Salzer Electronics Limited has informed the Exchange about Investor Presentation on Results of Q4FY22
Salzer Electronics Limited Result Update Presentation Q4 & FY22
Disclaimer
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
Joint Managing Director’s Message
“The impacts of the third wave of the pandemic are subsiding now, as markets in India and abroad are recovering from the slowdown. We are witnessing a steady growth in demand and an increasing good orderbook, from both domestic as well as export markets. During the fourth quarter of the financial year, we registered a revenue of Rs. 228.02 crores with EBITDA and PAT of Rs. 12.89 crore and Rs. 3.83 crore, respectively. Growth came in primarily from industrial switchgear products. Continued volatility in raw material prices, substantial freight cost Increase has offset our price hikes and impacted margins. We are slowly passing on these hikes to our customers in time. However, going forward, we expect raw material prices to stabilize now and margins to improve slightly. Moreover, one-time expenses for new product development also dented margins. I am happy to share that we recently received two patents – one for integrated cam operated rotary switches, which is a legacy product contributing substantially to our top line, and another for MPCB. Such developments help protect our intellectual property and boost our efforts in R&D and product development. On another note, our recent joint ventures to enter the electric vehicles space are both on track. We are excited about this line of business as it is a high growth potential vertical, and we have strong technical alliances in the form of these JVs to get an early start in the market. Going into the next fiscal, we expect to maintain our growth trajectory with our strong product offerings and brand position in the market. Based on domestic and export outlook, we are cautiously optimistic about the overall business performance. I thank all our stakeholders for their continued support and faith in our Company and wish everyone good health.”
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Commenting on the results, Mr. Rajesh Doraiswamy, Joint Managing Director, said :
Key Financial Highlights – Quarterly
Revenue, EBITDA, PAT (Rs. Crore)
Revenue
EBITDA
PAT
250
200
150
16.4 126.8
126.5 14.0
100
16.7 134.7
143.5 16.1
155.0 16.9
162.1
16.7
17.5 137.8
16.7 134.7
50
4.9
4.5
5.6
5.4
5.8
5.9
5.5
8.4
132.3 14.3
9.1
95.7 9.6
0.7
18.8 149.8
170.4
17.3
189.7
194.8
18.4
17.7
16.2
149.0
14.8
6.6
6.4
7.0
7.5
7.3
228.0
211.8
30.0
25.0
20.0
12.9
15.0
10.0
4.0
3.8
5.0
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 Q2 FY22 Q3 FY22 Q4 FY22
0.0
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Q4 FY22 Financial Highlights
Rs. in Crore
Net Revenue
Raw Materials
Employee Cost
Other Expenses
Total Expenditure
EBITDA
EBIDTA Margin (%)
Other Income
Depreciation
Interest / Finance Cost
Exceptional Item (Gain) / Loss
Profit Before Tax
Tax
Profit After Tax
Profit After Tax Margin (%)
Basic EPS (Rs.)
Q4 FY22 228.02 185.55 8.60
20.97
215.13 12.89 5.65% 0.35 4.05 5.02 0.00 4.16 0.34 3.83 1.68% 2.39
Standalone
Y-o-Y % 20.21%
(20.26%) (287 bps)
(49.54%)
(45.25%) (200 bps) (45.31%)
Q4 FY21 189.69 150.83 7.50
15.20
173.53 16.16 8.52% 1.44 4.09 5.26 0.00 8.25 1.26 6.99 3.68% 4.37
Q3 FY22 211.82 167.62 7.35
19.17
194.14 17.68 8.35% 0.88 3.93 4.97 0.00 9.66 2.41 7.25 3.42% 4.53
Consolidated Q4 FY22 238.87 192.82 9.62
22.51
224.96 13.91 5.82% 0.53 4.13 5.04 0.00 5.27 0.70 4.57 1.91% 2.03
▪ Increase in Revenue driven by higher volumes and price increase, especially in Switchgear segment ▪ Contribution from Exports was 20.43%, on account of increase in sales to the Americas, Middle East, Africa and Europe. Overall export
revenue grew 22.5% YoY in Q4
▪ One-time product development costs had impact on margins
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Q4 FY22 Revenue Breakup – Business Verticals
Q4 FY21
Q4 FY22
Industrial Switchgear, 41.31%
Energy Management , 0.00%
Building Segment, 6.23%
Industrial Switchgear, 48.1%
Wire & Cable, 52.46%
Building Segment, 7.3%
▪ Industrial Switchgear – 48.12% of net revenues
▪ Wires & Cables – 44.63% of net revenues
▪ Buildings Products – 7.25% of net revenues
▪ Energy Management – No tenders issued by the Government during this period
Wire & Cable, 44.6%
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Q4 FY22 Revenue Breakup – Geographical
Q4 FY21
Q4 FY22
Asia (Exclu. India), 10.8%
North/South America, 3.1%
Middle East, 1.5%
Asia (Exclu. India), 7.6%
North/South America, 4.7%
Middle East, 2.2%
Europe, 4.7%
Europe, 5.9%
India, 80.0%
India, 79.6%
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FY22 Financial Highlights
Rs. in Crore
Net Revenue Raw Material Expenses Employee Expenses Other Expenses Total Expenditure EBITDA EBITDA Margin (%) Other Income Depreciation Interest / Finance Cost Exceptional Item (Gain) / Loss PBT Tax PAT PAT Margin (%) Basic EPS (Rs.)
