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Ladies and gentlemen, good day, and welcome to the Q4 and FY'22 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 very much. Good afternoon, everybody, and thank you all for joining us today to discuss the audited financial performance for the fourth quarter and the full year ended 31st March 2022. It's a pleasure to speak to you again this quarter. I hope you all are safe and well. I have with me today Mr. Baskarasubramanian, Director of Corporate Affairs and Company Secretary; Mr. Murugesh, Assistant Company Secretary of our company; and Bridge IR, our Investor Relations team. We already 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 for the fourth quarter, I would like to share some of the key developments during this year and the market scenario with you. As you all are aware, effects of the pandemic continue to be felt during this fiscal as well, the second wave led to lockdowns in various parts of the country, including Tamilnadu during the initial months of this financial year, where logistics and supply chain were hampered, business subsequently regained the momentum gradually across the world and in India. Luckily, the third wave did not prove to be as impactful as the previous one. Consumer sentiment also started rebounding fairly quickly, and we see an uptick in demand from domestic as well as export markets. I'm very happy to share that we have received 2 patents in the recent period, which were pending since some time, one for the Integral Cam Operated Rotary Switch and another for Motor Protection Circuit Breaker with increased air gap. The Rotary Switch product is one of the legacy products, providing substantial revenue contribution and margins for the company. The patent protects our IP and reinstates our focus on R&D and new product development and reinstates Salzer as one of the technical product leader in the country today. On another exciting note, as you might be aware, during this year, we forayed into electric vehicles vertical, in line with one of our growth strategies for adding new products and entering new and promising business verticals. In a nutshell, these 2 joint ventures, one with Austrian Company Kostad and another with Indo-Austrian start-up E-March LLP. Through our JV with Kostad from Austria, we will be manufacturing DC fast chargers for electric vehicles. With Kostad's technical know-how, we shall be manufacturing EV chargers for the Indian and also the Southeast Asian markets. Through our JV with E-March LLP, we will manufacture electric conversion kits for auto rickshaws, buses et cetera. We foresee a definitive shift in the automotive industry towards EVs, especially in the public transport going forward. As of now, the progress on both the JVs are a bit slow due to the initial technical teething issues. Coming to our existing product portfolio, the domestic markets have continued to recover well over the last quarters, which especially reflects in our Switchgear business, where we are witnessing robust demand. We are optimistic that the demand for these products will continue to gain momentum in the coming years. The volatility in raw material prices such as that of copper, silver, plastics, steel et cetera continued to increase this quarter. We have been passing on this price hike to customers at various points. In some of our product lines, we have already increased prices. However, the margins have been impacted to a great extent due to a lag in passing on these price increases. The lag in passing the price hike this quarter was mainly because of the high volatility in the input material prices, which we didn't expect and we couldn't pass on. However, in April and May, we have increased the finished products prices of Salzer by 6% to 10% on all products. Also, new product introduction of panels, which contributed at least 4% to 5% of our revenue this year is yet to generate EBITDA margins due to the initial teething issues. This, coupled with increased cost of freight, subcontracting charges and onetime product development expenses are some of the main reasons for a poor Q4 margin figures. All this combined pulled down EBITDA margins by at least 8% in Switchgear division. However, we are hopeful that for the coming year, we should see improvement in margins. Our export markets have also recovered well with significant demand coming in as the impacts of the pandemic subside slowly in the global markets. Export demand is likely to be stable and positive in the near future. Our growing export market complements the domestic market to help us grow at a faster rate, giving an upbeat view for the coming fiscal year. We expect good growth in volumes in the coming quarters. The company is well positioned to cater to higher demand from our customers and poised to take up new opportunities. Now coming to the quarterly financial and business performance. During the fourth quarter, our revenues increased by 20% year-on-year to INR 228 