Ladies and gentlemen, good day, and welcome to the GE T&D India Limited conference call for the second quarter ended 30th September 2022. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suneel Mishra, Head of Investor Relations at GE T&D India Limited. Thank you, and over to you, sir.
Thank you, Roshan. Good day, and welcome to this conference call that has been organized to present and discuss audited financial results for the second quarter ended as of 30th September 2022. Now let me introduce GE T&D management team available on this call. We have with us Mr. Pitamber Shivnani, who is the Managing Director and Chief Executive Officer. We have Mr. Sushil Kumar, CFO cum Whole Time Director. Mr. Sandeep Zanzaria, who is our Commercial Leader. We have Mr. Mariasundaram Antony, who is our Project Business Leader. We also have with us Ms. Bhumika Sinha, who is the Company Secretary. We have with us Mr. Anshul Madaan, who is our Communications Leader. Please note that this conference call is scheduled up to 5 P.M. I hope you would have received the investor analyst presentation, and the same has been uploaded in our website.
I hope you would have also read out the disclaimer as to slide number 2. Mr. Shivnani will begin this conference call highlighting key events of the quarter. Mr. Mariasundaram updating us on operations, followed by Mr. Sandeep Zanzaria, who will take us through order book and the T&D grid market. Mr. Sushil Kumar will give his insights on the financials. I would now request Mr. Shivnani to begin the conference with his opening words. Over to Mr. Shivnani.
Thank you, Suneel. Ladies and gentlemen, good evening. Thanks for joining the call. We hope you and your families are healthy and safe. I would like to start this call by giving you a brief overview about the last quarter and then would request my other colleagues present in the call to go through the details. First of all, thanks to the diligence of our execution teams and consistent efforts towards lean initiative, we have been able to deliver a profitable second quarter of financial year 2022-2023. We have reported a net profit of INR 2.8 crores compared to a loss of INR 7.7 crores in the corresponding quarter of the last financial year. Our overall sales in the second quarter were at INR 700 crores compared to INR 850 crores in the corresponding quarter of last financial year.
We received the orders for around INR 490 crores. The orders were down in the second quarter due to a few major decisions regarding PGCIL contracts getting deferred to Q3 and Q4. However, we have a good pipeline in the next quarter, and Sandeep will cover more about this in his address. As we move into the last two quarters of the financial year, we continue to focus on reducing costs to drive profitability. We have seen some stability in commodity prices and inflation. However, we continue to monitor these variables closely and are well-placed to adjust our procurement strategy accordingly. As per the report released this Monday from Arthur D. Little, a renowned international management consulting firm, India will lead additional strategic investment of over $300 billion to achieve its clean energy capacity target of 500 GW by 2030.
The findings of the report further reinforce the continuous growth of the Indian power sector in the coming years. The clean energy acceleration, along with the government focus in introducing policy reforms in the power sector, will boost the transmission industry overall. Our strategy of taking new orders remain unchanged. Our priority will be to pick orders that will help us grow profitably, keeping in mind the long-term sustainability of the company. With that, I will request Mariasundaram Antony to provide further insights on the operations during this quarter. Over to you, Maria.
Thank you. Thank you, Pitamber. Good evening, ladies and gentlemen. It is my pleasure to share with you the operational update of GE T&D India Limited. In this quarter, last quarter, Q2 of fiscal year 2023, we actually continued to commission three milestones. Actually, three milestones with our customers across the region. It involved commissioning of major equipment at different substations. I would like to call out some of those three milestones achieved in some of our key operations and regions in the last quarter. I think we commissioned the IPPs with 100 MVA IPP in Himachal Pradesh for the Himachal Pradesh Power Transmission Corporation Limited. Then we also commissioned I think 200 MVA IPP for MSETCL in Subhedar substation in Maharashtra. Then I would say we actually covered a lot of commissioning milestones.
I think we completed a lot of commissioning milestones in Bhutan at different substations for Bhutan Power Corporation in Phuentsholing, where we commissioned the transformers, as well as in Damchoe where we also commissioned transformers there. In Dagapela, where we commissioned the second 40 MVA, 50 and 32 KV transformer, along with the 32 KV GIS. This was a significant completion which we did in Bhutan. Apart from that, we commissioned around 3 400 KV GIS bays for Dhulikhel Hydropower power plant, which is being built in Bhutan for the UP, Uttar Pradesh State Corporation, I think. We actually commissioned the 3 bays out of the 15 400 KV bays which we have planned to do there.
