Salzer Electronics Ltd. — Investor Presentation 2019

Feb 8, 2019

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Salzer Electronics Limited
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Result Update Presentation Q3 & 9M FY19

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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
01
Company Overview
02
Business Overview
03
Way Ahead
04
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Financial Highlights
Salzer Electronics Limited
Investor Presentation
FY17
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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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“This nine months FY19, we have demonstrated revenue growth of 28% YoY, on account of higher contributions from Wires & cables and building product a scenario and cost raw segments, despite challenging industry rising of materials.

Throughout the nine months FY19 our products namely three phase dry type transformers, wire harness along with our legacy product of cam operated rotary switches has shown good traction in the industrial switch gears segment and we have been able to increase our sales of Modular Switches, MCB’s Distribution Boards, Changeovers, Wires & Cables which has help us grow in India.

We on new under our continually focus adding high margin products product portfolio, reach out newer geographies and offer total customized solutions to our customers. Our focus also remains on new opportunities for technical associations/acquisition to further strengthen our base of product offerings.”

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Q3 FY19 Financial Highlights
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Rs. in Crore	Q3 FY19	Q3 FY18	Y-o-Y %	Q2 FY19
Total Income from Operations	143.5	110.7		134.7
Excise Duty	0.0	0.0		0.0
Net Revenue	143.5	110.7	29.7%	134.7
Raw Materials	106.6	80.9		98.5
Employee Cost	7.6	4.6		6.7
Other Expenses	13.2	11.7		12.8
Total Expenditure	127.4	97.2		118.0
EBITDA	16.1	13.5	19.4%	16.7
EBIDTA Margin (%)	11.21%	12.18%		12.40%
Other Income	0.1	0.6		0.1
Depreciation	3.4	2.6		3.3
Interest / Finance Cost	4.9	3.6		4.8
Profit Before Tax	8.0	7.9		8.8
Tax	2.6	2.6		3.2
Profit After Tax	5.4	5.3	2.0%	5.6

• Contribution from domestic sales at 84% mainly driven by wires & cables and building segments

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* Numbers as per Ind AS guidelines

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Q3 FY19 Revenue Breakup – Business Verticals
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Q3 FY18 Q3 FY19
Building Energy Energy
Building
Segment, Managemen Manageme
5.1% t , 0.8% Segment, nt , 1.3%
6.6%
Industrial
Wire &
Wire &
Switchgear,
Cable, 45.2%
48.9% Cable, Industrial
48.1% Switchgear,
44.0%
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• Industrial Switchgear – 44.0% of net revenues - mainly on driven by two products - 3 phase dry type phase transformers and wire harness

• and despite continued sluggishness in Indian industrial switchgear industry

• Buildings Products – 6.6% of net revenues, on account of increase in focus on retail segment in India

• Wires & Cables – 48.1% of net revenues, mainly on account of consolidation of Salzer Magnet Wires (acquired in Q4 FY18) and increase in

• demand

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* Numbers as per Ind AS guidelines

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Q3 FY19 Revenue Breakup – Geographical
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Q3 FY18
Asia (Exclu. Middle
India), 5.4%East, 1.3%
U.S, 5.8%
Europe,
5.5%
India,
82.1%
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Q3 FY19
Asia Middle
(Exclu. East, 1.5%
U.S, 1.9% India),
7.3%
Europe,
4.9%
India,
84.4%
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* Numbers as per Ind AS guidelines

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9M FY19 Financial Highlights
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Rs. in Crore	9M FY19	9M FY18	Y-o-Y %
Total Income from Operations	404.7	326.6
Excise Duty	0.0	10.6
Net Revenue	404.7	316.0	28.1%
Raw Material Expenses	301.2	231.8
Employee Expenses	20.2	14.4
Other Expenses	36.5	32.9
Total Expenditure	358.0	279.1
EBITDA	46.8	36.9	26.8%
EBITDA Margin	11.56%	11.67%
Other Income	0.4	4.0
Depreciation	9.7	7.6
Interest / Finance Cost	14.3	11.1
PBT	23.1	22.2
Tax	7.6	7.0
PAT	15.6	15.2	2.6%

