SJS Enterprises Ltd

“SJS Enterprises Limited Q3 & 9M FY2023 Earnings Conference Call” Feb 10, 2023 ANALYST: MR. RAKESH JAIN – AXIS CAPITAL MANAGEMENT: MR. K.A. JOSEPH – MANAGING DIRECTOR MR. SANJAY THAPAR – CEO & EXECUTIVE DIRECTOR MR. MAHENDRA NAREDI – CFO MS. DEVANSHI DHRUVA – HEAD – INVESTOR RELATIONS

SJS Enterprises Limited

SJS Enterprises Limited

offering a wide mix of products, and our lean operations designed to support multi-fold revenue. Our robust performance is demonstrated by our financial numbers, which Sanjay and Mahendra will take you’ll through shortly. I would like to hand over to Sanjay to take you through some of the business and industry highlights. Thank you. Over to you, Sanjay. Sanjay Thapar: Thanks, Joe, and good morning, everyone. So SJS, as you know, is a fast-growing design and aesthetics solution provider, our business model and diversification strategy is unique, and this has enabled us to consistently outperform the underlying industry growth quarter-after-quarter, and this quarter has been no different. Yet again, we outperformed the automotive industry, premiumization theme continues to accelerate very rapidly and we remain confident of our ability to benefit from this mega trend that we see to grow our business over the medium and long-term. So specifically for this quarter, we delivered strong performance in our automotive business that is two-wheelers and passenger vehicles combined, SJS grew by 25% year-on-year, whereas the Industry, the two-wheeler, four- wheeler production growth, was only 4%. Our total revenue for Q3 stood at about INR 106 crores, growing by 21% Y-o-Y. The passenger vehicle business grew by 43% for us, and the two-wheeler business grew by about 14%. SJS generates strong cash flows, and we have a healthy cash and bank balance of INR 143 crores on books as of 31st of December. This cash, of course, will be used for the company's growth and expansion plans. I'm also delighted to share that this quarter, we added new marquee customers to our portfolio, customers like Foxconn and IFB to our already very large client- base, and we hope to build a healthy, long-lasting relationship with them. On the CSR front, the company's initiatives on garbage collection under the Clean Village Initiative Campaign improved lives of close to 3,000 families across 12 villages, and we also added 20 beds to local community center, hospitals here, with 50 patients everyday benefit from this. On the next slide, you see a graph where you have a performance of the industry and how SJS performed. So for quarter ending December '22, the full year industry volumes were flat at about -- just about 0.5% growth over the last year. Whereas SJS two-wheeler values were shot up by 14% for the same period. This superior growth in two-wheeler segment compared to the industry quarter on account of new business wins and market share gains as we increase our share of wallet with key customers. The PV industry volumes grew by 21% Y-o-Y, whereas SJS volume sales grew by 43% on a Y- o-Y basis. We have grown well within our set of PV customers. Our PV journey is still in early stages, and we are bringing new businesses that can help us grow our Q3 FY '22 revenues, and we hope to continue this momentum forward, especially with the introduction of new generation products that are under development at SJS.

