TEJASNETNSE24 January 2019

Tejas Networks Limited has informed the Exchange regarding Investor Presentation

Tejas Networks Limited

January 24, 2019

The Secretary National Stock Exchange of India Ltd Exchange Plaza, C/1, Block G, Bandra Kurla Complex, Bandra (East) Mumbai – 400 051 NSESymbol: TEJASNET

Dear Sir/Madam,

Re: Earnings Call Presentation- Q3 FY 2019

The Secretary BSE Limited P J Towers, Dalal Street, Fort, Mumbai – 400 001 BSE Scrip Code: 540595

Pursuant to Regulation 30 and 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith the earnings presentation on the unaudited Financial Results of the Company for the quarter and nine-months ended December 31, 2018.

The same is available on the website of the Company at www.tejasnetworks.com.

Thanking you,

Yours sincerely

For Tejas Networks Limited

N R Ravikrishnan General Counsel, Chief Compliance Officer & Company Secretary

Tejas Networks Ltd. Earnings Call Presentation (Q3 FY19)

24th Jan, 2019

Software Enabled Transformation

www.tejasnetworks.com

Safe Harbor Statement

Certain statements in this release 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 due to risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully implement our strategy and our growth and expansion plans, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, changes in the laws and regulations that apply to the industry in which the Company operates. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company.

Software Enabled Transformation

Q3 Financial Update

Q3 2019

9M 2019

Revenues (Net)1

176.2 Cr (YoY -22.1%)

610.9 Cr (YoY -4.7%)

EBITDA

36.3 Cr (YoY -28.4%)

143.5 Cr (YoY 0.9%)

Operating Profit

20.2 Cr (YoY -43.2%)

95.0 Cr (YoY 2.5%)

PBT

PAT

24.9 Cr (YoY -35.7%)

112.9 Cr (YoY 14.5%)

32.8 Cr (YoY 9.0%)

111.4 Cr (YoY 43.8%)

1. The reported revenue for 9M 19 are net of GST, however revenues of 9M 18 are inclusive of excise duty (for 3 months) and are not comparable The Revenues (Net) are net of taxes (excise duty/GST) and pass through component sale to our contract manufacturers

Software Enabled Transformation

Global Optical Networking Market is Growing

Global optical networking market to touch $20 billion by 2023

Asia, Middle East, CALA and Africa forecasted to increase investments for 4G as well as 5G Optical spending to be dominated by 100G/>100G WDM and OTN technologies Global wireless backhaul spend to be $10 billion by 2023

Optical backhaul to dominate and radio backhaul will diminish

5G to add another $1.5 Bn capex for optical fronthaul, in addition to backhaul GPON/FTTX revenues to be $7.6 Bn by 2023 dominated by Asia and Africa

Source: Ovum

Global Backhaul Expenditure ($Mn)

Software Enabled Transformation

Indian Optical Networking Market: Strong Growth

India continues to show consistent growth in optical equipment spending

India is the largest consumer of data in the world with 500 M+ Internet users Operators are spending on multi-year network transformation with significant investments in 4G/5G backhaul, xPON, and metro/longhaul optical transmission

India undergoing large-scale adoption of optical fiber for mobile backhaul Fiberization of cell towers expected to increase from 25% in 2018 to 60% by 2023

Home and enterprise broadband connectivity (FTTX) to accelerate

50% of homes to be connected on fixed broadband by 2022 Will contribute to 30% telco revenue share by FY2023

Government-funded projects to increase broadband connectivity

BharatNet Phase-2 (to connect a total of 250,000 Gram Panchayats) and State-led BharatNet++ (to build a state-wide network) are in execution stage Each Gram Panchayat will have 1G/10Gbps connectivity by 2020/22 100 Mbps broadband to every government/academic institution Smart City and video surveillance projects require optical backbone

Software Enabled Transformation

Source: Ovum , ICRA, NDCP

Sales Update

India

International

India Govt. revenues expected to be flat

Strong growth from International-Direct

BharatNet orders (center and state), in which our EPC partners have won tenders have been delayed. Revenues planned for FY20

We continue to win many utility customer projects (Power/Rail, Oil & Gas); this segment will deliver strong growth

Many new optical equipment tenders in pipeline in BSNL/Railtel/PGCIL for FY20 revenues

Strong growth expected from India private Strong run-rate business on existing applications

Won new application (OTN/DWDM) with a major private operator. Rate-contract signed for large multi-year opportunity (impact from FY20)

Well placed for GPON/FTTX opportunities with multiple private telcos in India. Expecting rate- contract closures this quarter

Growth in International-Direct across all regions US-China issues generating significant customer interest Added 4 new customers- 3 in Africa and 1 in America

SE Asia and SAARC

Good repeat orders from existing customers Active engagements for large deals in Malaysia, Vietnam, Sri Lanka and Bangladesh

Africa

Repeat orders from existing customers Well placed for new wins in multiple Tier-1 customers, which are expected to become large run-rate accounts

North America

Mexico: Strong order flow. Well placed for large deals for new applications US: active engagements with over 20 customers; deals taking longer to close. YTD order flow is slow Overall North America expected to deliver growth, despite OEM business shrinking to nominal levels

Software Enabled Transformation

Financials: 9M’19 vs 9M’18

% of Rev

Operating expenses

` cr

% of Rev

EBITDA

` cr

% of Rev

` cr

Revenue (net of taxes and component sales) Revenue (net of taxes)

