Zen Technologies Limited has informed the Exchange about Investor Presentation
Date: 08th May 2022
To BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai- 400001 Through: BSE Listing Centre Security Code: 533339
Dear Sir/Madam,
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 ID: ZENTEC
Sub: Earnings Presentation Q4FY 2022 & FY 2022
Please find attached earnings presentation for the quarter and year ended 31st March 2022.
The above https://www.zentechnologies.com/calls-and-conferences.
is also available on
information
the website of
the Company:
This is for your kind information and records.
Thanking You.
Yours sincerely, For Zen Technologies Limited
Hansraj Singh Rajput Company Secretary & Compliance Officer M. No. F11438
HANSRAJ SINGHDigitally signed by HANSRAJ SINGH Date: 2022.05.08 21:08:51 +05'30' Zen Technologies Limited Earnings Presentation Q4FY22 & FY22 India’s leading defence training solution provider
NSE: ZENTEC BSE: ZENTEC - 533339 BLOOMBERG: ZEN IN REUTERS: ZETE. BO
Inside the Document
01
02
03
04
Management Commentary
Quarterly & FY22 Highlights
Order Book Status
Way Forward
05
06
07
08
Financial Statement Summary
Disclaimer
Contact Us
Annexures
Management Commentary
ZEN TECHNOLOGIES LIMITED
Q4FY22 & FY22 Earnings Presentation
03 / 12
Commenting on the performance of Q4FY22, Mr. Ashok Atluri, Chairman and Managing Director commented:
“We are pleased to share an update to accompany our FY22 results. This year’s sales were primarily driven by AMC contracts, while we continued to face some unforeseen challenges.
Our profitability was impacted on account of increase in selling and distribution expenses, accompanied by increased foreign travel, in line with our plans to expand Zen’s global outreach. Our Business Development and Business Promotion activities increased, as we spent close to INR 2.16 crores in our exhibition at Abu Dhabi. To add to this, cost of few components required in manufacturing our products increased drastically. There was a delay in executing the big orders that we have received. Shortage of electronic components globally caused delays in procurement; lead times for some chips has increased dramatically. Worse has been the complete non-availability of some components, forcing us to redesign some of the sub-systems. Mechanical components that were outsourced also were delayed due to labour non-availability (post-Covid) at vendor locations. Logistics and shipping constraints further impacted the execution timelines.
On our order book and order status front, we have received an AMC contract worth INR 55 crore, wherein the revenue will be recognized periodically over the next 5 years. Both our export order of INR 120 crore and IAF order worth INR 155 crores are expected to be fully executed by Q3FY23. Our order book position as on 31st March 2022 stood at ~ INR 430 crores .
On the exports front, we continue to pursue substantial opportunities and expect to have a big order book position by this year end. The extremely favourable environment for the Indian defence players created by current Government does act as an antidote to the Covid impacted environment. One example is the Indian government's robust simulation framework, which gives us confidence that in the coming years will see a very strong performance.
#WalkingTheTalk #Atmanirbhar inititiaves coupled with policy actions being announced clearly indicate the Govternment's resolve to make India self-reliant in defence and this augurs well for companies like Zen which have developed and continue to invest in developing their own IP for global markets.”
Quarterly Highlights
All data ₹ in crores
04 / 12
REVENUE FROM OPERATIONS (QOQ)
EBITDA (EXCLUDING OI) (QOQ)
PROFIT AFTER TAX (QOQ)
27.78
16.26
30.00
25.00
20.00
15.00
10.00
5.00
0.00
4.82
0.91
5.00
4.00
3.00
2.00
1.00
0.00
Q3FY22
Q4FY22
Q3FY22
Q4FY22
6.00
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
5.15
-0.22
Q3FY22
Q4FY22
REVENUE FROM OPERATIONS (YOY)
EBITDA (EXCLUDING OI) (YOY)
PROFIT AFTER TAX (YOY)
27.78
21.55
30.00
25.00
20.00
15.00
10.00
5.00
0.00
4.82
3.08
6.00
5.00
4.00
3.00
2.00
1.00
0.00
10.00
5.00
0.00
5.15
1.83
Q4FY21
Q4FY22
Q4FY21
Q4FY22
Q4FY21
Q4FY22
QUARTER HIGHLIGHTS:Q4FY22
Revenue Contribution from Sale of Equipment: ₹ 7.96 crores
Revenue Contribution from Annual Maintenance Contracts: ₹ 8.00 crores
Revenue contribution from Exports: ₹ 0.00 crores
Revenue contribution from Domestic: ₹ 7.96 crores
05 / 12
Financial Year Highlights
All data ₹ in crores
REVENUE FROM OPERATIONS
EBITDA
PROFIT AFTER TAX
69.75
54.64
80
40
0
7.38
4.56
10
8
6
4
2
0
2.77
2.61
2.8
2.75
2.7
2.65
2.6
2.55
2.5
FY21
FY22
FY21
FY22
FY21
FY22
REVENUE SEGMENTATION
REVENUE SEGMENTATION
R & D EXPENSES
80.00
40.00
18.95
0.00
30.62
FY21
33.08
20.62
FY22
SALES OF EQUIPMENT
AMC
40.00
0.00
10.35
20.27
2.89
17.73
FY21 Domestic
FY22
Export
16.00
12.00
8.00
14.24
11.97
FY21
FY22
Order Book Status
06 / 12
ORDER BOOK
+
NEW ORDERS
-
ORDERS EXECUTED
=
TOTAL ORDER BOOK
Order Book as on 1st January 2022
New Order bagged in Q4FY22
Orders executed in Q4FY22
Total Order Book as on 31st March 2022
AMC: 122.62 Cr Sale of Equipment: 298.37 Cr
AMC: 1.01 Cr Sale of Equipment: 24.68 Cr
AMC: 8 Cr Sale of Equipment: 7.96 Cr
AMC: 115.63 Cr Sale of Equipment: 315.09 Cr
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.
