The building electrical segment is poised to be a growth driver: Salzer Electronics
- September 2, 2021
Salzer Electronics is a prominent name in the industrial switchgear business with clear market leadership in CAM-operated rotary switches. The recent years have been very eventful for Salzer as it prepares to expand its product and solutions portfolio. In this exclusive exchange, we have Rajesh Doraiswamy, Joint Managing Director Salzer Electronics Ltd, discussing the company’s strategic moves like entering the wiring devices segment, acquiring the “Kaycee” brand and the proposed foray into e-mobility. The aim is groom Salzer into a provider of complete and customized electrical solutions, notes Doraiswamy.
Let us start by understanding in brief Salzer’s range of industrial switchgear.
We started our journey into the industrial switchgear business in 1985 by manufacturing CAM operated rotary switches. Over the years, we entered into technical collaborations with global leaders in this segment to add more products. Today, we have more than 15 products in this segment and are leaders in CAM operated rotary switches, wiring ducts and toroidal transformers. Our R&D has worked very hard to innovate and we are now not just a switchgear provider but a customized electrical solutions provider for our esteemed customers across the world.
“We entered the building segment by offering modular switches.”
Salzer has also entered the home wiring devices segment with modular switches, sockets, dimmers, etc. How has the journey been so far?
In the building segment we started by offering modular switches. Over time, we expanded our product portfolio on account of demand and our capabilities to mini circuit breakers, distribution boards and Salzer-branded wires & cables.
We understand that Salzer is also engaged in control panels and distribution boards. Please explain how this complements your switchgear business?
This enables us to offer more products that are complementary to our customers. It also helps us customize solutions, meeting the exacting electrical requirements of our customers.
“We are currently filing patents for five new industrial switches.”
Salzer has been a longstanding market leader in rotary CAM switches. Please discuss your market leadership.
Though we have not been the first to bring CAM operated rotary switches to India, our superior design and quality, our association with L&T and its 300+ distributors across India, and our increasing exports have enabled us to be the market leader in the organized space. Also, with the acquisition of our next nearest competitor Kaycee Industries, we are clearly the market leader in this product segment.
We also understand that Salzer is in the process of filing patents for five new types of industrial switches. Can you tell us more?
Yes, we are and as you must be well aware this process takes years. For now, we will state that we are continuing with the filing for five patented industrial switches.
Also read: Salzer Makes Foray In EV Charging Infrastructure, Ties Up With Austrian Company
In FY21, we understand that the wires & cables business had a significant share in Salzer’s total revenues. In conjunction with your wiring devices business, do you therefore see that the “building segment” as a promising growth driver?
In FY21, the switchgear business across India and the world was on a decline due to the COVID-19 situation. This was reflected in our numbers as well. As a result, the share of wire & cables increased. All our business segments continue to be our focus – predominantly industrial switchgear business segment. Of course, the building electrical segment will be a future growth driver for us, as this component is our sales is still very small and we have a lot of opportunities to grow. We have also made our foray into the EV segment – creating joint ventures with prominent players for manufacture DC fast charging stations and e-conversion kits for auto rickshaws and buses.
“Our e-mobility diversification has two aspects — EV charging infrastructure and electric conversion kits.”
Salzer, as you said, is entering the electric vehicle charging infrastructure space, in collaboration with specialist partners. Tell us more.
Yes, we have planned to foray into the e-mobility space as we see great potential here. The Indian government is promoting the adoption of electric vehicles in a big way, and this is likely to open up significant business opportunities.
Our e-mobility diversification has two aspects — EV charging infrastructure, and electric conversion kits for e-vehicles like cars, buses and auto rickshaws. Each of these businesses will be housed in two new joint ventures.
The first JV, called Salzer Kolstad EV Chargers Pvt Ltd will be a joint venture between Salzer Electronics, Austrian technology firm Kolstad and an Indo-Austrian firm E-March LLC.
The second JV, Salzer EMach E-Mobility Pvt Ltd will have E-March LLC and Salzer EV Infra Pvt Ltd, a wholly-owned subsidiary of Salzer Electronics, as the main partners. This JV will look at the electric conversion kits business where we are planning to start with auto rickshaws, moving on to cars and buses in the next stage.
In both the JVs, Salzer will be the single largest shareholder.
How much investment are you planning in this diversification?
We have estimated a total investment of Rs.18 crore in the first joint venture. Salzer will bring in its share of 26 per cent over the next 12 months.
Please tell us in brief about the products in your newly-launched “energy” segment. Do you see growing consciousness towards energy-conservation products and solutions?
The energy management business was developed in-house by our R&D team. Energy being a state government mandate, this is predominantly a tender-driven business, and there have been no new tenders that have come up. However we are hopeful as our systems used by four municipal corporations in Coimbatore, Tamil Nadu, have demonstrated that energy consumption has reduced by 30 per cent.
“The Kaycee brand will continue to co-exist with Salzer.”
Lastly, you spoke about having acquired controlling stake in Kaycee – a longstanding industrial switchgear brand. Please discuss the rationale of this acquisition and the positive impact seen on Salzer.
Kaycee Industries, in fact, actually got CAM-operated rotary switches to India. It is a pre-Independence company with a strong and widespread presence in the domestic market. Around two years ago, we completed the acquisition of Kaycee Industries from its promoters—CMS Group.
The rationale behind this strategic acquisition was to strengthen Salzer’s position in the industrial switchgear market. Salzer also stands to benefit from an enhanced product offering and an expansion of its footprint into newer products segments and markets.
The “Kaycee” brand has a strong reputation and customer loyalty. The brand dominates certain markets where Salzer traditionally did not have significant presence.
In summary, the acquisition is complementary and synergistic to Salzer’s existing line of business, and provides access to a larger client base.
Will the “Kaycee” brand coexist with “Salzer”, especially for rotary CAM switches?
Yes, the “Kaycee” brand will continue to co-exist with Salzer.
