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

Highlights of the call:

The management was happy that in September 2017 quarter sales grew. This growth was mainly driven by demand in wire & cables business and a good pickup in industrial switch gear business.

Sales grew also because Exports grew in 29% in Q2. Exports grew mainly due to increase in exports to UK & USA.

The company also saw improvement in EBIDTA and margins sequentially of more than 270 basis points.

This is an indication of efforts over the past three quarters, on improving margins and increasing operating efficiencies.

The management expects this trend of margin improvement will continue.

Its endeavor continues to remain on profitable growth and improving margins.

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

The company constantly on the lookout for any new opportunities for technical associations to strengthen the base for product offerings.

Industrial Switchgear accounted for 50% of sales against 47%.

Wire & Cable accounted for 46% of sales against 38%.

Building Segment accounted for 4% of sales against 8%.

Energy management accounted for 0% of sales against 7%.

Revenues grew despite Zero contribution from Energy Management business.

India accounted for 77.4% of sales against 82.4%.

US accounted for 4.6% of sales against 2.5% during the quarter.

Switchgear accounts for 90% of exports.

Fall in EBIDTA for the six months was on account of higher contribution from lower margin business of Wires & Cables in Q1 FY18 especially.

The company has extensive product portfolio across verticals with In-house manufacturing facilities.

The company has strong focus on product development and innovation. It has registered patent for Rotary Switches and currently has 5 product patents in process.

With its own distribution network the company serves local business and globally it exports to 50 countries.

The company has access to L&T's local network through more than 350 distributors.

In-house manufacturing and R&D enables superior customization of products.

The company is amongst few players in India, to offer total & customized electrical solutions

It has own network for modular switches with 50 stockist in 4 southern & western states

The company has direct network across 50 countries with 40 international distributors.

More than 80% components are made in-house.

The company plans to expand direct network in US, Africa and Middle- east.

Future growth will come from growth and expansion of existing product verticals.

It hopes to have better margins through increase sales of high margin products both from existing and new products and increase exports by focusing on fast growing markets of US, Africa and Middle East.

EBITDA margins target is in the range of 11-12% for FY 2018. But it all depends on revenue mix.

It also plans to venture into new project/ product development.

The company hopes to launch new products in Wire Harness & Consoles, DC Load Break Switches and for GE Transportation.

The company is in talks with other states to incorporate energy savers and street light controllers

The present govt is making the country a better investing place. Those efforts saw teething problems in last few quarters.

The management is confident and optimistic of the company's prospects in the changing economic scenario and vast potential that the Indian market offers which appears on the verge of take-off.

Margins were best in past 4 quarters and the management expects the improvement to continue.

Revenue from operations (net off excise duty) in Q2 FY18 was Rs 100.7 crore as against Rs 92.5 crore, up 9.1%.

Exports accounted for 23% and grew 29%.

For the six months revenue from operations (net off excise duty) stood at Rs 205.3 crore against Rs 182.5 crore, up 12.5%.

Exports contributed to 18% of total revenues and grew 11%.

It is the largest manufacturer of CAM Operated Rotary switches & Wire Ducts in India, with a market share of 25% & 20% respectively.

Switchgear is seeing early signs of revival and the company has received good inquiries from large OEMs.

The company is focusing on more value added products.

Building products is the only segment it has which is B2C. This business is expected to grow to 10% of sales in 2-3 years. This segment has given the company new opportunities in the real estate sector where it has got some annual contracts with major builders like Sobha Developers, Purvankara, Kumar builders etc. This business accounted for 4% during the quarter and same for the six months.

Energy management business is expected to have sales of around Rs 10.75 crore sin second half.

GST for the company was 28% which is now reduced to 18%.

Salzer Board approved proposal to acquire Salzer Magnet Wires Limited. Salzer Magnet Wires offers wide range of enamel coated Copper wires suitable for winding application in Transformers, Motors, Alternators, Contactors, Relays and Auto electrical.

The acquisition will be volume, revenue & EPS accretive. The proposed increase in Capital towards acquisition will be 10.30 lakhs shares (on a fully converted basis issued at Rs 197 as per SEBI rule for pricing).

This acquisition will enable it to better leverage on pricing with suppliers, it will also bring in operational synergies helping it grow profitably. This will also expand customer base and will be able to offer total and complete electrical solutions to a wider set of customers that will enable the company to increase and strengthen its market penetration in India and over time, target offering new products globally as well.

The business of Salzer Magnet Wires has grown at a CAGR of 20% since the inception of the company in 2008.

The acquisition will immediately add Rs 60 crore to sales of Salzer in 2018 with an incremental growth of 20-25% in next 5 years.

In six months sales of Salzer Magnet Wires was Rs 37 crore and the company is expected to do sale of Rs 70 crore in FY 2018.

The acquisition will bring cost efficiency and the company will get benefit of 1-2% in pricing terms.