In addition to that, in Odisha, the Angul West substation, we commissioned the transformer along with the 5 bays of 140 KV GIS and 9 bays of 30 KV GIS. Finally in Jharkhand, in Latehar substation for PGCIL, we commissioned the 220 KV AIS bays. We continue to kind of implement our technologies covering our transformers, GIS, AIS in the substations for the region. We'll continue the momentum as we move into the last two quarters of this year. Thank you, and I will now hand it over to Sandeep Zanzaria to give the commercial update.
Thanks, Maria, and good afternoon, everyone. If you look for H1 results, in terms of revenue we are down by about 2% from the INR 1,110 crores of H1 performance for 2021-22. Versus INR 1,090 crores of H1 performance for 2022-2023. If you look to the comparable quarter-on-quarter, we are down by about 23% with INR 490 crores versus INR 650 crores. This quarter has been primarily got impacted on both sides by shifting of lot of PDCD projects. The complete Rajasthan packages because of GIB issues have again shifted. Even the Bhakra packages have also now gotten delayed. Actually because of this.
I'm sorry to interrupt. May I request you to please move the phone a little closer to you, sir, so we can hear you better?
Okay. Now is it okay?
Yes, sir. Please go ahead.
The Bhadla packages also and the other related packages are also getting delayed due to certain approvals and survey issues in that area. We are now seeing that, probably in Q3 and Q4, large number of decisions will be taken. If you really look at the details of the orders which are there, most of the orders are centered around our GIS product and as well as the automation and the maintenance contracts. Another aspect would be is that we are L1, we are in a good way, close to about INR 700 crore, which we have carried over from the last quarter, which the orders could not come due to the approval issues. That could be a carryover, which is going to be booked. I'll hand it over to Sushil for further. Thanks, Sandeep. Good evening, everyone.
We move to page three on financials. As Shama mentioned during quarter two, we generated revenue of INR 700 crore, which was 17% lower than last year's revenue of INR 861 crore. However, at the same time, due to operational execution improvement versus last year and reduction in expenses, we have generated EBITDA of around INR 34 crore, which represents 2.8% of revenue compared to an EBITDA of INR 20 crore, which is representing 2.2% of revenue in the last year. The EBITDA includes other income because most of the elements in our income are exceptional in nature. Similarly, on a first half basis, we generated revenue of around INR 1,300 crore, which was lower than the revenue of INR 1,500 crore, approximately INR 1,500 crore generated in the last year by about 30%.
However, we see a similar improvement in the EBITDA. In the first half of this year, we generated an EBITDA of approximately INR 65 crores, representing 5% of revenue, versus INR 21 crores representing 1.5% of revenue in the last year. During the first half this year, our debt has increased from INR 0.8 billion in the beginning of the year to about INR 3.6 billion at the end of September. This is mainly because of increase in the working capital, and we are taking actions to recover this in the second half of the year. Moving to page number seven, which gives a breakup of orders, revenue and orders on hand. For about INR 490 crores orders in this quarter two, 40% of the orders from export market and 60% of orders were from domestic market.
On a first half basis, out of INR 1,085 crore orders, 84% of orders from the export market and 96% from the domestic market. On the revenue side, out of INR 700 crore orders, revenue in quarter 2, 31% was from the export segment and 69% from the domestic market. In the annual H1 revenue of INR 490 crore, 32% revenue came from the export market and 68% revenue from the domestic market. The breakup of the backlog in hand of approximately INR 3,450 crore is also given on the page. 62% of the backlog is from the private customers, 30% of the backlog from state utilities, and the remaining 16% from the central utilities and CPSUs. With that, we'll now open up for questions. Thank you.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question at this time may press star and then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to please mute handsets while asking a question. We will wait for a moment while the question queue assembles. Our first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, congratulations to you for holding a good growth of global profitability. My first question is the increase in debt. You mentioned that was in capital-
Sorry to interrupt. Parikshit, if you're on a speakerphone, please switch to your handset while you're asking your question.
Okay.
Thank you.
My first question was, on the debt level, it has gone up. Our scale of operations has come down. Even the order intake has been lower in the first half and even the revenues. Any particular reason? Are we seeing any elongation in the working capital cycle? Can you please elaborate on this increase in the working capital debt?
Yeah. The changes in the working capital are given in the cash flow statement. We had about INR 250 crore increase in the working capital. Most of it is in the inventory side, because we have procured inventory for the orders which are in the manufacturing process for the orders which are in execution for current year, for first second half of the year. Then rest of the increase is in the trade receivables and provisions and liabilities. As I said in the beginning of the call that we are making continuous effort to increase the cash collection pattern to improve it and reduce the working capital and reduce debt.
