SALZERELECNSE5 November 2023

Salzer Electronics Limited has informed the Exchange about Investor Presentation

Salzer Electronics Limited

Result Update Presentation

Q2 & H1 FY24

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.

Table of Contents

Financial Highlights

Joint Managing Director’s Message

“During the Second quarter of the financial year, we registered a consolidated revenue of Rs. 280.72 crores with EBITDA (excluding other income) and PAT of Rs. 26.79 crore and Rs. 10.10 crore, respectively. Overall market has been bit slow due to international geopolitical uncertainty, high oil prices etc. Despite we have seen growth coming in from Industrial switchgear and wires and cable businesses especially in high demand products like three phase transformers, Wire harness, relays and new products like contactors etc. Our revenues from exports were largely from Asia, North & South America, Middle East / Africa as well as Europe.

We have seen positive trend in decreasing raw material cost, expect this to continue which helped to improve our EBITDA Margins. We are focusing on maintaining a balanced business mix between industrial switchgear and wires & cables products to manage overall gross margin percentage.

On the EV front, we completed the developmental activities for DC Fast charger, and we are taking steps to roll out the product in the current fiscal after securing clearances from the regulatory bodies.

We have recently developed lot of new products for a new segment HVAC (Heating, Ventilation, and Air Conditioning). This segment comprises products like Definite purpose contactor, AC disconnect Switches and Whips and disconnects. These products are being used in both domestic and Industrial AC systems.

Commenting on this, Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Ltd said:

We strive to maintain this growth trajectory to set our eyes on new summits of achievement. At Salzer, innovation is in our manifesto, and our strong product offerings and brand position in the market has placed us in a position to achieve new benchmarks for the future. Based on the domestic and export outlook, we are optimistic on our overall business performance.

I thank the entire team at Salzer Electronics for their untiring efforts and all our stakeholders for their continued support and faith in our Company.”

Key Consolidated Financial Highlights – Quarterly

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

350

300

250

200

150

100

200.0

19.1

218.8

18.4

8.0

7.7

Revenue

EBITDA

PAT

238.9

237.9

245.6 25.6

245.6

24.9

20.7

302.7

24.7

288.7

26.1

280.7

26.8

13.9

4.6

9.6

10.5

9.9

10.2

10.1

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

Q2 FY22

Q3 FY22

Q4 FY22

Q1 FY23

Q2 FY23

Q3 FY23

Q4 FY23

Q1 FY24

Q2 FY24

Q2 FY24 Revenue Breakup – Business Verticals

Q2 FY23

Q2 FY24

Industrial Switchgear, 57.61%

Industrial Switchgear, 56.4%

Building Segment, 8.25%

Wire & Cable, 34.15%

Building Segment, 6.1%

Wire & Cable, 37.5%

 Industrial Switchgear – 56.44% of net revenues

 Wires & Cables – 37.46% of net revenues

 Building Electrical Products – 6.10% of net revenues

Q2 FY24 Revenue Breakup – Geographical

North & South America, 6.0%

Europe, 8.1%,

Q2 FY23

Asia (Exclu. India), 10.2% Middle East, 1.1%

Q2 FY24

North & South America, 11.1%

Middle East; 1.8%

Asia (Exclu. India), 11.0%

Europe, 10.9%

India, 74.6%

India, 65.2%

 Contribution from Exports at 34.8%

 Export revenue driven by higher exports to Middle East, North & South America, Europe and Asian countries

Q2 FY24 Consolidated 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 FY24 280.72

214.17

11.22

28.54

253.93

26.79

9.54%

0.29

5.16

8.32

0.00

13.60

3.50

10.10 3.60% 5.99

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

Y-o-Y % 14.29%

4.51%

(90 bps)

5.10% (31 bps) 2.04%

Q1 FY24 288.67

225.48

10.41

26.70

262.59

26.08

9.03%

0.74

4.66

8.00

0.00

14.16

3.99

10.17 3.52% 6.10

 Increase in Revenue – mainly driven by higher demand for Industrial Switchgear and Wire & Cables business

H1 FY24 Consolidated Financial Highlights

Rs. in Crore

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.)

H1 FY24

H1 FY23

569.40 439.65 21.63 55.24 516.52 52.87 9.29% 1.02 9.82 16.32 0.00 27.76 7.50 20.27 3.56% 12.05

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

Y-o-Y %

16.50%

14.12% (19 bps)

5.29% (38 bps) 2.38%

 Increase in Revenue – higher sales in high demand products like Three phase transformers, wire harness, relays and contactors etc  Contribution from exports was 29.2% in FY23

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

H1 FY24 Revenue Breakup – Business Verticals

H1 FY23

H1 FY24

Industrial Switchgear, 53.2%

Industrial Switchgear, 55.1%

Building Segment, 8.0%

Wire & Cable, 38.9%

Building Segment, 5.7%

Wire & Cable, 39.1%

 Industrial Switchgear – 55.13% of net revenues  Wires & Cables – 39.14% of net revenues  Building Electrical Products – 5.73% of net revenues