SJS Enterprises Limited

Overall, the automotive segment grew by about 4% Y-o-Y, whereas SJS revenues on the Automotive segment grew 25%, surpassing the overall combined industry growth. Our consolidated sales grew by 21% Y-o-Y. This growth was despite slowdown in the consumer durables market and the impact on exports due to this ongoing war in Europe and the other geopolitical challenges like the rising in energy costs, high inflation in the developed nations and the subdued demand both in Europe and North America. For the 9 months, SJS outperform the market by growing at 54% where the industry grew by about 16%, and we have delivered a strong revenue growth about 25% for the first 9 months. On a sequential basis, the combined industry volume from quarter 2 to quarter 3 declined by 17% whereas SJS consolidated auto sales degrowth was limited to about 6%. Despite this impact on export and consumer durables, I really appreciate the efforts of our team to consistently maintain the company's sales momentum in this last quarter of Q3, and our strategy for diversification by industry, segments and products has helped us minimize this impact. Some key enablers of what helped us grow, let me summarize that for you. So, growing mega accounts by consistently within key businesses is an important area of focus for us. We continue to expand our share of wallet with key customers, by offering new products within new businesses. This quarter, we won many new businesses from our customers like Mahindra, Tata Motors, Toyota, Whirlpool, Electrolux, Royal Enfield, and many more. We bagged our first order for optical plastics for a passenger vehicle manufacturer, and we are very positive on executing many such businesses in the future. This quarter, we added leading customers like Foxconn in the two-wheeler electric vehicle space and IFB Industries in the consumer durable sector. We continue to enhance our global presence. We have added sales representatives in Columbia. So now in addition to Brazil, Argentina in Latin America, we also cover Columbia, and this ensures that we have a major presence in the Latin American market. On the next slide, we tell you about how customers reward our efforts. So, Visteon in this quarter, presented us with the best performance award for Extra mile Support with respect to the flawless launch of Scorpio - N. This underscores our very, very strong new product development capability. We also continuously participate in Kaizen Contest, so the SJS team won the prize, third prize at the Kaizen competition organized by ACMA in the Southern Region. We have laid down an ESG framework for the company. ESG essentially comprises of 3 dimensions: Environment, Social and Governance and our responsibilities towards fulfilling our duties in each dimension as a responsible corporate citizen. If anybody would like to understand further details on our ESG initiatives, please feel free to reach out to Devanshi, who heads IR at SJS. At SJS, we believe in inclusive growth, not just for the employees and stakeholders, but also for the community around us. So last quarter, as mentioned, we adopted 7 villages under the Agara Gram Panchayat jurisdiction, Bangalore, close to our factory, as a part of this Swachh Bharat

SJS Enterprises Limited

Abhiyan. This initiative is helping improving health and hygiene conditions in these villages, leading to a better living environment for all the villagers and minimize risk of health hazards. Taking this initiative forward, we today cover 12 villages and 3,000 families benefit from our Clean Village Initiative where we organized garbage collection from door step. We also added 20 beds at the Community Health Centre, as was said earlier. 50 patients benefit from that daily. We also contributed towards infrastructure buildings for schools in our vicinity. I would now like to hand over to Mahendra, our CFO. He will update you on the SJS financial performance for the last quarter, before Joe and I come back to you and talk about the future growth outlook. So over to you, Mahendra. Mahendra Naredi: Thank you, Mr. Thapar. Good morning, everyone. Moving to Slide 12, which talks about our financial performance in detail, I would like to highlight that the Company maintained a strong pace of growth and delivered a robust Q3 FY23 financial performance despite various external challenges. I would like to bring to your notice that revenue and margin for Q3 FY22 have been adjusted for INR 37.6 million of provision for discount on a customer sale created during FY21 that was reversed in December '21, and this resulted in increased sales, EBITDA, PBT and PAT. So, to make a like-to-like comparison, we have excluded that amount and shown our financials for Q3 FY22 and 9M FY22. Considering this, our consolidated revenue grew by 20.8% on Y-o-Y basis to INR 1,063.7 million. This strong revenue growth was on account of overall domestic sales, clocking 22.2% Y-o-Y growth on back of 56.4% Y-o-Y growth in PV and 16.7% in two-wheeler. EBITDA grew 25.3% on Y-o-Y basis to INR 284 million on a margin of 26.1%. Adjusted PAT grew by 29.5% on Y-o-Y basis to INR 157.1 million, delivering a strong margin of 14.8%, thereby maintaining around 15% profit margin consistently quarter after quarter in FY23. On 9-month basis, we are consistently delivering a robust performance and inching closer to achieving our target quarter after quarter. The company clocked 24.6% Y-o-Y growth in revenue boosted by 31.7% Y-o-Y growth in domestic sales. EBITDA grew 31.6% on Y-o-Y basis to INR 896 million with a margin of 26.9% and margin improvement of 117 bps. PAT grew by 40.6% on Y-o-Y basis to INR 518.7 million, or a margin of 15.9% and margin expanded by 181 bps. I am happy to share that all our efforts and initiatives taken post Exotech acquisitions are adding growth and momentum to the consolidated revenue. Exotech achieved FY22 full year revenues in just 9M of FY23, with EBITDA margin improvement to 14% from 12.8% in FY22, which is higher by around 115 bps improvement in 9 months. Overall, SJS delivered a strong ROCE of 33% based on 9M FY23 performance compared to 27% in FY22. Talk about sales, both two-wheeler and passenger vehicle shares of revenue has improved to 47% and 31%, while consumer durables witnessed a decline in revenue share to around 15% due to macroeconomic headwinds, rising inflation that led to subdued demand in Europe and

