Salzer Electronics Ltd. — Interim / Quarterly Report 2021

Aug 12, 2020

Salze ~~r E~~ l ~~e~~ ctronics Limited Result Update Presentation Q1 FY21

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Disclaimer

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

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

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

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Table of Contents

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Financial Highlights

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Company Overview Business Overview

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Way Ahead

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Financial Highlights

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Joint Managing Director’s Message

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Commenting on the results, Mr. Rajesh Doraiswamy, Joint Managing Director, said :

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“During the first quarter of the financial year, we registered a revenue of Rs. 95.7 crores with EBITDA and PAT of Rs. 9.6 crore and Rs. 0.7 crore respectively. The performance of the quarter has been impacted on account of nation-wide lockdown to reduce the spread of COVID-19. Our manufacturing facility had been temporarily shut down and we had restarted the facility from mid may.

However, since the start of the unlocking phase the demand for the product were significant lower and no major capex plans by the industry that affected our revenues. Despite this, we have seen good demand for our industrial switchgear products in the export markets and have registered 19% of our revenues from the export. Also, this has helped us in maintaining our EBITDA margins at the same levels without much disruption.

The current COVID 19 situations are tough and is causing disruption in the market. However, the time which we had during the lockdown has been utilized to reformulate the strategies in term of reduction of cost, utilizing available resources optimally, recognising and identifying new clients in the domestic as well as export markets, etc. which will help us in the future. Though the near-term future is fluid, we are optimistic on the medium term based on the indication from various experts in the markets.

Overall, we remain committed to our set agenda of delivering sustainable growth. I thank all our stakeholders for their continued support and faith in our Company”

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Key Financial Highlights – Quarterly

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Revenue, EBITDA, PAT (Rs. Crore)

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Revenue EBITDA PAT
180 30.0
162.1
155.0
160
143.5
25.0
137.8
134.7 134.7
140 132.3
126.8 126.5
120 110.7 20.0
104.6 17.5
100.7 16.4 16.7 16.1 16.9 16.7 16.7 95.7
100
14.3
14.0
13.5 15.0
12.9
80
10.5
9.6
9.1
60 8.4 10.0
40 5.8 5.3 4.9 4.5 5.6 5.4 5.8 5.9 5.5
4.1
5.0
20
0.7
0 0.0
Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21
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Q1 FY21 Financial Highlights

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Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights	Q1 FY21 Financial Highlights
Rs. in Crore Standalone Consolidated Q1 FY21 Q1 FY20 Y-o-Y % Q4 FY20 Q1 FY21 Net Revenue 95.7 162.1 (41.0%) 132.3 98.2 Raw Materials 74.3 126.5 95.2 75.8 Employee Cost 4.3 6.3 6.7 4.8 Other Expenses 7.5 12.6 16.1 8.1 Total Expenditure 86.1 145.5 118.0 88.8 EBITDA 9.6 16.7 (42.5%) 14.3 9.5 EBIDTA Margin(%) 10.02% 10.28% (26 bps) 10.81% 9.65% Other Income 0.3 0.7 -0.1 0.3 Depreciation 3.9 3.5 3.7 4.0 Interest/Finance Cost 4.8 5.3 5.4 4.8 Exceptional Item(Gain) /Loss 0.0 0.0 0.0 0.0 Profit Before Tax 1.1 8.5 5.0 0.9 Tax 0.4 2.8 -4.1 0.4 Profit After Tax 0.7 5.8 (88.1%) 9.1 0.5 Profit After Tax Margin(%) 0.72% 3.57% (285bps) 6.91% 0.49% Basic EPS(Rs.) 0.43 3.63 (-88.2%) 5.72 0.31
	Rs. in Crore	Standalone				Consolidated
		Q1 FY21	Q1 FY20	Y-o-Y %	Q4 FY20	Q1 FY21
	Net Revenue	95.7	162.1	(41.0%)	132.3	98.2
	Raw Materials	74.3	126.5		95.2	75.8
	Employee Cost	4.3	6.3		6.7	4.8
	Other Expenses	7.5	12.6		16.1	8.1
	Total Expenditure	86.1	145.5		118.0	88.8
	EBITDA	9.6	16.7	(42.5%)	14.3	9.5
	EBIDTA Margin(%)	10.02%	10.28%	(26 bps)	10.81%	9.65%
	Other Income	0.3	0.7		-0.1	0.3
	Depreciation	3.9	3.5		3.7	4.0
	Interest/Finance Cost	4.8	5.3		5.4	4.8
	Exceptional Item(Gain) /Loss	0.0	0.0		0.0	0.0
	Profit Before Tax	1.1	8.5		5.0	0.9
	Tax	0.4	2.8		-4.1	0.4
	Profit After Tax	0.7	5.8	(88.1%)	9.1	0.5
	Profit After Tax Margin(%)	0.72%	3.57%	(285bps)	6.91%	0.49%
	Basic EPS(Rs.)	0.43	3.63	(-88.2%)	5.72	0.31

