ZENTECNSE5 September 2023

Zen Technologies Limited has informed the Exchange about Investor Presentation

Zen Technologies Limited

Date: September 5, 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 ****

With reference to the subject cited above, please find the enclosed Investor Presentation.

The same https://www.zentechnologies.com/investors

information

is also available on

the website of

the Company:

Kindly take the same on record and acknowledge the receipt

Thanking You. Yours sincerely, For Zen Technologies Limited

M. Raghavendra Prasad Company Secretary and Compliance Officer M.no. A41798

Investor Presentation

September 2023

Zen Technologies – Solutions Offered

Protection Division

Training & Simulation

Description

Protection Solutions

 Designed to meet the training requirements of the mechanised forces in field craft,

battle drills, tactical and gunnery procedures

Live Simulation



Solutions include TacSim indoor, Combat Training System, Shoot-Edge, etc.

Virtual Simulation

 Designed to train for real life situations in a virtual scenario



Solutions include Rotary Wing Simulator, Medium Machine Gun, Automatic Grenade Launcher etc

Live Ranges

 Designed to provide training for air-to-ground weapons delivery



Solutions include Containerized indoor shooting range, tank targets, tank zeroing systems etc.

Anti-Drone Systems

 Advent of drone technology in warfare, huge scope of developing anti-drone

technologies



Inducted into Indian Armed Forces As war and cross border threats intensify

Training Simulators & Anti-Drone Systems made with high end technology solutions makes Zen Technologies a distinct & niche player in the global defence industry

Competitive Advantages – Bet on Capability to Innovate

• IP driven advantage (High IP Content and low BOM 15-35%)

• 130+ Patents filed of which 50 have been granted .

• Less dependence on imports for supply chain.

• 611+* Strong Human Capital

• Effective Virtual demo – saving cost and time

• Asset light business Model

• Diverse Customer Base - 100+ Government Customers

• 90% orders from Repeat Customers – Customer Stickiness

Note ‐ *Includes Contract Labour of ~320 people.

Zen Technologies – Revenue Streams

Training Simulation Equipment

Counter-Drone Solutions

Annual Maintenance Contract



Leader in Defence Training Solutions

Infrequent but large orders

 ~90% of order from repeat customers

 Remote Demonstration.

 Anti-drone systems are used to detect

and/or intercept hostile drones



System can detect and deactivate drones upto 20-km radius (depending on the size of the UAV)

 Remote demonstration – getting

positive response

 Expecting big orders in the coming

years

 Recurring revenue stream

 New simulator sales leading to growth

in revenues from AMC

 Growing service revenue from AMC

ensuring sustainability

 Reached about ₹ 40 crores of annual

AMC revenues

 May achieve ₹ 150 crores of AMC annual revenues by 2027-28

The Book of Five Rings – Miyamoto Musashi

If you think training is important for Indian army, there is only one good bet in India

30 years of singular focus on training and simulation!

And…

 120+ total Staff dedicated to R&D

 Huge legacy libraries of Reusable Software, Electronics and Mechanical

modules

 Huge Collection of Weapon replicas and their physics

 30 years worth of Data being used in AI to reduce training time

 Extremely Leveraged R&D – Only 73 Cr spent in the last 5 years

Zen’s Unique Value Chain Designed to Scaleup

 R&D

 Engineering

 Manufacturing (Outsourced) – Capex Minimized

 On-site Installation and Training

 Warranty

 AMC (More on AMC later)

Regulatory Tailwinds

Buy Indian IDDM (Late Sri Parikkar) – 2016 DPP and 2020 DAP

Recognition of the Importance of Training – Simulation Framework from MOD

Policy

https://pib.gov.in/PressReleasePage.aspx?PRID=1757253

Policy

https://pib.gov.in/PressReleasePage.aspx?PRID=1757253

Agnipath Yojana – Effective training of Agniveers at lesser time and cost

Four 'Positive Indigenisation' lists prohibit import of 12 products developed by Zen.