FY22
783.63 621.79 29.40 68.66 719.85 63.78 8.14% 2.18 16.01 19.81 0.00 30.15 7.67 22.48 2.87% 14.07
FY21
605.62 470.39 24.34 49.10 543.83 61.79 10.20% 1.99 15.61 21.27 0.00 26.90 6.23 20.67 3.41% 12.93
Y-o-Y %
29.39%
3.22% (206 bps)
12.07%
8.75% (54 bps) 8.82%
FY22 (Consl)
803.54 630.17 33.60 73.54 737.30 66.24 8.24% 2.48 16.33 19.88 0.00 32.51 8.30 24.20 3.01% 14.14
▪ Strong demand for industrial switchgear products, particularly wire harnesses and 3 phase dry type transformers ▪ Contribution from exports was 23.29% in FY22, mainly from higher exports to Middle East Africa , European, American and Asia markets ▪ Volatility in raw material prices and freight charges offset impact of price hike of finished goods
Consolidated – on account of acquisition of 74.9% shares of Kaycee Industries
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FY22 Revenue Breakup – Business Verticals
FY21
FY22
Industrial Switchgear, 41.3%
Energy Management , 0.5%
Building Segment, 5.4%
Industrial Switchgear, 50.3%
Wire & Cable, 52.8%
Building Segment, 6.5%
▪ Industrial Switchgear – 50.25% of net revenues
▪ Wires & Cables – 43.23% of net revenues
▪ Buildings Products – 6.52% of net revenues
▪ Energy Management – No tenders issued by the Government during this period
Wire & Cable, 43.2%
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FY22 Revenue Breakup – Geographical
FY21
FY22
Asia (Exclu. India), 9.4%
North/South America, 4.0%
Middle East, 1.3%
Europe, 5.3%
Asia (Exclu. India), 9.7%
Middle East, 1.4%
North/South America, 5.2%
Europe, 7.0%
India, 80.0%
India, 76.7%
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Balance Sheet as on 31st Mar’ 22
Rs. Crore
Shareholder’s Funds Share capital Other Equity Non Controlling Interest Non-current liabilities Financial Liabilities Borrowing Provisions Deferred Tax Liabilities (Net) Other Non-Current Liabilities Current liabilities Financial Liabilities Borrowing Trade Payable Others Other Current Liabilities Provisions Current tax liability (Net) Total Equities & Liabilities
As on 31st Mar’ 22 351.47 15.98 335.48 0.00 32.01
As on 31st Mar’ 21 331.29 15.98 315.30 0.00 35.03
12.41 0.00 19.61 0.00 358.31
235.40 73.77 4.86 42.59 1.70 0.00 741.79
16.27 0.03 18.74 0.00 307.91
197.48 58.81 4.89 44.07 1.30 1.36 674.23
Rs. Crore
Non-current assets Property, Plant & Equipment Capital WIP Investments Property Intangible Assets FA - Investments FA - Trade Receivables FA - Others Other Non Current Assets Current assets Inventories Financial Assets Investments Trade receivables Cash & Cash equivalent Bank Balance other than above Loans Other Other Current Assets Total Assets
As on 31st Mar’ 22 261.15 210.57 0.78 0.01 3.86 17.45 11.63 11.83 5.02 480.64 223.70
3.10 208.52 1.28 6.76 10.58 0.35 26.35 741.79
As on 31st Mar’ 21 260.14 206.66 1.35 0.01 4.10 17.26 11.60 17.27 1.89 414.09 177.38
3.90 178.46 4.93 5.57 18.41 0.34 25.10 674.23
Board has recommended dividend at the rate of 18% i.e. Rs. 1.80 per equity share of Rs. 10 each subject to shareholders approval
*Consolidated – on account of acquisition of 74.9% shares of Kaycee Industries
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Key Financial Highlights – Annual
Revenue (Rs. Crore)
EBITDA (Rs. Crore) / Margins (%)
559.8
566.9
605.6
442.8
783.6
12.0%
11.4%
11.5%
10.2%
53.3
63.6
65.2
61.8
70
60
50
40
30
20
10
0
8.1%
63.8
14%
12%
10%
8%
6%
4%
2%
0%
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
Net Profit (Rs. Crore)
Networth as on 31st March (Rs. Crore)
30
25
20
15
10
5
0
4.5%
4.3%
4.7%
24.0
26.4
20.0
3.4%
20.7
2.9%
22.5
5%
4%
3%
2%
1%
0%
270.6
287.0
309.4
331.3
351.47
FY18
FY19
FY20
FY21
FY22
FY18
FY19
FY20
FY21
FY22
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Company Overview
About Us
Leading player offering total and customized electrical solutions
Wide Distribution network – local and global
▪ Presence in Industrial Switchgears, Wires
& Cables and Energy management business
▪ Largest manufacturer of Cam Operated
Rotary Switches – Market leader with 25% share
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
▪ 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
▪ 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…
▪ 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
1985
1991-95
2001-06
2010-14
2017-22
▪ Established to
manufacturer of CAM operated Rotary Switches
▪ Unit III - manufacture modular switches ▪ Started manufacturing of Wire & Cable for L&T
… to manufacturing multiple products across sectors
▪ 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
▪ 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’