▪ Decline in Revenue, mainly on account of nationwide lockdown announced by govt of India to reduce the spread of COVID-19 pandemic

▪ Contribution from exports at 19.3 %, as against 11.4%

Consolidated – on account of acquisition of 74.9% shares of Kaycee Industries

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Q1 FY21 Revenue Breakup – Business Verticals

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Q1 FY20
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Q1 FY21
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Industrial
Switchgear,
37.1%
Wire & Cable,
Energy 54.7%
Management ,
1.8%
Building Segment,
6.4%
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Industrial
Switchgear,
37.5%
Energy
Management ,
1.5% Wire & Cable,
Building Segment, 57.1%
3.9%
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• Industrial Switchgear – 37.5% of net revenues

• Wires & Cables – 57.1% of net revenues

• Buildings Products – 3.9% of net revenues

• Energy Management – 1.5% of net revenue – order book driven business; revenue incurred from AMC charges for the past orders executed`

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Q1 FY21 Revenue Breakup – Geographical

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Q1 FY20
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Middle East,
Asia (Exclu. India),
3.8%
U.S, 1.1% 2.6%
Europe,
4.0%
India,
88.6%
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Q1 FY21
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Asia (Exclu. India),
Middle East, 2.4%
8.8%
U.S, 5.0%
Europe,
3.1%
India,
80.7%
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FY20 Financial Highlights

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Rs. in Crore Net Revenue Raw Material Expenses Employee Expenses Other Expenses Total Expenditure EBITDA EBITDA Margin(%) Other Income Depreciation Interest/Finance Cost Exceptional Item(Gain) /Loss PBT Tax PAT PAT Margin(%) Basic EPS(Rs.)	FY20	FY19	Y-o-Y %	FY20 (Consl)
	566.9	559.8	1.3%	584.4
	419.8	418.8		427.7
	26.4	24.9		29.8
	55.5	52.4		60.0
	501.8	496.1		517.6
	65.2	63.6	2.4%	66.8
	11.50%	11.37%	13 bps	11.43%
	0.9	0.7		1.3
	14.4	12.2		14.8
	21.2	19.9		21.2
	0.0	0.0		0.2
	30.5	32.3		31.9
	4.1	8.4		4.5
	26.4	24.0	10.2%	27.4
	4.66%	4.28%	38 bps	4.69%
	16.51	15.21	8.5%	16.96

▪ Increase in Revenue of 1.3% driven by growth in industrial switchgear business

▪ Contribution from exports was 17.1% in FY20

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Consolidated – on account of acquisition of 74.9% shares of Kaycee Industries

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FY20 Revenue Breakup – Business Verticals

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FY19 FY20
Industrial
Industrial Switchgear,
Switchgear, 44.8%
41.4%
Wire & Cable, Energy
Energy
48.5% Management ,
Management ,
2.1%
2.6% Wire & Cable,
Building Segment, 47.0%
Building Segment, 6.2%
7.6%
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▪ Industrial Switchgear – 44.8% of total revenues, YoY increase of 9.9%, driven by exports

▪ Wires & Cables – 47.0% of total revenues

▪ Buildings Products – 6.2% of total revenues, YoY decline of 16.5%

▪ Energy Management – 2.1% of total revenue. This is an order book driven business and increase in revenues have been due to in AMC

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FY20 Revenue Breakup – Geographical

