Salzer Electronics Ltd. — Interim / Quarterly Report 2024

May 29, 2024

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Salzer Electronics Limited

~~Result Updat~~ e Presentation Q4 & FY24

1

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

4

Joint Managing Director’s Message

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Commenting on this, Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Ltd said:

“During the fourth quarter of the fiscal year, the consolidated revenue grew over 8% to Rs. 326.57 crore. The EBITDA was at Rs 33.08 crore, a year on year increase of 34.1% while the PAT increased by 35.2% to Rs 13.32 crore.

The consolidated revenue for the full year was Rs 1,166.31 crore, a year on year growth of over 12%. The EBITDA grew by 22.0% at Rs 116.98 crore while the PAT growth was 18.8% at Rs 47.07 crore.

We have observed a positive trend in the increase of our sales prices, and we anticipate this momentum to persist, contributing to the improvement of our EBITDA Margins. Our strategic focus is on sustaining a well-balanced business mix between industrial switchgear and wires & cables products to effectively improve the overall gross margin.

We are committed to sustaining this growth trajectory as we aim for new heights of accomplishment. The company has demonstrated robust performance, with sales revenue and profitability showing growth in Q4 & full year driven by businesses of Industrial Switchgear and Wires & Cables. Export markets have also been instrumental in revenue generation, with Salzer actively pursuing expansion initiatives in regions such as Australia, New Zealand, and the Middle East, while anticipating continued growth in its switchgear business.

This year, Salzer Electronics achieved noteworthy milestones in product development. Most notably, we successfully created a Smart Meter facility and received BIS certification.

At Salzer, innovation is ingrained in our strategy, and our robust product offerings and strong brand position in the market position us to establish new benchmarks for the future. With a positive outlook on both domestic and export prospects, we maintain optimism regarding our overall business performance.

I thank the entire team at Salzer Electronics for their untiring efforts and all our stakeholders for their continued support and faith

in our Company.”

5

Key Consolidated Financial Highlights – Quarterly

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Revenue, EBITDA (excluding other income), PAT (Rs. Crore)

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350 Revenue EBITDA PAT 326.6 40.0
302.7
288.7 33.1 35.0
300 280.7
270.4
250 238.9 237.9 245.6 245.6 26.8 31.0 30.0
26.1
25.6
24.9 24.7
25.0
200 20.7
20.0
150
13.9
13.5 13.3 15.0
100 9.6 9.6 10.5 9.9 10.2 10.1
10.0
4.6
50
5.0
0 0.0
Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24
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Q4 FY24 Revenue Breakup – Business Verticals

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Q4 FY23

Q4 FY24

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Industrial Switchgear,
53.36%
Wire & Cable,
Building Segment,
40.86%
5.77%
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Industrial Switchgear,
53.7%
Building Segment, Wire & Cable,
5.8% 40.5%
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• Industrial Switchgear – 53.72% of net revenues

• Wires & Cables – 40.47 % of net revenues

• Building Electrical Products – 5.81% of net revenues

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Q4 FY24 Revenue Breakup – Geographical

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Q4 FY23

Q4 FY24

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Asia (Exclu.
Middle East, 1.5%
India), 14.1%
North & South
America, 5.6%
Europe, 6.1%,
India, 72.8%
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North & South
Middle East; 1.2%
America, 8.2%
Asia (Exclu.
India), 9.9%
Europe, 5.6%
India, 75.0%
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 Contribution from Exports at 24.97%

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Q4 FY24 Consolidated Financial Highlights

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Rs. in Crore	Q4 FY24	Q4 FY23	Y-o-Y %	Q3 FY24
Net Revenue	326.57	302.73	7.87%	270.35
Raw Materials	243.06	240.37		198.28
Employee Cost	13.27	10.78		11.74
Other Expenses	37.15	26.91		29.31
Total Expenditure	293.49	278.06		239.33
EBITDA(Excluding other Income)	33.08	24.67	34.09%	31.02
EBIDTA Margin(%)	10.13%	8.15%	198 bps	11.48%
Other Income	0.25	0.33		0.67
Depreciation	5.42	4.33		4.88
Interest / Finance Cost	9.06	7.69		8.71
Exceptional Item(Gain)/ Loss	0.00	0.00		0.00
Profit Before Tax	18.86	12.98		18.11
Tax	5.54	3.13		4.63
Profit After Tax	13.32	9.85	35.24%	13.48
Profit After Tax Margin(%)	4.08%	3.25%	83 bps	4.99%
Basic EPS(Rs.)	7.42	6.01	23.46%	7.98