• Net revenues declined by 4.7% on YoY basis

•

Revenues grew internationally as well as India Pvt; India Government to stay flat due to delays in Bharatnet phase II orders

• Operating expenses (including depreciation) for 9M marginally declined by 0.7% on YoY basis

•

Continued to invest in R&D and Sales, while there was a reduction in other operating expenses

• •

EBIDTA grew by 0.9% on YoY basis and as a % of net revenue increased from 22.2 % to 23.5% primarily on account of better gross margins Profit before tax increased by 14.5% and Profit after tax increased by 43.8% on YoY basis

• •

Primarily due to increase in EBIDTA and other income and deferred tax considered for 9M 19 Since Tejas Israel was officially liquidated in Q3 (provisioned in 2012-13), we will get the tax benefit in the current year

Software Enabled Transformation

Key Financial Indicators

•

The working capital as at Dec 18 has increased to Rs. 549 crore from Rs. 323 crore as on Mar 18

• Working capital days increased by 98 days to 239 days

• DSO increased to 257 days from 135 days as on Mar 18, due to continual delays in collections from one large India Government customer

• While we have partially collected the overdue amounts in Q3, we are targeting to collect a majority of the balance amount in Q4

• DPO increased to 123 days from 99 days as on Mar 18 Inventory days decreased to 76 days from 83 days as • on Mar 18

The reported revenue for 9M 19 are net of GST, and revenues for 9M 18 are inclusive of excise duty (for 3 months) and are not comparable Revenues net of taxes (excise duty/GST) and pass through component sale to our contract manufacturers

1. 2. 3. Cash and cash equivalents, investment in liquid mutual funds, Other Bank balances in current assets, and Borrowings in current liabilities are not considered in computation of Net working capital

Software Enabled Transformation

Amount in ` croreParticulars9M 189M 19VarianceRevenue from operations1665 627 -6%Revenue from operations (Net)2641 611 -5%EBIDTA (before exceptional item)142 143 1%Operating Profit93 95 3%Profit after Tax77 111 44%EPS (Basic) `9.18 12.21 33%EPS (Diluted) `8.63 11.57 34%Cash flow from Operations179 (104) (284cr)Net Worth1,115 1,281 165crBorrowings3 2 (1cr)Net working capital3388 549 (161cr)Net working capital as % of LTM Revenue338.82%65.61%(-2679bps)Target Markets for Tejas Products

High-speed Broadband Access

5G-Ready Fronthaul

Networking

Global 5-yr TAM: $40 Bn

Global 5-yr TAM: $5.8 Bn

High Growth Markets

Metro and Core DWDM Transport

Hyper-scale Packet/OTN DXC

Global 5-yr TAM: $72 Bn

Global 5-yr TAM: $43 Bn

Software Enabled Transformation

Source: Estimates based on Ovum forecasts

Ultra-converged Access and Edge Products (TJ 14xx Family)

Next-gen Mobile Backhaul

PTN, OTN, WDM

CE2.0, IP/MPLS

High-speed Enterprise Services

Circuit Emulation

Network Modernization

Gigabit Fiber Broadband

GPON, NG-PON

Broadband Wireless Access

4G/LTE

5G-ready Platform

Software Enabled Transformation

Legacy TDM Applications

SDH/SONET

5G-ready Fronthaul and Backhaul

Nx100 GE

Small Cell

ONT

Small Cell

ONT

TJ1400 with OLT

Small Cell

ONT

100GE support for High-capacity 5G Backhaul

Gigabit and 10-Gigabit PON for Small Cell Backhaul

5G DU

5G RRU

eCPRI/TSN/OTN/xPON

Multi-protocol support to deliver comprehensive 5G front-haul solutions

Software Enabled Transformation

5G Network Slicing through SDN-capable NMS

Versatile Metro DWDM and OTN Products (TJ 16xx Family)

Optical Backbone

80ch Coherent DWDM

100G/200G Alien Wavelength

Wholesale Bandwidth Services

PTN, CE2.0, IP/MPLS

Next-gen Mobile Backhaul

Data Center Interconnect

OTN, 200/400/600G DWDM

Multilayer Switching & IP Bypass

PTN, OTN, ROADM

Software Enabled Transformation

Hyper-scalable Packet-OTN DXC

Disaggregated Architecture

Corporate Update

Team

758 employees, 53% in R&D

Awards

Selected as “Company of the Year-Telecom Products” by ZEE Business

Patents and Standards

Crossed 100 patent grants (72 International; 28 India) Active participation and contribution to 5G standards through TSDSI (India’s standards body) TSDSI actively engaged with ITU-R to define a new 5G Radio Interface Technology

Software Enabled Transformation

Summary

Optical networking is a large, growing market

Global optical equipment spending will continue to be robust for next few years India will stay one of the fastest growing market for optical equipment- lot of catch-up growth

Our technology focus has resulted in very competitive end-to-end product portfolio

One of the few global players having an end-to-end portfolio from Access to Core Our 5G-ready converged access/aggregation and scalable metro core products winning globally

Our increased focus on India-private and International to reduce dependence on Government tenders

India private is growing strong- opportunities to increase our market-share with new application wins Investments in International-direct business resulting in strong growth across all regions. Many large new customer wins as well as new application wins in the pipeline Geo-political issues are also helping us get more customer interest

Maintaining healthy profitability, while investing for growth

Continuing to invest aggressively in R&D and Sales

Software Enabled Transformation

← All Transcripts TEJASNET Stock Page →

Tejas Networks Limited has informed the Exchange regarding Investor Presentation

Market Movers