SJS Enterprises Limited

North American markets. Other segments witnessed a little slowdown in revenue from farm equipment, hence, the share marginally declined. Exports declined due to adverse impact of geopolitical issues and macroeconomic challenges in many regions. Decline in exports also impacted sale of new generation products to a certain extent, and hence, overall contribution of new generation product to revenues is around 11% to 12% for 9M FY23. However, we are confident that despite near-term challenges, our medium-term growth targets for consumer durables and strong focus on export segment remain intact. Moving to the next slide. This slide gives you financial highlights in a snapshot, which we have already discussed in previous slides. As of 31st December '22, SJS has built a comfortable consolidated cash and cash equivalent of around INR 1,431 million. We are a debt free company on a net cash basis. The company generates strong free cash flow, and for the 9 months, we have added INR 478 million to our balance sheets. Our free cash flow to EBITDA for 9M FY23 stands at a healthy rate of 53.4%. As on 31st December '22, we have achieved robust ROCE of 33% and ROE of 15%. I would now like to hand over to Mr. Joseph and Mr. Thapar to talk about our future plans and growth outlook. K.A. Joseph: Thank you, Mahendra. SJS, as you know, is a technology and innovation-driven company with strong in-house design and engineering capabilities. The company has a track record of successful new product development and commercialization, supported by its dedicated product development and R&D teams. The company's strategy is to introduce premium futuristic products that are complex to manufacture and increase our addressable market significantly for automotive and consumer durables industries. For passenger vehicles, we are working on products that will increase our kit value from a current INR 1,200 to INR 1,500 by almost 3 to 4 times. A few examples of these products are: 1. Optical plastics/cover glass with touch screen capability. Recent vehicle launches have demonstrated a huge demand by the end consumer for larger and integrated display screens inside the cars. These are very complex parts. At SJS, we have had an early start in this technology, and we are very hopeful of growing this to become a large part of our product portfolio in the coming years. 2. In-mould decoration integrated with In Mould Electronics for car interiors. 3. We have illuminated emblems and door projector branding and illuminated scuff plates are other examples of our new products under development.

SJS Enterprises Limited

For the two-wheeler industry, we target to increase the kit value from the current INR 300 to INR 500 by around 2 times by highly futuristic products, such as, 1. Cover glass for two-wheeler instrument cluster with touch functionality 2. In Mould Electronic parts with integrated multiple functions in the moulded decorative substrate, especially for EVs. For the consumer appliances, we target to increase the kit value from the current INR 50 to INR 150 by around 3 to 4x with the addition of futuristic products such as: 1. Optical glass with SMI functionality for control panels 2. Printed electronics with the capacitive touch function for consumer appliances again. The opportunity for growth is significant, and the company is confident of achieving this in the near future. With that, I would like to hand over to Sanjay to brief you all on our future outlook. Sanjay Thapar: Thanks, Joe. So quickly moving to Slide 21, which talks about our organic strategy for the medium-term. As you can see, SJS continues to deliver on its promise of strong operational and financial performance. Organically for the first 9 months for FY23, we delivered a strong 25% year-on-year growth, maintaining best-in-class EBITDA margin of 27% and a PAT margin at 16%. We are confident of maintaining a high growth trajectory for our company over the medium-term by gaining new businesses, increasing wallet share with our existing customers, adding new customers, increasing content by adding exciting new products to our portfolio. We expect SJS to continue to outperform the industry growth. Recovery in the consumer durables sector, in export markets and tailwinds of our resurging auto industry will add momentum to our growth trajectory. On the capacity expansion plan at Exotech, with higher customer demand pipeline, we are well on track as is our focus on new technology, product development to meet the futuristic needs of our customers. I now come to the inorganic growth strategy for the company. So over the last 2 years, our company has demonstrated its ability to acquire and integrate and grow acquired businesses. So we acquired Exotech 2 years ago. In the last 2 years, we've doubled revenue, demonstrating ability to cross-sell products across new and existing customers very rapidly. Sales have grown from INR 68 crores in FY21 to about INR 102 crores in FY22. And for the first 9 months, we already achieved full sales of FY22, so we are on track to achieve a great growth in that company this year as well. We expanded EBITDA margins from 12.2% in FY21 to 14% over the last 2 years. And also, we've successfully integrated operations of Exotech with SJS. We have great confidence to acquire and integrate new businesses, and we are currently actively evaluating a few other acquisition proposals that will add value to SJS.