crores from INR 189.69 crores the previous year. Growth was on account of increase in volumes, coupled with higher product prices. The EBITDA for the quarter stood at INR 12.89 crores as compared to INR 16.16 crores in the corresponding previous period. The EBITDA margin stood at 5.7%, a decline of 287 basis points year-on-year, mainly due to continued increase in raw material prices, coupled with freight and other costs, as explained earlier. The price increase on all of our products to the tune of 6% to 10% has been done from May 2022 onwards. The profit after tax at INR 3.83 crores in Q4 FY'22 as against INR 6.99 crores in Q4 FY'21. Now coming to the full year results, FY '22. In the year ended March 2022, revenues increased 29.39% year-on-year to INR 783.63 crores, primarily due to strong demand for industrial switchgear products and increased volumes as well as price. EBITDA, excluding other income, stood at INR 63.78 crores in FY '22 as against INR 61.7 crores in FY '21, year-on-year growth of 3.22%. FY '22 EBITDA margin at 8.14% year-on-year, which is a decrease of 206 basis points on account of input material cost, freight cost and onetime product development expenses, which are barring on the margins. Profit after tax was at INR 22.48 crores in FY '22 as against INR 20.67 crores in FY '21, a year-on-year growth of 8.75%. Moving on to the breakup of revenues as per the business division. The Industrial Switchgear division contributed 48% of the total revenues in this quarter and 50% during the full year. This division's EBITDA margin stood at 5.23% in Q4 and 9.7% for the year FY '22. Wire & Cable division contributed 44.6% to our revenues this quarter and 43.2% during the full year. There is an increase of 2.1% year-on-year in this division during this quarter. Wire & Cable division's EBITDA margin has been steady at 6.6% in Q4 and 7.3% for the full year FY '22. Building Products division has contributed 7.2% in this quarter and 6.5% for the full year FY'22. At INR 16.53 crores for Q4 FY '22, the division has grown by 40% year-on-year. The EBITDA margin stood at 2.5%. The fourth is the Energy Management division. During this quarter also, we didn't receive any new orders from the government as there were no tenders issued during this period. On the export front, despite slight headwinds due to partial lockdowns across the world, we were seeing steady growth, especially from the U.S. and the European markets. Export to the Americas grew 84% year-on-year in this quarter. Exports to Europe grew 52% year-on-year in this quarter, and for the Middle East, also grew 81% year-on-year in this quarter. For this quarter, the export share of the revenue was 20.43%. For the full year, it stood at 23.29%. On another note, our recent joint ventures to enter the electric vehicle space are both on track. As explained earlier, we are excited about this line of business as it is a high-growth potential vertical, and we have strong technical alliance in the form of JVs to get an early start in the market. On behalf of the company, I thank all the stakeholders of Salzer Electronics Limited for their continued support and faith in our company and wish all of you a very good health. This is all from our side for now. I would once again like to thank everyone for your time and affection. We can now take questions.
[Operator Instructions] The first question is from the line of Niteen Dharmawat from Aurum Capital.
A couple of questions. So we mentioned that the exports has done really well in some of the geographies. So I just wanted to understand the revenue distribution between domestic and the export, what is the percentage that we are having?
Okay. Our export percentage right now for the full year, this is around 23.2% of the revenues.
Okay. And the trend that we have witnessed in the last quarter, is it continuing now as well? Or we are seeing some sort of slowdown over there in export?
No, exports have been steady for the last full year and it continues to be like this. But no, we are not seeing any slowdown as of now.
Wonderful. And what is the revenue target that we are having from the [indiscernible] segment? You mentioned that it is right now slow because of variety of teething problems. But what is the revenue target that we are keeping from the EV segment?
I think it is still in a very initial stage. So I think it will be difficult for us to give you a revenue target from those 2 JVs as of now. Maybe I think a couple of quarters down the line, I think we will have a better idea on how this product comes out and how the market accepts these products, then we will be able to give you a good guidance on that.
The next question is from the line of Sreeram Ramdas from Green Portfolio.
So on the EV business, I think we were supposed to have shipped our first DC charging unit in April. So can you explain where is the delay? And I'm sure that we have not recorded any revenues, but do we have any order book that is now being built up in the EV segment?