Aggressive #Atmanirbharta push towards indigenisation through iDEX and Make-2

The order book position of the simulators over the years

Order Book of Past Years (In INR Crs)

2020

2021

2022

2023

65.96 94.83 160.79

72.30 120.37 192.67

183.74 115.63 299.37

240.20 145.61 385.81

Products AMC

As on 31st March each year

As on Sept 5, 2023 590.96 228.25 819.21

Military Training Simulators: A Snapshot

Global Market

$ 9.2 bn $ 9.2 bn 2022 2022

$ 12.2 bn $ 12.2 bn 2027P 2027P

Source: Industry Reports, Framework for Simulators in Armed Forces; DDP* = Department of Defence Production

Military Training Simulators: A Snapshot

Indian Market

INR 15,000 Cr INR 15,000 Cr Estimated Indian Market Size Estimated Indian Market Size

Source: Industry Reports, Framework for Simulators in Armed Forces; DDP* = Department of Defence Production

Anti- Drone Systems

Most frictionless product – 3 decades of Zen

Drones herald a Tectonic Shift in Warfare – similar to swords to gun fighting

Developed Anti- Drone System with Soft-kill as well as Hard kill option

Article published on India Today

The order book position of the ADS over past two years

Order Book (In INR Crs) As on Sept 5, 2023

2023

2022

Product AMC

As on 31st March each year

131.35 ‐ 131.35

87.28 ‐ 87.28

456.11 ‐ 456.11

Mindset –

Infinite Game Player

Finite Game Player

Difference Between Zen and Other Players:

AMC Starts after 2-3 year warranty period

Current Future

 ~Rs 40 Crores

 By 2025 AMC would increase to ~70 Crores, as per current Order Execution

 Order book worth ~Rs 1,270 Crores

 AMCs expected to increase to ~Rs 150 Crores by 2027-28

Winning new orders on back of continuous R&D efforts

Rs 542.84 Cr Total Order Book on 30th June 2023

Order Book & New Orders

New Orders received in Q2 FY 2024 till date.

AMC Order – Rs 169.98 Cr

Equipment Order – Rs 372.86 Cr

Sr. No

Description

Supply of Anti Drone System to MoD

Significant order win in the Export Market (includes both Training Equipment and ADS)

Supply of Training Equipment to MoD

Month

July-23

Aug-23

Sept-23

Note – New Orders include both Equipment and AMC component of orders.

Order Size (In INR Crs)

160

340

105

732

Anti-Drone Industry: Key Growth Drivers

INCREASED DEMAND IN MILITARY AND NATIONAL SERVICES

• Due to the asymmetric damage the drones can do, Anti-drone systems will continue to

see growth in the demand.

Source: Industry Reports; News Articles

Other Strategic Priorities

Increasing focus on International Markets

- Keen focus on export markets has resulted in brisk growth in export

markets

- Fast clearances from Government for exports will further act as tailwind

Source: Industry Reports; News Articles

Other Strategic Priorities

Expansion through Inorganic Growth

- Actively evaluating potential targets for acquisition to further expand the

business in adjacencies – market and product

Source: Industry Reports; News Articles

Other Strategic Priorities

Sustainability

- On World Environment Day, June 5 2023, collaborated with TERI* and

released a report on how simulators can enhance sustainability in the

armed forces.

- Utilizing simulators costing Rs 15Cr for one particular type of weapon

platform over a 30-year period can result in savings of ~Rs 380 crore

Note – *TERI = The Energy and Resources Institute

Source: Industry Reports; News Articles

Zen Technologies – Investment Merits

Focus on Simulators and Anti-drone Systems – IDDM Category

Increasing Revenues from AMC – Annuity in nature

Regulatory Tailwinds – Framework on Training Simulators & Agnipath Yojana

Asset Light Business Model

Increasing R&D Spends with emphasis on Anti-Drone Systems

Strong Balance Sheet with Zero Debt

Distinguished Board of Directors (1/2)

 First generation entrepreneur & visionary founder of Zen Technologies

 He is a PG Diploma holder in Applied Computer Science

 He was awarded the title of “Small Scale Entrepreneur of the Year” by the Hyderabad Management Association in 1998

Mr Ashok Atluri Chairman & Managing Director

 Mr Kishore Dutt Atluri is a Post graduate in Computer Application from University of Hyderabad

 He co-founded Zen Technologies in 1993 with primary objective of designing and developing training simulators for defence and security

forces

Mr Kishore Dutt Atluri Founder & Joint Managing Director

 He has over 21 patents in his name and he is also in-charge of all defence marketing activities at Zen

 He has a deep insight of simulation technology and its application for defence and the homeland security

 Ms Shilpa Choudari holds a Bachelor’s Degree in Technology & a Master’s degree in Finance and Foreign Trade

 She has worked as a research associate and later as an AGM Sales and Marketing which has given her a deep insight into Zen’s products