 Increase in Revenue – mainly driven by wires and cable and Industrial switchgear businesses combined with increase in sales prices

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FY24 Consolidated Financial Highlights

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Rs. in Crore	FY24	FY23	Y-o-Y %
Net Revenue	1,166.31	1,037.17	12.45%
Raw Material Expenses	881.00	807.16	9.15%
Employee Expenses	46.64	39.37
Other Expenses	121.70	94.75
Total Expenditure	1,049.33	941.27
EBITDA(Excluding other Income)	116.98	95.90	21.98%
EBITDA Margin(%)	10.03%	9.25%	78 bps
Other Income	1.95	1.70
Depreciation	20.11	16.60
Interest/Finance Cost	34.09	26.12
Exceptional Item(Gain) /Loss	0.00	0.02
PBT	64.73	54.90
Tax	17.66	15.28
PAT	47.07	39.62	18.80%
PAT Margin(%)	4.04%	3.82%	22 bps
Basic EPS(Rs.)	27.38	24.21	13.09%

 Increase in Revenue – driven by business of Industrial switchgear and wire & cable businesses

 Contribution from exports was 26.93% in FY24

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FY24 Revenue Breakup – Business Verticals

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FY23
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Industrial
Switchgear, 54.3%
Building
Wire &
Segment, 7.2%
Cable, 38.4%
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FY24
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Industrial
Switchgear, 54.7%
Building
Segment, 5.9% Wire &
Cable, 39.5%
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• Industrial Switchgear – 54.66% of net revenues

• Wires & Cables – 39.48% of net revenues

• Building Electrical Products – 5.86% of net revenues

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FY24 Revenue Breakup – Geographical

FY23

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Asia (Exclu. Middle East,
India), 11.8% 1.2%
North & South
America, 5.7%
Europe,
6.8%
India, 74.4%
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FY24
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Middle East,
Asia (Exclu.
1.2%
India), 9.7%
North & South
America, 8.7%
Europe,
7.3%
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India, 73.1%
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 Contribution from exports was 26.93% in FY24

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Key Consolidated Financial Highlights – Annual

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Revenue (Rs. Crore) EBITDA (Rs. Crore) / Margins (%)

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140 11.5% 10.2% 14%
9.3%
1166.3 120 12%
10.0%
1037.2
100 8.1% 10%
783.6
80 8%
605.6
566.9
60 117.0 6%
95.9
40 4%
65.2 61.8 63.8
20 2%
0 0%
FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24
Net Profit (Rs. Crore) Earning per Share(Rs.)
50 4.7% 3.8% 5% 27.38
4.0%
24.21
3.4%
40 4%
2.9%
16.5
30 3%
14.07
12.9
47.1
20 39.6 2%
10 20.7 22.5 1%
26.4
0 0%
FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24
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27.38
24.21
16.5
14.07
12.9
FY20 FY21 FY22 FY23 FY24
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Consolidated Balance Sheet Highlights – Annual

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Return on Capital Employed ( %)

Return on Equity (%)

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12.7%
11.6%
11.0%
9.4%
8.6%
FY20 FY21 FY22 FY23 FY24
Debt to Equity(X)
0.71
0.68
0.65
0.60
0.56
FY20 FY21 FY22 FY23 FY24
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9.7% 9.9%
6.2% 6.4% 6.4%
FY20 FY21 FY22 FY23 FY24
Networth as on 31st March (Rs. Crore)
473.46
407.71
351.47
331.3
309.4
FY20 FY21 FY22 FY23 FY24
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• Return on Capital Employed – EBIT/Total Capital Employed (Total Shareholders equity+LT Debt+ST Debt+Current Maturity of LT Debt-Non Current Investment), RoE – Net Profit/Networth , Debt to Equity = Total Debt/ Networth

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Working Capital & Borrowings

Working Capital (Cr.) – Bar Chart Working Capital (Days) – Line Chart

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179
165
157
154
147
233.2
181.6
122.3
106.2
91.9
FY20 FY21 FY22 FY23 FY24
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Borrowing (Cr.)

