TEJASNETNSE25 July 2019

Tejas Networks Limited has informed the Exchange regarding Investor Presentation

Tejas Networks Limited

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

July 25, 2019

Dear Sir/Madam,

Re: Earnings Call Presentation- Q1 FY 20

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 ended June 30, 2019.

The above information is also being made available on the website of the Company at www.tejasnetworks.com.

Kindly take the above information on record and acknowledge.

Thanking you,

Yours sincerely

For Tejas Networks Limited

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

TEJAS NETWORKS LTD EARNINGS CALL PRESENTATION Q1FY20

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.

Q1FY20: Key Updates

• Financial Update

• Net Revenues: ₹ 156.6 cr • PBT: ₹ 10.2 cr , PAT: ₹ 5.9 cr • Working capital increased, primarily due to higher DSO • Order Book: ₹ 426 cr

•

India Update

• Strong growth in India Private • Government business declined to 15% of total (55% in FY19); Expected to pickup in 2H

•

International Update

• Strong pipeline of customer engagements; 3 new customers signed up in Q1 • Won rate contract with Tier-1, Pan-African operator for wholesale bandwidth application • Hired US Sales head- Paul Harrison (industry veteran with 35 years of experience)

• Continued focus on R&D to create differentiated products

• 349 global patents; 288 semiconductor IPs

• Awards

• Tejas GPON OLT/ONT won “National Technology Award” by Technology Development Board,

Department of Science and Technology, Government of India

• Finalist at 2019 Leading Lights Award, USA for Most Innovative Telecoms Product • UAE Business Award for “Best Global Optical & Data Networking Provider in the MEA region”

Financial Update

Revenues (Net)1

156.6 Cr (YoY -32.5%)

876.7 Cr (YoY 18.5%)

Q1 2020 (₹)

FY 2019 (₹)

EBIT

PBT

PAT

EPS

6.6 Cr (YoY -85.4%)

130.3 Cr (YoY 42.3%)

10.2 Cr (YoY -80.2%)

150.0 Cr (YoY 41.5%)

5.9 Cr (YoY -87.0%)

147.2 Cr (YoY 38.2%)

0.64 (YoY -87.2%)

16.13 (YoY 30.0%)

1. The Revenues (Net) are net of taxes (excise duty/GST) and pass through component sale to our contract manufacturers

Key Financial Indicators

Particulars

Q4 19

Q1 20

Variance

Amount in ₹ crore

Cash flow from Operations for the period

Net Worth

Borrowings

Net working capital1

Net working capital as % of LTM Revenue1

(122)

(145)

1,320

1,326

581

725

56.54%

77.40%

(144)

• Our working capital increased by ₹ 144 cr (77 days), on account of higher DSO and higher inventory. We expect to reduce our working capital levels by end of Q2.

• DSO increased to 284 days from 236 days (as on Mar 19), due to continual delays from India Government customers and higher revenue in the last month of previous quarter Inventory days increased to 87 from 64 days (as on Mar 19), in anticipation of customer orders, which got delayed.

•

• We are a practically debt-free company, with cash and cash

equivalents (incl. mutual fund investments) of ₹ 231 cr

1. 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

Our Medium-term Strategy

Leverage incumbency in India to benefit from pent-up demand for broadband and data; increase depth in India-private accounts so as to reduce dependence on lumpy, India-Govt business

Increase international sales in Africa, S. East Asia and America, to reach 50% of overall revenues

Continue to invest in R&D to maintain our product differentiation & expand our portfolio to increase our addressable market

Continue to deliver strong financial performance- maintain profitable growth and improve working capital efficiency

Macro trends driving Data Growth and our Business

Internet of Things

VPN

VOIP

2022 Total Traffic

4.8 ZB/Yr

Compliance Driven Corporate Back-ups

Cloud Services

On-Demand HD Video

Social Networking

Video and Mobile Web

1.5 ZB/yr

2017 Total Traffic

Source: Cisco VNI Forecast, 2017-2022

Business Drivers- Data demand continues to grow

FIXED BROADBAND

4G, 5G & IOT

CLOUD, DATA CENTER

Multi-gigabit Access on Optical Fiber (FTTX) and Broadband Wireless (WTTX)

Network Densification and Fiberization driving growth in Metro Networks

Demand for Massively Scalable DWDM Networks with Multi-terabit Switching

Revenue By Segments

India-Pvt + International contributed to 85% of total

International expected to show strong growth during the FY BSNL/BBNL business will be lumpy- exp. to pick up during 2H

Focus is to increase run-rate business

Sales Update: India

Private

 Telcos making aggressive

investments in optical capex  Upgrading their networks to

handle data growth; increased tower fiberization

 Large scale rollout of FTTX network planned to address home and enterprise broadband needs

 We are expanding wallet share through new application wins

 FTTx based on GPON  Metro capacity upgrades: on

OTN/DWDM

 Enterprise data services

Government- Critical Infra.