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• 28% YoY growth in Net Revenue - mainly driven by wires & cables and building segments • Contribution from domestic sales at 84% mainly driven by increase in demand and good traction for products in Building and Industrial Switchgear Segments • 27% YoY growth in EBITDA - mainly on account of growth of all business segments

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* Numbers as per Ind AS guidelines

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9M FY19 Revenue Breakup – Business Verticals
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9M FY18 9M FY19
Building Energy Building Energy
Segment, Managem Segment, Managem
4.8% ent , 1.2% 7.8% ent , 2.0%
Wire &
Industrial Wire &
Cable, Industrial
Switchgear Cable,
48.5% , 45.5% 48.5% Switchgear
, 41.8%
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• Industrial Switchgear – 41.8% of net revenues, mainly driven by two products - 3 phase dry type phase transformers and wire harness and

• despite continued sluggishness in Indian industrial switchgear industry

• Buildings Products – 7.8% of net revenues, on account of increase in product offerings and focus on the retail segment in India

• Wires & Cables – 48.5% of net revenues, mainly on account of consolidation of Salzer Magnet Wires

• Energy Management – 2.0% of net revenue - an order book driven business and increase in revenues has been from increase in AMC

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* Numbers as per Ind AS guidelines

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9M FY19 Revenue Breakup – Geographical
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9M FY18
Asia (Exclu. Middle
India), 6.9% East, 1.4%
U.S, 4.4%
Europe,
5.5%
India,
81.8%
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9M FY19
Asia (Exclu. Middle
India), East, 1.7%
U.S, 2.4% 6.9%
Europe,
4.6%
India,
84.4%
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* Numbers as per Ind AS guidelines

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Balance Sheet as on 30 [th] Sept’18
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Rs. Crs	As on 30th Sept’18	As on 30th Sept’17
Equity	275.6	243.6
Equity Share Capital	15.9	14.5
Other Equity	259.7	229.1
Non-current liabilities	27.2	29.0
Financial Liabilities
(a) Borrowing	4.0	9.4
Provisions	0.4	0.3
Deferred Tax Liabilities (Net)	22.8	19.3
Current liabilities	256.5	203.2
Financial Liabilities
(a) Borrowing	117.7	102.4
(b) Trade Payables	64.0	29.3
(c) Other Financial Liabilities	11.8	11.1
Other Current Liabilities	58.5	57.0
Provisions	0.6	0.3
Current Tax Liabilities (Net)	3.9	3.0
Total Equities & Liabilities	559.3	475.8

Rs. Crs	As on 30th Sept’18	As on 30th Sept’17
Non-current assets	213.4	187.8
Property,Plant and Equipment	169.3	140.6
Capital work inprogress	1.7	8.5
Investment Property	0.0	0.0
Intangible Assets	4.5	1.7
Financial Assets
Investments	0.7	1.4
Trade Receivables	18.6	31.3
Others	15.5	1.4
Other non Current Assets	3.1	2.9
Current assets	346.0	288.0
Inventories	139.7	94.8
Financial Assets
Investments	2.5	2.0
Trade Receivables	122.3	114.5
Cash & Cash Equivalent	9.1	10.5
Bank Balance other than above	9.4	5.2
Loans	38.9	40.3
Other Financial Assets	2.9	2.9
Other Current Assets	21.1	17.7
Total Assets	559.3	475.8

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* Numbers as per Ind AS guidelines

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Company Overview

Salzer Electronics Limited 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

• 4 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,

• 5 product patents in process

Consistent Dividend Payout Track Record for past 18 years

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From a Single Product Company…
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• 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

