Zen Technologies Limited has informed the Exchange about Investor Presentation
ZEN TECHNOLOGIES LIMITED Certified ISO 9001 :2015, ISO 27001 :2013, CMMI ML5 Regd. Office : B-42, Industrial Estate, Sanathnagar, Hyderabad - 500 018, Telangana, India. Phone: +91 40 23813281 /3294/2894/4894 Fax No: +914023813694 Email: info@zentechnologies.com Website: www.zen.in Corporate Identity Number: L72200TG1993PLC015939
To National Stock Exchange oflndia Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Through: NEAPS Symbol/Security ID: ZENTEC
being there ...
Date: 291h January 2022
To BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai- 400001 Through: BSE Listing Centre Security Code: 533339
Dear Sir/Madam,
Sub: Earnings Presentation Q3 FY 2022
Please find attached earnings presentation for the quarter ended 31st December 2021.
The above information is https://www.zentechnologies.com/calls-and-conferences.
also available on the website of the Company:
This is for your kind information and records.
Thanking You.
Works: Plot 36, Hardware Park. Near Shamshabad International Airport, Hyderabad - 501 510, Telangana, India
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ISO 9001 Certified
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Zen Technologies Limited Earnings Presentation Q3FY22 India’s leading defence training solution provider
NSE: ZENTEC BSE: ZENTEC - 533339 BLOOMBERG: ZEN IN REUTERS: ZETE.BO
Inside the Document
01
MANAGEMENT COMMENTARY
02
QUARTERLY HIGHLIGHTS
03
04
ORDER BOOK STATUS
WAY FORWARD
05
06
07
08
FINANCIAL STATEMENT SUMMARY
DISCLAIMER
CONTACT US
ANNEXURES
Management Commentary
ZEN TECHNOLOGIES LIMITED
Q3FY22 Earnings Presentation
01 / 07
Commenting on the results, Mr. Ashok Atluri – Chairman and Managing
Director, said:
“I am pleased to provide you with an update on our performance in Q3FY22. Our revenue streams were primarily driven by AMC’s during the third quarter. AMC’s contributed a total of INR 9.35 crores during the quarter, and in line with our strategic objectives, they have now started to cover the Company's fixed operating costs.
While we suffered a minor setback as a result of the fire incident at our demonstration centre in Hyderabad, we are pleased to report that the previous quarter brought a fresh wave of growth opportunities. Not only did we receive our first export order for ‘Live Simulators’, but our subsidiary Unistring Tech Solutions Private Limited also secured its largest order to date, worth ~ INR 61 crores, from an Indian defence PSU.
I am also pleased to report that we successfully raised ~INR 86.57 crores through the issuance of 10% Compulsorily Convertible Debentures (CCD’s), which the Company intends to prudently invest in research and development and expanding its export footprint.
With the recent framework issued by the Ministry of Defence (MoD) promoting the use of simulators in training the Indian Armed Forces and the changing dynamics of warfare presenting Drone threats, we believe Zen is well positioned to capitalise on the opportunity and chart out a strong growth path for itself.”
Consolidated Quarterly Highlights
All data ₹ in crores
REVENUE FROM OPERATIONS (QOQ)
EBITDA (EXCLUDING OI) (QOQ)
PROFIT AFTER TAX (QOQ)
26.22
15.75
30
25
20
15
10
5
0
0.50
0.00
-0.50
-0.15
-0.09
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
-0.74
-1.80
Q2FY22
Q3FY22
Q2FY22
Q3FY22
Q2FY22
Q3FY22
REVENUE FROM OPERATIONS (YOY)
EBITDA (EXCLUDING OI) (YOY)
PROFIT AFTER TAX (YOY)
26.22
16.57
30.00 27.00 24.00 21.00 18.00 15.00 12.00 9.00 6.00 3.00 0.00
5.50
3.50
1.50
-0.50
-2.50
3.37
-0.09
2.50
1.50
0.50
-0.50
-1.50
-2.50
1.75
-1.80
Q3FY21
Q3FY22
Q3FY21
Q3FY22
Q3FY21
Q3FY22
02 / 07
STANDALONE QUARTERLY HIGHLIGHTS:Q3FY22
Revenue Contribution from Sale of Equipment: ₹ 3.01 crores.