We expect that from now to the end of the year, there will be an improvement from the current level of working capital, and we should be able to improve. It's mainly the inventory and payment of trade payables which have increased the working capital this year.
Okay. The second question is on the overall market size. We have been telling historically that the market size for us is about, India piece is about, close to about INR 18,000-20,000 crore. For this year, how do we see this given the backdrop of weaker inflows, which has accrued in the first half? How big is the total market size for us?
Parikshit, I think we are still anticipating it to remain, like about INR 18,000 crore, primarily because the market is not, I would say, they have got deferred and not been wiped. Like, for example, I was just saying that the Rajasthan 30 GW packages, Khavda 30 GW packages. All those packages have got deferred to when primarily there's some GIB issues, one due to other clearance or survey issues, et cetera. But those generation projects have already started coming up. All the sanctions for generation projects have happened. Eventually the transmission fees are going to come. It's delayed, but it is not, like the market has not vanished.
Okay. The question is on the products. To address this market, are there any product gaps and after the GE Vernova things which happened. Do you think we can introduce more products on the HVDC side and the transmission side? Can the potential market for us go beyond 18,000 by introduction of new products? If you can touch upon that, any new products have been planned to be introduced in India.
I think one thing is there that, for example, whatever HVDC projects right now are coming, we have already executed a similar project in India for the Champa-Kurukshetra. The upcoming project is exactly similar like a ±800 kV, 6,000 MW, which we have already executed. On the HVDC front, we are not lacking anything on the technology side. In fact, the transformer, et cetera, were all manufactured in India only. We were the first manufacturer in India to have supplied an 800 kV DC transformer. That is one thing. Second thing on Vernova side, it is basically a restructuring which is happening at the global level. It is exactly a restructuring that is happening between the companies. Our product portfolio in that case is not getting impacted in any way.
Only thing is what's happening is that, the global team and the Indian team keeps on working, depending upon the need, that if any new products can be introduced or if there is a requirement of new products which are there. We constantly keep on monitoring and, the products which are required in the market, then they are brought in and launched.
Okay. Sir, just the last question on the current levels of capacity utilization, if you can talk about it and the export opportunity. Can we reach out to more countries? Any plans over there to increase distribution in the exports market beyond Bhutan or some other countries?
It's not that we are only exporting to like, for example, Bhutan and all. There is a huge amount of exports which is happening to Southeast Asia, to Africa, to Latin America, even to few countries in Europe as well. It's, it is not that. For example, when Maria was talking about, she was mostly talking about from the product perspective, which we are doing in Bhutan, and that is product wise. If you look at our circuit breakers, our GIS, our automation, in fact our transformer guys also, so we are exporting it to many continents which are there. There is a constant endeavor also to add more countries for one thing, and second also to improve the market share in the existing countries we are to generate more volume from the existing countries wherever we are supplying today.
Sir, capacity utilization remain same? You know, capacity is actually a very flexible thing, Parikshit Kandpal, because, you know, we have. Like for example, when you talk about a transformer factory, probably in 400 kV, if it stops, then you will be manufacturing less number of units. In 250 kV, the number of units will become more. So it's kind of a flexible, I would say. But I would still categorize that, we still have a, in Padappai production, we still have, sufficient capacity to take about 20%-25% more orders as well. Okay. Let's put this, in another term. In 2019, 2018, those years we had a revenue of around INR 4,200-4,300 crore. Yeah.
It means that the organization has capacity to execute that kind of revenue and go beyond also. Obviously, it will require additional effort, for one. Obviously, given the COVID challenge that we faced in last couple of years and the issues on margin and customer exclusivity in the past, we were selective for last couple of years. As the market picks up, we will try to improve our other execution, and we should be able to increase revenue if the orders are also developed by us. We have capacity to go beyond our current market position. Okay. Thank you, sir. Thank you.
Thank you very much. Ladies and gentlemen, before we take the next question, we'd like to remind participants to enter star one to ask a question. The next question is from the line of Ashwani Sharma from ICICI Securities. Please go ahead.
Yeah. Thanks for the opportunity. Couple of questions from my side. First is, the order inflow that you said that has been deferred, is it possible to quantify the order which got deferred in the quarter?
It's just about INR 400-INR 500 crores, which is a combination of something coming from export market and also from industry. We'll not be able to give you the further details in terms of customers et cetera, but that's the overall position that we are having.
INR 500 crores which got deferred, that's what you're saying?
Yes.
Okay. One clarification on the previous participant's question. Now INR 18,000 crore is addressable opportunity. This is purely for domestic market, right?
Yes.