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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
P. Sivakumar AVP – Marketing Corporate
▪ Bachelors in Engineering with over
3 decades of experience
▪ Responsible for Sales & Marketing
division
D. Rajeshkumar Joint Managing Director
▪ Electrical Engineer, India; Postgraduate in Business Management, US
▪ JMD and CEO of Company -
responsible for driving the vision of Company
M Laksminarayana VP - Operations
▪ B.E (Electrical) with over 2 decades of
experience
▪ Responsible for Production, Planning, Inventory Management, Maintenance & General Administration
S. Baskarasubramanian Director-Corporate Affairs & CS
▪ Qualified Company Secretary ▪ Wide experience in company
law/ corporate affairs
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
Guided by 11-member experienced Board
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Business Overview
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 products
▪ Modular Switches ▪ Wires & Cables ▪ MCB’s ▪ Changeovers
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
CT’s
Terminal Sockets
Coils / Inductors
Panels
In-house manufacturing and R&D enables superior customization of products
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Key Strengths
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 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
▪ 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
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
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
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Five Manufacturing facilities...
UNIT I
UNIT 2
UNIT 3
UNIT 4
UNIT 5
▪ Rotary Switch ▪ Contactors & Relays ▪ Panel Assembly ▪ Lighting Energy
Savers
▪ Automatic Meter
Reading
▪ Three Phase Dry Type
Transformers
▪ Toroidal Transformers ▪ Isolators (Dis-connectors) ▪ Terminals ▪ Wiring Ducts ▪ MPCB ▪ Wire Harness ▪ 3 PH Transformers
▪ Wiring Accessories
▪ Wires & Cables ▪ Flexible Bus Bars ▪ Bunched Conductors ▪ Tinned Wires
▪ Enamelled Copper
Wires
▪ Fine Enamelled Copper Wires ▪ Polyester Coated Winding wires
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...With In-house process capabilities...
▪
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 servicing of Moulds and press tools
room facility for manufacturing and
– 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
R&D expenses (Rs crore)
▪
In-house R&D Center
12.00
− More than 35 engineers
− Recognized by Department of Science, Govt of India
8.50
7.75
9.07
▪
▪
Patented Rotary switches
Five patents in process
4.27
2.50
FY16
FY17
FY18
FY19
FY20
FY21
− 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
▪
1st 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
ISO 9001
ISO 14001
ISO 18001
CE Certification
UL Certification
CB certification
RoHS
Intertek Semko approval
CSA Certification
... Across entire product portfolio
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Blue Chip Customers
▪
▪
▪
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
▪
▪
▪
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: − Nuclear Power Corporation − Schneider Electric − GE Energy
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Wide Distribution Network
International ▪
Direct network across 50 countries ▪ ▪ Plans to expand in US, Africa and Middle east
17% of sales from global distribution 40 international distributors
▪
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
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
▪ Formed JV’s with Kostad Steuerungsbau GmbH & EMarch LLP to
enter EV market
▪ 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
Growth and expansion of existing product verticals ▪ Constantly develop new products through in-
house R&D
▪ Expand existing product portfolio to newer
geographies
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Way Ahead
Environment
Social
Governance
▪
▪
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
▪
▪
▪
▪
▪
▪
for
Continues to contribute towards skill development among the local population Recruitment of rural youth for local sales operations Contribution 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
▪
▪ 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
▪
▪
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Thank You
For further information, please contact:
Salzer Electronics Ltd.
Bridge Investor Relations Pvt. Ltd.
Mr. Baskarasubramanian
baskarasubramanian@salzergroup.com
www.salzergroup.net
Ms. Savli Mangle savli@bridge-ir.com
Mr. Rahul Trivedi rahul@bridge-ir.com
www.bridge-ir.com
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