• 4 manufacturing units

• Foray into tailor made products and branding for large

customers

• Specialized panels for OEMs

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1985
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1991-95
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2001-06 2010-14 2017-18
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 Established to

manufacture of CAM operated Rotary Switches

• Unit III - manufacture modular switches

• Started Wire & Cable manufacturing for L&T

• Started commercial production of Three Phase Dry Type Transformers

• Acquired Salzer Magnet Wires

… to manufacturing multiple products across sectors

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Professional Management
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• Core Promoter for over 2 decades of experience R.Doraiswamy • Qualified Electrical Engineer and Technocrat Entrepreneur Managing Director • Vast Experience in Foreign Collaboration & wide global contacts D.Rajeshkumar • Electrical Engineer , India; Post Graduate in Business Management, US Joint Managing Director • JMD and CEO of Company - responsible for driving the vision of company S.Baskarasubramanian • Qualified Company Secretary & member of FCS India Director-Corporate Affairs & CS • Wide experience in company law/ corporate affairs • P.Sivakumar Bachelors in Engineering with 22 years of experience GM – Marketing Corporate • Responsible for Sales & Marketing division • B.E (Electrical) with 17 years of experience M Laksminarayana • Responsible for Production, Planning, Inventory Management, Maintenance & General GM - Operations Administration D.Govindaraj • Masters in Commerce, DLL and DTL with 26 years of experience Sr. Manager-Corp. Accounts & • Responsible for project finance and corporate accounts Projects

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R Karunakaran Sr. Manager -PR & Central Excise

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

• • Responsible for Central Excise and Public Relations of Company

Led by a 13 members experienced Board

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Business Overview

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Business Overview
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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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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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Wide Product Suite – Industrial Switch gears
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Products	Features
Cable Ducts/ Wire Ducts	 More than 75 sizes  India’s largest RoHS and Halogen Free Ducts UL and CSA Listed
Rotary Switches	 6A to 400 Amps  > 2500 ranges  UL & CB Tested
Isolators (Dis-connectors)	 16 to 250 Amps  UL 50 rated Enclosed mounting  Changeover Switches  DC – PV Isolators  CB Tested
General Purpose Relays	Plug-in, PCB and Solder type 1 Amp to 100 Amps
Load Break Isolators & Changeovers	 16 to 250 Amps  Multiple mounting options, ABS / Aluminium / Sheet Steel enclosures / IP65 / NEMA Rated  Upto 8 poles
Limit & Foot Switches	 Available in Normal / Snap action types  From Light to Heavy duty applications
Terminal connectors	 2.5 to 95 sq mm  Screw-less Terminals  All Accessories  UL Listed
Customized Control Panel	 Electrical Panels  SCADA Panels

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Wide Product Suite – Industrial Switch gears
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Products	Features
Contractors & Overload Relays	 16 to 250 Amps  UL 50 rated Enclosed mounting  Changeover Switches  DC – PV Isolators  CB Tested
Motor Protection Circuit Breaker(MPCB)	Two Frames 0.1 amps to 63 Amps Type F Co-ordinated UL Listed
Miniature Circuit Breaker(MCB’s)	High Performance Easy Installation No Overload& Short Circuit
CT’s & Rogowski Coils	 CT’s  Rogowski Coils of Class 0.5%
Inductors, Chokes & Filters	 Custom Built High frequency Inductors, & Chokes
Single Phase Toroidal Transformers	 15va to 60 Kva  1 and 3 Phase  Custom built Assemblies  Wide CT Range  UL Listed
Three Phase Laminations Transformers	 Lamination Transformers upto 800 KVA

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Wide Product Suite – Building Products
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Products	Features
Automatic Source Changeover with Current Limiter	Unique - patented design - Contactor based ACCL Heavy Duty - AC 32A and AC22A utilization category
Distribution Board	 Easy to Install  User Friendly  Durable
Miniature Circuit Breakers(MCB)	High Performance – 10KA Easy Installation No Overload& Short Circuit
Modular Switches & Speciality	 Contemporary & Aesthetically Sleek Modular  10, 20 & 32 Amps AC suitable for Standard  Anti Spark shield & Finger Protected
Movement Sensors	 Detects intrusion in all directions  Adjustable time/lux
Remote Switches	 Compact Design  High Performance  Low Maintenance
Single Phase Motor Starter	 Controls voltage fluctuation  Protection against phase imbalance and reversal
House Wires	 From 0.5- 240 Sq mm  Single & Multi Core  FR, FRLS, Halogen Free  UL Listed

