Salzer Electronics Limited (517059) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 and FY '21 earnings conference call of Salzer Electronics Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Limited. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and thank you all for joining our earnings call to discuss the audited financial performance for the fourth quarter and the full financial year ended March 31, 2021. I have with me Mr. Baskarasubramanian, Director, Corporate Affairs and Company Secretary; Mr. Murugesh, Assistant Company Secretary; Savli Mangle and Rahul Trivedi from Bridge Investor Relations. We have shared our results update presentation, and I hope you all must have received it and gone through the same. Before we discuss the financial performance of the last quarter and the financial year, I would like to share the recent developments and market scenarios with you. As you are all aware, the COVID-19 pandemic wreaked havoc across industries during the initial months of this year, and its impact still continues to be felt as the second wave continues. Even in such trying times, Salzer has shown tremendous resilience and demonstrated a decent performance. The domestic dealers and retail market is showing signs of recovery from the COVID levels, which reflects in our Switchgear and Building segment business, where sales are picking up pace. We are hopeful that in the new financial year, demand for these products will continue to gain momentum. Despite the sluggish period, we have been able to surpass the last year's quarterly performance for Industrial Switchgears, which gives us an upbeat view for the coming year. Moreover, the Wires & Cables division has seen a very strong demand, which has helped us achieve higher volumes in the quarter as well as the full year. Prices of raw materials, such as copper, plastic, steel and every other material have continued to rise through this quarter. We have been able to pass on the price increase in some of the product lines. However, the margins have been impacted to some extent due to a lag in passing on the price increase to our customers. Our export markets are showing signs of strong recovery, with substantial demand coming in. Export revenue has grown this year and even more so in the last quarter. As the industry reopens fully, our growing export market will complement the domestic market to help us grow at a faster rate giving an optimistic view for the next financial year. The near-term market situation is still a little uncertain, given the ongoing second wave of the pandemic and partial lockdowns in various parts of India. But based on the demand we are witnessing as of now, we are optimistic in the medium term, based on the indications from various OEMs and customers and definitely optimistic about profitable growth in the long term. The company is well positioned to cater to any demand from our customers and poised to take up opportunities coming our way. Now coming to our quarterly and annual financial and business performance. We'll first look at the Q4 FY '21 performance. During the fourth quarter, our revenues increased by 43.4% year-on-year to INR 189.7 crores from INR 132.3 crore in the previous corresponding period, mainly on account of rise in sales of wire harness products under the Industrial Switchgear division and a very strong growth in Wire & Cable division. EBITDA for the quarter stood at INR 16.2 crores as compared to INR 14.3 crores in the corresponding previous period, a year-on-year growth of 13% on account of higher sales. Q4 FY '21 EBITDA margin stood at 8.5%. The profit after tax was at INR 7 crores in Q4 FY '21 as against INR 9.1 crores in the corresponding previous period, Q4 FY '20. Now coming to the full year performance. As a result of the nationwide lockdown, the Q1 FY '21 business was impacted which has affected the revenues, EBITDA and PAT for the full year. Hence, the results may not be directly comparable with the previous corresponding year. For FY '21, our revenues stood at INR 605.6 crore, up by 6.8% year-on-year. Strong demand for the wire harness products, 3-phase transformers, Wires & Cables business altogether has actually offset the impact of COVID-19 in the first quarter. EBITDA for FY '21 stood at INR 61.8 crore compared to INR 65.2 crore in FY '20, a decline of 5.2%, mainly due to increase in raw material prices. FY '21 EBITDA margins stood at 10.2% as against 11.5% in the previous corresponding period. The reason for the decline is the rise in raw material prices and also higher contribution from the Wire & Cable business. Profit after tax for FY '21 was at INR 20.7 crore as against INR 26.4 crore in the previous corresponding period. The main reason for the decline is during the last financial year, there was a substantial deferred tax write-back of INR 4 crore, which is not there in this year. Moving on to the breakup of revenues as per the business division. The Industrial Switchgear division contributed 41.3% in this quarter and 41.3% for the full year FY '21 as against 45% in the last full year. Our new wire harness product has shown strong sales during the quarter, ever since it was introduced in the market, mainly driven by newly acquired business from various existing OEMs. Wire harness business alone grew at 122% year-on-year in FY '21. Industrial Switchgear division's EBITDA margin percentage stood at 12.6% in Q4 and 14.6% for FY '21. Wire & Cable division contributed 52.5% in this quarter and 52.8% for the full financial year FY '21 as against 47% in the last full year. There has been an overall increase in demand across all sectors for Wire & Cable. Price increase coupled with growth in volumes, led to a 63% year-on-year revenue growth in this division during Q4. This division's EBITDA stood at 6.3% in Q4 and 7.7% for full year FY '21. The Building Products division has contributed 6.2% this quarter and 5.4% in FY '21. This business is only B2C business that we have. Consumer sentiment in the real estate market was relatively muted until now, but we are seeing signs of gradual recovery from this quarter. We expect the trend to improve in the next quarter, which will help us increase our contribution from this segment to the overall revenues. The fourth is the Energy Management division contributing 0.5% to revenues in FY '21. During the quarter, we have not received any new orders from the government as there were no tenders issued during this period. We are hopeful that in the coming quarters, we'll be able to back some projects once the government starts to issue tenders. On the export front, barring temporary fluctuations due to lockdowns, we are seeing steady growth, especially from the U.S. and the European markets. Exports to Americas grew 21.2% and 40.8% year-on-year in this quarter and full year, respectively. Exports to the Middle East and Africa grew 200% year-on-year in this quarter. For the quarter as well as the full year, the export share in the revenue is at 20% as against 18% last year. We also see very strong demand coming in from U.S. and Europe as well as other domestic OEMs. With Q4 being a very good quarter on sales, we expect to maintain the momentum this financial year, too. However, the second wave of the pandemic is impacting the logistics and business operations across India with various regions having partial lockdowns. The situation still remains fluid and uncertain, especially in the domestic market. Here again, we expect things to be under control from Q2 onwards. Our aim is to maintain margins and focus on our working capital cycle and remain competitive to capitalize on the opportunities arising in the future. In the long term, based on the recent budget benefiting the infra sector, we expect CapEx to increase and thereby spur demand for all our products across various industry sectors. Also in addition to strengthening the revenue drivers, improving our ROCE and working capital cycle is our core strategy. On the whole, we remain focused on our agenda to deliver consistent, profitable volume-led growth on a sustainable basis. I thank all the stakeholders of Salzer Electronics for their continued support and faith in our company. This is all from our side. I would once again like to thank everyone of you for your time and attention. We can now take questions.

