Salzer Electronics Ltd. — Interim / Quarterly Report 2022

Aug 12, 2021

Salze ~~r E~~ l ~~e~~ ctronics Limited Result Update Presentation Q1 FY22

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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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“As we all are aware, the past year brought headwinds for the economy and overall industry, in the form of the COVID-19 pandemic. The pandemic adversely impacted entire supply chains, logistics and business operations across sectors in India and globally. Several regions in India are still under the impact of the second wave of this pandemic. Initial months were most affected by the lockdown but over the last two quarters, we have seen gradual recovery as markets are slowly opening in India and abroad.

I am happy to say that our Company has shown tremendous resilience and sustained through this tough period, even as we reopened gradually with partial capacities. We even conducted a vaccination drive for all our employees in April-May 2021.

During the first quarter of the financial year, we registered a revenue of Rs. 148.98 crores with EBITDA and PAT of Rs. 14.80 crore and Rs. 3.95 crore, respectively. First quarter performance was good with growth coming in from industrial switchgear products and export markets mainly the US. One of the challenges which remains is the input material price increase. The lag between the passing off input costs to customers, coupled with fixed expenses during the lockdown period has impacted margins slightly.

In line with our strategy to diversify into new innovative product lines, we have recently entered into two Joint Ventures in the electric vehicles (EV) industry. One is a technical alliance with Kostad Steuerungsbau GmbH, an Austria-based specialist in EV FAST chargers and the second one is with EMarch LLP – an India based technology firm which has IP for Electric Conversion Kits for Auto rickshaws, Cars, and buses. We expect these alliances to help us capitalize on the high-growth-potential sector of EVs, as more and more countries encourage the adoption of EVs.

Moreover, as the dealer and retail markets pick up pace, and domestic as well as international markets gradually recover and business regains momentum, we expect to maintain our growth trajectory with our strong product offerings and brand position in the market. Overall, we remain committed to our agenda of delivering sustainable growth and are cautiously optimistic about the business performance in the coming quarters.

I thank all our stakeholders for their continued support and faith in our Company and wish everyone good health.”

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Key Financial Highlights – Quarterly

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Revenue, EBITDA, PAT (Rs. Crore)

Revenue EBITDA PAT

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200 189.7 30.0
180 170.4
162.1
155.0 25.0
160 149.8 149.0
143.5
137.8
134.7 134.7
140 132.3
126.8 126.5 18.8 20.0
17.5 17.3
120 16.4 16.7 16.1 16.9 16.7 16.7 16.2
14.8
14.3 95.7
14.0
100 15.0
80
9.6
9.1
8.4 10.0
60
7.0
6.6 6.4
5.6 5.4 5.8 5.9 5.5
40 4.9 4.5
4.0
5.0
20
0.7
0 0.0
Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22
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Q1 FY22 Financial Highlights

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Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights	Q1 FY22 Financial Highlights
Rs. in Crore Standalone Consolidated Q1 FY22 Q1 FY21 Y-o-Y % Q4 FY21 Q1 FY22 Net Revenue 148.98 95.68 55.71% 189.69 Raw Materials 114.57 74.31 150.83 Employee Cost 6.53 4.28 7.50 Other Expenses 13.08 7.51 15.20 Total Expenditure 134.18 86.09 173.53 EBITDA 14.80 9.59 54.37% 16.16 EBIDTA Margin(%) 9.93% 10.02% (9 bps) 8.52% Other Income 0.14 0.27 1.44 Depreciation 3.94 3.94 4.09 Interest / Finance Cost 5.12 4.82 5.26 Exceptional Item(Gain)/ Loss 0.00 0.00 0.00 Profit Before Tax 5.88 1.10 8.25 Tax 1.93 0.41 (1.26) Profit After Tax 3.95 0.69 470.64% 6.99 Profit After Tax Margin(%) 2.65% 0.72% 195 bps 3.68% Basic EPS(Rs.) 2.47 0.43 4.37
	Rs. in Crore	Standalone				Consolidated
		Q1 FY22	Q1 FY21	Y-o-Y %	Q4 FY21	Q1 FY22
	Net Revenue	148.98	95.68	55.71%	189.69
	Raw Materials	114.57	74.31		150.83
	Employee Cost	6.53	4.28		7.50
	Other Expenses	13.08	7.51		15.20
	Total Expenditure	134.18	86.09		173.53
	EBITDA	14.80	9.59	54.37%	16.16
	EBIDTA Margin(%)	9.93%	10.02%	(9 bps)	8.52%
	Other Income	0.14	0.27		1.44
	Depreciation	3.94	3.94		4.09
	Interest / Finance Cost	5.12	4.82		5.26
	Exceptional Item(Gain)/ Loss	0.00	0.00		0.00
	Profit Before Tax	5.88	1.10		8.25
	Tax	1.93	0.41		(1.26)
	Profit After Tax	3.95	0.69	470.64%	6.99
	Profit After Tax Margin(%)	2.65%	0.72%	195 bps	3.68%
	Basic EPS(Rs.)	2.47	0.43		4.37