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Wide Product Suite – Copper Products
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Products	Features
PVC Insulated Copper wires & Cables	From 0.5- 240 Sq mm  Single & Multi Core  FR, FRLS, Halogen Free  UL Listed
Flexible Busbars	Upto 1000 Amps  Only Manufacturer in India  UL Listed
Wire Harness	 Power Cable Harness  Control cable harness  RoHS Compliant
Enameled Copper Wire	 0.3 to 3 mm (9-29 AWG)  Upto 200 Deg Cent  UL Listed
Bunched Copper Conductors	 Flexible Rerouting  Low Power Loss  Low Maintenance Cost
Tinned Copper Wires	 High electrical and thermal conductivity  Highly flexible wires  Soft and annealed  Highly conductive	Need Image

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Wide Product Suite – Energy Mgmt. Services
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Energy Saver
& Panels
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Street Light
Controllers
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• Increases lamp-life by an average of 20% for HPSV lamps

• 30% reduction in energy consumption under normal working conditions

• Reduces the power consumption by optimizing the voltage to the lamps

• State of the art GSM/ GPRS technology is used for monitoring and controlling the street lights

• Eco–Friendly : SES reduces the emission of CO and is eligible for Carbon Credits

• Automatic On/Off based on Sunrise/Sunset or on programmed timings

• Wireless control and monitoring through sophisticated web-based/ Terminal based software

• Reduces operational, maintenance and running cost

• Detection of Energy theft or leakage

• Maintains a high power factor of above 0.85

• Eco-friendly First in India to adhere to RoHS compliance

A sophisticated street lighting & energy saving system at your door step

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Wide Product Suite- Customised for OEM’s
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CT’s
Terminal Socket
Coils / Inductors
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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Wide Product Suite

Complete Backward Integration

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

• Well developed R&D enables continual product innovation

Strong Customer Relationships

• Strong customer relationships across the world

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

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

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• 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

Advanced Engineering Capabilities

• 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

Wide Distribution Network

• 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

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Four Manufacturing facilities...
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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 Savers

• Wiring Ducts

• Automatic Meter

• MPCB

• Reading

• Wire Harness

• 3 PH Transformers

• Three Phase Dry Type Transformers

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UNIT 4

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• Wires & Cables

• Flexible Bus Bars

• Bunched Conductors

• Tinned 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

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8.4
7.8
5.7
4.3
2.5
FY14
FY15
FY16
FY17
FY18
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• More than 35 engineers

• Recognized by Department of Science, Govt of India

• Patented Rotary switches

• 5 patents in process

• Manual Single Phase Starter with no voltage tripping, Energy Saver System for Street Lighting, Integrated ammeter / volt meter 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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ISO 16949

... 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 & over load 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

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• 23% of sales from global distribution

• 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

Direct network across 50 countries

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Way Ahead

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Future Growth Drivers
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Growth and expansion of existing product verticals

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Margin improvement through

 Increase sales of high margin products – existing and new

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

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Venture into new project/ product development

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2017-18 – Proposed new products to be launched
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Wire Harness & Consoles
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• Product developed and Invoicing started

• Industrial Wire Harnessing - Very good potential in Indian Market

• Value Addition for Wires & Cables.

• New & different set of customers bringing new opportunities

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GE Transportation
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• Secured 10 Year contract with GE transportation for supply of High power contactors for India requirements.

• Negotiating with GE Transportation for Three Phase Transformers for both India and US

DC Load Break Switches (PV)

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• Product developed and Invoicing started

• Very good potential for this product in Australasia region

• Our switches – best available in market, exporting good volume to Europe & US

• Due to lower costs – can compete with good quality high cost European & low price Chinese manufacturers

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Future Growth Drivers- Energy Mgmt. Business
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Only manufacturer in India:

• Energy savers

• Street light controllers

CRISIL rated Grade I ESCO Operator for street lighting

Significant opportunity in power starved country

Successfully implemented for:

• Madurai Corporation

• Coimbatore Corporation

• Navi Mumbai Corporation

• Tirupur Corporation

• Erode Corporation

• Vellore Corporation

In talks with other states to incorporate energy savers and street light controllers

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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 - www.salzergroup.net www.bridge ir.com