[Operator Instructions] The first question is from the line of Sudhir Bheda from Right Time Consultancy.

Congrats for good top line growth in Q4, particularly. But sir, disappointment is coming from 2 quarters, like one, we have -- are we sacrificing our margin to capture the business because if we study the peer company, their margins are not affected in Q4. And second disappointment comes from the poor operating cash flow, sir. Because of high receivables, our cash flow from the operation has gone down considerably. So what is your view on that? That's number one question. And sir, second question is, we have kind of a run rate of INR 200 crore -- we have made some INR 200 crores of sales in Q4. So barring first quarter, those kind of run rate will continue in the current year, and the margin guidance for the FY '22, if you can view. Because constantly, we are seeing that our margins are not coming up to the level of 13%, 14%. So your guidance for this. So these are the 2, 3 questions.

Sir, you're right. I think our Q4 sales run rate was very good. There are a couple of reasons for that. One, there was real volume growth in the Switchgear business, which grew around 27% year-on-year. And on the Wire & Cable, I think we grew around 63%, but I would say, out of that around 35% is mainly because of the price increase. So real volume growth will be around 25%. So that's one of the reasons that we had a very high growth in that. So bearing that, I would say Q4 is normally a very good quarter for our industry. So we do not expect the same kind of a run rate of INR 190 crores for the next 3 quarters or 4 quarters. But definitely at least 80% to 90% of this for the first 3 quarters and then growth from there again on the Q4 for FY '21. So that's what we expect for FY '22. On the margin front, there are a couple of things that we have to see. One, extremely high contribution, more than 52%, 53% contribution from Wire & Cable, which has actually brought down or pulled down the blended margins from around 10.5%, 11% to 8.5%. That is one reason. Secondly, the EBITDA margin of switchgear industry itself has dropped for us this quarter from close to around 15%, 15.5% to around 13%. So there's a 2% drop in Q4 on EBITDA margins for Industrial Switchgear projects -- business. So combined, this has actually pulled our EBITDA margins down. Though the absolute numbers, if you see, is around INR 16.5 crores compared to INR 17 crores in Q3. You may be right, I think, some businesses, some peers would have not reduced the EBITDA margins. I'm not sure how that's possible because across the board, all raw materials have increased between 10% and 40% or 50% price, starting September 2020 or October 2020, this price increase started fluctuating going up every month, every month.