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FY19
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Middle
Asia (Exclu. India),
East, 2.3%
5.5%
U.S, 2.2%
Europe,
4.0%
India,
86.1%
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FY20
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Asia (Exclu. Middle
India), 5.8% East, 2.8%
U.S, 3.1%
Europe,
5.6%
India,
82.8%
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Balance Sheet as on 31[st] Mar’ 20

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Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20	Balance Sheet as on 31st Mar’ 20
Rs. Crore	As on 31st Mar’ 20	As on 31st Mar’ 19	As on 31st Mar’20*		Rs. Crore	As on 31st Mar’ 20	As on 31st Mar’ 19	As on 31st Mar’20*
Shareholder’s Funds	309.4	287.2	310.0		Non-current assets	254.3	215.9	248.2
Share capital	16.0	16.0	16.0		Property,Plant & Equipment	202.4	178.4	205.4
Other Equity	293.4	271.2	294.1		Capital WIP	2.7	6.1	2.7
Non ControllingInterest	0.0	0.0	3.9		Investments Property	0.0	0.0	0.0
Non-current liabilities	36.9	24.6	37.2		Intangible Assets	4.3	4.6	11.3
					FA - Investments	17.5	0.7	0.9
Financial Liabilities
					FA - Trade Receivables	7.1	11.2	7.1
Borrowing	17.8	4.2	17.8
					FA - Others	17.8	9.4	17.8
Provisions	0.6	0.6	0.8
					Other Non Current Assets	2.6	5.5	3.0
Deferred Tax Liabilities(Net)	18.5	19.7	18.3
					Current assets	352.4	349.7	368.5
Other Non-Current Liabilities	0.0	0.0	0.2
					Inventories	157.2	142.7	160.6
Current liabilities	260.5	253.8	265.6
					Financial Assets
Financial Liabilities
					Investments	2.3	3.0	2.3
Borrowing	155.9	135.6	156.3
					Trade receivables	142.8	146.3	152.1
Trade Payable	50.4	53.8	54.1
					Cash & Cash equivalent	2.2	7.1	2.3
Others	5.0	8.2	5.0
					Bank Balance other than above	6.6	7.0	9.4
Other Current Liabilities	48.2	53.8	48.7
					Loans	24.1	25.4	24.1
Provisions	1.0	0.7	1.6
					Other	0.5	0.5	0.5
Current tax liability (Net)	0.0	1.7	(0.1)
					Other Current Assets	16.8	17.8	17.2
Total Equities & Liabilities	606.8	565.6	616.7
					Total Assets	606.8	565.6	616.7

*Consolidated – on account of acquisition of 74.9% shares of Kaycee Industries

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Key Financial Highlights – Annual

Revenue (Rs. Crore)

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559.8 566.9
442.8
385.0
FY17 FY18 FY19 FY20
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Net Profit (Rs. Crore)

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30 6%
4.5% 4.7%
4.5% 4.3%
25 5%
20 4%
15 3%
26.4
24.0
10 20.0 2%
17.3
5 1%
0 0%
FY17 FY18 FY19 FY20
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EBITDA (Rs. Crore) / Margins (%)

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70 13%
12.0%
60
11.5% 11.4% 11.5% 12%
50
11%
40
30 63.6 65.2
53.3 10%
20 44.1
9%
10
0 8%
FY17 FY18 FY19 FY20
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Networth as on 31[st] March (Rs. Crore)

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309.4
287.0
270.6
222.0
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2017

2018

2019

2020

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Salzer Electronics Limited Company Overview Investor Presentation FY17

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Company Overview

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Leading player offering total and customized electrical solutions

▪ Presence in Industrial Switchgears, Wires & Cables and Energy management business

▪ Largest manufacturer of Cam Operated Rotary Switches – Market leader with 25% share

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Extensive Product portfolio across verticals with In-house manufacturing facilities

• Five manufacturing units located in Tamil Nadu

• More than 15 products catering to Industrial / Building / Automobile verticals

Wide Distribution network – local and global

▪ Own distribution network – local and global – export to 50 countries

• Access to L&T’s local network through more than 350 distributors

Strong focus on product development and innovation

• Registered Patent for Rotary Switches, five product patents in process

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From a Single Product Company…

