The Hindu Business Line : Salzer Electronics planning rights issue

The board, which met last week decided to go in for a rights issue, but left the other details (such as the premium, and ratio) to be worked out by a sub-committee formed for this purpose. The sub-committee is expected to meet within the next couple of days to finalise the proposal.

The issue is aimed at strengthening its capital base to meet the expansion cost.

The venture, incorporated in 1985, started its journey with the production of CAM Operated Rotary Switches. Over the years, it has expanded its product range to include automobile switches, load brake switches, proximity and modular switches, wiring ducts, terminal connectors and toroidal transformers.

Salzer Electronics forayed into the business of torodial transformers in 1996 by collaborating with the Canada-based Plitron Manufacturing Inc. This business has grown significantly in the last couple of years, from a modest Rs 20 lakh per annum to Rs 1 crore in 2003-04. It touched a high of Rs 2.5 crore in the first half of 2004-05. The company is confident of doubling this sum by January 2006. The company has been exporting 85 per cent of the transformers to its partners in Canada.

While striving to achieve this turnover, the company is also proposing to manufacture higher KVA transformers, which find application in large UPS. "The opportunity in this space is phenomenal," its Managing Director, Mr R. Doraiswamy, told Business Line.

The company is planning to enhance the plant capacity for manufacture of the new transformers. "We are importing the machinery from Germany. The total investment cost works out to $0.93 million (Rs 4 crore) with an additional working capital requirement of $0.47 million (Rs 2 crore). The total fund requirement works out to $1.40 million (Rs 6 crore)," he said.

For Salzer, the expansion proposal is still on paper, but orders have started to flow and so have the supplies.

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