Saietta Group plc (LON:SED) Executive Chairman Tony Gott and Chief Financial Officer Steven Harrison caught up with DirectorsTalk for an exclusive interview to discuss a new Letter of Assignment, what it means for the group & its shareholders, progress with small commercial vehicles, the signing of a suite of contracts, and the outlook for the company going forward.
Q1: First off, Tony, a couple of weeks ago you announced a new Letter of Assignment for a third vehicle line with an existing Indian client. Can you tell us about this third line and what’s being produced?
A1: It’s very significant for Saietta this, we’ve been working with these clients on the introduction of our Axial Flux e-drives for two platforms. This latest announcement really is a tremendous, huge endorsement of the state of that original programme and also our capabilities in a related sector.
So, for us, we’re super pleased about it because everything is going on the right tracks, at the right time, with the approval of the client.
This latest one features Radial Flux Technology, we have integrated inverters complete with transmissions etc., and that takes us into a slightly different product range, it’s a light duty vehicle that is for personal us.
It significantly demonstrates to the Indian market our Radial Flux Technology as well as our previous Actual Flux so very important for us to be able to demonstrate the capabilities of that system also in that market. We also see it as a huge endorsement and validation of the work we’re doing with the OEM.
Q2: What does it mean for the Group and for shareholders?
A2: The shareholders here, we’re moving into a market which is bigger, nearer and more certain that ever before so that enables us to deliver increased shareholder value sooner, basically.
That’s the reason why this is an important signal I think to shareholders that our strategy is now crystalising in our chosen market and chosen sector and it’s coming to us, as I said, sooner, bigger and more certain that ever before.
Q3: Are you still on track for the first projects for the two small commercial vehicles?
A3: Again, this further endorsement is a clear sign that everything is on track.
Importantly, our new manufacturing facility in Gurugram in Delhi is in the last stage of completion of fit out. Gurugram, by the way, is the home of Google, Meta, Hyundai, JLR, a lot of our supply chains and customers.
That is progressing very very well, machinery is going inside the factory as we speak, and the technical programmes, those vehicles running round at the client’s premises all successfully.
The programme delivery and the supply chain is all progressing well, the supply chain is in place, and it’s important to reinforce that our supply chain are all very very large Indian companies, well used to supplying at volume with the quality systems required by an OEM.
So, the whole entity is now coming to fruition in India to supply units from now onwards.
Q4: You also announced the signing of a suite of contracts to replace the joint commercialisation and development agreement, how has the agreement changed and what does it mean for the Group now?
A4: This is a strategic move. As you might remember, in November ’21, we acquired a company called e-Traction, that brought into the company some specific technologies in heavy duty motors and high voltage controllers. The IP sits now within the Group and is held with our technical teams in Silverstone.
November last year, we signed the agreement with ConMet to leverage that background IP and move it into new products in-wheel generator, in-wheel motor. Since then, the project’s gone really well, progress has been really good.
For us though, we were aware that the time to market for these products was moving to the right in terms of getting the revenue streams in place, and so it was our decision, our Board’s decision, to concentrate on the market that is right in front of us, which is light duty market around the world but predominantly in India. To be able to relieve ourselves of the management bandwidth issues that are caused by managing a very completely different market opportunity, which is trucks in the US.
In doing that, we’ve managed to secure a free cash injection for the company which will be applied to our Indian programmes but significantly the IP that we bought for €1.7 million two years ago, now will return back in value to the company to the tune of up to €20 million, as those new products come to market.
So, we’re very happy that we’re taking the right technical decisions moving forward.
Q5: Just turning to your Steve, what does this mean now for the outlook for Saietta Group going forward?
A5: This has been a very helpful move, firstly because it’s obviously brought in some additional funds so it’s €3.3 million of cash coming in, and also because it’s helped reduced the burn rate on our cash anyway, because there’s about €2 million of costs that we now won’t be incurring.
All of this enables us to direct our funds towards expansion in light duty, and the culmination of all these factors is our ability to get to EBITDA positive in the first quarter of calendar year 2024, which is something we’ve stated and this obviously helps us feel much more comfortable with fulfilment of that.
