ZENTECNSE23 September 2019

Zen Technologies Limited has informed the Exchange regarding Investor Presentation

Zen Technologies Limited

ZEN TECHNOLOGIES LIMITED

Certified ISO 9001:2015, ISO 27001:2013, ISO 14001:2015, CMMI ML5 Regd. Office : B-42, Industrial Estate, Sanathnagar Hyderabad - 500 018, Telangana, India

Phone: +914023813281, Fax No: +914023813694 Email: info@zentechnologies.com Website: www.zen.in Corporate Identity Number: L72200TG1993PLC015939

Date: 23 September 2019

To The Secretary National Stock Exchange of India Ltd., Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Symbol - ZENTEC

being there ...

To The Secretary BSE Limited Phiroz Jeejeebhoy Towers Dalal Street Mumbai- 400001 Scrip Code - 533339

Dear Sir I Madam,

Sub: Corporate Presentation made at the 26'h Annual General Meeting of the company.

With reference to the above mentioned subject, please find enclosed the corporate presentation made at the 26th Annual General Meeting (AGM) of the company held on Saturday, the 21st September, 2019 at I 0.00 a.m. at I I th Floor, Signature Towers, Opp. Botanical Garden, Kondapur, Hyderabad - 500 084, Telangana, India.

This is for your information and record.

Thanking you

Works : Plot 36, Hardware Park, Near Shamshabad International Airport, Hyderabad - 501 510, Telangana, India

ISO 9001 Certified

CMMIDEV /SSM

Exp. 2022-01-30 I Appraisal #2306

Presentation at 26th ANNUAL GENERAL MEETING

Saturday, 21 September 2019 at 10.00 a.m.

Venue: 11th Floor, Signature Towers

Contents

Company Snapshot

Key Milestones

Technocrat Management

Business Model

Competitive Edge

Combat Training Centre

Financial Overview

Growth Drivers

Zen: Snapshot

Defence Training Solution Player

In-house R&D Created Products

Listed On BSE and NSE

Installed Base of more than 1,000 Simulators

Customers - Armed Forces, State Police Forces & Para Military Forces of Various Countries

Zen Product Results in Google Searches

Milestones

Company Incorporation

R&D recognised by Indian Govt

BMP Driving Simulator & BMP Integrated Missile Simulator Launch

Zen Combat Training Centre Launch

Listing on NSE

Tank Simulator Launch

1993

1996

1998

2002

2004

2006

2008

2009

2011

2012

2013

2015

2016

2017

2018

First Sale of Simulator (Zen SATS)

Listing on BSE

Live simulation Launch

UAV Simulator Launch

Introduction of CTSR (Containerised Tubular Shooting Range)

R&D centre commissioned at Hyderabad

Advanced Weapons Simulator (AweSim) Launch

Maheshwaram Unit commissioned

IWTS, ACTS, TZS, MMG & AGL Sims Launch

Large Order - Tank Driver Simulators (Rs 224 Cr)

Large Opportunity Size

Combat Training Centre

 Handful of companies

globally



Large value add to the forces with simulated war- games / large scale joint exercises

 Potential order size of

USD 50-100 million for a single installation

Indian Army training requirement of 8000 Cr

Global addressable market size of more than USD 8 billion

Large installed base with AMCs – significant recurring income

Abundant Export Opportunities

 Operational Preparedness Increasingly Important in Europe, Middle East and Africa

 Cost of Advanced simulators very

prohibitive in Africa and Middle East

 Smaller markets which are ignored by

larger established players

 No ITAR restrictions on Exports

 Growing credibility of Indian Defence Vendors with active government encouragement

Zen’s Business Model

 Pioneering Defence Training Solution Provider

 Balancing the product and services business mix



Exports to further diversify revenue base

 AMCs revenues to hit

a level where company is profitable even in absence of new equipment orders

Revenue Drivers

Simulator Products

 Orders are of large size and have long closing cycles resulting in revenue volatility  First mover advantage with many soldiers having trained on company’s products

Combat Training Centre (CTC)

 Combat Training Centre as a highly advanced & tailored training solution would enable

deeper penetration and longevity of relationship

Annual Maintenance Contract

 

Long term recurring income with high margins Lifecycle of a simulator is 15 years creates lifetime revenue potential of 120% of product sale