07 / 12
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:
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.
ZEN TECHNOLOGIES LIMITED
Q4FY22 & FY22 Earnings Presentation
08 / 12
Financial Statement Summary
SUMMARY OF CONSOLIDATED PROFIT & LOSS STATEMENT All data ₹ in crores (excluding EPS)
Particulars
Q4FY22
Q3FY22
Q4FY21
Revenue from Operations
Other Income
Total Income
Total Operating Expenses
EBITDA
27.78
2.64
30.42
22.96
4.82
16.26
1.02
17.28
15.35
0.91
21.55
0.89
22.44
18.47
3.08
FY22
69.75
5.38
75.13
65.19
4.56
FY21
54.64
3.02
57.66
47.26
7.38
EBITDA Margins
17.35%
5.60%
14.29%
6.54%
13.51%
Interest Cost
Depreciation
Profit Before Tax & Exceptional Item
Profit After Tax
EPS
0.66
1.20
5.58
5.15
0.42
0.44
1.20
0.30
-0.22
-0.02
0.29
1.26
2.42
1.83
0.17
1.53
4.83
3.58
2.61
0.25
1.09
4.95
4.36
2.77
0.39
Financial Statement Summary
Summary of Consolidated Balance Sheet All data ₹ in crores
09 / 12
Particulars
Total Equity
Non Current Liabilities
Current Liabilities
Total Equity and Liability
Non Current Assets
Current Assets
Total Assets
FY22
289.90
7.10
71.96
368.96
92.75
276.21
368.96
FY21
210.66
2.94
9.72
223.32
93.21
130.11
223.32
Financial Statement Summary
Summary of Consolidated Cash Flow Statement All data ₹ in crores
Particulars
Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Net increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
10 / 12
FY22
-44.26
-43.61
87.98
0.12
20.93
21.05
FY21
5.90
-9.77
8.98
5.12
15.81
20.93
Disclaimer
11 / 12
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 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 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
12 / 12
HANSRAJ SINGH RAJPUT
DIWAKAR PINGLE
ABHISHEK MEHRA
cosec@zentechnologies.com
Diwakar.pingle@in.ey.com
abhishek@theinvestmentlab.in
Company Secretary & Compliance Officer
Investor Relations Advisor
Zen Technologies Limited
Ernst & Young
Investor Relations Advisor TIL Advisors
Annexures
Zen Technologies at a glance
A pioneer in providing state of art Defence Training Solutions, Drones and Anti-Drone 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.
27+
YEARS OF EXPERIENCE
ORDER BOOK OF
~431
CRORES*
100+
CUSTOMERS SERVED
200+
EMPLOYEES
109
PATENTS FILED
1,000+
CUMULATIVE INSTALLATIONS
*Order book as on 31 st March 2022
Business Canvas
SALE OF EQUIPMENT
COMBAT TRAINING CENTRE
ANNUAL MAINTENANCE CONTRACT
• 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.
• 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.
~67
CRORES OF INVESTMENTS IN R&D IN LAST 5 YEARS
~17%
OF CUMULATIVE SALES INVESTED IN R&D IN THE LAST 5 YEARS
109
PATENTS FILED
•
•
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
Anti-Drone Systems
Anti-Drone Simulators & Drone Simulators
Integrated Air Defence Combat Simulators
Logistic Drones
• 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