Yes...

Yes. I mean, at least copper, we were able to pass on, on the Wire & Cable division with -- with a very slight lag of 15 days, we were able to pass on the price increase in Wire & Cable. But for all other materials in Industrial Switchgear division, the passing on can happen only on a contract basis or at that time. So there's always a lag of 1 or 2 months before we pass on the price increase. So since the price increase was consistently happening since October, November, until March. So we already did 2 price increases in last financial year by about 5% and 7% -- 5% and 5%. We have again done a price increase in June. So with all these price increases, we have covered the entire rise in raw material prices, but there is always a lag. So that is the reason that you see a drop in margin for the Industrial Switchgear division. I'm hopeful that in Q1 FY '22 and Q2 FY '22, we will be back to between 15% and 16% EBITDA margin in Switchgears and 8%, 8.5% in Wire & Cable division, which will again take us back to around 11.5%, 12% levels.

Great. If you can clock 12% margin, it would be good news for investor guys.

And on the operations side, you are right, I think our working capital cycle has again declined compared to what it was around 150, 155 days last year to around 170. Main reason, I think, is, one is the very high sale that happened in the last quarter of last year, which has actually pushed up our debtors by at least 10, 15 days. And also because of various COVID situation, we had to do a little more stocking in the inventories. That has actually pushed our inventories up. But I'm hopeful and confident that we will be able to manage this and bring this down in the coming quarters.

The next question is from the line of [ Chirag Patel from Adinath Shares. ]

Congratulation on back to the normal kind of numbers receiving in this uncertain scenario. I have a few questions, sir. Like in Q4, the numbers which we posted, excluding the export business, what kind of numbers we received due to volume? I mean bifurcation between volume and value terms if you can provide?

On the Industrial Switchgear business, we only had a 5% price increase. So rest is -- we had a 26% growth. So we can say that we had a volume growth of 20%. And similarly, Wire & Cable, we had a 63% growth. But if we leave apart the price increase, we would have still had a volume growth of around 25%.

Okay. So which industry is mainly given orders in this -- both 2 products at domestic level like Wire & Cable and other than real estate, I'm asking?

I think our export business, if you see, as this quarter has also grown, doubled, I would say, 50% growth we have seen. We have -- we had an export revenue of INR 38 crores in this Q4 as against last year's Q4 of around INR 24 crores. So the growth of -- the growth has come from exports as well as local domestic OEMs demand as -- we have seen increasing demand from the domestic OEMs.

Okay, sir. My second question is, what was utilization in Q4 this financial year?

Around close to 70 -- between 70% and 75% in all facilities.

Okay. And what generally we do utilization in normal scenario?

Wire & Cable, we can go up to 90%. And all other industries, we can go up to around 80%.

Okay. So like when you expect this, we will reach to this normal level again? I mean from which quarter you're expecting normal as to back in our production...

I was very hopeful that from Q3, Q4 onwards, it was normal continuing, and we will continue the same trend. But unfortunately, from May 10 onwards, we have lockdown here in Tamil Nadu. And I think the rest of the country was from April, May. Looking at it from now, I think from Q2, we will see some normalization.

Okay, sir. My third question is, as you mentioned in your remarks that like in last 6 months, you done price increases 2 times, right? So...

It is once in Q3 and once in Q4.

Okay, sir. So coming to that, like, is there any further scope to increase price in coming quarters?

We have again done a small increase in June.

Okay. So for Industrial Switchgear or Wire & Cable?

For Industrial Switchgear.

Okay. And as you mentioned that the 15 days lag is there in pass to customer for copper. So like -- and you're also guiding that we will reach to the normal kind of margin from Q2 somewhere? So like for Q1, what kind of margin one should expect? Because the asset utilizations definitely will be down due to plants and all. So like...

Q1, I think, is a little uncertain because almost 45 days have been disrupted because of closure across India and also here in the manufacturing facility. But I'm definitely hopeful that it will be definitely better than -- much, much better than Q1 of FY '21, where we had a major lockdown. So I think on the top line, we should be back to almost normal, but may not be like Q4 of FY '21, but we will definitely be below that, but it will be as good as Q2 of last year or previous to that.