 Growing recurring income as simulator installation base increases

Exports

 

Focus on sales to underserved markets of Middle-East and African countries Focus on developed market sales with a sales team in US

Competitive Edge

Focused R&D driven organisation

 R&D Driven prototyping to develop state of

the art training simulators

 Over 90 in-house researchers working on

specialised in-house created domain libraries

 Collaboration with universities to further

augment research capabilities

 R&D spend of over 65 crs in the last 5 years,

~24% of revenues

 Significantly shortened lead time in developing new simulators with a databank of extensive simulation modules

 Filed 92 domestic and global patents applications of which 23 granted

Total IPR Applications

Trade marks

Designs

Patents

Zen Technologies Competitive Edge

Comprehensive product range

 More than 50 simulator and other training

products for varied training needs

 Comprehensive Customised Training solutions with

Combat Training Centre

Credibility with 25-year track record

 Great understanding of Indian defence

procurement process

 Good insight into the potential pipeline and armed

forces pain-points

 Great credibility within the Indian Forces having supplied over 825 simulators over the last 2 decades

 Over 90% of Indian business is from repeat

customers

Best-in-Class Sales Support

 23% of workforce in after sales support



Excellent feedback ratings

 Over 99% Uptime of product installations in AMC

Complete in-house skills

Electronics

Optics

System Engineering

Mechanical

Software

Moving Up The Complexity Pyramid

 Real terrain & equipment  Seamless Laser, Sensors, GPS and Wireless communication Live movement in outdoor environment



 6 axis motion platform (Patented)  Over 100 sensors and actuators  Simulated motion dynamics &

firing dynamics

 Synchronized multi-projector

displays

CTC : Command Training Centre Virtual Simulators

TacSim, ACTS,ITS : Tactical Simulators & Army Combat Training Simulator

DS & CGS : Driving and Crew Gunnery Tank Simulators

BMP-II : Infantry Combat Vehicle Driving Simulator

AWESIM : Advanced Weapons Simulator

 Networked with Geo Specific Terrains    Advanced scoring and analytics

Instrumented (Live Simulation) Live Firing ranges

 Train tank crews for battle

conditions Environmentally controlled

  Containerised multi-crew simulators (Patented)

 Multiple persons training

simultaneously

 Multiple laser sensing system (Patented)

 Single lane system  Simple database

SATS : Small Arms Training Simulator

Simulator Life Cycle

-3 to 0 Years: Presales and product specifications

0-2 Years: New product sale X

8-15 Years: AMC & Upgrades: 0.75X

3-7 Years: AMC ~9% pa of sale 0.45X

Simulator sale of X creates a future revenue potential of 1.2X over the product life

Simulator Product List

Defence

Homeland Security



81mm Mortar Integrated Simulator

 Medium Machine Gun Simulator

Advanced Weapons Simulator

 Multi-Functional Target System

Air-to-Ground Firing Range Scoring System

Anti-Aircraft Air Defence Simulator

Anti-Tank Guided Missile Simulator

Armour Combat Training System

Artillery Forward Observers Simulator

Automatic Grenade Launcher Simulator

BMP II Driving Simulator

BMP II Integrated Missile Simulator

Carrier Mortar Tracked Simulator

Combat Training Centre

Combat Training Simulation System

Containerised Shooting Range

Containerised Tubular Shooting Range

Driver Aptitude Testing System

Driving Training Simulator

Hand Grenade Simulator

Infantry Weapons Training Simulator



Rotary Wing Simulator

ShootEdge®

Shoot House for Live and Simulated Indoor Tactical Training

Small Arms Training Simulator - SL

Smart Target System

Tactical Engagement Simulator (TacSim®)