No, I think there is no order book as of now because we are still perfecting the product that is to be made in India. The idea was to build the chargers here in India. So in line with that, we have already imported samples and whatever parts required on a CKD as well as a fully assembled condition. And the team is working on absorbing the technology and building a charger here at a price point that the Indian market will accept. So the delay is the absorption of technology because it's a complicated product. It's not as simple as any other electronic product because it involves DC current and the charging of batteries requires a lot of safety measures and controls. And our collaborators are coming here quite soon to ensure that things are all online.
Okay. Okay. So when can we expect at least like testing phase must be done by now. Now when can we expect to build order book, I'm not talking about revenues, but at least order books, when can we expect to be...
I think from August, September onwards, we should be able to build the order book now.
Okay. And what about the EV retrofitting space, there I believe we must be already bid testing with converting a fixture. So even there, are we facing technical issues or problem in technology...
Some technical issues because we are trying to bring the cost down because the costs are not as expected. So the costs are still high, and we're trying to improve on the range. So these are the 2 things that have we there, and I expect that product also to -- we should start building order book from August, September this year onwards.
Okay. So September, October, tentatively, we start to see order book buildup for both BEV units.
Yes.
Okay. And the Building segment, I believe it is -- what do you think about the building segment? It's been quite stagnant even the energy. So is the government issuing more tenders in the energy management? Or is it still silent over the energy management?
Energy Management is still not a big focus for us. I think as I said earlier, in many calls, it's government tender business. So it comes as a bulk and sometimes it is not there for a long time. So we are not really focusing on that as of now. I think our focus is mainly on the industrial switchgear and the wire and cable and the building electrical business. On the building electrical, if you see, I think this year, the segment has really grown very well. Year-on-year, it has grown around 55% compared to last year. And we are seeing improvements in the margin side also on that segment. So I'm hopeful that this segment will start contributing at least 7% to 10% on the revenues going forward with good EBITDA margins.
Okay. Last question. Last question from my side is on the sorry, yes, the onetime product development cost that we have incurred, which actually dampened the margins. Can you give me some information on this cost, the cost that we incurred for product development?
Actually, these are product development as well as testing charges that we incur when we develop new products. So last year, I think we have developed a few new products for new customers in U.S. and Australia. So those testing and approval charges are to the extent of around INR 1.5 crores has been spent on this quarter alone because the product was completed and tested this quarter.
And this is for the traditional business or for the EV, which was in [indiscernible]
Switchgear business, this time, switchgear...traditional.
The next question is from the line of [indiscernible], an individual investor.
Rajesh, I have couple of questions on the margins. So I think for the last 3 quarters, we have been guiding of achieving 10% to 11% or 12% margin. But now I know with all the current conditions, the costs are going up. And then we don't know how the immediate future outlook is, right? So in this environment, what are we doing to improve the margin, if at all? Or will it be difficult to improve the margin in the near term?
Actually speaking, these are very, very unprecedented times that's happening right now. One, the pandemic hit because of that, there were a lot of logistical issues, shortage of various materials which actually pushed the input prices higher. And during that time, I think we have also actually increased our prices sometimes twice or thrice in a year during 2020 and 2021. However, when things we thought things are stabilizing, then the Russia, Ukraine War came, I think that, again, took a big time impact on all the commodity materials, particularly on -- because of the oil, I think the freight costs started going up again. copper, silver, all the metals started going up, again, because of the oil, all the plastics started moving again. So the problem for us was if it increases and stabilizes, we can pass on.
But if we kept on increasing every month, every 2 weeks, there was a change in price, which we didn't anticipate and we couldn't pass on that quickly this kind of a volatile pricing. So that's one of the reason that Q4 has been poor on the margins. But I'm confident that we have already increased our prices, and I don't think it is difficult to pass on the price increase because the world today is reeling under inflation and everybody knows what is the input cost impact. So people accept price increase, and we have done that. At the same time, internally, which's a continuous process that we are doing of value engineering, there are different teams in different factories are constantly working to reduce cost, add more value to the product. So that's happening continuously. And this price increase, coupled together, I think we should be back to the normal margin levels.