SJS Enterprises Limited

These acquisitions would require additional funds. Therefore, in a proactive manner, the Board has passed an enabling resolution for a fund raise, for an amount not exceeding INR 300 crores. This approval is valid for a year and can help us meet our fund requirement as and when we conclude a suitable acquisition. Any acquisition, I can assure you will be done with a judicious mix of debt and equity, keeping in mind the interest of all stakeholders and the best for the future of the company. I now come to our outlook for FY23. So SJS will continue to outperform the industry in terms of growth. For the first 9 months of FY23, our revenues have grown by 25% despite a very challenging external environment, especially in exports due to the ongoing war in Europe and the subdued sentiment in North America and European markets. We continue to face headwinds for exports in the current quarter as well. We are awaiting recovery here. Considering this, we are moderating our FY23 guidance slightly from 25% revenue growth to about 20% and our PAT growth estimates of 30% we would possibly reach 20% - 25% this year. SJS will continue to maintain best-in-class margins with a very robust cash flow. So despite the rise in the FY23 outlook numbers on some of these external factors, the company is still in a very good shape. We are optimistic about achieving our mid-term guidance from FY23 to FY25. We continue to maintain our target of revenue growth of 25% and a PAT growth of 30%. So with this, we finish the presentation. Then I would open this floor for answering any questions. Thank you. Moderator: The first question is from the line of Deepen Shah an Individual Investor Deepen Shah: I had a couple of questions. Firstly, just related to the business. Just wanted to understand, you are into various products, as have depicted in PBT. If you can just give us some idea on what is the kind of USP which you have when you approach clients for these new products, and what is the competitive scenario in maybe the top 3 or 4 products which you have? Sanjay Thapar: So thank you for your question, Dipen. So fundamentally, our competitive edge really is that we have a seamless design to manufacturing and delivery company. So in terms of the number of technologies that we have under one roof, we are quite unique not only in India, but across the world. So that is a great USP and differentiator if I map competitors in India or overseas, either they are printing companies, they don't do plastic moulding, or they are plastic moulding companies, they don't do printing, or vice versa. There are other technologies like chrome plating assemblies that are required, some special finishing on badges required. So our competitors, because of their focus on a few product areas, are not able to identify or deliver such a vast array. So that's on the technology side. On the manufacturing side, we handled a very large number of SKUs, and we've handled it very successfully, delivering across 22 countries worldwide, and customer lines have never stopped because of us. So we are very strong in terms of our delivery capability, so that also is a differentiator when you talk of competitors.