The next question is from the line of Vijay Sarda, an individual investor.

Rajesh, congrats on good set of numbers. Rajesh, I just wanted to understand 2 things on a broader perspective. Given the volatility in copper prices, as you rightly said, you won't be in a position to pass on that, where you've always been able to pass on with the lag. Now with copper now correcting, so will that be a reverse, so we will have a benefit of that coming to us and the price decrease, what has to happen has happened with lag. So will that be a positive once if we see copper price falling from here on? First thing. And second thing, what is the mix we need to consider when we are looking at a broader perspective in terms of cable and wire because wire, as you rightly said, is a single-digit margin, higher single-digit business for us in terms of margin, whereas switchgear is mid-teens kind of margin for us. So what is the mix that we need to consider going forward? Because last quarter, it got skewed much higher on the side of wires because of the price increase and all that. So that is the second thing. Third, I just wanted to understand in the entire of our business, it's -- B2B is how much as a percentage of sales? So except for modular switches, I think most of the business is B2B or in switchgear, we do some B2C also?

Okay. For your first question, I think I was about to tell that, but then you bought up the right point. On the price increase of raw material price increase, normally, I think on copper, on Wire & Cable, we pass it on, on every fortnight. So that's whatever price changes, we keep passing it on. If the price starts declining, again, we have to pass it on, with the same 15-day lag. I think it will keep going like that. So we will not be able to gain much on the Wire & Cable industry. There, we will be only able to gain margins by operational efficiency and increased volumes. But coming to the Industrial Switchgear division, whatever price increase, including copper or plastic, steel, silver, whatever price increase, we have passed on now, whatever is increasing we have passed on. But as you said, when it starts declining, here, I think we will definitely -- we will have an edge of getting a little bit higher margin because we will not reduce to the same extent as the raw materials going to reduce in future. I expect the raw material prices to stabilize. It's already stabilized. It will start declining hopefully after Q2 of this year is what we all expect in the industry. And if it happens, we will definitely have to start passing on the benefit, but not to the same extent of the reduction material. So definitely, as you have rightly pointed out, there will be possibility of increasing the margins when the prices starts going down. Second, on the mix of Industrial Switchgear business and Wire & Cable business, we are right now -- I mean, we have been on an average at 45%, 45%. But this last 2 quarters have been very different because of the substantial price increase of copper. So when copper prices increase, at the same volume, our value of Wire & Cable business goes up, and the share of business actually goes up. So that is how it is discrete the share of business. If -- at copper remaining at the same level, I think the share of business we have to see is between 50% and 42%, 43%. That is how you have to see this share. But we -- from the company's point of view, we don't really look at it that way. Whatever be the share of business between Wire & Cable and Industrial Switchgear, we are focusing on how to maintain a 16% EBITDA on the Industrial Switchgear division and an 8% to 9% EBITDA on the Wire & Cable business and continue to grow on both divisions at 20%, 25% year-on-year. If we are able to do that, I think on the absolute number side, we will be able to easily grow the EBITDA numbers by 20%. Hope I have answered your question, sir.

Yes. Yes. How is the B2B and B2C mix?

On the B2C, as you said, I think the Building Product is one product we have B2C. On the switchgears, we have very little B2C, not a very major portion.

Basically 95% plus business is B2B only?

B2B. Yes. Yes. Correct.

Okay. And last thing on Kaycee, how is the numbers? And how is the overall Kaycee because I think Kaycee performance has also dragged the performance on a consolidated basis, if I consider, because there the EBITDA percentage was lower compared to the overall average of our overall business.

Kaycee, on the top line, it has been flat. Because the COVID impact in Maharashtra has been much worse last year. But on the top line, we have managed to do INR 23 crores as against INR 23.5 crores the previous year. On the profits, I think from previous year of INR 2 crores, it has declined to INR 1.1 crores. So there's a decline of almost INR 1 crore in the profit before tax and also profit after tax. The main reason is, again, an increase in RM costs. Otherwise, operationally, we have been able to reduce all costs, the employee cost, the finance cost, everything, other expenses, everything has been -- we are able to cut down and -- to this. And if the lockdown -- I mean the pandemic issues are over, I think Kaycee will start growing at around, again, 20%, 25%.