Revenue Contribution from Annual Maintenance Contracts: ₹ 9.35 crores.
Revenue contribution from Exports: N/A
Revenue contribution from Domestic: ₹ 3.01 crores.
R&D spends during the quarter ₹ 2.88 crores.
Order Book Status
03 / 07
ORDER BOOK
+
NEW ORDERS
-
ORDERS EXECUTED
=
TOTAL ORDER BOOK
Order Book as on 1st October, 2021
New Order bagged in Q3FY22
Orders executed in Q3FY22
Total Order Book as on 31st December, 2021
AMC: 113.01 Cr Sale of Equipment: 279.95 Cr
AMC: 18.96 Cr Sale of Equipment: 21.43 Cr
AMC: 9.35 Cr Sale of Equipment: 3.01 Cr
AMC: 122.62 Cr Sale of Equipment: 298.37 Cr
Way forward
INCREASING PREDICTABILITY IN TURNOVER:
We are working towards strategically positioning the business model to reduce lumpiness. The sale of equipment done in the last couple of years will start contributing to the top line in terms of Annual Maintenance Contracts.
04 / 07
EQUIPMENT SALE ORDER WINS:
In the next couple of years the contributions from AMC stream will cover the fixed operating expenses of the business. This will provide stability and predictability to the business operation. The huge order wins of equipment sale can then offer huge operating leverage and boost to our bottom line.
STRONG GOVERNMENT SUPPORT TO ACT AS TAILWIND:
The GOI has formulated several measures along with strict implementation timelines. The governments keen focus on Make in India and Atmanirbhar Bharat campaign has created a conducive environment to make in India for the defence industry. This should act as a strong tailwind going forward
ZEN TECHNOLOGIES LIMITED
Q3FY22 Earnings Presentation
FOCUS ON NEW PRODUCTS: The continuous investments in R&D ensure that the products are technologically advanced and suited for the customer requirements. This coupled with more than 2 decades of track record of delivering value to our customers has not only made us the preferred partner of choice but has also ensured enhanced share of their wallet.
Financial Statement Summary
05 / 07
SUMMARY OF CONSOLIDATED PROFIT & LOSS STATEMENT
All data ₹ in crores (excluding EPS)
Particulars
Revenue from Operations
Other Income
Total Income
Total Operating Expenses
EBITDA (excluding other income)
EBITDA Margins
Interest Cost
Depreciation
Profit Before Tax
Profit After Tax
EPS
Q3FY22
Q2FY22
Q3FY21
26.22
1.77
27.99
26.31
-0.09
-0.34%
0.60
2.45
-1.37
-1.80
-0.16
15.75
0.97
16.72
15.90
-0.15
-0.95%
0.27
1.18
-0.63
-0.74
0.00
16.57
0.73
17.30
13.20
3.37
20.32%
0.17
1.23
2.69
1.75
0.29
Disclaimer
06 / 07
This document which have been prepared by Zen Technologies Limited (the “Company”), have been prepared solely for information purposes and do 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 document 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 Document. This Document 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 Document is expressly excluded.
Certain matters discussed in this Document 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 Document. The Company assumes no obligation to update any forward-looking information contained in this Document. Any forward-looking statements and projections made by third parties included in this Document are not adopted by the Company and the Company is not responsible for such third-party statements and projections.
Let’s connect
07 / 07
HANSRAJ SINGH RAJPUT
DIWAKAR PINGLE
ABHISHEK MEHRA
cosec@zentechnologies.com
dpingle@christensenir.com
abhishek@theinvestmentlab.in
Company Secretary & Compliance Officer
Investor Relations Advisor
Zen Technologies Limited
Christensen Advisory
Investor Relations Advisor The Investment Lab
Annexures
Zen Technologies at a glance
A pioneer in providing state of art Defence Training Solutions for imparting defense training and measuring combat readiness of security forces. The company is engaged in indigenous design, development and manufacturing of sensors and simulators technology based defence training systems.