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294.88
264.77
235.4
183.28
155.91
17.78 16.27 12.41 7.78 12.99
FY20 FY21 FY22 FY23 FY24
Long Term Borrowing Short Term Borrowing
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*Working Capital (Cr.) – Current Assets – Current Liabilities, Working Capital Days – Inventory Days + Receivable Days - Creditors Days

Consolidated Balance Sheet Highlights

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Rs. Crore	As on 31st Mar’ 24	As on 31st Mar’ 23*
Shareholder’s Funds	480.41	413.24
Share capital	17.38	16.18
Other Equity	456.08	391.52
Non ControllingInterest	6.94	5.54
Non-current liabilities	42.49	34.78
Financial Liabilities
Borrowing	12.99	7.78
Lease Labilities	3.63	4.13
Provisions	1.01	4.43
Deferred Tax Liabilities(Net)	24.60	22.32
Other Non-Current Liabilities	0.26	0.25
Current liabilities	470.30	447.21
Financial Liabilities
Borrowing	294.88	264.77
Trade Payable	103.72	112.01
Others	1.80	5.33
Other Current Liabilities	64.65	62.74
Provisions	2.79	2.30
Current tax liability (Net)	2.45	0.05
Total Equities & Liabilities	993.20	895.27

Rs. Crore	As on 31st Mar’ 24	As on 31st Mar’ 23*
Non-current assets	289.65	266.46
Property, Plant & Equipment	253.29	234.52
Right of use assets	4.98	6.09
Capital WIP	2.40	0.63
Investments Property	0.01	0.01
Goodwill	7.73	8.85
Intangible Assets	3.04	10.56
FA-Investments	0.12	0.91
FA-Trade Receivables	9.66	9.34
FA-Others	2.84	6.17
Other Non Current Assets	5.58	5.29
Current assets	703.54	628.81
Inventories	293.49	273.80
Financial Assets
Investments	6.96	4.23
Trade receivables	333.51	287.30
Cash & Cash equivalent	3.25	7.27
Bank Balance other than above	8.82	10.10
Loans	7.71	10.21
Other	3.03	0.43
Other Current Assets	46.78	34.47
Total Assets	993.20	895.27

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

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Company Overview

17

About Us

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



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Leading player offering total and customized electrical solutions

Wide Distribution network – local and global

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

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

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

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

Extensive Product portfolio across verticals with In-house manufacturing facilities

Strong focus on product development and innovation

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

• Six manufacturing units located in Tamil Nadu

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

• Receives patent for ‘Integral Cam Operated Rotary Switches’ for a duration of 20 years, ending 2031

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From a Single Product Company…

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2017-24
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Started commercial production of Three Phase Dry Type Transformers Acquired Salzer Magnet Wires

1985

Established to manufacturer of CAM operated Rotary Switches

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

1991-95

2001-06

Unit III - manufacture modular switches Started manufacturing of Wire & Cable for L&T

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

2010-14

Upgrade in Credit Rating for longterm borrowing to ‘CRISIL A/Stable’ Acquired Kaycee Industries Ltd.

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

Receives patent for ‘Integral Cam Operated Rotary Switches’ for a duration of 20 years, ending 2031

Receives patent for ‘Motor Protection Circuit Breaker With Increased Air Gap’

Set up new manufacturing rented facility strategically located in Hosur, Tamil Nadu – production to commence in March 2023

Kostad Steuerungsbau GmbH - JV Company has become a Subsidiary Company with shareholding of 60%

Building “one-of-its-kind Fully Integrated” Smart Meter manufacturing facility in India

… to manufacturing multiple products across sectors

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Professional Management

R. Doraiswamy

Managing Director

Qualified Electrical Engineer and Technocrat Entrepreneur with over 4 decades of experience

Vast Experience in Foreign Collaboration & wide global contacts

D. Rajeshkumar

Joint Managing Director

Electrical Engineer, India; Postgraduate in Business Management, US

JMD of Company - responsible for driving the vision of Company

P. Sivakumar A

AVP – Marketing Corporate

Bachelors in Engineering with over 3 decades of experience

Responsible for Sales & Marketing division

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M Laksminarayana

VP - Operations

B.E (Electrical) with over 2 decades 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 over 3 decades of experience

Responsible for project finance and corporate accounts

R Karunakaran

GM - PR & GST

BSc, Diploma in Marketing Management with more than 3 decades of experience

Responsible for GST and Public Relations of Company

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Business Overview

21

Business Overview

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 Electrical 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

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Panels

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

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Key Strengths

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

Well developed R&D enables continual product innovation

Amongst few players in India, to offer total & customized electrical solutions Wide product basket – 15 products developed in-house

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

Largest manufacturer and market leader in CAM operated rotary switches

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

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

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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Six Manufacturing facilities...

