Salasar Techno Engineering Ltd Management Discussions.

Salasar Techno Limited is a key player in the customized steel fabrication and infrastructure solutions segment in India. The company is primarily engaged in the business of manufacturing and sale of galvanized and non-galvanized steel structures for Telecom Towers, Transmission Towers, Utilities Poles, High Mast Poles, Stadium Lighting Poles, Smart City Poles and is engage in providing one-stop EPC solutions. The Company caters to the major players in the telecom sector, the power transmission sector and the railway sector and has established a strong position in the growing Infrastructure Industry through a customer-centric approach and an on-time delivery model.

1. Industry Overview

Indian Telecom Sector

The Indian telecom industry has been going through a paradigm shift from a voice-centric market to a data- centric market. There has been an increase in tele-density largely in the last decade as a result of liberalization of the telecom sector and creation of a market through appropriate policy and regulatory measure. These attributes have resulted in achievement of price levels where the cost-benefit ratio suited large masses of the urban population. It is expected that the availability of affordable smartphones and lower rates of data would drive growth in the Indian telecom industry.

India is currently the second-largest telecommunication market and has the second-highest number of internet users in the world. Telecom penetration has grown rapidly over the last few years. Total telephone subscriber base and tele-density reached 1,177.02 million and 87.45%, respectively, till January 2020*. Telecommunications penetration has seen a surge in rural areas with rural penetration gaining a significant pie of the overall subscription base. Rural subscribers form 43.69% of the total telephone subscribers in FY20 (till January 2020) compared to 33.35% in FY11.

(Source - The number of internet subscribers in the country increased at a CAGR of 45.74% during FY16-FY19 to reach 636.73 million in FY19. The number of internet subscribers in the country is expected to double by 2021 to 829 million from 422 million in 2017 (as per CISCO). A surge in the subscriber base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in telecom infrastructure.

The Indian telecommunications industry is likely to remain steady amid the political uncertainties and an uncertain economic outlook due to the COVID-19 pandemic because of the defensiveness nature of the industry. During this period overall traffic is estimated to have witnessed a jump of 10% and streaming platforms have witnessed a 20% spike in viewership. While demand for services continues to spike, given Indias dependence on wireless traffic, there is increased pressure on cellular infrastructure. Players are expected to invest in infrastructure for increasing penetration of 4G and rollout of 5G as demand for services continue to spike.

Indian Power Sector

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of Indias focus on attaining Power for all has accelerated capacity addition in the country. Total installed capacity of power stations in India stood at 370.34 GW as of April 2020. Electricity production reached 1,252.61 billion units (BU) in FY20. In the Union Budget 2020-21,

Rs 15,875 crore (US$ 2.27 billion) has been allocated to the Ministry of Power, while Rs 5,500 crore (US$ 786.95 million) has been allocated towards Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY). Indias power sector is forecasted to attract investment worth Rs 9-9.5 trillion (US$ 128.24-135.37 billion) between FY19-FY23.

The total thermal installed capacity in the country in FY20 stood at 230.81 GW, while renewable, hydro, and nuclear energy installed capacity were 86.76 GW, 45.70 GW and 6.78 GW, respectively. By 2022, India has set a target to achieve total production of 175 GW from renewable resources, out of which, 100 GW will be produced from solar power.

Transmission Towers Segment: India has emerged as the second-largest market after China for transmission towers, contributing to over 15% of the global market. There is a need for substantial growth in the transmission sector to support the growing load and to provide connectivity to power generation projects - especially the renewables. The transmission sector has witnessed a significant growth in the country. There is a need to install new transmission and distribution infrastructure to keep pace with trends as well as replacement of ageing infrastructure. All these factors are expected to drive the growth of the transmission tower market in the country.

Indian Railway Electrification Sector

Indian Railway network is growing at a healthy rate. Indian Railways is targeting to increase its freight traffic to 3.3 billion tonnes by 2030 from 1.1 billion tonnes in 2017. The railway department has set forth plans for expansion, upgradation and modernization of its existing infrastructure. As per Union Budget 2020-21, Ministry of Railways have been allocated Rs 72,216 crore (US$ 10.33 billion). The Government is going to come up with a National Rail Plan to enable the country to integrate its rail network with other modes of transport and develop a multi-modal transportation network. The railways have set a 100% electrification target by the next four years. Electrification of 6,000 Km route is targeted, with wiring of the entire broad-gauge network now envisaged for completion by 2023-24.