So at least, we can say that if the situation doesn't deteriorate as it is the worst is behind us?
I'm 100% sure about that, yes.
Okay. So now regarding the EV business, I think there is so much focus now with the sale prices going up. The urgency for green fuel or green energy is further increasing. So with all that, the market conditions, these 3 very conducive for us to enter into this business, essentially, I mean, the timing of our end, do you think it is very appropriate?
In my opinion, I think the EV business in India is still in a nascent stage. I think it will take at least a couple of more years before we see the advent of electric cars and buses, public transport in electric vehicles, at least a couple of years down the line is what we think. So in that opinion, I think the entry timing of ours is quite right. Maybe I would say we are still behind 6 months, I would say. So maybe we should have been earlier. But still, nevertheless, I think we are still one of the few players who will be making DC fast chargers, a charger that will charge a normal car in less than 20 minutes from 0% to 80%. So that's going to be a business, definitely worth to be in.
Okay. So the last question I have is on the -- for FY '23 now. I know that you mentioned -- I don't want to ask the question on what revenue growth we expect because we will be increasing the prices and other stuff, right? So what volume growth increase we are targeting for FY'23? What do you think can be achievable?
I'm sure the 25% volume growth is definitely achievable looking at the current demand scenario from the OEMs and the market.
[Operator Instructions] The next question is from the line of Aditya Sen from RoboCapital.
Most of my questions are already answered. Just one more. Broadly, can we understand that there has been a volume dip Q-on-Q this time and the revenue realizations have been only due to price hike.
No. I think this quarter, actually, the entire growth has been because of the volume because this quarter, we didn't change price. This -- whatever revenues we got is purely volume growth.
Next question is from the line of Raj Kumar V, an Individual Investor.
I have 2 questions. The first one is on your operating margin. For the current quarter, it has come at about 5.7%. I know there are a lot of -- I mean you mentioned some one-off costs and all that. So I just want to know what are you guiding for FY '23, just a band if you have -- if you could mention that.
I think we will see a tough quarter FY '23, Q1 also will be a tough quarter. But from Q2 onwards, I think we will be back to normal EBITDA levels of 10% to 11%.
Okay. And any benefit Salzer will be getting because of the recent changes done by the government at the last weekend?
GST changes?
No, all the import duty cuts and so on and so forth. Will there be any benefit for Salzer?
No. I think it has not impacted any of our products as of now. already what we are importing, a lot of things we are importing on a duty-free basis. So there's no additional benefit that we might get from this.
Okay. And the last question is, sir, I looked at your return on equity. For the last 10 years, it has kind of -- the average is about 8%. That kind of seems very low, like an FD return, right? So just wondering, is it because of IT capacity now and then what plans you have to shore up the return on equity?
I think that's one of our targets also to increase the ROCE margins or the ROCE percentage. Unfortunately, this has been at the lower end, as you said, is mainly because of our long working capital cycle. So once we improve on that, I think then we should see better ROCEs. And this year, I think we have seen our inventory days coming down from 110 to close to 100 days, and we continue to push to bring that down to 90 or less than 90, and that's when we will see -- start seeing improved ROCE.
The next question is from the line of Ankit Kumar from Alpha Capital.
So my question is on, in the PPT, you are talking about good improvement in the order book. So can you please explain how much is the order book now? How much it has grown versus last year?
Actually, we don't really operate on a large order book because most of our business is a 4- to 6-week delivery. That's how we operate. What we mentioned is, we are trying to pass on this information that based on the inputs that we receive from our OEMs, the forecast that they give for this year and based on what we see the demand coming from the general open market from the dealers and distributors, I think that shows that there is a robust demand, strong demand in the country as well as from U.S. and Europe. So that's the reason that we said that the order book is quite good and the reason that we are also saying that we will be able to get a 26% volume growth in the coming year.
Sure, sir. And sir and very recently, government did export duty on steel side. So any worries on that, can there be a worry for volume growth for next year?
