh	I think we we can actually do a lot of debottlenecking there and No, can improve the productivity we on there, that is what are working now.

M0derator:	you. As now Thank there are no fiirther questions from the participants I would like to hand the
	conference over to Mr. Rajesh Doraiswamy for closing comments.
Doraiswamy: Rajesh	so much I would every one of you like to thank each and each and for your interest in the company forward to talk to you again in the next call. Thank for your suggestions. Looking and
	you.
Moderator:	you. On Thank behalf of Salzer Electronics Limited, that concludes this conference. Thank you now may you for joining us and disconnect your lines.