2. Company Overview:

Salasar Techno Engineering Ltd., incorporated in 2007, provides customized steel fabrication and infrastructure solutions in India. The Company provides 360-degree solutions by carrying out engineering, designing, fabrication, galvanization and deployment.

Salasars product Portfolio includes telecommunication towers, power transmission line towers, smart lighting poles, monopoles, guard rails, substation structures, solar module mounting structures and customized galvanized & non-galvanized steel structures. Their service portfolio includes providing complete engineering, procurement and control for projects such as Rural Electrification, Power Transmission Lines, and Solar Power Plants.

They have three State of the art manufacturing facilities spread across 1,30,000 square yards area at Jindal Nagar, Hapur District (UP) and Khera Dehat with a total of 1,00,000 MT installed capacity of Steel Galvanizing equipped with latest technology.

Towards the end of the year, the Companys operations were impacted due to the COVID-19 Pandemic. As per the directions issued by the Central Government, all the manufacturing plants at Hapur District (UP) were shut down w.e.f. 23th March, 2020. Thereafter, all the plants have resumed operations in phased manner from 2nd week of May, 2020, in accordance with the guidelines and norms prescribed by the respective Govt Authorities.

Business Segments:

Salasar Techno Engineering operates primarily in four business verticals, viz., Telecom Tower, Transmission Business, Solar and Poles.

Telecom Tower Business: Salasar manufactures telecommunications towers and monopoles that are designed as per time-tested Ramboll designs, in-house IIT certified designs, or tailored as per customer designs. This makes it Indias preferred Tower supplier within a short period of time. The company has manufactured over 45,000 Towers since inception.

Transmission Business: This segment includes manufacturing and deployment of Transmission towers for EPC business, Turnkey Projects, supplying structures to other EPC contractors. The company has executed more than 475 Kms transmission lines. This segment also includes the supply of railway towers and railway electrification work.

Solar Structures: This segment includes manufacturing, fabrication and deployment of solar module mounting structures. The Company has already supplied solar module mounting structures for over 1,000 MW of solar projects throughout the country, commissioned by industry leaders such as Mahindra Susten and NEXTracker. Utility Poles/ Smart City Poles and other revenue: The segment includes production of custom-made poles of the highest quality equipped with technologies like LED lights, CCTV cameras, pollution sensors, Wi-Fi routers. Steel utility poles have various commercial, industrial, as well as residential applications. Steel poles are preferred over other materials because of their durability, eco-friendliness, and ease of installation and maintenance. Salasar, with its top-class machinery and well-trained manpower, has pioneered the production of custom-made poles of the highest quality in the shortest times. Smart Poles play a major role in making cities safer and more manageable. They are equipped with technologies like LED lights, CCTV cameras, pollution sensors, Wi-Fi routers, distress buttons, road information display systems, and motion-detecting energy savers to make our cities smarter.

1. Financial Highlights

On a standalone basis for the year ended March 31, 2020, total income for the Company stood at Rs 527 crores compared to Rs 655 crores in the corresponding last year.

The total revenue from Telecom tower segment for the year ended March 31, 2020 was Rs 315.77 crore as against Rs 397.26 crore for the corresponding previous period. The total revenue from this transmission segment for the year ended March 31, 2020 was Rs 153.88 crore as against Rs 200.23 crore. The total revenue from solar and other division for the year division for the year ended March 31, 2020, was INR 55.86 crore as against INR 57.23 crore for the corresponding previous period.

On a Standalone basis the EBIDTA for the current fiscal year stood at Rs. 51 crores, with EBITDA margin of 9.77%. PAT was Rs. 22 crores with PAT margin of 4.20%.

The financials this year were impacted due to COVID-19 lockdown, which came into effect on 24th March 2020.

On a Consolidated basis, the Companys total income for FY2019-20 stood at Rs 528 crores. The EBIDTA stood at Rs. 52 crores with EBITDA margin being 9.84%. PAT for the year stood at Rs. 22 crores with PAT margin being 4.25%.