H1 FY24 Revenue Breakup – Geographical

H1 FY23

H1 FY24

Asia (Exclu. India), 9.7%

Middle East, 1.0%

Asia (Exclu. India), 10.1%

Middle East, 1.3%

North & South America, 5.3%

Europe, 7.2%

North & South America, 9.1%

Europe, 8.7%

India, 76.9%

 Contribution from exports was 29.2% in H1 FY24

India, 70.8%

Key Standalone Financial Highlights – Annual

Revenue (Rs. Crore)

EBITDA (Rs. Crore) / Margins (%)

559.8

566.9

605.6

1013.1

783.6

11.4%

11.5%

10.2%

8.1%

9.0%

91.4

63.6

65.2

61.8

63.8

100

14%

12%

10%

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

Net Profit (Rs. Crore)

Earning per Share(Rs.)

4.3%

4.7%

3.4%

2.9%

24.0

26.4

20.7

22.5

15 10

3.6%

36.4

15.2

16.5

12.9

14.07

22.74

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

Balance Sheet Highlights – Annual

Return on Capital Employed ( %)

Return on Equity (%)

12.0%

11.0%

9.4%

8.6%

11.6%

8.4%

8.5%

9.0%

6.2%

6.4%

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

Debt to Equity(X)

Networth as on 31st March (Rs. Crore)

0.56

0.60

0.49

0.71

0.68

287.0

309.4

331.3

351.47

402.89

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

*Return on Capital Employed – EBIT/Total Capital Employed (Total Shareholders equity+LT Debt+ST Debt+Current Maturity of LT Debt-Non Current Investment), RoE – Net Profit/Networth , Debt to Equity = Total Debt/ Networth

Working Capital & Borrowings

Working Capital (Cr.) – Bar Chart Working Capital (Days) – Line Chart

Borrowing (Cr.)

180

160

140

120

100

179

148

157

154

144

95.7

91.9

106.2

122.3

164.1

FY19

FY20

FY21

FY22

FY23

20000%

18000%

16000%

14000%

12000%

10000%

8000%

6000%

4000%

2000%

135.6

4.21 FY19

235.4

264.77

155.91

183.28

17.78

16.27

12.41

7.78

FY20 Long Term Borrowing

FY21

FY22

FY23

Short Term Borrowing

*Working Capital (Cr.) – Current Assets – Current Liabilities, Working Capital Days – Inventory Days + Receivable Days - Creditors Days

Consolidated Balance Sheet Highlights

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’ 23 438.21 16.68 415.60 5.93 35.21

As on 31st Mar’ 23 413.24 16.18 391.52 5.54 34.78

11.19 0.85 22.91 0.26 457.28

284.36 88.54 5.19 75.26 2.61 1.33 930.70

7.78 4.43 22.32 0.25 447.21

264.77 112.01 5.33 62.74 2.30 0.05 895.23

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 30th Sept’ 23 274.15 240.83 2.28 0.01 10.47 0.99 7.96 6.28 5.33 656.55 279.96

As on 31st Mar’ 23* 267.43 234.52 0.63 0.01 10.56 0.91 9.34 6.17 5.29 627.80 273.80

5.75 317.82 1.86 6.72 10.55 0.28 33.61 930.70

4.23 287.30 7.27 10.10 10.21 0.43 34.47 895.23

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

Company Overview

About Us

Leading customized electrical solutions

offering

player

total

and

 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

 Six manufacturing units located in Tamil Nadu  More than 15 products catering to Industrial /

Building Electrical / Automobile verticals

Wide Distribution network – local and global

 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

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

1985

Established to manufacturer of CAM operated Rotary Switches

2001-06

Unit III - manufacture modular switches

Started manufacturing of Wire & Cable for L&T

2,000 employees

5 manufacturing units

Foray into tailor made products and branding for large customers

Specialized panels for OEMs

1991-95

2010-14

2017-23

Leading player offering total and customized electrical solutions

Started commercial production of Three Phase Dry Type Transformers

More than 15 different products

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’

Set up new manufacturing rented facility strategically located in Hosur, Tamil Nadu – production to commence in March 2023

… to manufacturing multiple products across sectors

Professional Management

R. Doraiswamy Managing Director

M Laksminarayana VP - Operations

Qualified Electrical Engineer and Technocrat Entrepreneur with over 4 decades of experience

Vast Experience in Foreign Collaboration & wide global contacts

B.E (Electrical) with over 2 decades of experience

Responsible for Production, Planning, Inventory Management, Maintenance & General Administration

