ZEN TECHNOLOGIES LIMITED

Certified ISO 9001 :2015, ISO 27001 :2013, CMMI MLS Regd. Office : B-42, Industrial Estate, Sanathnagar, Hyderabad - 500 018, Telangana, India. Phone: +914023813281/3294/2894/4894 Fax No: +91 40 23813694 Email: [email protected] Website: www.zen.in Corporate Identity Number: L72200TG1993PLC015939

Date: 01 st November 2021

To BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai- 400001 Through: BSE Listing Centre Security Code: 533339

To National Stock Exchange of India Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Through: NEAPS Symbol/Security JD: ZENTEC

Dear Sir/Madam,

Sub: Earnings Presentation Q2 FY 2022

Please find attached earnings presentation for the quarter ended so" September 2021.

The above information is also available on the website of the Company: https://www.zentechnologies.com/calls-and-conferences.

This is for your kind information and records.

Thanking You.

Works: Plot 36, Hardware Park, Near Shamshabad International Airport, Hyderabad - 501 510, Telangana, India

Zen Technologies Limited Earnings Presentation Q2FY22

India's leading defence training solution provider

NSE: ZENTEC BSE: ZENTEC - 533339 BLOOMBERG: ZEN IN REUTERS: ZETE.BO

Inside the Document

Management Commentary

ZEN TECHNOLOGIES LIMITED Q2FY22 Earnings Presentation

Commenting on the results, Mr. Ashok Atluri – Chairman and Managing Director, said:

"I am delighted to share with you our performance for this quarter. Our AMCs contributed about INR 7.63 crores to this quarter. We soon expect to cross the run rate of INR 8.5 crores per quarter. The AMC revenues will soon cover all the fixed overheads during this financial year, which is a positive direction for us at Zen.

We recently bagged two big orders, one from the export market and another from the Indian Air Force. The order for our anti-drone technologies validates our hard work and our bets, and we believe that there will be many such big orders in the future.

This quarter we have also integrated hard kill technology with our anti-drone systems, which has further strengthened our position and opened up new markets for us.

We have also decided to raise INR 100 crores, primarily, for further R&D in anti-drone area and export promotion."

Consolidated Quarterly Highlights

All data ₹ in crores

QUARTER HIGHLIGHTS:Q2FY22

Revenue Contribution from Sale of Equipment: ₹ 8.62 crores.

Revenue Contribution from Annual Maintenance Contracts: ₹ 7.63 crores.

Revenue contribution from Exports: ₹ 2.79 crores.

Revenue contribution from Domestic: ₹ 5.83 crores.

R&D spends during the quarter ₹ 4.51 crores.

Order Book Status

Way forward

INCREASING PREDICTABILITY IN TURNOVER:

We are working towards strategically positioning the business model to reduce lumpiness. The sale of equipment done in the last couple of years will start contributing to the top line in terms of Annual Maintenance Contracts.

EQUIPMENT SALE ORDER WINS:

In the next couple of years the contributions from AMC stream will cover the fixed operating expenses of the business. This will provide stability and predictability to the business operation. The huge order wins of equipment sale can then offer huge operating leverage and boost to our bottom line.

STRONG GOVERNMENT SUPPORT TO ACT AS TAILWIND:

The GOI has formulated several measures along with strict implementation timelines. The governments keen focus on Make in India and Atmanirbhar Bharat campaign has created a conducive environment to make in India for the defence industry. This should act as a strong tailwind going forward

FOCUS ON NEW PRODUCTS:

ZEN TECHNOLOGIES LIMITED

Q2FY22 Earnings Presentation

The continuous investments in R&D ensure that the products are technologically advanced and suited for the customer requirements. This coupled with more than 2 decades of track record of delivering value to our customers has not only made us the preferred partner of choice but has also ensured enhanced share of their wallet.

Financial Statement Summary

SUMMARY OF CONSOLIDATED PROFIT & LOSS STATEMENT All data ₹ in crores (excluding EPS)

Particulars	Q2FY22	Q1FY22	Q2FY21
Revenue from Operations	15.75	9.96	12.35
Other Income	0.97	0.75	0.71
Total Income	16.72	10.71	13.06
Total Operating Expenses	15.91	10.97	9.72
EBITDA (excluding other income)	-0.15	-1.01	2.63
EBITDA Margins	-0.97%	-10.16%	21.30%
Interest Cost	0.27	0.16	0.5
Depreciation	1.18	1.25	1.22
Profit Before Tax	-0.63	-1.67	1.62
Profit After Tax	-0.74	-1.57	0.92

Financial Statement Summary

All data ₹ in crores (excluding EPS) SUMMARY OF CONSOLIDATED BALANCE SHEET

Particulars	H1FY22	FY21
Total Equity	207.60	210.66
Non Current Liabilities	3.18	2.94
Current Liabilities	31.63	9.72
Total Equity and Liability	242.41	223.32
Non Current Assets	91.98	93.21
Current Assets	150.43	130.11
Total Assets	242.41	223.32

Financial Statement Summary

SUMMARY OF CONSOLIDATED CASH FLOW STATEMENT All data ₹ in crores (excluding EPS)

Particulars	H1FY22	H1FY21
Cash Flow from Operating Activities	12.85	-4.56
Cash Flow from Investing Activities	-22.35	-2.13
Cash Flow from Financing Activities	-1.92	9.90
Net increase/ (decrease) in cash and cash equivalents	-11.42	3.21
Cash and cash equivalents at beginning of the year	20.93	15.81
Cash and cash equivalents at the end of the year	9.51	19.02

Disclaimer

This document which have been prepared by Zen Technologies Limited (the "Company"), have been prepared solely for information purposes and do 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 document 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 Document. This Document 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 Document is expressly excluded.

