ZENTECNSE7 May 2023

Zen Technologies Limited has informed the Exchange about Investor Presentation

Zen Technologies Limited

Date: May 7, 2023

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: Investor Presentation ****

Please find attached Investor Presentation for the quarter & year ended March 31, 2023.

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 faithfully, For Zen Technologies Limited

ASHOK ATLURI Chairman and Managing Director DIN: 00056050

Encl: as above

Investor Presentation

Q 4 F Y 2 3

NSE: ZENTEC BSE: ZENTEC - 533339

BLOOMBERG: ZEN IN REUTERS: ZETE.BO

Inside this document

03 Management Commentary

04 Quarterly Standalone Highlights

05 FY23 Standalone Highlights

06 Quarterly Consolidated Highlights

07 FY23 Consolidated Highlights

08 Order Book Status

09 Financial Statement Summary

11 Overview

13 R&D - Our Strong Suit

14 R&D Spends over the Years

15 Business Model

16 Strong Regulatory Tailwinds

17 Investment Merits

18 Strategic Priorities

19 Way Forward

2 2 0 2

N O

I T A T N E S E R P

R O T S E V N

D E T I

I L

S E I

G O L O N H C E T

N E Z

Management Commentary

Our investment in R&D reached an all-time high of nearly ₹19 crores, significantly higher than the average of 12-14 crores spent in the last 5 years.

Mr Ashok Atluri CHAIRMAN & MANAGING DIRECTOR

I am pleased to provide you with an update on the impressive performance of Zen Technologies Limited for Q4FY23 and the fiscal year 2023. This year has been a strong one, as we achieved our highest-ever revenue.

We will continue to strengthen our R&D capabilities and focus on high- value complex systems. Our investment in R&D reached an all-time high of nearly ₹19 crores, significantly higher than the average of ~₹14 crores spent in the last 5 years.

We have made significant progress on our export order, with a partial execution of the order and recording of the corresponding revenues during the fiscal year. However, we are excited to inform that we are confident about delivering the remaining part of the order in H1FY24.. Additionally, the delivery of the remaining part of our anti-drone order, is also scheduled for Q1FY24. These developments set the stage for a robust start to the next financial year, and we look forward to further building on this momentum in the year to come.

During Q4FY23, we secured multiple new orders worth ₹141.67 crores, increasing our orders in hand to ~₹473 crores as of March 31st, 2023. We have placed bids for substantial orders and we expect the results to be out by H1FY24. To capitalise on these potential opportunities, we are taking steps to enhance the bandwidth of our key functions, including Supply Chain, Procurement, and Production Planning. We have also initiated the recruitment of technical and non-technical manpower to support our growth.

Our liquidity position is currently at an all-time high, positioning us well to deliver on our ambitious growth plans. We anticipate a few order wins under the Emergency Procurement plan, which will further accelerate our growth. We are also optimistic about the promising prospects of the export market.

Our long-term focus is on achieving leadership in several key areas. Our first priority is to establish ourselves as leaders in the development of both live and virtual land-based simulators. We are also committed to dominating the anti-drone market through continuous investment in research and development, and by maintaining strong connections with our customers. Additionally, we plan to grow our services business by leveraging AMC. Finally, we aim to expand our global presence, with a particular focus on the Middle East, Africa and CIS countries.

Quarterly Standalone Highlights

Revenue from Operations (YoY)

EBITDA (YoY)

Profit After Tax (YoY)

(All Values ₹ in Crore)

364.54%

74.14

960%

26.50

1133.57%

17.27

15.96

2.50

1.40

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Revenue Segmentation (Sale of Equipment vs AMC)

(All Values ₹ in Crore)

Revenue Segmentation (Domestic vs Exports) (All Values ₹ in Crore)

R&D Expenses

(All Values ₹ in Crore)

7.86

66.28

Q4FY23

8.01 7.95

Q4FY22

31.22

35.07

Q4FY23

0.10 7.86

Q4FY22

7.46

3.46

Sales of Equipment

AMC

Domes tic

Exports

Q4FY22

Q4FY23

FY23 Standalone Highlights

Revenue from Operations (YoY)

EBITDA (YoY)

Profit After Tax (YoY)

(All Values ₹ in Crore)

200.58%

701.24%

161.44

53.71

FY22

FY23

7.28

FY22

Revenue Segmentation (Sale of Equipment vs AMC)

(All Values ₹ in Crore)

Revenue Segmentation (Domestic vs Exports) (All Values ₹ in Crore)

35.9

125.54

FY23

33.08

20.62

FY22

2.89 17.73

FY22

58.33

FY23

55.49

70.04

FY23

1763.37%

37.64

2.02

FY22

FY23

R&D Expenses

(All Values ₹ in Crore)