As on March 31st, 2020, the consolidated net worth stood at Rs. 207 crores, while the consolidated debt was at Rs. 164 crores. The cash and cash equivalents at the end of March 31st, 2020 were Rs. 9 crores.

The Company has been rated BWR A-1 for Long Term Borrowing and BWR A2+ for short term borrowing by BRICKWORK ratings.

Rs. in Crs



FY19-20 FY18-19 FY19-20 FY18-19
Total Income 527.23 655.18 527.96 655.74
EBIDTA 51.36 72.89 51.81 73.36
EBIDTA Margin 9.77% 11.14% 9.84% 11.20%
Interest 20.57 16.32 20.58 16.32
PAT 22.09 32.96 22.38 33.27
PAT Margin 4.20% 5.04% 4.25% 5.08%
ROE 17.02% 11.17% 17.00% 11.29%
ROCE 22.77% 13.54% 22.91% 13.65%
EPS 16.61 24.78 16.84 25.04


The Company continuously works towards de-risking its business by adopting preventive measures. Your Company has well established Business Risk Management System which enables detection and monitoring of the business risks on a continuous basis. However, there are certain potential risks being more industry oriented and the management strongly feels the same could be mitigated by having systematic decisions and measures. These risks include:

Commodity Price Risk

The Companys business is significantly dependent on the availability, cost and quality of raw materials for the construction and development of projects undertaken. The principal raw materials include steel and zinc. Prices and supply of these are varied due to economic conditions, competition, production levels, and import duties, etc.

Mitigation: The Company passes on such impacts to its clients partially or completely, by adding price escalation clause in most of the contracts. In case of firm price contracts, the Company tries to pass on back-to-back firm price contract to its vendor/contractor and/or hedge itself through price discovery, wherever possible. It measures and manages these risks centrally and carries out periodic reviews of these risks at appropriate levels.

Execution Risk

The Company has undertaken a number of projects in the last year and several more are in the pipeline. Project execution is largely dependent upon project management skills and timely delivery by equipment suppliers. Any delay in project implementation can impact revenue and profit for that period.

Mitigation: Our implementation schedules are in line with the plans. Emergency and contingency plans are in place to prevent or minimize business interruptions. Therefore, we do not expect this risk to affect us materially in the future.

Liquidity Risk

Some of the projects of the Company are working capital intensive. Any significant adverse change can impact the overall profitability of the company.

Mitigation: The Company plans its liquidity position through judicious utilization of its banking facilities and with good support by its bankers. It also monitors its projects, timelines and collections closely to avoid any stretch in working capital.


The Company has taken adequate measures to strengthen its internal control systems such as fraud risk assessment, mandatory leave for employees, strengthening background verification process of new joiners, whistle blower policy and strengthening the process of risk management. The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations.

The organization is well structured and the policy guidelines are well documented with pre-defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and there is strict adherence to applicable laws and regulations.

The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported. The Company also has an exhaustive budgetary control system to monitor all expenditures against approved budgets on an ongoing basis.

Recognizing the important role of internal scrutiny, the Company has an internal audit function which is empowered to examine the adequacy of, and compliance with, policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process.

Periodical audit and verification of the systems enables the various business groups to plug any shortcomings in time. As stated earlier the Company has improved effectiveness of the risk management process wherein it evaluates the Companys risk management system and suggests improvement in strengthening risk mitigation measures for all key operations, controls and governance process. In addition, the top management and the Audit committee of the Board periodically review the findings and ensure corrective measures are taken.


The Company has Human Relations and Industrial Relations policies in force. These are reviewed and updated regularly in line with the Companys strategic plans. The Human Relations team continually conducts training programs for the development of employees.

The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for the Companys successful growth. The Companys employees age bracket represents a healthy mix of experienced and willing-to-experience employees.

Human resources are the principal drivers of change. They push the levers that take futuristic businesses to the next level of excellence and achievement. The Company focuses on providing individual development and growth in a work culture that enables cross- pollination of ideas, ensures high performance and remains empowering. As on March 31, 2020, the Company had a workforce of 1,536 people on rolls.