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

Highlights of the call:

For the quarter ended March 2017, sales grew 13% to Rs 111.96 crore. OPM fell 20 basis points to 9.5% which saw OP grow 10% to Rs 10.67 crore.

PBT grew 8% to Rs 6.78 crore. As tax provision jumped 37% to Rs 3.22 crore (tax incidence grew from 37.4% to 47.4%), PAT fell 9% to Rs 3.57 crore.

During the quarter exports accounted for 16.6% of total revenues, Industrial Switchgear business was 40.8% of total revenues and grew 12.7%, Buildings Products business accounted for 6.9% of total revenues and grew 82.4%, Wires & cables business accounted for 50.8% of total revenues and grew 28.6%. Energy Management business accounted for 1.6 % of total revenues and it fell of 80.9%.

For FY 2017, sales grew 6% to Rs 384.063 crore. OPM fell 80 basis points to 11.1% which saw OP fall 1% to Rs 42.47 crore.

PBT grew 4% to Rs 25.28 crore. As tax provision grew 14% to Rs 8.18 crore (tax incidence grew from 29.7% to 32.4%), PAT remained unchanged at Rs 17.09 crore.

In FY 2017 Industrial Switchgear business grew 2.7% and accounted for 45.8% of total sales. Building Products business grew 50% and accounted for 6.0% of total revenues. Wires & Cables business grew 32% and accounted for 45.6% of total sales.

In FY 2017 Energy Management business fell 76% and accounted for 2.6% of total revenues. Energy Management business is an order book driven business. The company won an order of Rs 106 crore and a major part of the revenue was booked in FY16 and the balance spread equally in four years. Only the last portion of the order is being invoiced now and in line with this the company booked Rs. 10.2 crore of revenue in FY17 as against Rs 42.0 crore in FY 2016.

The company witnessed a healthy growth in March 2017 quarter across key segments of Industrial Switchgears, Wires & Cables Business and Building Segment despite challenging conditions in the industry.

Overall this revenue growth has been driven by building and wires & cable segment both of them have grown by more than 30% in FY 2017.

The Industrial Switch gear business saw a healthy growth of around 13% in march 2017 quarter despite tepid growth in the industry.

The market conditions in India as well as USA and Europe continue being very challenging, despite this the company has been able to sustain and achieve this growth due to its association with large OEM's.

Going forward the management sees pickup in demand especially because of its association with companies like GE, Schneider, Honeywell, ABB & Siemens.

It is confident that with its products of international standards, consistency in

Quality, timely delivery and some revival in the industry it will be able to achieve much healthier growth going forward in its Industrial Switch gear business.

In Energy Management Business revenues came in purely from Operations & Maintenance.

Energy Management business has a higher margin as compared to other business segments and will continue to give Operations & Maintenance revenues in the coming quarters.

The company has received an letter of intent of Rs 18.7 crore from Energy Efficiency Services Ltd (EESL) for Energy Management business. EESL is a JV company of PSU's of Ministry of Power, Government of India.

Going forward, the company will continue to focus on adding new, niche and high margin products, enter new geography and offer total and customised electrical solutions to its existing and new customers.

The company has started discussions with Saelzer Electric, Germany, the original collaborator. Saelzer Electric is the market leader in Rotary Switches in Germany with significant sales in Germany, UK & US.

Discussion is to explore possibilities of Joint product development and Joint marketing for Rotary Cam Switches world-wide.

Its three phase dry type transformers started commercial production and invoicing. Samples have been submitted to various large OEM's. This product has huge potential in segments like, Renewable Power Industry, Railways & Defence sector.

EBITDA was flat due to increased contribution from lower margin Wires & Cables business and only O&M revenues from Energy Management Business.

The company has a wide distribution network locally and globally, exporting to more than 40 countries.

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

The company has a strong R&D team that focuses on developing and commercializing the technologies of the products, and as a result, can offer total customized electrical solutions to its customers.

In FY 2017 exports accounted for 18% of total revenues.

All its product fall under 17.5%-18% tax slab. GST should not have major impact.

Overall GST will be very positive for the organized industry.

The management is confident of growing at the rate of 20% for next two years.

Even if L&T sells its switchgear business it won't impact Salzer much. Currently L&T accounts for around 30% of its business.