TacSim® with Indoor Tracking System

Tank Simulators

Tank targets

T72 Crew Gunnery Simulator

T72 Tank Driving Simulator

T72 Tank Gunnery Simulator

T90 Crew Gunnery Simulator

T90 Tank Driving Simulator

T90 Tank Gunnery Simulator

Tank Zeroing System

UAV Mission Simulator

 Master Control Station for Live-Firing

 War Gaming Solutions

Ranges

http://www.zentechnologies.com/training-simulators-equipment-systems.php

81mm Mortar Integrated Simulator

 Master Control Station for Live-

Firing Ranges

Advanced Weapons Simulator

 Medium Machine Gun



Air-to-Ground Firing Range Scoring System

Artillery Forward Observers Simulator

Automatic Grenade Launcher Simulator

Carrier Mortar Tracked Simulator

Combat Training Centre

Containerised Shooting Range

Containerised Tubular Shooting Range

Driver Aptitude Testing System

Driving Training Simulator

Hand Grenade Simulator

Driving



Automated Driving Simulator

Basic Driving Simulator

Bus Driving Simulator

Simulator

 Multi-Functional Target System



Robotic Targets

Rotary Wing Simulator

ShootEdge®

Shoot House for Live and Simulated Indoor Tactical Training

Small Arms Training Simulator - SL

Smart Target System

Tactical Engagement Simulator (TacSim®)

TacSim® with Indoor Tracking System

UAV Mission Simulator

Driving Training Simulator

Driver Aptitude Testing System

Tatra Driving Simulator

WHAT’S THE MOST IMPORTANT QUESTION FOR ARMED FORCES?

Are You Combat Ready?

9/23/2019

Combat Training Centre

Control Center

Virtual Domain

Zen CTC: One Stop Solution for higher Combat Readiness

Immense Cost Saving

Helps overcome challenges to combat training

Combat Readiness: Much higher, Measured and ‘Scored’

Measurement And Recording: Powerful scoring model

Integrated, wholesome combination of all types of training systems: Live, Laser Instrumented, Virtual-Simulators and Traditional

Facilities

Production Division

75,000 Sq. Ft. built up on 8.55 acre land

Hardware Park, Maheshwaram, Hyderabad

Corporate Head Office

27,000 Sq. Ft.

B-42 Industrial Estate, Sanath Nagar, Hyderabad

New R&D centre

25,000 Sq. Ft.