Certain matters discussed in this Document 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 worldwide, 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 Document. The Company assumes no obligation to update any forward-looking information contained in this Document. Any forward-looking statements and projections made by third parties included in this Document are not adopted by the Company and the Company is not responsible for such third-party statements and projections.

Let's connect

HANSRAJ SINGH RAJPUT

[email protected]

Company Secretary & Compliance Officer Zen Technologies Limited

DIWAKAR PINGLE

Investor Relations Advisor Christensen IR

ABHISHEK MEHRA

Investor Relations Advisor The Investment Lab

Annexures

Zen Technologies at a glance

A pioneer in providing state of art Defence Training Solutions for imparting defense training and measuring combat readiness of security forces. The company is engaged in indigenous design, development and manufacturing of sensors and simulators technology based defence training systems.

*Order book as on 30th September 2021

Business Canvas

SALE OF EQUIPMENT

A leader in manufacturing defence training solution with > 95% market share in tank simulators.
Infrequent but large order size with long closing cycles is an inherent characteristic of this segment.
Huge opportunity size in existing products with strong focus on R&D for continuous new additions to product basket.
Focus on Anti-Drone Simulators

A training platform to provide realistic battle experiences by integrating together the entire range of product offerings.
Big ticket size offerings with potential order wins worth USD 25M for single installation.
Expected growth in export market on the back of attractive EXIM financing options.

COMBAT TRAINING CENTRE ANNUAL MAINTENANCE CONTRACT

A recurring revenue stream with superior profitability margins.
Addition in simulator installations base leads to growth in revenues from AMC
Growing service revenue from AMC ensures profitability even in absence and lumpiness of new equipment orders
AMC revenues start kicking in after 3 years of equipment installation.

R&D – Our Strong Suit

At Zen, continuous research efforts have resulted in creation of diverse technological solutions and corresponding patent portfolio. Till date the company has filed for more than 109 patents for the pioneering initiatives undertaken, of which 27 have been granted.

IP driven business with bill of materials not contributing to more than 10%-25% of the final product cost.
Investments in R&D over the last years has resulted in continuous new product additions. The company has recently come out with Anti-Drone system technology and is making further investments in development of Air Defence Gun Simulators.
Willing to take short term pain with possibility of long-term gains.
Investments made in R&D written off in P&L
High investments made in R&D throughout the lifetime of the company make creates high entry barriers for a new entrant.

New Product Additions

With changing warfare dynamics, drones have become a major threat to any country's security.
Authorities across the globe investing in technologies to neutralize this threat.
Wide applications. Not only restricted to military training.
A huge opportunity size.
New products to contribute significantly to the revenues and profitability in the coming years.

Strategic Priorities

The business model of the company has been strategically positioned to reduce lumpiness and enhance the profitability in the coming years.

Continue to grow the sales of Equipment and expand the product portfolio with strong focus on emerging space Anti-Drone systems.

Scale the AMC business, where the contributions from AMC can take care of the fixed operating expenses.

Develop and expand the international presence and exports with friendly countries.

Continuously improve competitiveness, efficiency and drive operational excellence.

Strong Regulatory Tailwinds

The defence business is a regulated one, which is largely impacted by government policy and budget allocation to the sector. The government's keen focus on Make in India and Atmanirbhar Bharat campaign has created conducive environment

The Government of India (GOI) has formulated several measures along with strict implementation timelines.

Import embargo on 101 items (9 items manufactured by Zen Technologies Limited) to enhance domestic manufacturing.
Aligning Defence Acquisition Procedure (DAP), 2020, with the long-term goals of increase in indigenized content under various categories
Aggressive push towards MAKE -2
INR 52,000 crores allocated for equipment procurement from domestic defence industry.
Exports target of INR 35,000 crores by 2025. Strong support to the industry for exports of equipment to friendly countries by offering attractive financing option through EXIM bank.
Enhancement of FDI limit to 74% under automatic route.
Significant reduction in receivables from government.

The confluence of all these factors provides for a strong regulatory tailwind for the Indian defence space.

Investment Merits ASSET-LIGHT

business model

INCREASING SHARE OF AMC which is annuity in nature

STRONG REGULATORY tailwinds

Focus on HIGH VALUE COMPLEX SYSTEMS

INCREASING R & D SPENDS

with special emphasis on Anti-Drone systems for armed forces

STRONG BALANCE SHEET with zero debt

AI assistant

Zen Technologies Ltd. Investor Presentation 2021

60795_rns_2021-11-01_957169da-628b-4585-8cbb-82410b85f3ea.pdf