The next question is from the line of [ Kiran Naik from Mody Fincap Private Limited. ]

I have 2, 3 questions. Why the promoter holding is below 40%? And secondly -- no, only 1 question.

Sir, I think the promoter holding has always been between 30% and 33%, 34%. So the promoters are looking at increasing the stake. We have been buying in the market in the last financial year. However, there has been some change in shareholding in the recent past. So that is why you see a small decline. However, going forward, in this financial year and next financial year, there is an intention to increase the promoter stake.

The next question is from the line of Raj Kumar B, an individual investor.

Can you hear me?

Not very clearly, but we could.

Yes, we can hear you, but not very clear. So I would you come in the handset mode please.

Can you hear me now?

Yes, sir.

It is better.

Congrats for a good set of numbers. Of course, the top line has increased very well. Sir, I just have a couple of questions. The first one is on the revenue guidance, so you mentioned to the previous participant that the revenue will reduce to somewhere like 80% of your Q4 for the first 3 quarters, and then you'll see some growth in the Q4 of the upcoming year. So is it fair to assume that your top line will be more or less similar to what you've done for the current year and with an EBITDA margin of about 11.5% to 12%?

Our -- I think on the top line, our guidance for FY '22 will be -- we are looking at a 20% growth from the current level. And we can safely assume that our EBITDA margins will be between 11% and 11.5%.

Okay. Okay, sir. That's helpful. And secondly, sir, this Kaycee acquisition, any plans of merging it with Salzer at some point?

As of now, there is no plans to merger Kaycee business.

The next question is from the line of Rohit Ohri from Progressive Shares.

Sir, continuing with the question related to Kaycee, what will be the fate will be going in for a 100% subsidiary by the end of this year? Or will that be postponed to the next financial year?

Sorry? Say that again, sir, your question?

Sir, for Kaycee, will you make it a fully-owned subsidiary by the end of this year? Or will it be pushed to the -- will it be pushed to FY '23?

It is already a subsidiary with Salzer holding 75%. I don't think we will be able to increase the stake beyond this because of the regulations. So kind of -- I would say it's a fully-owned subsidiary already. If we make it 100% owned subsidiary, then we have to delist, and then that's the different decision that you have to take. I don't think there is any plans for it as of now.

Okay. Sir, in terms of the export orders, can you help us to what are the geographies where you are getting the orders from?

On the geography -- okay. This full financial year, if you see, we have grown very well in the Americas. As I said, for full year, the U.S. business has contributed around INR 24 crores, INR 25 crores, which is a 40% growth on year-on-year. And similarly, we have got a lot of new businesses from SEZs and EOUs in India, which has actually grown at 200% compared to last year. This is also a reason why our new businesses like 3-phase transformer and wire harness is growing. I think that is the business that we are supplying to SEZs and EOUs, which we considered it as dollar billing and we consider it as exports. So these 2 areas are growing very well, but we see strong demand coming in from Europe also because Europe was completely under lockdown in Q1 and Q2. However, after Q3, it started picking up, and we see good demand coming in from Europe also going forward.

Sir, can you put a number? Last time, I remember you said somewhere around USD 4 million to USD 5 million is the export that we were looking at with the horizon of 2, 3 years, of course. In the current scenario, does that still exist in terms of the order book?

For FY '21, our total export revenues is at around INR 121 crore compared to INR 97 crore in FY '20. So we definitely see with the current trend, around INR 140 crore, INR 150 crore is what we're looking at for FY '22.

Okay. So these orders are coming from in Eaton, Dublin and Ireland isn't it or from Australia and New Zealand?

Eaton is from U.S. And from Australia, New Zealand, they're different companies. The revenues are yet to start to flow in from Eaton and this Australia and New Zealand business. So Q2 will be the first quarter where we will be seeing revenue from these companies.

And sir, if I can mention the name, the old customers seem to be coming back, and we see that value is showing quite a lot of traction in the market in terms of the electric vehicles and auto vehicles that are there. So any contracts that you would like to share in terms of numbers from earlier?

I didn't get your question. Sir, this is regarding our business of automotive?

Yes.

I don't think we right now have any business that is related to electric vehicle as of now. We are still in the R&D stage. So our business is primarily focused on -- other than electric vehicle, we supply to other automotive companies like Bosch and Value. These are the couple of automotive companies that we are into and we supply to them.