13.80

19.09

Sales of Equipment

AMC

Domes tic

Exports

FY22

FY23

Quarterly Consolidated Highlights

Revenue from Operations (YoY)

EBITDA (YoY)

Profit After Tax (YoY)

(All Values ₹ in Crore)

245.14%

95.88

371.45%

35.17

508.13%

20.19

27.78

7.46

3.32

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Q4FY22

Q4FY23

Q4FY22

Q4FY23

*PAT Adjusted for Non-Controlling Interests

FY23 Consolidated Highlights

Revenue from Operations (YoY)

EBITDA (YoY)

Profit After Tax (YoY)

(All Values ₹ in Crore)

213.76%

218.85

702.61%

79.86

2047.74%

42.74

69.75

9.95

FY22

FY23

FY22

FY23

1.99

FY22

FY23

FY22

FY23

FY22

FY23

FY22

FY23

*PAT Adjusted for Non-Controlling Interests

Order Book Status as of 31st Mar 2023

Order Book

New Orders

Orders Executed

Total Order Book

Order Book as on 1st January 2023

New Order bagged in Q4FY23

Orders executed in Q4FY23

Total Order Book as on 31st March 2023

AMC: 136.08 Cr Equipment: 268.36 Cr

AMC: 17.39 Cr Equipment: 124.27 Cr

AMC: 7.86 Cr Equipment: 65.43 Cr

AMC: 145.61 Cr Equipment: 327.20 Cr

Total : 404.44 Cr

Total : 141.67 Cr

Total : 73.29 Cr

Total : 472.82 Cr

Financial Statement Summary

Summary of Standalone Profit & Loss Statement

Particulars (₹ in Crore)

KEY PERFORMANCE INDICATORS

Sales

Other Operating Revenue

Total Revenue

Total Operating Expenses

EBITDA

EBITDA Margins

Interest Cost

Depreciation

Profit Before Tax

Profit After Tax

Q4FY23

(Audited)

Q3FY23

(Unaudited)

Q4FY22

(Audited)

FY23

FY22

(Audited)

74.14

0.19

74.33

47.83

26.50

32.93

1.91

34.84

24.57

10.27

15.96

2.60

18.57

16.07

2.50

35.65%

29.48%

13.46%

0.33

1.38

24.78

17.27

0.45

1.11

8.69

7.58

0.61

0.89

0.98

1.40

161.44

7.05

168.49

110.16

58.33

34.62%

2.03

4.38

51.93

37.64

53.70

5.28

58.98

51.70

7.28

12.34%

1.40

3.73

2.14

2.02

Financial Statement Summary

Summary of Consolidated Profit & Loss Statement

Particulars (₹ in Crore)

KEY PERFORMANCE INDICATORS

Sales

Other Operating Revenue

Total Revenue

Total Operating Expenses

EBITDA

EBITDA Margins

Interest Cost

Depreciation

Profit Before Tax

Profit After Tax (Adjusted for Non-Controlling Interests)

Q4FY23

(Audited)

Q3FY23

(Unaudited)

Q4FY22

(Audited)

FY23

FY22

(Audited)

95.88

(0.01)

95.86

60.69

35.17

52.49

1.95

54.43

35.77

18.66

27.78

2.64

30.41

22.96

7.46

36.68%

34.28%

24.53%

0.63

1.52

33.02

20.19

2.10

1.54

15.01

9.43

0.66

1.21

5.59

3.32

218.85

7.25

226.09

146.23

79.86

35.32%

4.08

6.06

69.73

42.73

69.75

5.38

75.13

65.18

9.95

13.24%

1.53

4.83

3.58

1.99

Overview

Since

1993

Vision To be a leading global defence training & anti-drone solutions provider.

Mission To provide defence training & anti-drone solutions through innovative and cost-effective solutions.

Overview

A pioneer in developing defence training systems, and anti- drones solutions

An IP player (intellectual property)

3 decades About 3 decades of successful track record

25 years Focus in the first 25 years exclusively on simulators and training equipment for armed and police forces

5 years Additional focus in the last 4 years on anti-drone systems also

100+ Institutional customers served

280+ Human capital: 280+ manpower strength

₹472.82 crores Robust order book of ₹ 472.82 crores as of 31 March, 2023

State-of-the-art State-of-the-art R&D facility recognised by the Ministry of Science and Technology, Government of India.

1,000+ Shipped more than 1,000+ training systems across the globe

~₹73 crores R&D investment of ~₹73 crores in the last 5 years

§ 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

~73

CRORES OF INVESTMENTS IN R&D IN LAST 5 YEARS

~14%

OF CUMULATIVE SALES INVESTED IN R&D IN THE LAST 5 YEARS

110+

PATENTS FILED

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 110 patents for the pioneering initiatives undertaken, of which 27 have been granted.