No, I think the steel prices in the country have doubled compared to what it was a few months ago. So that has impacted the material prices of a lot of components. So this ban on exports might bring the steel prices a little bit down, which can ease the input prices for us. So in my opinion, I think it's a good move for us.
The next question is from the line of [ Karthikeyan ], an Individual Investor.
So just wanted to understand, we have reduced our inventory holding period and also debtors to some extent in Q4. But what is the headroom there for us to improve further? And what is the best case working capital cycle we are looking for maybe another 1 year, 2 year down the line?
Currently, the debtor days have actually dropped from 107 to 97, so a 10-day improvement and we can further bring this down to around 90 or 85 to 90 is the normal cycle that we will have. And inventory days, I think we should bring this down to, I would say, 80 days. So we still have room to reduce the entire working capital cycle to at least 30 to 40 days from the...
So 170, 180 will be the gross cycle that is normal for this business that we will be operating...
No, 160 minus 30, so we will be at around 130, 120, 130 will be the normal...
Okay. And then sir, for this EV division, do we have any PLI schemes that will benefit us here?
I think if we will be eligible for PLI because the investment requirement for the PLI is quite high. So our total CapEx investment is not...
The next question is from the line of Akshay Kothari from Envision Capital.
So you did mention about EV fast charger, which can charge in 20 minutes. So I just wanted to understand, like, are we having any patent or how difficult is it to reverse engineer or any stringency of the enforcement regime, which would come in. So can you explain regarding that?
Yes, sir. Actually, it's a very complicated product. If it was easy to reverse engineer, I think we would have already done it. But then it is not that easy to reverse engineer this fast charging product. So that requires a lot of technical know-how to make this charger, and that is why we are relying upon on our collaborator, Kostad, who is an expert in this and have been making such fast chargers for the last 10 years in Austria. Having said that, I think there is no IP for us in India, but our collaborator holds certain IP in Europe, which will protect us in India also.
Okay. Okay. And which are the geographies we are targeting with this at...
Right now, our market is for India. Our focus is on India. But in case we start manufacturing here, then we might look at the Southeast Asian market also, which is also open for us as per the agreement.
Okay. But we won't be going to Europe and all this... that would be their... our partners...
Yes. That will be our partners' territory.
Okay. And in the PPT, there are a mention of some of the marquee customers. So could you just elaborate the significant partnerships which we have with them? And going forward, how are we expecting to grow?
We already have a very, very strong tie-up partnership with Schneider Electric. That has become much more stronger after L&T becoming a part of Schneider Electric. So today, I think we will probably be the largest partner supply chain partner for Schneider Electric, including the L&T business that we're doing with them. So the partnership there is quite strong, quite good. I think we continue to get new businesses from various divisions of Schneider. So that's growing good. Apart from that, we also have a strong partnership with Honeywell, Eaton. We are also working with ADB for export markets. So all these partnerships have been there with us for the last several years, and they continue to grow quite strong.
Sir, my last question would be on the raw material side. So what are the key raw materials, which we use in commodity and where do we procure them from?
All of our raw materials are procured locally in India. The supplies in India, we have -- our major material is copper, plastics, copper for wire and cable, for switchgear division, it is plastics, silver, steel and other items.
The next question is from the line of [ Anjul Agarwal from Green Portfolio ].
Sir, I wanted to ask how far along are we in the optimization of working capital requirements? Because what I see is despite operating on cash profits, companies still have to rely on short-term borrowings to meet its working capital requirements. So how are we planning to go ahead with this?
I think once the inventory days and debtor days start coming down, I think we will see positive cash flows. And that's when I think we will earn cash profits, and we will not be relying on the short-term debts.
Okay. And how are you planning to bring it down?
I think it's a constant work. Unfortunately, the last 2 years have been bad, and it worked against us due to this pandemic and the first -- after the first wave, we actually went opposite to our direction, and we started increasing our inventory because we thought there will be a second wave, there will be further lockdowns. So we wanted to stock up ourselves, and it has actually increased our inventory in FY '21 and '22. And now we have started, again, reducing that.