I just mentioned Value. Okay. In terms of the Railway market, and the orders from the Government of India, which should be relieved, I guess, in time to come, would you like to share some data on that in terms of the ICF, RCF or MCF?

Railway business has been very subdued in FY '21 because -- mainly because of the COVID. I think they have pushed all the orders that were given to us. They have not picked up any orders in FY '21. So our business with Railways was -- I don't have the figures, but it's much, much less. I think it declined by more than 70%, 80% compared to the previous year. However, we see that all the demand is being pushed to FY '22, and we expect FY '22 to be a good year for Railways.

Okay. Okay. Sir, anything from the PLI scheme that is favoring us or maybe from the modified EMC schemes?

No, sir, we -- I don't think our products are covered under the PLI scheme.

And in terms of the telecom, we had some relations with Jio and Bharti, Indus Towers, so nothing that is coming through from that horizon as well?

We do supply -- we continue to supply our products and components to telecom industries like Indus Towers, Jio and various other tower companies, but they don't fall under the PLI.

Okay. And sir, last question, in our previous conversations, you said that with the balancing machines in addition of around INR 1.5 crores to INR 2 crores, you could double the capacity from around INR 30-odd crore to INR 50 crore, INR 55-odd crore. So do you see the customer is demanding more? And do you feel that this CapEx, which you had mentioned in the past, would be coming into existence now, to put the revenue to the vision of around INR 1,000 crore in times to come?

We don't envisage any major CapEx in this financial year nor also for next year because we have done enough CapEx in the last few years, and we are now ready to scale up this business, whatever we are doing, INR 1,000 crores, with only minimal maintenance CapEx for the next 2 years.

The next question is from the line [ Sriram Rajaram from Ratnatraya Capital. ]

I have 2 questions. So my first question is basically, you'll sell to ABB, Siemens and Honeywell. So what is the -- basically, what is the end output that's coming out of Honeywell? And what do you supply?

Honeywell, actually, manufactures a lot of products. I'm not sure how -- what products they make. They also make a lot of sensors, panels, things like that. So what we do to them is only components that they use in their panels and in their products and then convert -- they sell into the market.

So what exactly do you supply? You said components used in panels. So is it...

We supply relays, general-purpose relays to their panels. We supply wiring ducts to them. We supply wiring management systems to them.

Okay. Okay. That's helpful, sir. And secondly, you mentioned that our capacity utilization is already 70%, 75%. But you were talking about no major CapEx in the coming years. So I just want to get some sense on that.

Actually, the 70% capacity utilization at -- in the Wire & Cable, we will be able to increase another 20% without doing any CapEx because we can do utilization of close to 90% in Wire & Cable because it's a continuous process business. On the Switchgear business, again, we can go up to around 80%, 82% capacity utilization. After that, as I said, with minimal CapEx, whatever maintenance CapEx we are doing, we will be able to add capacities to our switchgear business, which we have been doing traditionally as and when the demand picks up.

The next question is from the line of [ Neha Jain from Etica Wealth. ]

Sir, I have a couple of questions. First is, could you throw some light on the future expectations from Energy Management division?

Okay. Energy Management division, as I have been saying, for us, has been a government-dependent business. We secured some large orders 4, 5 years ago. And we have successfully completed that, and we have handed it over to the corporation. And we are right now not having any order backlog. Apart from that, we secured some orders through EESL, which halfway through after implementation has actually stalled because of various internal issues of EESL. So -- but for that, I think we don't have any further orders as of now. But we are constantly looking at seeing what other governments are doing and whether we can secure any order. But due to the last 1.5, 2 years -- 1.5 years pandemic that's been happening, most of the governments have not been going on to any new contracts or tenders in the Energy Management side, particularly on the street light side. So we are not foreseeing major business coming in for the Energy Management in FY '22.

Okay. Sir, my next question is regarding the Building segment. So revenue from Building segment has increased during the quarter as well as during the year. So is this due to the revival in the real estate market? And can we continue to see this trend?

Truly speaking, in the Building Electrical segment, we are a much, much smaller player, I would say. And our revenues have been flat compared to FY '20 to FY '21. Because the first 2 quarters, we were not doing very well, and the markets were completely closed. And then it started picking up. Q4 was a very good quarter. So we were able to do almost INR 12 crores of revenues in Q4. Looking at Q4 and looking at the way the markets demand was there, we see definitely the demand coming back to the real estate sector and projects coming back or started to work again. So hopefully, FY '22 in real estate -- for real estate will be good.

