Salasar Techno Engineering Ltd

- The company currently has a debt level of around Rs. 235 crores, with a gearing ratio below 1x, indicating a comfortable leverage position. - No new equity fundraising is mentioned. - Regarding future debt, the company plans to take term loans to finance capacity expansions: - For the new galvanizing plant (GI plant) CAPEX, no disbursement has yet been taken; such disbursement is expected in the current financial year. - For the Bhilai plant expansion, the company will apply for a term loan from the bank to finance the CAPEX. - These two term loans relating to capacity enhancement will increase the debt levels going forward. - The rationale behind any current financial actions is mainly tied to expansions rather than equity fundraising or major new debt beyond capacity-related loans.

- New galvanizing plant at Hapur Unit III, UP: - Cost: Rs. 50 crores - Capacity: 96,000 metric tons - Expected commissioning: December 2022 - Machinery orders placed; some machinery being imported and manufactured locally. - Land acquired; construction ongoing. - Heavy steel structure division plant at Bhilai, Chhattisgarh: - Cost: Rs. 60 crores - Capacity: 25,000 metric tons - Expected commissioning: December 2022 - Land acquisition in progress; construction to start in July 2022. - Overall galvanizing capacity to reach ~200,000 metric tons after commissioning new plant. - Additional financial details: - CAPEX at Bhilai increased from Rs. 40 crores to Rs. 60 crores due to redesign. - Debt expected to increase as disbursement for new plant and Bhilai capacity enhancements begin. - Strategic advantage: - Heavy steel plant approved for bullet train project (Ahmedabad-Mumbai), estimated 10,000 tonnes of structures over next couple of years.

- The company targets a growth of at least 30% to 35% in topline (sales/revenue) for the financial year 2022-23. - Order book as of December was close to Rs. 980 crores, with new L1 orders worth Rs. 80 crores expected soon. - Strong order inflows in the heavy steel structure division and steady telecom orders (~Rs. 30-35 crores monthly) indicate sustained demand. - Capacity expansions at Hapur (new galvanizing plant) and Bhilai (new steel plant) expected to be commissioned by December 2022, supporting volume growth. - Government focus on steel capacity expansion and infrastructure projects (including bullet train bridges) provide substantial business opportunities. - Growth prospects in telecom (including anticipated 5G rollout), power transmission, and railway electrification sectors. - The company is selective in bidding tenders to maintain margins and payment terms while capitalizing on growth segments.

- Salasar Techno Engineering is poised for a growth of at least 30-35% in topline for the current financial year (FY23) due to a strong order book and growing opportunities. - Sustainable EBITDA margin is expected to be in the range of 10-11%, with PAT margin around 5%, reflecting long-term profitability. - Capacity expansions, including new galvanizing and steel structure plants (expected operational by December 2022), will support growth and efficiency. - The company expects improved operating efficiency and capacity utilization, which can enhance margins rather than price increases. - Growth drivers include increased telecom infrastructure (5G rollout), power transmission, railway electrification, and heavy steel structures including bullet train projects. - The steel industry’s planned capacity expansion in India up to 300 million tonnes by 2030 presents significant business growth opportunities. - Despite previous volatility due to commodity prices, stabilized steel and zinc prices forecast steadier margins and earnings going forward.

- As of 31st March 2022, Salasar Techno Engineering Limited had an overall order book of Rs. 1,182 crores. - The breakup includes: - Unexecuted EPC orders: Rs. 808 crores. - L1 EPC orders (awaiting LOI): Rs. 130 crores. - Manufacturing orders under heavy steel structure division: Rs. 200 crores. - Export orders of telecom towers: Rs. 44 crores. - The heavy steel structure division's unexecuted orders increased from Rs. 163 crores as of 31st December 2021 to Rs. 200 crores as of 31st March 2022. - Telecom tower orders are received on a rolling, site-to-site basis, typically Rs. 30 to 35 crores monthly. - Order inflows for the recent quarter were around Rs. 200 crores, and the company is L1 in additional projects worth Rs. 80 crores as of April-May 2022. - The company expects strong order book growth and selective bidding for better margin projects.