R&D Spends over the Years

146.98

161.44

92.22

61.65

52.61

38.96

49.57

53.70

14.30

12.72

12.83

12.27

14.82

12.88

13.80

19.09

FY15-16

FY16-17

FY17-18

FY18-19

FY19-20

FY20-21

FY21-22

FY22-23

LEGENDS (All Values ₹ in Crore)

Sales

R&D Expenditure

Business Model

Training Simulation Equipment

Counter-Drone Solutions

Annual Maintenance Contract

§ A leader in defence training solutions.

§ Infrequent but large orders with long closing

cycles.

§ 90% of order from repeat customers.

§ Anti drone systems are used to detect and/or intercept unwanted drones and unmanned aerial vehicles (UAVs).

§ A recurring revenue stream with exceptional

profitability margins

§ New simulator sales leading to growth in

§ System can detect and deactivate drones of

revenues from AMC

any size within a 4-km radius.

§ Remote demonstration – getting positive

sustainability

response.

§ Expect big orders in the coming years.

annual AMC revenues.

§ Have already reached about ₹ 40 crores of

§ Growing service revenue from AMC ensuring

§ Will soon achieve ₹ 50 crores of AMC annual

revenues.

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.

§ Aligning Defence Acquisition Procedure (DAP), 2020, with the

long-term goals of increase in indigenized content under various categories

§ Aggressive push towards MAKE -2, Make in India and Atmanirbhar

Bharat

§ 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.

§ Significant reduction in receivables from government.

§ iDEX (Innovations for Defence Excellence) and IDDM (Indigenously Designed, Developed and Manufactured) would help us achieve the goals faster than expected

§ Framework for increased utilisation of simulators by the Indian Army, Navy and Airforce & Indian Coast Guard issued by MoD

§ Agnipath Pravesh Yojna (APY) announced by the Government is

another emerging opportunity for our Company

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

Investment Merits

Asset-light business model

Increasing Revenues from 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

Strategic Priorities

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

Establishing the Demo centre overseas and focusing on export markets to expand the international presence.

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

Enhance technical capabilities by increasing our investments R&D and getting into high value-added complex systems.

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

Streamlining operational efficiencies and focusing on cost optimisation and enhancing financial performance.

Way Forward

Increasing Focus on Simulators

The recently announced Policy Document on Framework of Simulators in the Armed Forces has created significant opportunities for us, as it aims to promote simulation- based training across all military domains. Going forward, we will be focusing on leveraging this policy framework to offer innovative, cost-effective, and safe training solutions to the Indian Armed Forces.

Increasing Revenues from AMC

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 can then offer huge operating leverage and boost to our bottom line.

Strong Government Support to Act as Tailwind

The Government's strict implementation timelines and focus on Make in India and Atmanirbhar Bharat has created a favorable environment for the defense industry. This provides a strong tailwind for us, and the recently announced Agnipath Pravesh Yojna (APY) by the Government presents another emerging opportunity for our Company.

Focus on New Products and R&D for Anti Drone

The continuous investments in R&D ensure that the products are technologically advanced and suited for the customer requirements. This coupled with ~ 3 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.

Increasing Focus on International Markets

The keen focus on export markets has resulted in brisk growth in export footprint. The Company has a strong product and projects pipleline in the export markets of Middle East, Africa and CIS countries and expects exports to contribute more than 30% to the top line in the current financial year. Furthermore fast clearances from the Government for exports further acts as a tailwind.

Thank You

©2018 ZEN TECHNOLOGIES LIMITED., ALL RIGHTS RESERVED. ZEN TECHNOLOGIES LOGO IS A TRADEMARK OF ZEN TECHNOLOGIES LIMITED. IN ADDITION TO COMPANY DATA, DATA FROM MARKET RESEARCH AGENCIES, STOCK EXCHANGES AND INDUSTRY PUBLICATIONS HAS BEEN USED FOR THIS PRESENTATION. THIS MATERIAL WAS USED DURING AN ORAL PRESENTATION; IT IS NOT A COMPLETE RECORD OF THE DISCUSSION. THIS WORK MAY NOT BE USED, SOLD, TRANSFERRED, ADAPTED, ABRIDGED, COPIED OR REPRODUCED IN WHOLE ON OR IN PART IN ANY MANNER OR FORM OR IN ANY MEDIA WITHOUT THE PRIOR WRITTEN CONSENT. ALL PRODUCT NAMES AND COMPANY NAMES AND LOGOS MENTIONED HEREIN

ARE THE TRADEMARKS OR REGISTERED TRADEMARKS OF THEIR RESPECTIVE OWNERS.

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Abhishek Mehra

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Disclaimer:

Statements

Certain this presentation concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The relating to these risks and uncertainties statements include, but are not limited to, risks and uncertainties regarding fluctuations intense competition, political in earnings, instability and general economic conditions affecting our industry. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

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