SJS Enterprises Limited

And if I talk of export competitors in the other markets, our products are batch mode production. So these are labor-intensive parts, and we have a very strong labour arbitrage and so SJS is far more competitive. So that is why we are very excited about growth, and those, I think are the key factors which differentiate us from competitors, both in India and overseas. Devanshi Dhruva: Also, apart from the new products that we introduced, one of the other things is that the amount of SKUs that we are able to handle and the number of products that we have under one roof that we manufacture. We manufacture about 10, 11 products, and we are growing out there as well by introducing new products as well as the number of SKUs we manufacture as well. 6,000 SKUs, and growing there as well. So that sheer complication that is involved in manufacturing these number of SKUs and delivering to all our OEMs on-time, quality products, that itself is one of the bigger challenge, which acts as a barrier for our competitors. Sanjay Thapar: I like to add one more point. The great strength we have is our new product development capability. We have a very strong team. This team is focused only on futuristic products, so that is why we are able to launch these products, wherein one of our very old standing customer awarded us for that last mile support. They appreciate our quality levels to support global volumes. So, I think all in all, we are quite uniquely positioned to support customers in the aesthetic decorator space. Deepen Shah: Sir, just to carry it a bit forward, like once when you go to a new client and pitch for a product, why would it shift from their existing supplier to you? That is the first question. And the second is that when you pitch to an existing customer that you need to gain market share and replace another supplier with your products, why would he do that? Because that obviously is well entrenched with the existing supplier, and the cost arbitrage which we speak about is probably not that much because you contribute maybe INR 300 per vehicle in a two-wheeler and maybe INR 2,000 in a four-wheeler. So why is cost arbitrage that important, when he has to change the whole supplier for just a very small part? K.A. Joseph: So answering your question, so we have a very long-standing relationship with customers. It is not just a transactional thing that we support the part. We are co-developers of parts with them. So for the customers, for new models, we have an insight onto what new model will happen, maybe 1 year or 2 years before the customer launches the vehicle. So we do a like of ideation workshops. We conduct what are called Bling workshops where we say, we offer the customer multiple technology options. So it's not just a part of or he wants a logo. We can offer them a logo in 5 - 7 different technologies. We can do very rapid prototyping and show them the results, what the effect is going to be. And that is the reason why customers like to come to us and not go to other people. So for example, there is a chrome plating business, so company could start with thinking that I want a chrome plated badge, but when he sees 5 options from SJS, he finds that there's a larger variety and we have parts priced at different price points.

SJS Enterprises Limited

So depending on what the requirement is, and that is something that I think we are quite unique in that concept because of this early engagement, as I talked of. And the customers like to have robust suppliers. So they are all financially robust, well-run companies, and there's already consolidation that's happening. So a customer would like to have fewer suppliers buy larger parts, larger quantity of parts from these supplies so we gain from that trend as well. So we don't compete on price. We compete on our capability to differentiate products and add value to the customers' product. Deepen Shah: Okay. And I just wanted some data if you probably could. In what part of the revenue comes from increase in market share? Like you replacing the existing supplier in an old model with your product? And how much comes from new products of the customers, the new launches of the customers? Sanjay Thapar: To be honest, I don't have that breakup with me right now. But I can only say that our out performance of the industry is primarily on increase in wallet share. So customers, I would not like to name specific customers and give you data around that, but new model launches by a very premium motorcycle manufacturer. So we virtually gained the wallet share across all and our revenues have increased quite significantly. So again, as I said, this is confidential. I would not like to name customers. But a large extent, it is because of premiumization and gain of wallet shares. So these are the two significant drivers of growth when we outperform the industry. Moderator: Sir, we request you to kindly return to the question queue as there are several participants waiting their turn. The next question is from the line of Harsh M. from Kriis PMS. Harsh M: Congrats on good set of numbers. I actually had 2 questions. One is more on if you can explain what exact headwinds are we facing in consumer durables? And are we even facing headwinds for our automobile sector as well in case of export, or it's just the CD segment? That is my first question. And then I'll come to my second question. Sanjay Thapar: Okay. So the headwinds are headline news across the world, so everybody reads the same papers. So, the war in Ukraine continues, the sentiment is dampened because inflation is very high, energy costs are spiralling out of control. So sentiment both in Europe and North America, which are very large markets for us, are impacted. The question was that is it only consumer durables or also automotive? So also automotive. For example, we supply a lot of dials to customers across the world and with lower production in Europe and North America that demand has fallen. So overall sentiment is low, and we are hopeful that this demand should come back. But essentially, it is this rising interest rate and a scenario where customers are cutting back on discretionary expenditure in those advanced countries, which is impacting sales in the long-term. But nonetheless, these continue to be very large consuming markets, and we are hopeful that return to growth will come in the near future. So we are just crossing our fingers and watching how it plays out.