My second question is on the margins. If you look at margin, so we have, you know, barely reached at breakeven that is available. Where do you see margin even given the fact that now the commodity prices have also kind of softening. How do you see this, you know, fiscal 2023, you know, ending in terms of margins for them, sir?
Ashwani, thanks for the question. As for the past, I will not be giving the year-end guidance or any particular number. Just a few clarification on the existing margin level. During this quarter, we generated a gross margin of 25.2%, which is lower. There is one specific element which I want to highlight. We booked a charge of about INR 12 crore in this number related to foreign currency variation. There is a corresponding offset, which will offset it in the other income. That is the reason we are calling other income as an exceptional item, because as per the accounting standard, INR 1.5 lakh is a gross profit and the other is in the other income.
If we eliminate that item or adjust for the gross margin level for the quarter, we can count the gross profit as 27%, which is lower end of the range of 27%-30% that we have or 27%-29% that we have communicated in the past. Whereas on an actual basis, our actual gross profit number is 29.5%. Eliminating this INR 12 crore Forex adjustment, the H1 gross profit is 30.5%, which is the higher end of the range we have been communicating. That is because within the range that we have communicated in the past, 30% of gross margin H1. As we also mentioned in the past, order book margin is generally 27%-29% or 30% of that range.
During execution we try to improve our average which is 30% to generate better profit. Last 1 year or 18 months, this was not difficult or not feasible because of significant variation in the commodity price and even few other exceptional item as we have been seeing in the past. Our individual goal for what is that we try to improve on this margin by the way.
Okay. Thanks for the explanation. Just lastly, if you can update on the Leh-Ladakh project, what is the status?
Leh-Ladakh project is going to take time because the project is going for some studies because of you know, environmental issues and other things. After the studies are completed, then the specifications would get around probably. It looks slightly longer. I don't expect that it's going to take minimum more than a year to materialize.
Can we expect some positive news in the second half of the next year?
There is a possibility. I'm hoping to get formalized, next year.
Okay. Understood. Thank you.
Sure.
Thank you. Ladies and gentlemen, you may enter star one to ask a question at this time. Participants who would like to ask a question may please enter star one now. The next question is from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead.
Hello, sir. Thanks for the opportunity. If you look at the current order backlog also, there's a 60% contribution from the private sector. If you can touch upon, you know, going forward, how is the outlook for the private sector and these, you know, projects, the execution of the current order backlog, what's the kind of, you know, timeframe, which you are looking at?
The timeframe that we are looking is earlier I would put it as about 13-month timeframe. You know why the private sector contribution is more and more increasing? Because the investment is happening on the generation side if you look at wind, solar, that's happening in the private sector and even in the transmission sector also if you see, there are a number of private transmission players who are now winning the bids for the TBCB project. That's why the share of private sector is now increasing. Earlier, before the TBCB project, it used to be dominated by the government sector.
Okay. From the industry's perspective, are you seeing any kind of attraction there, you know, from them, maybe cement, steel plant? Is there any kind of a demand coming from the core industries for power transmission equipment?
We are seeing a big uptick in the demand. As far as cement demand, you know, it is mostly the lower voltages requirement which is there. A cement plant expansion are typically more investments in 30 kVA and below. If you really look at the steel plants and also we are seeing other metal sectors also. We expect in time to come from aluminum as well, some demand we are seeing coming from copper. And also steel, that is one of the primary investments that we are seeing. Expansion of capacities which is there.
Okay. Sir, in the initial remarks you also talked about, you know, automation in terms of the orders picking up. If you can give more color, you know, what is the kind of quantum of these automation orders and how does the competition stack up, you know, or maybe from our market share perspective, how it has been. Can it expand from the existing market share, maybe on the automation side, sir?
On the automation side, I would say that the digitalization of the grid is definitely helping a lot. That is one aspect of it. We are continuously even talking to various asset owners as well on even the digitalization of the maintenance aspect of it, because that is going to help them and us both in terms of providing the latest global technologies, and also then it will give them a better predictability and also these analytics will help them in reducing the downtime for those industries. That is the first thing. Secondly, on the competition side, of course, we are, I would say, equally on an equal footing as compared to other competitors.
I'm not gonna comment much on the market share part of it, but I can only say that, you know, now the projects which are coming, whether it is industry or whether it is, for example, the PBJ or the transmission side, the weightage of automation is slightly increasing. There are a few tenders which have come out with, on the specification and the clear digital technology. So that's why the share of automation in that product is slightly better. We are totally geared up to deliver that kind of solution from the company.