27+
YEARS OF EXPERIENCE
ORDER BOOK OF
~421
CRORES*
100+
CUSTOMERS SERVED
200+
EMPLOYEES
109
PATENTS FILED
1,000+
CUMULATIVE INSTALLATIONS
*Order book as on 31st December 2021
Business Canvas
SALE OF EQUIPMENT
COMBAT TRAINING CENTRE
ANNUAL MAINTENANCE CONTRACT
•
•
A leader in manufacturing defence training solution with > 95% market share in tank simulators.
Infrequent but large order size with long closing cycles is an inherent characteristic of this segment.
• Huge opportunity size in existing
products with strong focus on R&D for continuous new additions to product basket.
•
Focus on Anti-Drone Simulators
•
A training platform to provide realistic battle experiences by integrating together the entire range of product offerings.
•
•
A recurring revenue stream with superior profitability margins.
Addition in simulator installations base leads to growth in revenues from AMC
• Big ticket size offerings with potential order wins worth USD 25M for single installation.
•
Expected growth in export market on the back of attractive EXIM financing options.
• Growing service revenue from AMC
ensures profitability even in absence and lumpiness of new equipment orders
•
AMC revenues start kicking in after 3 years of equipment installation.
R&D – Our Strong Suit
At Zen, continuous research efforts have resulted in creation of diverse technological solutions and corresponding patent portfolio. Till date the company has filed for more than 109 patents for the pioneering initiatives undertaken, of which 27 have been granted.
~67
CRORES OF INVESTMENTS IN R&D IN LAST 5 YEARS
~17%
OF CUMULATIVE SALES INVESTED IN R&D IN THE LAST 5 YEARS
109
PATENTS FILED
•
•
IP driven business with bill of materials not contributing to more than 10%-25% of the final product cost.
Investments in R&D over the last years has resulted in continuous new product additions. The company has recently come out with Anti-Drone system technology and is making further investments in development of Air Defence Gun Simulators.
• Willing to take short term pain with possibility of long-
term gains.
•
Investments made in R&D written off in P&L
• High investments made in R&D throughout the lifetime of the
company make creates high entry barriers for a new entrant.
New Product Additions
Anti-Drone Systems
Anti-Drone Simulators & Drone Simulators
Integrated Air Defence Combat Simulators
Logistic Drones
• With changing warfare dynamics, drones have become a major threat to any country’s security.
• Authorities across the globe investing in technologies to neutralize this threat.
• Wide applications. Not only restricted to military training.
• A huge opportunity size.
• New products to
contribute significantly to the revenues and profitability in the coming years.
Strategic Priorities
The business model of the company has been strategically positioned to reduce lumpiness and enhance the profitability in the coming years.
Continue to grow the sales of Equipment and expand the product portfolio with strong focus on emerging space Anti-Drone systems.
Scale the AMC business, where the contributions from AMC can take care of the fixed operating expenses.
Develop and expand the international presence and exports with friendly countries.
Continuously improve competitiveness, efficiency and drive operational excellence.
Strong Regulatory Tailwinds
The defence business is a regulated one, which is largely impacted by government policy and budget allocation to the sector. The government’s keen focus on Make in India and Atmanirbhar Bharat campaign has created conducive environment
The Government of India (GOI) has formulated several measures along with strict implementation timelines.
•
Import embargo on 101 items (9 items manufactured by Zen Technologies Limited) to enhance domestic manufacturing.
• Aligning Defence Acquisition Procedure (DAP), 2020, with the long-term goals of
increase in indigenized content under various categories
• Aggressive push towards MAKE -2
•
INR 52,000 crores allocated for equipment procurement from domestic defence industry.
• Exports target of INR 35,000 crores by 2025. Strong support to the industry for exports of equipment to friendly countries by offering attractive financing option through EXIM bank.
• Enhancement of FDI limit to 74% under automatic route.
• Significant reduction in receivables from government.
The confluence of all these factors provides for a strong regulatory tailwind for the Indian defence space.
Investment Merits
ASSET-LIGHT business model
INCREASING SHARE OF AMC which is annuity in nature
STRONG REGULATORY tailwinds
Focus on HIGH VALUE COMPLEX SYSTEMS
INCREASING R & D SPENDS with special emphasis on Anti-Drone systems for armed forces
STRONG BALANCE SHEET