SJS Enterprises Limited

SJS Enterprises Limited

SJS Enterprises Limited

raising is a lengthy and time-consuming process, we just thought we should start the process in ahead. So whenever the transaction happens, it happens smoothly. Sanjay Thapar: Expansion at Exotech is an important lever, which we've already gone on record, right? So we see very strong traction. We have doubled the sales in 2 years. We've increased EBITDA margins. So we are extremely bullish, we're looking at talking to large global customers. So for that, we need capacity, like we've done at SJS. The same thing we want to build at Exotech so that we can fully utilize the benefits of scale in that company and fully utilize the cross-selling opportunities that we have with customers that we have large relationships with. Moderator: The next question is from the line of Dhiral from Phillip Capital-PCG. Dhiral: So if I look at your P&L, and particularly the other expense, so as I see our other expense on a Y-o-Y basis has risen sharply by almost 30%. So any one-off line item over there, which has impacted our margins? Sanjay Thapar: So Mahendra will take that call. Mahendra Naredi: Yes. We have a one-off expenses in this quarter in our subsidiary, Exotech. There was a rate amendment request from the customer, which I mean, that has belong to the transaction we have agreed before the acquisition. The details are yet to evaluated, but on a conservative side, we have accounted for, and that is accounted for in our provision for doubtful debt. So that was one item. That's impacting around INR 6 million. Apart from that, all expenses are almost in line. And the percentage rise when we see it compared to the last year, in the last year, we had a one-off income in our revenue, INR 37 million, which I talked about in my commentary. If you see in an adjusted manner, you will find that the cost has gone down. Sanjay Thapar: But overall, just to add 1 more point. So Exotech, we've actually expanded EBITDA margin. So, I think that is the way to look at it. We've grown sales, we’ve doubled sales, as I said earlier, in 2 years. Outlook is very bright. We also expanded margins, so we are on the right track in Exotech, and this is what we'll try to do moving forward, growth and profitability. Dhiral: So this is a onetime expense, sir, or…? Mahendra Naredi: So Dhiral, we are still evaluating. But however, for the 9-month period, we have already factored. So while we're giving the EBITDA of 14% that has already been factored there. But yes, it is under evaluation. Devanshi Dhruva: Yes. So despite factoring in that thing also, at 9 months, we still stand at 14%.

SJS Enterprises Limited

SJS Enterprises Limited

So margins would continue, I mean they would be, as I said, demonstrated increase in margins has happened. And in addition to this, once we get into the export markets, then we should be able to get even more traction and positive upside on the margin front at Exotech. But this expansion in terms of capacity utilization you asked, so we are quite confident that our ROCE here for whatever expansion we're doing will be upwards of 20%, so that is what is our investment thesis of business. Karan Kokane: Understood. And sir, second question is just on the ownership of the company. So if I look at the promoter ownership, there is about a 35% stake, which is being held by a private equity company, and then the promoter is holding around 15% stake. So just wanted to understand how should we think about this 35% stake, which is being held by the private equity firm? So that's my second question. And then I just have one last question after. Sanjay Thapar: Look, so Everstone is a private equity player and at some point will exit, so that is the nature of all PE funds. But essentially, the business is professionally run, so Joe, who is right next to me, is the promoter. This is a business that is very close to his heart. He will continue to hold, and he is very passionate about this new product that he is launching. So maybe you'd like to get it from Joe as the promoter. So Joe? K.A. Joseph: Yes. I think I have repeated this. For me, this is like live here, die here kind of business. So I started with about 35 years back, and I continue to play a leading role, and I'd like to continue as much as possible. So, there is no going back on that part of it at all. Sanjay Thapar: So Joe's family is also committed to the business, so his son has joined the business, so he's not going anywhere. I mean, that's what he is trying to say. Karan Kokane: Okay. Understood. And sir, just one question on exports. So exports, you said that you're feeling a lot of pressure because of demand weakness in North American and European geographies. So just wanted to check if our company can also be a play on the China +1 thing? Because we've seen other auto component players saying that the suppliers from China are facing heat, and that's why they're gaining market share. So is there any scope for us to gain market share? And if China is a big supplier, could you just name a few Chinese suppliers? Sanjay Thapar: Yes, so very good point. So absolutely. So all the supply chains are aligning post-COVID and this war. India is a great beneficiary and in SJS we have copied ourselves into a position that we have won customer's trust. We have a very pro delivery model. We ship across the world both on the supply side and to purchasing and delivery, both the supply chains have been tested during COVID and customers have sent us appreciation letters. So that's a very strong point when I talk to any customer. So supply chains are re-aligning. We have large inquiries from global customers wanting to ship business out of China. In fact, also ship business out of Europe because of this rising energy costs and inflation in those countries, so those companies have lost their, I mean, we are always more competitive than them. But now, the pressure is even more acute.

