Rajesh Doraiswamy, Jt. Managing Director of the company addressed the call:

Highlights of the call:

In pursuance of business acquisition effective 8 March 2018 the financials results of the company includes 24 days financial operations of the business acquired SMW in audited Fourth quarter as well as FY 2018 results. Hence the Financial results for the Fourth quarter as wail as FY 2018 is not comparable to that extent.

During the 24 days of operations after acquisition, SMW business generated the revenue of Rs. 9.79 crore and made PAT or Rs.7 83 lakh:

In March 2018 quarter net sales rose 14% to Rs 126.75 crore. OPM grew 290 basis points to 12.9% which saw OP rise 46% to Rs 16.41 crore.

PBT grew 30% to Rs 8.74 crore. As taxation jumped 58% to Rs 3.89 crore (tax incidence jumped from 36.5% to 44.5%), PAT grew 13% to Rs 4.85 crore.

In FY 2018 sales rose 14% to Rs 442.77 crore. OPM improved 60 basis points to 12.0% which saw OP grow 21% to Rs 53.28 crore.

PBT grew 19% to Rs 30.94 crore. As taxation grew 25% to Rs 10.92 crore (tax incidence grew from 33.6% to 35.3%), PAT grew 15% to Rs 20.02 crore.

During the year, the company acquired the whole or business undertaking of Salzer Magnet Wires (SMW) on a slump sale basis as a porno concern in terms of the Business Transfer Agreement dated March 08 2018 for lump sum consideration or Rs 20.29 crore which was discharged by means or allotment of 5,00,000 Equity share of rs 10 each at an issue Price of Rs 197/- per snares and 5,30,000 Non cumulative 5% Convertible Preference share of Rs 10 each at an issue Price of Rs 197 per share on preferential basis. Accordingly all the assets and liabilities or SMW have been transferred and vested upon in the books of the Company effective March 08, 2013 without any further obligations.

The company demonstrated good growth in revenues. This growth was mainly driven by demand in switchgear business segment and also from products like wire harness and three phase dry type transformers.

In FY 2018 Industrial Switchgear accounted for 45.01% of total revenues, Buildings Products accounted 4.71%, Wires & Cables for 45.2% and Energy Management accounted for 1.08% of total revenues.

Direct Exports contributed to 17.2% of sales. The increase in exports to USA and Europe has also been another factor contributing to the increased revenues.

EBIDTA for the quarter, has grown and has shown significant improvement in margins of more than 235 basis points. The management believes this is an indication of its focus over the past three quarters, on increasing margins and improving operating efficiencies.

The management expects this margin to sustain and its endeavour will continue to remain on profitable growth and margin improvement.

The company is also making inroads into new industries like solar, elevators and locomotives for its products like three phase transformers and wire harness.

It will continue to focus on adding new, niche and high margin products, enter new geographies and offer total and customised electrical solutions to its existing and new customers.

To aid to this it is constantly on the lookout for any new opportunities for technical associations to strengthen the base for its product offerings.

Sales for FY 2018 grew mainly n the back of revenue increase driven by Industrial Switchgear business.

Industrial switchgear business is seeing good demand due to pickup in the industrial Switchgear segment. New product launched in FY18 gained traction as per expectations.

Margins also improved due to better realization in various switchgear products.

Good traction in Three Phase Transformers - leading to significant contribution from this product

Wire harness business grew 100% in FY 2018.

The company is seeing uptick in in Industrial Switchgear and higher demand in Wire & Cable segments.

Schneider Electric, a global player in energy management and automation, has entered into a definitive agreement with Larsen & Toubro, a leading Indian conglomerate, to buy its electrical & automation business for an all-cash consideration of Rs 14,000 crore. This will have no impact of Salzer's sales to L&T. in fact business with L&T is as usual.

In India, Salzer markets its products through its own distributors and more than 350 local distributors of L&T.

In Wires & Cables business the company does branding for, Crompton Greaves, Texmo, Esab etc.

It hopes to increase Building Product business to account for 10% of sales as it has good order for this division. For instance it has received a good order from a large real estate firm in South India.

The company is on lookout for new opportunity to strengthen the base of Energy Management division.

The Salzer Magnet Wires acquisition should add at least 10% of revenues in FY 2019 so overall the company should grow by 15% to Rs 535 crore. There is constant endeavour to improve OPM and PATM.

Wires & Cables is highly seasonal. It is much higher in Q1 compared to other quarters. FY 2018 saw severe increase in commodity price and so business has grown at a fast rate. The business grew 20% and 15% came from price increase. Volumes have grown 5%.

The company hopes to have sales of Rs 90-100 crore from its Industrial Wires business in next two years from around Rs 30 crore currently. The company faces competition from 5 companies in this segment of which two have manufacturing facilities in India.

The year has not started on a good note as it has seen steep increase in commodities like copper, plastics etc. However, going forward the company hopes of doing good business on the back of new products and rise in demand etc.

The company doubled capacity of Magnet Wires business and will again double the capacity in coming years.

In FY 2019 SMW will add around Rs 45 crore on sales after adjusting for intersegment sales

Loss in Other Income was due to reversal of incomes reported in the first 3 quarters due to Ind AS accounting.

Building products business should double to around 7+% in FY 2019 and it hopes to again double it in FY 20.

Inventory was high due to addition of Rs 20 crore due to acquisition. Debt has also increased by Rs 18 crore due to acquisition.

Wire harnesses business has good business from Delta, GE Automotive etc. The company is working on few big OEMs.

The management hopes to increase OPM by 50 to 100 basis points in next one year.

Industrial Products business should continue to grow 15%.

Wires and Cables business volume should grow 15% but the management was non-committal on value growth due to copper prices.

Wire harnesses business is expected to clock sales of Rs 33 crore in FY 2019 from Rs 18 crore.

Its major raw material is copper and plastics.

It is very difficult to predict copper prices but various reports say that it will go up by 5-7% in FY 2019.