• Unit I (Coimbatore) – manufacture contactors, relays, panels, energy savers

• Starting of long term association with L&T

• Technical collaboration with Plitron for manufacture of Toroidal Transformers

• 1st Indian company to bring technology to India

• Leading player offering total and customized electrical solutions

• More than 15 different products

• 2,000 employees

• 5 manufacturing units

• Foray into tailor made products and branding for large customers

• Specialized panels for OEMs

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• 1985 1991-95 2001-06 2010-14 2017-19 ▪ Unit III - manufacture ▪ Started commercial production of modular switches Three Phase Dry Type Transformers

• ▪ ▪ Started manufacturing Acquired Salzer Magnet Wires of Wire & Cable for L&T ▪ Upgrade in Credit Rating for long term borrowing to ‘CRISIL A/Stable’

• ▪ Acquired Kaycee Industries Ltd.

▪ Established to

manufacturer of CAM operated Rotary Switches

… to manufacturing multiple products across sectors

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Professional Management

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R.Doraiswamy Managing Director

▪ Qualified Electrical Engineer and Technocrat Entrepreneur with over 2 decades of experience ▪ Vast Experience in Foreign Collaboration & wide global contacts

D.Rajeshkumar Joint Managing Director

▪ Electrical Engineer, India; Post Graduate in Business Management, US

▪ JMD and CEO of Company - responsible for driving the vision of Company

S.Baskarasubramanian Director-Corporate Affairs & CS

▪ Qualified Company Secretary & member of FCS India

▪ Wide experience in company law/ corporate affairs

P.Sivakumar AVP – Marketing Corporate

▪ Bachelors in Engineering with 22 years of experience

▪ Responsible for Sales & Marketing division

M Laksminarayana VP - Operations

▪ B.E (Electrical) with 17 years of experience

▪ Responsible for Production, Planning, Inventory Management, Maintenance & General Administration

D.Govindaraj Sr. Manager-Corp. Accounts & Projects

▪ Masters in Commerce, DLL and DTL with 26 years of experience

▪ Responsible for project finance and corporate accounts

R Karunakaran GM - PR & Central Excise

▪ BSc, Diploma in Marketing Management with 24 years of experience

▪ Responsible for Central Excise and Public Relations of Company

Guided by 13 members experienced Board

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Business Overview

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Business Overview

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Industrial Switch Gear Products

• Transformers

• Terminal Blocks

• Rotary Switches

• Isolators

• General Purpose relays

• Wiring Ducts

• MPCB’s

• Contactors & OLR’s

• Control Panels

• Wire Harness

Building products

• Modular Switches

• Wires & Cables

• MCB’s

• Changeovers

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Copper Products

• Wires & Cables

• Flexible Bus Bars

• Enamelled Wires

• Bunched Conductors

• Tinned Copper Wires

Energy Management products

• Energy Savers

• Street Light Controllers

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Wide Product Suite- Customized for OEM’s

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CT’s

Terminal Socket

Coils / Inductors

Panels

In-house manufacturing and R&D enables superior customization of products

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Key Strengths

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Wide Distribution Network

Complete Backward Integration

• In-house manufacturing facilities with process capabilities ensures better product development and customization

Strong Customer Relationships

• Strong customer relationships across globe

• Preferred supplier to GE, Schneider and only approved supplier of Nuclear Power Corporation

• Largest supplier of rotary and load break switches to Indian Railways

  • Wide distribution network – international and domestic

  • Tie up with L&T – access to over 350 dealers in India; own network for modular switches with 50 stockist in 4 southern & western states

  • Direct network across 50 countries with 40 international distributors

• Well developed R&D enables continual

• product innovation

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Advanced Engineering Capabilities

Wide Product Suite

• Amongst few players in India, to offer total & customized electrical solutions

• Wide product basket – 15 products developed in-house

• Largest manufacturer and market leader in CAM operated rotary switches

• Strong engineering capabilities backed by in-house manufacturing and R&D team

• Technical collaboration with Plitron for Toroidal transformers – 1st company to bring technology to India, Joint Venture with C3Controls for contactors and relays

• Resulting in all products been international certified and universal acceptance

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Five Manufacturing facilities...