• Increase in Revenue primarily since last year’s first quarter was severely impacted by lockdown

• Increase in exports also complemented growth. Overall, strong order booking in Switchgear products

• Contribution from Exports was over 24.5% , on account of increase in sales to Asia, the Americas and Europe. Overall export revenue grew 97.5% YoY in Q1

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Q1 FY22 Revenue Breakup – Business Verticals

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Q1 FY21 Q1 FY22
Industrial
Switchgear,
49.3%
Industrial
Switchgear,
37.5%
Energy Wire & Cable,
Management , 57.1%
1.5% Building Segment,
5.0%
Building Segment,
3.9% Wire & Cable,
45.6%
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▪ Industrial Switchgear – 49.34% of net revenues

▪ Wires & Cables – 45.62% of net revenues

▪ Buildings Products – 5.04% of net revenues

▪ Energy Management – No tenders issued by the Government during this period

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Q1 FY22 Revenue Breakup – Geographical

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Q1 FY21
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Middle East,
Asia (Exclu. India),
North/South 8.8% 2.4%
America, 5.0%
Europe,
3.1%
India,
80.7%
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Q1 FY22
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Asia (Exclu. India),
Middle East, 1.5%
13.0%
North/South
America, 4.5%
Europe,
5.6%
India,
75.5%
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Annual FY21 Financial Highlights

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Annual FY21 Financial Highlights	Annual FY21 Financial Highlights	Annual FY21 Financial Highlights	Annual FY21 Financial Highlights	Annual FY21 Financial Highlights	Annual FY21 Financial Highlights
Rs. in Crore FY21 FY20 Y-o-Y % FY21 (Consl) Net Revenue 605.62 566.95 6.82% 625.74 Raw Material Expenses 470.39 419.81 481.13 Employee Expenses 24.34 26.40 28.12 Other Expenses 49.10 55.55 53.48 Total Expenditure 543.83 501.76 562.72 EBITDA 61.79 65.19 (5.21%) 63.02 EBITDA Margin(%) 10.20% 11.50% (130 bps) 10.07% Other Income 1.99 0.89 2.20 Depreciation 15.61 14.44 16.01 Interest/Finance Cost 21.27 21.17 21.34 Exceptional Item(Gain) /Loss 0.00 0.00 0.15 PBT 26.90 30.47 28.01 Tax (6.23) (4.08) (6.63) PAT 20.67 26.39 (21.65%) 21.38 PAT Margin(%) 3.41% 4.65% (124 bps) 3.42% Basic EPS(Rs.) 12.93 16.51 (21.68%) 12.84
	Rs. in Crore	FY21	FY20	Y-o-Y %	FY21 (Consl)
	Net Revenue	605.62	566.95	6.82%	625.74
	Raw Material Expenses	470.39	419.81		481.13
	Employee Expenses	24.34	26.40		28.12
	Other Expenses	49.10	55.55		53.48
	Total Expenditure	543.83	501.76		562.72
	EBITDA	61.79	65.19	(5.21%)	63.02
	EBITDA Margin(%)	10.20%	11.50%	(130 bps)	10.07%
	Other Income	1.99	0.89		2.20
	Depreciation	15.61	14.44		16.01
	Interest/Finance Cost	21.27	21.17		21.34
	Exceptional Item(Gain) /Loss	0.00	0.00		0.15
	PBT	26.90	30.47		28.01
	Tax	(6.23)	(4.08)		(6.63)
	PAT	20.67	26.39	(21.65%)	21.38
	PAT Margin(%)	3.41%	4.65%	(124 bps)	3.42%
	Basic EPS(Rs.)	12.93	16.51	(21.68%)	12.84

▪ Revenue growth from revival in demand for wire harness and three-phase transformers, offsetting the COVID-19 impact in first quarter

▪ Contribution to revenue from exports was 20% in FY21 , with 24.6% YoY growth in export revenue , mainly on account of higher exports to American markets ▪ Margins impacted by rise in raw material prices, which are gradually being passed on to customers

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

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FY21 Revenue Breakup – Business Division

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FY20 FY21
Industrial Industrial
Switchgear, Switchgear,
44.8% 41.3%
Energy
Energy Management ,
Management , Wire & Cable, 0.5%
2.1% 47.0% Wire & Cable,
Building Segment, 52.8%
Building Segment, 5.4%
6.2%
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▪ Industrial Switchgear – 41.3% of total revenues