Okay. And my last question. Sir, short-term as well as long-term borrowings have increased. So have you taken any new loans?

No, I think on the long-term borrowing, I think this has been almost flat -- no, it has increased. I think what has happened is, I think the new lan cable facility that we have installed, that term loan, whatever we have been availing, has come into the books in this financial year. And on the short term, there's increase because as you see, the debtor days and the inventory days have gone up. So that's an inventory for both one-offs. So that is why the short-term borrowings have shot up.

Okay. Okay, sir. That's it for now.

Which has actually come back to the same March '20 levels in the first quarter of this financial year.

The next question is from the line of Rohit Ohri from Progressive Shares.

Sir, some questions which are related to the future. So in terms of the Salzer branded products, which are for the export, if you can just take us through that? How that part of the business doing?

Sir, say that again?

Salzer branded products for export?

On the export, there are different brands that we're doing. One, if you want percentage share, then I don't have that figure. But we do OEM export. We do exports to Schneiders and the GEs and ABBs, that is 1 export business that we do, where everything goes on Salzer brand that get used in their products and get sold. There is also other business that we do in various European markets that we brand for our distributors. There are large distributors in U.S. and Europe who buy it in their brand and resell it in the market. But there are also smaller distributors in Middle East, in Africa, in Egypt, in East European countries, where people buy in Salzer brand and resell. So if you want a breakup of this, then I don't have it right now, but I'll get it...

Okay. So the dealer distribution business that has started picking up on the export front as well, right?

Yes.

Okay. Sir, second question is related to the patented products. By when can we expect these to start contributing to the revenues?

We already have 1 patented rotary switch that's been -- that we are selling for almost long time, 10, 15 years. Actually, the patent itself is going to end, I think, this year. So that's the long term that we already used. Then the rest of the products also are on different stages of -- I mean, already in the sale at different levels. I don't know how -- what answer you expect. But we are already selling some of the products that we applied for patent. And there are certain products that has not come into sale, but as a technology, we have applied for patent.

Okay, technology. And in terms of the PCB business, that is printed circuit boards, do you wish to venture into that segment also? Or will we be happy with which we have right now?

No, we are not looking at the EMC business. PCB business, we are not looking at it right now.

The next question is from the line of Trisha Shah, an individual investor.

Congratulations on the good set of numbers. I have a couple of questions. Could you please throw some light on the outlook for the next year? And what kind of growth can we expect for the financial year '22?

We are definitely looking very optimistic for FY '22. We see a 20% minimum growth on the top line, which means that we will be at around INR 710 crores to INR 720 crores on the top line and with 11% to 11.5% EBITDA is what we are looking at for FY '22.

Okay. And are there going to be any new -- are there like any new clients lined up in the domestic or overseas market?

There are definitely new clients. Constantly, we are lining up both domestic and export, talking to various people. As I already mentioned in my previous calls, we already secured a few clients in Australia and New Zealand and also in U.S., with whom we have -- we're developing certain products, which all will be in the final stage -- which is already in the final stages, which we will see -- start seeing revenues from Q2 of this financial year.

Okay. And my next question is regarding the Building division. So what is going to be the targeted share of revenue from that division? And also, what is the level of margin that we can expect from this business?

We are looking at, at least 8% to 10% revenue share from this business currently at around 5%. So we're looking at around 8% to 10% in the next year with 10% to 12% EBITDA margin.

The next question is from the line of Ankit, an individual investor.

I have a couple of questions. Sir, if you can see the Switchgear division declined, but wire harness shown the good demand. So how do you see this business in the coming quarter as far as the retail market and domestic dealer is concerned?

Actually, we almost had a flat growth in the Industrial Switchgear business. That -- it is a flat business only because the first quarter we had a negative of almost 50%. So that actually pulls the Industrial Switchgear into the full year performance. Otherwise, for the second half, the Industrial Switchgear business actually was growing at around 20%, 26%. And the wire harness business actually grew at a much higher pace because it's a very potential product. We actually secured some new orders from our existing OEMs. So that is the reason that, that business has been growing -- has doubled this year. Going forward, we see at least 25% to 30% growth in the wire harness business and again a 20%, 25% of the Switchgear business.

Okay. Okay. Okay. Sir, can we see the similar demand in the Wire & Cable division? And what are your estimate with respect to the revenue split?