Okay. So moving forward, we are expecting that the situation is going to get better only?
Yes. That's true.
Sir, in other noncurrent assets, there has been an increase of nearly INR 3 crores. Could you please give more information on this?
Okay. I will not look at that figure, as not current asset. I can note down this question and answer you because I don't have that information right now with me.
Sir, we do have a question from the line of Mr. Ritesh from AXA Capital Advisors.
Sorry, I joined the call late. I just want to understand if our order cycle is about 4 to 6 weeks. And if we have a very strong position in some of these segments, why should it take such a long time for us to pass on the input price increase to the consumer sir?
No, it doesn't take time, but there is a process to increase the prices because there are agreements that we have with OEMs. So it has to be negotiated and passed on. So there's a process and it takes time. And if we do it this month, we cannot -- it is difficult for us to go back again next month for a price increase. So what we do is we consolidate all our input price increases, we go and do onetime price increase. That's how the industry operates. Until this couple of years, I think we normally do a price hike only once in a year during April and May. But because of this abnormal times, I think we have done 2 to 3 price increases in FY '20 and '21. And again, we have done it now in '22 April, May. So that is the reason that we see a lag in passing on the price increase.
Sure. But is there a formula which you work on with these larger OEMs any pricing formula that we have?
We do have a formula only based on copper pricing, but all other materials, there is no formula. Only copper, we pass it on every month, whatever is the increase or decrease. And that is the reason we see a stable margin on the wire and cable business.
So should the prices of, say, plastic, copper don't go anywhere from here on, probably in Q2, we should go back to the normal margins that we had at... is that understanding correct?
Yes.
And sir, I think in your presentation, you were mentioning about some onetime expense for a new product development. Could you share what this new product is and what is the quantum of the...
We developed some new products for American and Australian markets in the last 1, 1.5 years. And those products have gone through the third-party testing and approvals. So all those chargers to the tune of around INR 1.5 crores to INR 1.6 crores got accounted in this quarter.
Okay. Any -- can you share what is the market opportunity of these products? And what is your competitive position in them?
These are custom built products for certain OEMs in U.S. and Australia. And total potential for the products that we have developed for these customers, both in U.S. and Australia will come close to around $7 million to $8 million.
That is the revenue potential that we have from these products, is it?
Yes, from these customers now.
And where are we in terms of commercializing these products or probably converting into sales?
Yes. I think the testing is over, approvals are over, we should start seeing revenues from this quarter onwards.
Interesting. Great. And lastly, sir, on the EV products, you did mention about the potential that is there. But where are we on the customer acquisition with these products? And again, revenues coming from them?
No, I think we are still in the product development stage. And I'm sure that once our products are developed, I don't think there's difficulty in customer acquisition because the market is quite huge, and we can get the targeted revenues in the open market for sure on these products.
And any timeline to when do you see...
To develop the product.
Sure. Any timelines that you're working on, sir, in terms of commercializing these products?
Definitely this financial year, we want commercial export for sure.
The next question is from the line of Rohit Ohri from Progressive Shares.
Starting questions are related to Kaycee. If you see the yearly margin for Kaycee has started improving. So what is that you're doing slightly different over here that the margins have started coming up?
On Kaycee, I think as soon as we took over during 2019 September result, we started taking control of the company. I think in 6 months, the pandemic hit and went on a different turn, things took a different turn. But once the lockdowns have opened, I think this financial is a full financial year that we were able to operate properly except for the first 2 months. So we did a lot of exercise on cost cutting on the operational efficiencies, so all those things happened and the results of that are slowly being streamed in Kaycee so that the operating margins of Kaycee are improving. And we can see further improvement of at least 2% to 3% on the EBITDA margins going forward.
So the blended margins...
In terms of operational efficiencies.
Okay. And on the volume front, if you would like to guide something for Kaycee?
KC, I think we are planning to see we can touch INR 50 crores this year. So that's the target that we are looking at. Current year, we did close to INR 30 crores. So we're looking at a growth of INR 20 crores from on this side. That's growth from 60%.