D. Rajeshkumar Joint Managing Director

D. Govindaraj Sr. Manager-Corp. Accounts & Projects

Electrical Engineer, India; Postgraduate in Business Management, US

Masters in Commerce, DLL and DTL with over 3 decades of experience

JMD of Company - responsible for driving the vision of Company

Responsible for project finance and corporate accounts

P. Sivakumar A AVP – Marketing Corporate

R Karunakaran GM - PR & GST

Bachelors in Engineering with over 3 decades of experience

Responsible for Sales & Marketing division

BSc, Diploma in Marketing Management with more than 3 decades of experience

Responsible for GST and Public Relations of Company

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

Copper Products

 Wires & Cables    

Flexible Bus Bars Enamelled Wires Bunched Conductors Tinned Copper Wires

Building Electrical Products

Energy Management products

 Modular Switches  Wires & Cables  MCB’s 

Changeovers

 

Energy Savers Street Light Controllers

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

Key Strengths

In-house manufacturing facilities with process capabilities ensures better product development and customization

Well developed R&D enables continual product innovation

Complete Backward Integration

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

Wide Product Suite

Wide Distribution Network

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

Strong Customer Relationships

Advanced Engineering Capabilities

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

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

Six Manufacturing facilities...

UNIT I

UNIT 2

UNIT 3

UNIT 4

UNIT 5

Hosur Plant

Rotary Switch

Toroidal Transformers

Wiring Accessories

Wires & Cables

Contactors & Relays

Isolators (Dis-connectors)

Panel Assembly

Terminals

Lighting Energy Savers

Wiring Ducts

Automatic Meter Reading

Three Phase Dry Type Transformers

MPCB

Wire Harness

3 PH Transformers

Flexible Bus Bars

Bunched Conductors

Tinned Wires

Enamelled Copper Wires

Fine Enamelled Copper Wires

Polyester Coated Winding wires

Wire Harnesses

Toroidal Transformers

...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 room facility for manufacturing and servicing of Moulds and press tools

– – – – –

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

...And a strong R&D team

R&D expenses (Rs crore)



In-house R&D Center

− More than 35 engineers

− Recognized by Department of Science, Govt of India

10.37

10.04

9.07



Patented Rotary switches

Six patents in process

12.00

8.50

7.75

4.27

2.50

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

− 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

Continual focus on product innovation

Internationally certified

ISO 9001

ISO 14001

CE Certification

ISO 18001

UL Certification

CB certification

RoHS

Intertek Semko approval

CSA Certification

... Across entire product portfolio

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

Wide Distribution Network

Direct network across 50 countries

International



Direct network across 50 countries 

23% of sales from exports (FY22) 40 international distributors Plans to expand in US, Africa and Middle east



Domestic



than

Tie up with L&T – access to more 350 dealers in India for Direct Modular Switches – 50 stockists in 4 southern & western states

network

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

Acquired Kaycee Industries for new product development, enter new ventures and leverage brand & distribution network

Formed JV’s with Kostad Steuerungsbau GmbH & EMarch LLP to enter EV market

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

ESG Initiatives

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

Environment

Increasing green cover around all plants in and around the manufacturing facilities

Partner in EV Ecosystem to manufacture parts of environmentally friendly transportation

Continues to contribute towards skill development among the local population

Recruitment of rural youth for local sales operations

Social

Contribution for 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

Governance

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

ESG Initiatives - Carbon Emission by Scope

Scope 1  All Fossil fuels used in factories, such as diesel for backup power and fuels used in Cars, transport & fleet vehicles

Scope 2   Also the avoidable emissions are calculated by the use of Renewable power by own renewable sources as well as purchased renewable sources

Electricity consumed at all factories and offices of Salzer owned facilities

Details

Base Yr - 2019

Recent Yr - 2022

Scope 1 (Tons of Co2)

Scope 2 (Tons of Co2)

Turnover INR Cr

Scope 1+2 (Tons of Co2)

123

8357

559

8480

191

4217

783

4408

Intensity

Delta

0.000001517

0.000000563

-63%

Delta

55%

-50%

40%

-48%

Scope 1+2 (Tons of Co2)

8,480

- 48 %

4,408

Base Yr.2019

Recent Yr.2022



2019 was considered the Base year for calculation. 2020 & 2021 was not considered as it was a year with partial shutdowns due to Pandemic

The Direct Greenhouse Gas (GHG) emission from facilities we operate (scope 1) has increased from 123 tons of Co2 to 191 tons of Co2. The increase over the last two years is due to higher activities due to increased turnover

The indirect GHG emissions from Energy consumption (Scope 2) was calculated 10537 tons of Carbon. However, the offset due to Generation & Purchase of Renewable Power was at 6321 tons of Co2. Hence the Net Carbon Emission due to energy Consumption is at 4217 tons of Co2. At total reduction of 50% compared to 2019

Scope 1 & 2 put together there is a Net reduction of 48% in carbon emissions from 8480 tons of Co2 to 4408 tons of Co2

Thank You

For further information, please contact:

Salzer Electronics Ltd.

Mr. Murugesh

murugesan@salzergroup.com

www.salzergroup.net

Adfactorspr Pvt. Ltd.

Ms. Savli Mangle

savli.mangle@Adfactorspr.com

Mr. Rupesh Rege

Rupesh.rege@Adfactorspr.com

www.adfactorspr.com

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