Salzer Electronics Limited has informed the Exchange about Investor Presentation

Salzer Electronics Limited Result Update Presentation Q2 & H1 FY23

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

Commenting on this, Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Ltd said: “Our second quarter performance has been in line with our expectations. We have been seeing a good growth coming in from Industrial switchgear and Building products businesses. We are witnessing substantially higher demand in many key products from these two businesses.

During the Second quarter and half year ended of the financial year, we registered a revenue of Rs. 244.96 crores with EBITDA (excluding other income) and PAT of Rs. 24.48 crore and Rs. 8.95 crore, respectively. This growth came in primarily from industrial switchgear products as well as Building Products businesses especially in high demand products like Toroidal Transformers, Three phase Transformers, LAN Cables, Sensors, & MCB’s.

I am happy to share that there is a strong demand especially for our 3-phase dry type transformers, particularly from the sectors of renewables and machine tools, as this product is getting very well accepted in the market and orders have started flow in. Our raw material prices have begun to stabilize and we are seeing the benefits of our price hikes in the form of better margins quarter on quarter. We also expect to reduce raw material consumption in coming quarters.

We recently received two patents for duration of 20 years – 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.

Going ahead, we expect to maintain our growth trajectory combined with strong product offerings and brand position in the market. Based on the domestic and export outlook, we are optimistic on our 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 Standalone Financial Highlights – Quarterly

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

Revenue

EBITDA

PAT

300

250

200

150

100

50

0

189.7

16.2

7.0

149.0

14.8

4.0

194.8

18.4

211.8

17.7

7.5

7.3

228.0

233.1

245.0

24.5

19.6

8.8

9.0

12.9

3.8

Q4 FY21

Q1 FY22

Q2 FY22

Q3 FY22

Q4 FY22

Q1 FY23

Q2 FY23

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

6

Q2 FY23 Standalone Financial Highlights

Rs. in Crore

Net Revenue

Raw Materials

Employee Cost

Other Expenses

Total Expenditure

EBITDA (Excluding other Income)

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.)

Q2 FY23 244.96

189.93 8.69

21.86 220.48 24.48 9.99%

(0.37) 4.01 6.13 0.00 13.97

5.02 8.95 3.66% 5.60

Standalone

Y-o-Y % 25.75%

32.97% 54 bps

19.97% (17 bps) 19.91%

Q2 FY22 194.81

154.05 6.91

15.43 176.39 18.41 9.45%

0.81 4.08 4.69 0.00 10.45

2.98 7.46 3.83% 4.67

Q1 FY23 233.06 187.95 7.98

17.51

213.44 19.62 8.42% 1.07 3.95 5.61 0.00 11.13 2.35 8.78 3.77% 5.49

Consolidated Q2 FY23 245.62 186.81 9.80

23.38

219.99 25.63 10.44% (0.48) 4.09 6.14 0.00 14.93 5.32 9.61 3.91% 5.87

 Increase in Revenue – on account of higher demand for Switchgear as well as Building products businesses.  Strong order inflow for high margin switchgear product - Three Phase Dry Type transformer particularly in sectors of

renewables and machine tools

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Q2 FY23 Revenue Breakup – Business Verticals

Q2 FY22

Q2 FY23

Industrial Switchgear, 54.18%

Energy Management , 0.00%

Building Segment, 6.45%

Industrial Switchgear, 57.61%

Wire & Cable, 39.37%

Building Segment, 8.25%

Wire & Cable, 34.15%

 Industrial Switchgear – 57.61% of net revenues

 Wires & Cables – 34.15% of net revenues

 Building Electrical Products – 8.25% of net revenues

 Energy Management – No tenders issued by Government during this period

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Q2 FY23 Revenue Breakup – Geographical

Q2 FY22

Q2 FY23

Asia (Exclu. India), 11.6%

Middle East, 1.0%

North & South America, 6.2%

Europe, 8.2%

Asia (Exclu. India), 10.2%

Middle East, 1.1%

North & South America, 6.0%

Europe, 8.1%

India, 73.0%

India, 74.6%

 Contribution from Exports at 25.41%  Export revenue grew by18.3% YoY in Q2 FY23 - driven by higher exports to Middle East Africa, North & South America and

Europe

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H1 FY23 Financial Highlights

Rs. in Crore

H1 FY23

H1 FY22

Net Revenue Raw Material Expenses Employee Expenses Other Expenses Total Expenditure EBITDA (Excluding other Income) EBITDA Margin (%) Other Income Depreciation Interest / Finance Cost Exceptional Item (Gain) / Loss PBT Tax PAT PAT Margin (%) Basic EPS (Rs.)