UNIT I UNIT 2 UNIT 3 Rotary Switch Toroidal Transformers Wiring Accessories

Contactors & Relays Isolators (Dis-connectors)

Panel Assembly Terminals Lighting Energy Savers Wiring Ducts Automatic Meter MPCB Reading Wire Harness Three Phase Dry Type 3 PH Transformers Transformers

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UNIT 4 UNIT 5 Hosur Plant Enamelled Copper Wires & Cables Wires Wire Harnesses Flexible Bus Bars Fine Enamelled Copper Wires Bunched Conductors Toroidal Transformers Polyester Coated Tinned Wires Winding wires

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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

• More than 35 engineers

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12.00 12.00
10.37
10.04
9.07
FY20 FY21 FY22 FY23 FY24
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• Recognized by Department of Science, Govt of India

• Patented Rotary switches

• Six patents in process

• Manual Single-Phase Starter with no voltage tripping, Energy Saver System for Street Lighting, Track Feed Battery Changer Over System, Heavy duty energy efficient automatic source change over, Training warning system and Modular Housing

• Received two patents for CAM operated rotary switch & Motor Protection Circuit Breaker’ for duration of 20 years, ending 2036

• 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

Continual focus on product innovation

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Internationally certified

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ISO 9001

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CB certification

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ISO 14001

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RoHS

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CE Certification

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Intertek Semko approval

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ISO 18001

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CSA Certification

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UL 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

• Branding partner to various large OEM’s in India

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

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• Technical Tie-up with Trafomodern for Three Phase Transformers

• Preferred supplier to:

• Nuclear Power Corporation

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• Schneider Electric

• GE Energy

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Wide Distribution Network

Direct network across 50 countries

International

• Direct network across 50 countries

• 23% of sales from exports (FY22)

• 40 international distributors

• Plans to expand in US, Africa and Middle east

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

30

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Way Ahead

31

Way Ahead

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

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

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

02

01

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03

04

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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

Growth and expansion of existing product verticals

Constantly develop new products through inhouse R&D

Expand existing product portfolio to newer geographies

Ventured into Smart metering manufacturing in Coimbatore

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ESG Initiatives

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Committed towards a cleaner, greener and healthier environment

Optimise energy consumption

Towards this end Company has identified installation of rooftop solar panels Plan to recycle water as per environmentally friendly norms

Increasing green cover around all plants in and around the manufacturing facilities Partner in EV Ecosystem to manufacture parts of environmentally friendly transportation

M./s JDS Associates for statutory audit, M/s. Covai Management Services for internal audit and M/s. G. Vasudevan for Secretarial Audit

Five independent Directors out of 11 Members on the Board

Focus on Better compliances and best governance practices

Plan for gender diversification on the Board in due course

Continues to contribute towards skill development among the local population

Recruitment of rural youth for local sales operations

Contribution for women empowerment. Engaged around 50% women employees hailed from local rural areas who are breadwinners of their families

Spending under CSR Initiatives for health Care and education of rural populous particularly residing in the

local regions

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ESG Initiatives - Carbon Emission by Scope

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Scope 1

• All Fossil fuels used in factories, such as diesel for backup power and fuels used in Cars, transport & fleet vehicles

Scope 2

• Electricity consumed at all factories and offices of Salzer owned facilities

• Also the avoidable emissions are calculated by the use of Renewable power by own renewable sources as well as purchased renewable sources

Details	Base Yr - 2019	Recent Yr - 2022	Delta
Scope 1 (Tons of Co2)	123	191	55%
Scope 2 (Tons of Co2)	8357	4217	-50%
Turnover INR Cr	559	783	40%
Scope 1+2 (Tons of Co2)	8480	4408	-48%
Intensity	0.000001517	0.000000563
Delta		-63%

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Scope 1+2 (Tons of Co2)
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8,480 - 48 %
4,408
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Base Yr.2019 Recent Yr.2022
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• 2019 was considered the Base year for calculation. 2020 & 2021 was not considered as it was a year with partial shutdowns due to Pandemic

• The Direct Greenhouse Gas (GHG) emission from facilities we operate (scope 1) has increased from 123 tons of Co2 to 191 tons of Co2. The increase over the last two years is due to higher activities due to increased turnover

• The indirect GHG emissions from Energy consumption (Scope 2) was calculated 10537 tons of Carbon. However, the offset due to Generation & Purchase of Renewable Power was at 6321 tons of Co2. Hence the Net Carbon Emission due to energy Consumption is at 4217 tons of Co2. At total reduction of 50% compared to 2019

• Scope 1 & 2 put together there is a Net reduction of 48% in carbon emissions from 8480 tons of Co2 to 4408 tons of Co2

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murugesan@salzergroup.com www.salzergroup.net Adfactorspr Pvt. Ltd. Ms. Savli Mangle savli.mangle@Adfactorspr.com Mr. Rupesh Rege Rupesh.rege@Adfactorspr.com www.adfactorspr.com

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