SJS Enterprises Limited

So, that's the reason why I'm so very optimistic about exports, and it should pick up. So it's hard to say what time when Mr. Putin will decide to end the war and things come back to normal. But fundamentally, it cannot go on, right? So we are already in the worst stage, one year has gone, we've still grown at 20% - 25% growth, despite these external challenges. What we could do at these tough times is focused inwardly and work on improving our operational efficiencies, work on improving rejections, be very prudent with what we do moving forward. So I think we've utilized this challenge very well as the organization, and we are well poised for growth in the mid to long term. Moderator: The next question is from the line of Lokesh Manik from Vallum Capital. Lokesh Manik: Sanjayji, sorry, I joined a little late. So if you can just briefly share on the acquisition of Foxconn as a customer. What are the products that we are supplying to them, the end use of those products and therefore, domestic requirements or for their exports requirements? Sanjay Thapar: It is for the requirement in India. So as you are aware, Foxconn is a global and maybe the largest global assembler of electronic parts. A lot of these displays that are used in both these 2 two- wheeler, especially electric two-wheeler and the 4-wheelers, are all large electronic assemblies. And as I said earlier in my call to the investor community, there is definitely going to be localization that will happen once it reaches critical mass, and that is exactly what has happened. So, we have won this first business, so that's a very important step. We shook hands, the products are under development, and we will get this. So the product we have is an optical plastic part for the 2-wheeler EV. And incidentally, we've also broken ground in the PV industry, where we have the central stack display. So we won our first business again in that business, so that is what products Joe talked about in this presentation. So we have a good manner, we're getting a lot of customer traction on this. Lokesh Manik: And Sanjayji, just a follow-up on this. So have you done any research in terms of that if this product would be cost competitive in the export market versus their existing suppliers also? Sanjay Thapar: Sorry, could you repeat that a little slowly for me? Lokesh Manik: For the same products in the export market for their export requirements in the global market, would we be cost competitive versus other players? Sanjay Thapar: We are again, I would not like to name customers, but as I said earlier. So we've been working on these products for almost 2 to 3 years now. So yes, there is an export market, and we are cost competitive, so that also is a big lever. As we talk, we are knocking on doors all our customers where we have long relationship with. So certainly, they will consider for the export market with us. Moderator: The next question is from the line of Neel Shah from ValueQuest.