 She has published many articles in over 10 books on different subjects

Ms Shilpa Choudari Whole Time Director

Mr M Ravikumar Whole Time Director

 Mr. M Ravikumar is a technocrat and an expert in systems programming and robotics

 He has 20 plus years of experience in the software industry

 He is actively involved in the design and development of the present range of simulators for the company in his role as Head, R&D

Division

 He is the person behind the successful development of Zen SATS® SL, Zen AWeSim®, Zen TacSim® and ACTS

Distinguished Board of Directors (2/2)

 Dr. R.K. Tyagi is a Ph.D (Doctorate in Management Studies) from Agra University & has completed his Engineering (Electronics &

Communication) from IIT, Roorkee, MBA (Marketing) from IGNOU, New Delhi

 He has 46 years plus experience including 14 years of board level positions in various organisations.

Dr R K Tyagi Independent Director

 His strengths are organisational strategy and building strategical alliance, leadership and team development, growth/turnaround

specialist in business operations, corporate governance and CSR, R&D, technology, Investment and risk management

 Dr.Ajay Kumar Singh is a Post Doctoral Fellow in Social Marketing from ISB, Hyderabad and also holds a Ph.D.

 He is a recipient of the prestigious “The Rashtrapati Rovers Award” awarded to him in the year 2000

Dr Ajay Kumar Singh Independent Director

 Dr.Ajay Kumar Singh has extensive years of experience across functions ranging from leadership roles, program planning and designing,

implementation, teaching, monitoring and evaluation, business development and consulting

 Dr. Singh is also a member of the Academic Advisory Council of the Institute of Public Enterprise, Hyderabad Telangana

 Mr. Amreek Singh is an M.Com, LL.B., MBA, FCS, FCMA, EPAF-IIM, with over 27 years of industry experience

 He was recognised with best CFO award by 9.9 Group (CFO India) in the year 2017 (Risk Management) and 2018 (Cash

Management)

Mr Amreek Singh Sandhu Independent Director

 He also published an Article on Inflation and Economic Recession by “CFO Asia” before economic recession in 2007

 Ms Sirisha Chintapalli is an Associate Member of the Institute of Company Secretaries of India and the Institute of Cost Accountants

of India

 She has more than 11 years of exposure and experience in the fields of legal, finance, secretarial, insolvency and other regulatory

compliance matters

Ms Sirisha Chintapalli Independent Director

 She has successfully handled and completed various issues / assignments / mergers and is well-versed with various statutes involved in the

day-to-day operations of the Company

Strong Financial performance: Profit & Loss Statement (Standalone)

Income Statement (INR mn)

Net Sales / Income from operations

Expenditure

Cost of raw materials consumed

Changes in inventories of FG, WIP & SIT

Manufacturing Expenses

Employee Benefits Expenses

Other Expenses

Total Expenses

EBITDA

EBITDA Margin (%)

Finance Cost

Depreciation & Amortization Expenses

Other Income

PBT

Income Tax

PAT

PAT (Margin)

FY19

922

373

‐116

157

234

697

225

24%

171

‐21

192

21%

FY20

1,470

251

139

167

220

834

636

43%

586

‐19

605

41%

FY21

496

136

171

418

16%

FY22

537

145

‐62

148

246

517

‐2

FY23

1,614

636

‐228

228

389

1,102

513

32%

539

163

376

23%

Q1FY24

1,324

162

193

107

182

663

662

50%

670

199

471

36%

Strong Financial performance: Balance Sheet (Standalone)

Balance Sheet (INR mn)

EQUITY & LIABILITIES Share Capital Reserves & Surplus Non Current Liabilities Long term borrowings Deferred tax liabilities Other Non Current Liabilities Current Liabilities Short Term Borrowings Trade Payables Other Current Liabilities

Total Liabilities

ASSETS Non Current Assets Tangible Assets CWIP Investments Other Non Current Assets Current Assets Cash & Bank