Okay. What is the capacity utilization at Kaycee right now?
Kaycee's product, the capacities are quite dynamic, so we can improve, we add assembly lines and increase capacity as we build on the order book.
Blended kind of capacity kind of capacity utilization if you can share?
Right now, we're operating at around 75% to 80% capacity.
Okay. And any new products that you have worked on for Kaycee?
No. Right now, no new products on Kaycee.
And my next question is related to any value-added products that we have added in the wire segment, apart from [indiscernible] value-added products that you have touched up on or worked on?
Yes, we have added the data cables and CCTV cables last year. At the end of 2020, I think we started producing that. So the full '21, '22, we saw revenues coming from data cables, which is a much, much higher value-add product in the wire and cable segment. So this year has been the first year and we saw revenues close to around INR 20 crores coming in from that product. And we expect that product revenues to go up this year close to around INR 50 crores to INR 60 crores.
So any thoughts on products like flame retardant wires or something that can be an offering from Salzer?
That's already there. Flame retardant wires, low smoke wires, they are already there on the portfolio.
My next question is related to Valeo. And Valeo has come in contact with PowerPack Energy that is Honda and Atul Greentech. And they intend to work on some integrated compact electric powertrain system. So any scope for Salzer since Valeo is customer to us as well. So anything that gets connected, the dots get connected for Salzer, any opportunity...
We are working with Valeo on a few products, new products just under development. At the end of this financial year, we will see those products developed. I'm not sure if it is going to Honda or any other OEM player... But Valeo's products [indiscernible] start selling to almost all OEMs.
Okay. So is this in the wire and harness that we are working for Valeo or...
There are some switches from -- we are already supplying wire harnesses and wire...
In terms of the EV tenders we started opening up via EESL and CESL, do we see any scope for Salzer from these tenders that have opened up? Are we ready for that?
Right now, we are not ready. But once the product is developed, I think then we we'll definitely be looking for the CESL tenders.
Okay. Okay. since you're working on electric auto, any thoughts on giving some more value addition via golf carts as an offering or working towards the golf cart as a business?
That's not on the focus right now. I think we are only working on a conversion kit for an auto -- we are not going to build a full auto as of now and our focus is only on the conversion kit, but going forward, we don't know, we will see. Maybe it's a good idea that you are thrown now.
Okay. Okay, sir. My last question is related to these orders which are there. I know it's difficult to gauge, but if you can give a breakup in the public sector and the private sector, what is the ratio of the total turnover that comes from the public sector and private sector?
Majority of our business, I would say, 95%, 97% of our business in private sector. We are not directly selling to public sector companies that much. for, I think if you consider the railways [indiscernible] they are public sector means yes, we do sell to them, but they are not very much. I would say, less than 10% of our total revenues comes from the companies like BHEL and Indian Railways.
So hopefully, we see good numbers for Salzer coming up. I do not understand one thing is that you are saying that you have taken price you'll be able to pass it on, why do you intend to guide that the numbers will be better in the second half. I didn't understand that statement made by you.
Yes, because we did a price increase only in end of April starting May or April was gone. So we will obviously see the impact of this price increase for these 2 months, and there are still pending orders that we should be supplying at the old price. So that's why I said that Q1 will still be a very tough quarter. But Q2, we will see the full impact of this price increase as well as that we expect the input prices to reduce also. So the combined impact we will see in Q2.
So the blended margins for the full year would be in the range of 10%, 11%, 12% that we generally do every year?
Yes.
Okay. And sir, one last request that has not been touched upon. Is we increasing the shareholding pattern, which you mentioned that you will try to work towards that. Any positive output over there?
Yes, I think there is a positive output, but I'm not able to give a time line right now, but definitely looking at increasing the stake. The promoters are definitely looking at that.
By first half, second half, if you can just let us know...
In the financial year.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Limited, for closing comments.
Thank you all very much for your interest and your support to Salzer, as usual. I look forward to talking to you again during the next investor call after the next quarter. Thank you very much for your time and attention.
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.