UNIT 2

UNIT 3

UNIT I

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• Toroidal Transformers

• Rotary Switch

  • Wiring Accessories

• Isolators (Dis-connectors)

• Contactors & Relays

• Panel Assembly

• Terminals

• Lighting Energy

• Wiring Ducts

• Savers

• MPCB

• Automatic Meter Reading

• Wire Harness

• 3 PH Transformers

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UNIT 4

UNIT 5

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• Wires & Cables ▪ Enamelled Copper

• ▪ Flexible Bus Bars Wires

• Bunched Conductors ▪ Fine Enamelled

• Tinned Wires

  • Copper Wires

• Polyester Coated Winding wires

• Three Phase Dry Type

Transformers

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...With In-house process capabilities...

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▪ Full fledged Type testing laboratory

• Loads up to 500Amps

• Environmental test chamber for humidity test

• Salt spray test & all other basic tests as per UL Standards

• In-house tool room facility for manufacturing and servicing of Moulds and press tools

• CNC Wire Cut Machines and Spark erosion machines

• CNC Machining center, EDM Drilling

• Conventional machines

• Latest digital measuring equipment

• Inspected and certified by GE Tool Divisionca

More than 80% components made in-house

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...And a strong R&D team

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R&D expenses (Rs crore)

▪ In-house R&D Center

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12.0
8.5
7.8
4.3
2.5
FY16
FY17
FY18
FY19
FY20
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• More than 35 engineers

• Recognized by Department of Science, Govt of India

• Patented Rotary switches

• Five patents in process

• Manual Single-Phase Starter with no voltage tripping, Energy Saver System for Street Lighting, Integrated ammeter / voltmeter selectro CAM operated rotary switch, Track Feed Battery Change Over System and Fuse Automatic Changeover System

• 1[st] of its kind product in India

• Designed and manufactured Load Break Switches, Single Hole Mounting Switches, Halogen Free Cable Ducts, Flat Wire Ducts, Flexible Bus Bars etc

Continuous product innovation

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Internationally certified

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ISO 14001

ISO 9001

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CE Certification

UL Certification

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RoHS

Intertek Semko approval

CSA Certification

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ISO 18001

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CB certification

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... Across entire product portfolio

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Blue Chip Customers

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• Marketing Tie-up with L&T for Indian Market

• Largest supplier of rotary switches to Indian Railways

• Technical Tie-up with American Company C3Controls, to manufacture & market contactors & overload relays

• Technical Tie-up with Trafomodern for Three Phase Transformers

• Preferred supplier to:

• Branding partner to various large OEM’s in India

• Nuclear Power Corporation

• Schneider Electric

• GE Energy

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Wide Distribution Network

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International

• Direct network across 50 countries

• 17% of sales from global distribution

• 40 international distributors

• Plans to expand in US, Africa and Middle east

Direct network

across 50

countries

Domestic

• Tie up with L&T – access to more than 350 dealers in India

• Direct network for Modular Switches – 50 stockists in 4 southern & western states

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Way Ahead

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Way Ahead

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Operational Excellence

• Consistently executing business strategy and continued focus on improving operating costs by sourcing quality raw materials and efficient manpower

Venture into new project/ product development

• Look for Technical alliances to develop newer and technically advanced products

• Acquired Kaycee Industries enabling newer product development, entering new ventures and leveraging its brand and distribution network

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Focus on margin improvement

• Increase sales of high margin products – existing and new

• Increase exports – fast growing markets of US, Africa and Middle East

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Growth and expansion of existing product verticals

• Constantly develop new products through inhouse R&D

• Expand existing product portfolio to newer

• geographies

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Thank You

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SALZERELEC 517059 SZE IN SALZ.BO For further information, please contact: Company : Investor Relations Advisors : Salzer Electronics Ltd. Bridge Investor Relations Pvt. Ltd. Mr. Baskarasubramanian Ms. Savli Mangle baskarasubramanian@salzergroup.com savli@bridge-ir.com Mr. Smit Shah smit@bridge-ir.com www.salzergroup.net www.bridge-ir.com

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