Short term loans/advances & other current assets

Inventories Sundry Debtors

Total Assets

FY19

77 1,333

88 14 ‐

261 75 387

2,235

629 4 134 135

126

122

353 734

FY20

77 1,910

2 16 ‐

6 51 71

FY21

80 2,052

2 17 ‐

7 25 55

2,134

2,236

644 ‐ 159 299

185

299

104 444

621 ‐ 241 218

342

549

92 174

2,235

2,134

2,236

FY22

80 2,837

31 18 ‐

92 33 487

3,579

591 25 243 216

761

1,404

142 195

3,579

FY23

80 3,112

1 23 ‐

58 37 1,154

4,464

674 19 243 171

1,472

812

411 662

4,464

Robust historical financial performance

Revenue & Margin Profile

INR mn

922

24.4%

20.9%

FY19

1,470

43.3%

41.2%

FY20

Revenue

Working capital cycle

Days

496 15.6% 8.3%

FY21

537 3.8%

3.7% FY22

EBITDA Margin

PAT Margin

251

145

214 146 55

447

227

FY19 Inventory Days

FY20

FY21 Receivable Days

515

126

25 FY22 Payable Days

1,614

31.8%

23.3%

FY23

247

97 11

FY23

Net Cash Position

INR mn

Net Cash

126

FY19

185

FY20

Return Ratios

31.8%

30.4%

FY20

15.9%

13.6%

FY19

1,472

761

342

FY21

FY22

FY23

Net Cash

2.4%

1.9% FY21

0.7%

-0.1%

FY22

12.3%

11.8%

FY23

Avg. RoE

Avg. RoIC-Post Tax

Strong Financial performance: Profit & Loss Statement (Consolidated)

Income Statement (INR mn)

Net Sales / Income from operations

Expenditure

Cost of raw materials consumed

Changes in inventories of FG, WIP & SIT

Manufacturing Expenses

Employee Benefits Expenses

Other Expenses

Total Expenses

EBITDA

EBITDA Margin (%)

Finance Cost

Depreciation & Amortization Expenses

Other Income

PBT

Income Tax

PAT

PAT (Margin)

FY19

922

376

‐116

166

283

755

167

18%

112

‐21

133

14%

FY20

1,493

264

110

196

237

866

627

42%

567

‐19

586

39%

FY21

546

102

‐14

156

187

473

14%

FY22

698

246

‐114

210

270

652

FY23

2,188

785

‐199

359

441

1,462

726

33%

717

218

500

23%

Q1FY24

1,324

162

193

107

182

663

662

50%

670

199

471

36%

Strong Financial performance: Balance Sheet (Consolidated)

Balance Sheet (INR mn)

Total Liabilities

ASSETS Non Current Assets Tangible Assets CWIP Investments Other Non Current Assets Current Assets Cash & Bank

Short term loans/advances & other current assets

Inventories Sundry Debtors

Total Assets

FY19

77 1,229

33 - -

261 81 293

FY20

77 1,790

- - 1

11 45 63

FY21

80 1,965

14 - -

7 23 23

FY22

80 1,978

12 - -

93 29 534

2,185

2,141

2,233

3,690

630 4 78 78

123

1,215

353 734

2,185

650 - 22 22

251

1,586

140 465

2,141

617 - 22 22

413

2,171

147 186

2,233

591 25 22 22

829

2,440

250 317

3,690

FY23

80 3,082

42 - -

59 67 1,094

4,737

680 19 22 7

1,674

2,690

490 854

4,737

Robust historical financial performance (Consolidated)

Revenue & Margin Profile

INR mn

922

18.1%

14.4%

FY19

1,493

42.0%

39.3%

546

13.5% 5.1%

698

6.5%

3.7%

FY20 Revenue

FY21 EBITDA Margin

FY22 PAT Margin

Working capital cycle

Days

596

217

551

132

FY21 Receivable Days

FY22 Payable Days

248 185

18 FY19 Inventory Days

241 147 51

FY20

2,188

33.2%

22.8%

FY23

230 98

14 FY23

1,674

829

413

FY21

FY22

FY23

Net Cash

Net Cash Position

INR mn

Net Cash

123

FY19

251

FY20

Return Ratios

35.9%

35.6%

10.5%

10.3%

FY19

1.4%

1.2%

0.9% FY21

-0.1% FY22 Avg. RoIC-Post Tax

FY20

Avg. RoE

24.8%

16.0%

FY23

Thank You

Disclaimer Certain Statements in 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 risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, intense competition, political 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

Afzal Malkani Chief Financial Officer cfo@zentechnologies.com Zen Technologies

Diwakar Pingle Investor Relations Advisor diwakar.pingle@in.ey.com Ernst & Young

Abhishek Mehra Investor Relations Advisor abhishek@theinvestmentlab.in TIL Advisors Private Limited

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