I think in Q4, as I already mentioned, the Wire & Cable grew at 60%. That's mainly because we had a price increase of 35% and a 25% volume growth. So we will continue to see between 15% and 20% volume growth in Wire & Cable segment. And at this price level or copper price levels, we should expect 50% revenue share from Wire & Cable and 42%, 43% from the Switchgear division.

Okay. Sir, as you mentioned, the real estate is showing the sign of recovery. So in our Building division, do we cater to the same client or targeting the new client also?

We normally -- when we do business in the various business once we get a client, I think we continue to do business with the same client for a long time. At the same time, we also go and secure new clients. That's where we get the growth. But unfortunately, in the last 1 year, we were not able to secure any new clients. So we are constantly looking at getting new clients so that we start growing. So that can happen only when the sector reopens fully and functions at a full capacity. Hopefully, that starts happening in this quarter -- from this quarter onwards.

Okay. Okay. Okay. Sir, my last question. How do you see the demand from micro-small industry in the coming quarters?

So far, it's been very subdued because they have been closed in many areas. I think Industrial Switchgear business that we do to the electrical dealers actually goes into MSMEs. When MSME starts functioning, they start procuring the products and components from the dealers and the sub-dealers. That is when we see our demand going up to the dealer business. So far, it has been very subdued, and we hope that picks up and complements our growth this year. My expectation, I think it will be Q2 before things normalizes if the pandemic starts slowing down.

The next question is from the line of Chirag Patel from Adinath Shares.

Sir, in year 2017 somewhere, we gave a guidance of INR 1,000 crore turnover. So I understand that post that, the economics were also in the slump mode for PCB and slowdown in real estate and other subsectors of economy. So is there any -- like further guidance on that front that any year, you keep in mind that we want to achieve this turnover in...

Actually speaking, FY '21, '22 would have been our year to reach that milestone. But unfortunately, in the last 1.5 -- last year has gone, and even year before that, the economy was not great. So we expect, if everything goes well in FY '22, we should be close to around INR 720 crores, INR 725 crores on a pessimistic scale. Optimistic scale, I think we should be at around INR 750 crores. So I think FY '23, '24 is what we should be looking at INR 1,000 crore target.

Okay. And sir, this FY '23 and FY '24, which you've given just now, like is it more driven by the export business you expecting or domestic...

It will be a combination of growth from all sectors, both from export as well as domestic.

The next question is from the line of Rohit Ohri from Progressive Shares.

So one last question for the quarter under review. So if there was no COVID and considering that we had a normal scenario normal world, what would have been your targeted turnover for this year?

We should have been at least at around INR 670 crores.

The next question is from the line of Raj Kumar B, an individual investor.

Just 1 clarification. This INR 720 crores guidance that you gave, that is for the stand-alone revenue numbers, right? Not...

Yes, all the figures that I was talking about is standalone figures.

Yes. And sir, the second question is, any chance to optimize your finance cost because it's almost 70 percentage of profit where you could dollarize your date or something like that...

We are [indiscernible] with the banks for reduced rate of interest. We have already converted a lot of finances to PCFC and then the rates are down. Apart from that, I think we have to be operationally efficient to bring the debt down so that our interest cost goes down. I think that is the next step for which we have to bring our debtors and inventory days down.

So any guidance you can give for this year, this INR 21 crore number -- do you expect the number to come down or it will stay flat?

We -- I mean, I expect that to stay flat, at least for this year.

The next question is from the line of Chirag Patel from Adinath Shares.

Sir, just 1 clarification I required. Like as you mentioned, you gave guidance for standalone entity, right? So for Kaycee, you answered to someone in previous question that you're expecting a growth of 15% to 20%. Is my understanding correct for Kaycee industry?

Actually, Kaycee should be growing at 25%.

Okay. So did we introduce any product in that because when we acquired this entity, they have only 1 product in which they were like this switch products...

We have already started selling some of Kaycee's products in our channel, and we have started selling some of our products in Kaycee's channel. We already started doing that.

Okay. So this Kaycee industry is participating in export business? Or it could be just in domestic?

It's only domestic, 99% domestic.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Rajesh Doraiswamy for closing comments.

So once again, thank you all for your time and consideration and the interest that you're seeing on an Salzer. Looking forward to interacting with you again for the next quarter's call. Thank you.

Thank you. On behalf of Salzer Electronics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.