Floor No.11 and 12, Signature Towers, Kondapur, Hyderabad

Financials

Figures in INR Millions

2014

2015

2016

2017

2018

2019

Sales

463.5

785.5

526.1

616.5

389.6

922.2

Sale of Products

432.6

715.3

425.3

486.7

184.3

698.9

Sale of Services

30.9

70.2

100.8

129.8

205.3

223.3

Gross Profit

341.5

542.1

378.7

494.5

323.1

615.6

R&D Expenses

148.55

130.7

142.96

127.24

128.3

122.7

EBITDA Excl R&D

248.2

372.7

239.00

276.94

109.8

348.2

PAT

0.9

157.4

23.2

71.7

2.0

190.5

Total Order Book

40.0

1,190.0

760.0

740.0

3,500.0

2,663.6

AMC Order Book

10.0

790.0

760.0

700.0

1,243.0

1,108.9

Balance Sheet

Figures in INR Millions

2014

2015

2016

2017

2018

2019

Net Worth

985.6

1,110.5

1,124.4

1,196.1

1,184.2

1410.1

Long-Term Borrowings

44.4

36.8

77.6

Short-Term Borrowings

124.8

348.2

295.0

Trade Payables

20.9

31.2

20.9

58.0

21.6

30.7

32.7

88.0

68.3

329.9

34.7

75.2

Fixed Assets

438.7

440.6

431.2

446.4

646.4

627.7

Capital Work-in-Progress

10.4

3.1

147.2

166.9

0.0

4.0

Inventories

98.5

150.2

97.9

79.2

115.5

352.8

Trade Receivables

114.6

594.9

80.6

203.5

226.1

733.5

Cash and Cash equivalents

420.2

376.4

679.7

342.1

118.0

36.8

Financial Details

SALES

Figures in INR Millions

922.2

SALE OF PRODUCT

Figures in INR Millions

715.3

698.9

785.5

463.5

616.5

526.1

389.6

432.6

425.3

486.7

184.3

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

SALE OF SERVICES

Figures in INR Millions

GROSS MARGINS

Figures in INR Millions

205.3

223.3

542.1

494.5

615.6

341.5

378.7

323.1

129.8

100.8

70.2

30.9

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

Financial Details

EBITDA EXCLUDING R&D

Figures in INR Millions

R&D EXPENSES

Figures in INR Millions

372.7

348.2

148.55

142.96

248.2

276.94

239

109.8

130.7

127.24

128.3

122.7

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

OPERATING EXPENSES EXCLUDING R&D

Figures in INR Millions

659.6

157.4

PAT

Figures in INR Millions

190.5

445.9

308.75

341.84

375.76

332.2

71.7

0.9

23.2

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

Financial Details

NETWORTH

Figures in INR Millions

1,410.1

LONG TERM DEBT

Figures in INR Millions

1,110.5

985.6

1,124.4

1,196.1

1,184.2

44.4

36.8

77.6

32.7

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

TOTAL ORDER BOOK

Figures in INR Millions

AMC ORDERBOOK

Figures in INR Millions

3,500.0

2,663.6

1,243.0

1,108.9

790.0

760.0

700.0

1,190.0

760.0

740.0

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

Export Order Status

• 64 Crore Export Order Signed around end-2017 • Execution not yet started due to customer-end documentation delays including opening of L/C

• Process still pending at the customer-end

Change in Exports Approach

• Tremendous Indian Govt Support • Focus on countries friendly to India • Direct approach to various Govts via Indian Embassies • Less Focus on Exports from USA • Scale down operations in USA and, further, ramp up from

India

Regulatory Tailwinds

MAKE II procedure in the DPP 2016



Industry can suo moto come up with solutions which can solve or address the challenges faced by Indian Army

For accepted solutions the Indian armed forces will give a go ahead to develop such a system

Indian armed forces will assure the acquisition of such system as a single vendor

 Developer will have to incur the cost of development

 Government of India’s keen focus on promoting indigenous manufacturing has

created conducive environment to make in India for exports

Make in India

 Offset clauses require global defence players to partner with Indian

manufacturers

 New Category introduced by MoD in DPP 2016:

Indigenously Designed, Developed and Manufactured

 Under IDDM even Single vendor situations are accepted this opens up several

erstwhile closed opportunities.

 Govt. to focus on IP ownership of products; not just low-cost coolie

manufacturing done under licence

Growth Drivers

Domestic

Exports

AMC Annual Maintenance Contracts

 Conducive regulatory regime has opened erstwhile closed single vendor business opportunities

markets through tailored training solution

 Target smaller erstwhile ignored

 AMC CAGR of 38.5% over last 5

years

 Simulator sales leads to a

potential 120% AMC revenue over product lifecycle

 Continued engagement with customers result in potential upsell opportunities.

 Offset clauses require global

 Dedicated marketing team to

defence players to partner with Indian manufacturers

push sales

 Strong support from government

vs approval hurdles in past.

 Products developed under Make II

procedure can further be exported significantly enhancing the opportunity size

 Push will be from India rather

than USA due to active support from Indian Govt.

THANK YOU

D I S C L A I M E R:

C E R T A I N S T A T E M E N T S I N T H IS P R E S E N T A T IO N C O N C E R N IN G O U R F U T U R E G R O W T H P R O S P E C T S A R E F O R W A R D - LO O K IN G S T A T E M E N T S, W H IC H IN V O L V E A N U M B E R O F R IS K S A N D U N C E R T A I N T I E S T H A T C O U L D C A U S E A C T U A L R E S U LT S T O D I F F E R M A T E R I A L L Y FR O M T H O S E IN S U C H F O R W A R D- LO O K IN G S T A T E M E N T S. T H E R IS K S A N D U N C E R T A IN T IE S R E L A T IN G T O T H E S E S T A T E M E N T S I N C L U D E , B U T A R E N O T LIM IT E D T O, R IS K S A N D U N C E R T A IN T IE S R E G A R D IN G F L U C T U A T IO N S IN E A R N IN G S, I N T E N S E C O M P E T IT I O N , P O L IT I C A L IN S T A B I LI T Y A N D G E N E R A L E C O N O M IC C O N D IT IO N S A F FE C T IN G O U R IN D U S T R Y. T H E C O M P A N Y D O E S N O T U N D E R T A K E T O U P D A T E A N Y F O R W A R D- L O O K IN G S T A T E M E N T T H A T M A Y B E M A D E F R O M T IM E T O T IM E B Y O R O N B E H A LF O F T H E C O M P A N Y.

Regd. Office: B-42, Industrial Estate, Sanath Nagar, Hyderabad, Telangana, India – 500018 Phone: +91-40-23812894, 23813294, 23814894, 23813281 Email: info@zentechnologies.com | www.zentechnologies.com

© 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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