Government- Telco & USO

 Dominant market share in this

sector with a strong track record  Strong product fit- we seamlessly

modernize legacy networks

 Preference to Make in India (PMI) as well as security-sensitivity, benefits domestic manufacturers  We see steady run-rate business

across large number of customers in FY20

 USOF funds to be deployed

for rapidly completing BharatNet-2 by March 2020  DoT targeting 5M/10M public WiFi hotspots by 2020/2022

 Favorable policies such as Preference to Make in India (PMI) and NDCP 2018, for domestic companies

 Government keen to develop and nurture a domestic R&D driven, 5G ecosystem

 Revenues from this segment will continue to be lumpy. Expect to pick up in 2HFY20

Sales Update: International

South/SE Asia

Africa/Middle East

USA/Mexico

 Emerging as a credible

 Strong customer references in

 In USA, we expect new

alternative for customers looking to diversify their suppliers  Strong product-fit for market:

 Ultra-converged platform

integrating FTTx, WTTx, PTN and OTN in one shelf

 Universal backhaul from 2G/3G

to 4G/5G

 Continuing to increase regional

sales investments

 Focus on Malaysia,

Bangladesh, Sri Lanka, Singapore, Vietnam  Good customer traction and

active engagement should result in a strong YoY growth in FY20

the region

 Local presence in South Africa, Kenya, Nigeria, Dubai, Algeria, Oman

 Applications where we are

winning:

 Alien wavelength: 100G/200G interoperable with multiple, existing DWDM vendors  Ultra-converged broadband

access/edge

 Good customer funnel and

engagements with multiple pan- African, Tier-1 operators should result in a strong YoY growth in FY20

customer wins and strong revenue growth, based on active customer engagements with Tier-2/3 operators

 Added an industry veteran to

lead US sales

 Mexico shows strong growth with business from existing customers incl. a Tier-1  Strong traction for niche

solutions in the area of Network Modernization, GPON, Rural Broadband

 OEM business is unlikely to

grow much in future

Technology Focus on Access/Aggregation/Metro

Optical/Ethernet Aggregation (USD $Billion)

Fixed Wireless Access (USD $Billion)

2023

2019

Fiber-to-the-Home (GPON) (USD $Billion)

4.5%

7.6

15%

3.2

1.8

2019

2023 Access & Metro DWDM (USD $Billion)

7.5%

11.4

Source: Ovum and Company Estimates

2018

6.1

2023

2019

8.5

2023

End-to-End Product Portfolio Terabits

Multi-terabit Disaggregated PTN/OTN Products

CORE

METRO

TJ1600S

TJ1600I

TJ1600S

Compact and Scalable Metro WDM/OTN Products

TJ1600-2

Nx100G/200G/400G/600G

TJ1600-6

TJ1600-11

Ultra-converged Access/Edge Products

ACCESS

TJ1400-7

GPON

LTE

Ethernet

Nx10G/100G

TJ1400-3

TJ1400-18

N M S

S D N C O N T R O L L E R

TejNMS

Network Applications: Where we win

MOBILE BACKHAUL Converged Backhaul for

2G/3G to 4G/5G

5G-ready fronthaul

WHOLESALE SERVICES OTN/PTN Cross-connects Proven 100G/100G+ Alien Wave Solution

ENTERPRISE SERVICES Guaranteed QoS Support for Low-latency Services

KEY DIFFERENTIATORS

BROADBAND ACCESS Ultra-converged Access integrating FTTx and WTTx

UTILITIES Seamless transition from TDM to Packet; Integrated solution for SCADA & Teleprotection

NETWORK MODERNIZATION

Dense Circuit Emulation

Flexible SDH/SONET products

Key Takeaways

• Fundamental drivers for our business continue to be strong- data growth, broadband, 5G, cloud

services and fiberization are driving optical investments

• Our focus is to increase our run-rate customer business (India Private and International) so as to

reduce dependence on the lumpy, India-government tender business

India Private + International grew well and contributed to 85% in Q1 (versus 45% during FY19)

• India • • New applications wins driving growth in India-private accounts • Critical Infrastructure business (Power, Rail, Oil & Gas, defense) continues to be on a good run-rate trend •

India-Government (BSNL/BBNL) business is lumpy- expect to pick up during 2H-FY20

• International

• Our consistent focus and sales investments in International-Direct has resulted in strong deal pipeline • Each of the 3 regions (South/SE Asia, Africa/Mid-east and America) expected to deliver robust growth in FY20, based on existing wins

and new customer engagements

• Medium term goal is to have international contribute to 50% of total business • Hired a strong sales leader for the US market

• Sustained R&D investments expanding our addressable market and competitiveness

• We continue to invest aggressively in R&D and IPR creation- 349 patents and 288 semiconductor IPs • Globally competitive product portfolio for Broadband Access (fiber as well as wireless) and Metro aggregation • Gaining global recognition and international customer success for our products

Thank you!

ir@tejasnetworks.com

Contact - +91(80)41794600

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