Salzer Electronics Ltd

Growth is never by mere chance; it is always a result of all of us working together

R. DORAISWAMY, Managing Director

Dear Valued Shareholders,

I would like to begin this by sincerely thanking all our stakeholders who have stood with us in these difficult and trying times posing multiple challenges. The COVID-19 calamity, combined with the already recessive global economy, resulted in only minimum growth across all sectors in this particular year.

The past two years have been challenging with the beginning of the Covid pandemic. As variants of the viruses arose, uncertainties and panic continued to be on the rise. However across the world, medical experts strove to identify and fight the problem and with their tireless efforts, the vaccine developed led to a lot of comfort and relief. Vaccination drives helped control it to a large degree and the headwinds finally seem to be waning. With nearly half of India's population fully vaccinated and around two-thirds vaccinated at least once, consumers and businesses are learning to live with the virus, and economic impact should decline with each pandemic wave.

During the year, we have witnessed piecemeal state-level night lockdowns and weekend curfews, the closing of schools, curbs on social events, restaurants and bars and office attendance, while a few states have also imposed restrictions on public transport. There are also signs of voluntary pullbacks by the public. These restrictions have hurt the economy, although much less compared to the past two waves. Slowly the country is coming back on its feet with restrictions being lifted and life coming back to normal. Consumer sentiment has been on the gradual rise and along with it, the slow and steady pickup in demand.

We, at Salzer, proxy play on the burgeoning demand given the strong outlook for electricity generation and related infrastructure development. The demand for electrical components and switchgears is bound to rise due to the replacement of low KVA transmission lines with high KVA lines, electrification of railways, development of industrial corridors, Metro Rail projects and SMART City development.

Our standalone revenue for this fiscal grew 29.39% year-on-year to Rs. 783.63 cr, while EBITDA and PAT stood at Rs. 63.78 cr and Rs. 22.48 cr, respectively. In terms of segmental performance, our Industrial Switchgears segment contributed 50.25% to revenue, while Wires and Cables accounted for 43.23%, with a strong growth. The building products division contributed 6.52% to revenue, mainly due to a muted real estate sector especially in the initial quarters. With a revival in this sector, we can hope to see higher revenues from this division. The Energy management is an order book driven business and revenue was primarily from annual maintenance contracts. The lag in passing on the raw material price increase to the customers, impacted margins during this period. Exports during the year grew, accounting for 20% of our top line. This was mainly from Europe and North America. We continue to focus on our export markets as well, with an aim to add more regions to our purview.

In the post-COVID scenario, we are continually working on being future-ready to be able to capitalize on new opportunities going forward. Our focus has always been on driving sustainable growth and increasing efficiencies across all our business with a clear target of improving our returns on capital employed. The pandemic has brought a lot of new learnings and opportunities for us, and I believe the team and our Company has come out stronger. Looking ahead, our endeavours in the EV space are going on track via our two joint ventures, through which we shall be launching EV chargers and conversion kits. We see this as a high-growth-potential vertical.

About three-four years back, we had projected our top line to cross the Rs. 1,000 cr milestone by FY22 that we were not able to achieve. However, I am happy to share that despite the global pandemic wreaked havoc to the economy and markets, we have still managed to cross the Rs. 800 cr mark this year, which gives us the confidence of that we shall more than cross the Rs. 1,000 cr topline in FY23.

We expect that FY23 will be an important & critical year for Salzer Electronics to improve our performance in this complex, competitive and ever-changing market. We will strive to overcome the impact of circumstances such as the COVID-19 pandemic, economic downturn, increase in raw material prices, and supply chain disruptions, while seeking opportunities and maintaining stability in business operations, the Company is set to explore its full potential to achieve the expected goals.

In line with our strategy, we continue to expand our global footprint with high focus on market penetration and sustain investments in research & development to support progress. We continually strive to identify new avenues of growth and effective utilization of existing resources.

I would like to take this opportunity to thank each member of the Salzer family. I would also like to thank our Clients, Creditors, Banks, Financial Institutions, and other Stakeholders. Their faith in us and support extended makes it easier for us to strive and excel.

I am optimistic about what we can do next in the years ahead. With god's grace, the recent success has given our group a strong platform to build on. I am excited by the heights I know we can reach, not just financially, but also in terms of the difference we can make to communities. We can set new standards in technology, sustainability, and skills development.

But before that, I hope you take the opportunity to enjoy some well-deserved quality time with your family.

We will continue to carry forward the corporate core culture of Salzer Electronics and fully dedicated to growing and developing our business and bringing value to all shareholders and society.

We firmly believe that Salzer's future goals will be achieved.