478.02 377.88 16.66 39.37 433.92 44.10 9.23% 0.71 7.96 11.74 0.00 25.10 7.37 17.73 3.71% 11.10

343.78 268.62 13.44 28.51 310.57 33.21 9.66% 0.95 8.02 9.81 0.00 16.33 4.92 11.41 3.32% 7.14

Y-o-Y %

39.05%

32.78% (43 bps)

55.49% 39 bps 55.49%

H1 FY23 (Consl)

488.76 381.11 18.89 42.43 442.43 46.33 9.48% 0.75 8.11 11.77 0.00 27.20 7.95 19.25 3.94% 11.77

 Strong demand for industrial switchgear products, particularly in -Toroidal Transformers, Three phase Transformers, LAN Cables, Sensors, & MCB’s  Contribution from exports was 23.15% in H1 FY23, export revenue grew 24.2% YoY in H1 FY23, driven by higher exports to Middle East, Africa, North

and South America and Europe

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

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H1 FY23 Revenue Breakup – Business Verticals

H1 FY22

H1 FY23

Industrial Switchgear, 53.2%

Wire & Cable, 42.1%

Building Segment, 8.0%

Wire & Cable, 38.9%

Industrial Switchgear, 52.1%

Energy Management , …

Building Segment, 5.8%

 Industrial Switchgear – 53.15% of net revenues

 Wires & Cables – 38.87% of net revenues

 Building Electrical Products – 7.98% of net revenues

 Energy Management – No tenders issued by the Government during this period

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H1 FY23 Revenue Breakup – Geographical

H1 FY22

H1 FY23

Asia (Exclu. India), 12.2%

Middle East, 1.2%

Asia (Exclu. India), 9.6%

Middle East, 1.0%

North & South America, 5.5%

Europe, 7.1%

North & South America, 5.3%

Europe, 7.2%

India, 74.1%

India, 76.9%

 Contribution from exports was 23.15% in H1 FY23  Export revenue grew by 24.2% YoY in H1 FY23 - driven by higher exports to Middle East, Africa, North & South America and

Europe

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Balance Sheet as on 30th Sept’ 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 30th Sept’ 22 366.78 15.98 350.80 0.00 30.85

As on 31st Mar’ 22 351.47 15.98 335.48 0.00 32.01

As on 30th Sept’ 22* 358.38 15.98 337.91 4.49 32.42

10.09 0.00 20.76

0.00

12.41 0.00 19.61

0.00

12.41 0.15 19.62

0.25

377.48

358.31

361.54

233.74 92.38 4.91 42.59 1.93 1.93 775.11

235.40 73.77 4.86 42.59 1.70 0.00 741.79

235.40 76.22 4.90 43.17 1.83 0.00 752.33

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 30th Sept’ 22 264.20 214.14 1.68 0.01 3.92 17.55 12.35 10.88 3.68 510.91 241.87

3.67 214.07 4.17 7.10 10.63 0.39 29.01 775.11

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 30th Sept’ 22* 254.50 213.37 0.78 0.01 10.80 0.85 11.63 11.86 5.20 497.83 226.98

3.10 218.39 1.90 9.84 10.58 0.38 26.66 752.33

*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 Electrical / 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 Electrical 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

10.37

9.07

8.50

7.75

− Recognized by Department of Science, Govt of India





Patented Rotary switches

Six patents in process

4.27

2.50

FY16 FY17 FY18 FY19 FY20 FY21

FY22

− 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



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

AZ

Continual focus on 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

23% of sales from exports (FY22) 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



28

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





31

Thank You

For further information, please contact:

Salzer Electronics Ltd.

Adfactorspr Pvt. Ltd.

Mr. Baskarasubramanian

baskarasubramanian@salzergroup.com

www.salzergroup.net

Ms. Savli Mangle savli.mangle@Adfactorspr.com

Mr. Rupesh Rege Rupesh.rege@Adfactorspr.com

www.adfactorspr.com

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