▪ Wires & Cables – 52.8% of total revenues

▪ Buildings Products – 5.4% of total revenues

▪ Energy Management – 0.5% of total revenue

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FY21 Revenue Breakup – Geographical

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FY20
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Middle East,
Asia (Exclu. India), 2.8%
5.8%
North/South
America, 3.1%
Europe,
5.6%
India, 82.8%
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FY21
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Asia (Exclu. Middle East,
India), 9.4% 1.3%
North/Sout
h America,
4.0%
Europe,
5.3%
India, 80.0%
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Balance Sheet as on 31[st] Mar’ 21

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Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21	Balance Sheet as on 31st Mar’ 21
Rs. Crore	As on 31st Mar’ 21	As on 31st Mar’ 20	As on 31st Mar’ 21*		Rs. Crore	As on 31st Mar’ 21	As on 31st Mar’ 20	As on 31st Mar’ 21*
Shareholder’s Funds	331.29	309.38	336.48		Non-current assets	260.13	254.53	253.66
Share capital	15.98	15.98	15.98		Property,Plant & Equipment	206.66	202.37	209.39
Other Equity	315.30	293.40	316.44		Capital WIP	1.35	2.72	1.35
Non ControllingInterest	0.00	0.00	4.05		Investments Property	0.01	0.01	0.01
Non-current liabilities	35.03	36.85	35.35		Intangible Assets	4.10	4.28	11.07
					FA - Investments	17.26	17.47	0.67
Financial Liabilities
					FA - Trade Receivables	11.60	7.33	11.60
Borrowing	16.27	17.78	16.27
					FA - Others	17.27	17.78	17.28
Provisions	0.03	0.59	0.19
					Other Non Current Assets	1.89	2.57	2.30
Deferred Tax Liabilities(Net)	18.74	18.49	18.64
					Current assets	414.09	352.23	431.25
Other Non-Current Liabilities	0.00	0.00	0.24
					Inventories	177.38	157.15	180.99
Current liabilities	307.91	260.52	313.09
					Financial Assets
Financial Liabilities
					Investments	3.90	2.25	3.90
Borrowing	183.28	155.91	183.28
					Trade receivables	178.46	142.57	188.44
Trade Payable	58.81	50.40	63.16
					Cash & Cash equivalent	4.93	2.22	5.30
Others	4.89	5.01	4.93
					Bank Balance other than above	5.57	6.65	8.63
Other Current Liabilities	58.27	48.20	58.75
					Loans	18.41	24.08	18.41
Provisions	1.30	1.01	1.52
					Other	0.34	0.50	0.34
Current tax liability (Net)	1.36	0.00	1.45
					Other Current Assets	25.10	16.79	25.23
Total Equities & Liabilities	674.23	606.76	684.91		Total Assets	674.23	606.76	684.91

*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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605.6
559.8 566.9
442.8
FY18 FY19 FY20 FY21
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Net Profit (Rs. Crore)

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30 6%
4.5% 4.7%
25 4.3% 5%
3.4%
20 4%
15 3%
26.4
24.0
10 20.0 20.7 2%
5 1%
0 0%
FY18 FY19 FY20 FY21
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EBITDA (Rs. Crore) / Margins (%)

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70 11.5% 13%
12.0%
60
11.4% 12%
50 10.2%
11%
40
30 63.6 65.2 61.8
53.3 10%
20
9%
10
0 8%
FY18 FY19 FY20 FY21
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Networth as on 31[st] March (Rs. Crore)

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331.3
309.4
287.0
270.6
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2018

2019

2020

2021

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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 2017-21
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▪ Established to

manufacturer of CAM operated Rotary Switches

• Unit III - manufacture modular switches

• Started manufacturing of Wire & Cable for L&T

• Started commercial production of Three Phase Dry Type Transformers

• Acquired Salzer Magnet Wires

• Upgrade in Credit Rating for long-term borrowing to ‘CRISIL A/Stable’

• Acquired Kaycee Industries Ltd.

• Forays into EV Business through JVs with Kostad Steuerungsbau GmbH and EMarch LLP

… 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 member 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
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Terminal Sockets

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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

• Seek Technical alliances to develop new and technically advanced products

• Formed JV’s with Kostad Steuerungsbau GmbH & EMarch LLP to enter EV market

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• Acquired Kaycee Industries for new product development, enter new ventures and leverage brand & distribution network

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. Rahul Trivedi rahul@bridge-ir.com www.salzergroup.net www.bridge-ir.com

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