SJS Enterprises Limited

SJS Enterprises Limited

Right. And these products, do you have any target set for them as percentage of revenue in medium-term? Devanshi Dhruva: Sorry, could you repeat your question? Neel Shah: So I was saying, do you have any target in mind as to what level do you want to reach as percentage revenue in medium-term? Sanjay Thapar: So my thinking is that we should be at least 25%. And in fact, let's say, 7 years later, it could be almost 70% of our business. So big growth coming into this area. So 20% - 25% is what we can realistically assume over the next 3 to 4 years. Moderator: The next question is from the line of Dhananjay Jain from Brescon Ventures. Dhananjay Jain: I wanted to ask first question on exports. So in export, can you give me a breakdown of realization in terms of Latin America, Vietnam, Thailand and US and Europe, what is the difference in relationship with India, US, Europe and other countries? That is one. Second. What has been historically a percentage of revenue for export in North America, Europe and other countries? Third one I want to know is what time it takes to onboard the OEMs in overseas versus India, what is the process there? How much time it takes? Sanjay Thapar: A lot of questions rolled into one. Let me answer one by one. So first question you asked was what is the share of different geographies for exports, right? If I understood that question right. So as I mentioned -- Yes, Devanshi, go on. Devanshi Dhruva: Yes. In terms of share of export, we've always mentioned that Europe has been one of our larger markets, and that could be somewhere around 30% - 35% of our revenues generally. And this quarter, it's been a little lower than that because of the factors that we already mentioned. USA is another market, which is somewhere about 8% - 10% of our revenue. And Asia is another 30% - 35% of our revenues, balance are other countries. Dhananjay Jain: Okay. Differential realization? Devanshi Dhruva: Sorry? Sanjay Thapar: We don't guide on realization as per geography. So all export markets, primarily our competitors, are different companies. So let's say, whatever margins we earn here, export margins are about 5% higher at an average compared to what margins we have in the normal domestic business that we have. Dhananjay Jain: Okay. And time it takes to onboard OEMs outside India. What is the process for OEM? Sanjay Thapar: Depends on products. So we already have a relationship, for a company like Visteon, we supplied to for many years. There is zero time, it is just they give us a number and specifications, and we start developing the product, it is proven, so there is no challenge there. For some specific

SJS Enterprises Limited

new generation products like these optical plastic parts or the lenses with the special coatings, that could take maybe about 6 to 9 months for them to approve. But these are new technologies. All the legacy products that we have, we don't wait for approval. Specifically for some special export requirement like color matching, et cetera, we do some tests which again is 3 - 4 months testing period. Dhananjay Jain: Okay. And apart from this. Yes. I wanted to know in chrome plating business, what is the growth percentage you are seeing? Are you looking to go into areas, SJS customers as well? Can you bifurcate between cross sell and non-cross sell revenue? Sanjay Thapar: I think we have the last part of your question but let me report to what I heard. Dhananjay Jain: Cross sell and non-cross sell revenue. My question was... Sanjay Thapar: Your question is about cross sell opportunity -- cross sell. Okay. So we increased sales -- we increased sales at chrome plating business by 50% last year. Again, very strong growth as I said we are doubling sales in the last 2 years, so that's testimony to the traction that we have with our existing customers. A lot of that business has come from cross selling, especially this year. So it has come from cross selling, it has come from gaining market share and launching new products very quickly. So it's a mix of all. Do we have it? But maybe Devanshi will talk to you separately on this. Moderator: The next question is from the line of Chirag Fialoke from RatnaTraya Capital. Chirag Fialoke: Just a follow-up on the Exotech margin. Is it correct that the INR 6 million provision that has been taken for a pricing negotiation, I believe, all of it should be adjusted to the Exotech EBITDA? Is that right way to understand it? Sanjay Thapar: Mahendra, could you take that? Mahendra Naredi: Yes. So that was right. It was, as I said, with the Exotech contributions. Yes. Sanjay Thapar: Let me give you some flavor around that. So before -- I mean, the company entered into contract before we acquired Exotech. So this is something that has been a request raised by the customer now, we are examining it. But yes, it is specifically only Exotech. Chirag Fialoke: Understood. But if I don't adjust for that, then this quarter, Exotech would have made something like 12.4%, 12.5% EBITDA margin. Do you think that it's just because of that provisioning that if you adjust for that comes to 14%, that's how I should understand it? Because from a quarterly cadence point of view, we are at INR 35 crores, but the margins have come down on a quarterly basis on Exotech, specifically.

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Thank you, everyone. Have a great weekend. K.A. Joseph: Thank you. Sanjay Thapar: Yes. Thanks. Moderator: Thank you. On behalf of Axis Capital Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.