Okay, sir. Sir, just lastly from my side, you know, there's also talks about more CapEx picking up on the distribution side in terms of, you know, metering and distribution CapEx picking up. Any thoughts there, you know, in terms of, whether GE T&D can participate in that opportunity or we are, you know, developing products which can cater to that market?
We are not into metering side, but definitely, you know, there is a theme of RDSS which is coming, and GE is one of the leading players when we talk about DMS, Distribution Management System. I think once the RDSS strategies which are going to come in, we will be very strongly positioned in green gas area. We have a quite advanced solution in terms of providing the distribution platforms in terms of the management system. If you really look at, we have worked very closely with Genesis Carcas and all, and wherever their distribution systems are there, our platforms are already implemented and investment is very strong.
Okay. What does this require, you know, we setting up any new capacities and from the core business current, you know, capacities perspective, what is the kind of utilization level, and how do we see the, you know, CapEx, for us, shaping up going forward?
These projects which we're talking about on the distribution side, we are there mostly on the software side. It's going to require more resources in terms of manpower, et cetera, integration, testing, all those things. It is not going to require any additional manufacturing capacity on that.
I would say additional thing that as far as the manufacturing capacity is concerned, whether it is GIS, AIS, control and relay panel transformers, we have enough manufacturing capacity available in our 4 large factories in India actually.
Got it. That's all from my side. Thanks for taking my questions.
Thank you very much. Ladies and gentlemen, to ask the question, please enter star one now. Our next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Thanks for the follow-up. Just one question. On the exports market, if you can quantify, like how big is the possibility for us, the big opportunity there, so if you can quantify that.
You know, export market, when we are talking about, it is mostly, today we are concentrated mostly on product sales. It's difficult to quantify because, it also depends upon the transmission plans of those individual countries and the realization. At a construction level, we have been doing close to about 30%, 30%-35% of our order intake is coming from the export market.
That is on a lower base. If the ordering improves, the percent becomes larger part of that proportion will come down, right? Because I think first half we have done INR 370 crore of export inflows.
Only thing is I think going forward because more and more we are seeing that, the renewable capacity globally is getting added. You know the renewable is actually driving the transmission market, today. We have a generation capacity which might be the conventional path. Then on top of that when we are adding the renewable capacity, so the demand and the drive is there. Of course, we are looking at Europe and all, the US, et cetera. Of course, the demand which is now coming from Europe and the US has been phenomenal for the transmission team. This is what we are expecting now that similar things get replicated into other geographies as well. Like what we are seeing today, we have a kind of a 400 GW of installed capacity.
Of course, with not suppose that in 2050 it will be 500 GW renewable capacity. In next 2-3 years, we have to add practically an identical generation capacity to what is existing. That is why the demand in a big fashion. The same thing is going to get replicated into many geographies, and I think that's going to drive up the demand in export market as well. Only thing is that some geographies have slightly delayed plans of doing it. Some geographies are very advanced on its plans of renewables. That's how, you know, the shift is going to happen between the demand of export market.
Okay. Basically you're saying is that the multi-cable infrastructure on the transmission side picks up. We see a very big pipeline building up over the next few years as the renewable energy picks up, right?
Definitely it's going to happen. There's no doubt on it. I think maybe in next 10 to 15 years, it's going to be a big time for the renewable generation business, and it's going to impact, positively impact the transmission business as well.
Okay. Within the domestic market, how are your relationships with the players who are basically on the EPC side and they sometimes take support bid from us by bidding for some of these packages on the EPC side with our customers when they give an entire complete solution including transformers and the transmission entire ecosystem. How's the business development activities there? How's the relationships there likes of KEC or Kalpataru? If you can also highlight that.
I would say that we have a good relationship with all the EPC companies which are there. It's in fact on the presentation which you would see. There are number of others which are there from KEC to Kalpataru as well, which have been listed in the orders that we have acquired in the last quarter. We are one of the leading OEMs and we have like decades of relationships with all the equipment companies which are there.
Just last thing, so this L1 order of 500, so is it like, typically you carry these kind of L1 or like every quarter or is this like one-off, like a big L1 there or there are a lot of orders there?
No, we don't carry this volume of something we could also be carrying, but not of this volume.
Okay. Is it a government order or again a private order? I mean, is it like, can you give?
Combination of both. It's a combination of both.
Okay. Sure, sir. Thank you, Sushil Kumar.
Thank you. Thank you, Parikshit Kandpal.
Thank you. Ladies and gentlemen, to ask a question, please enter star one now. Our next question is from the line of Aniket Mittal from SBI Mutual Fund. Please go ahead.
Yes. A few questions from my side. Firstly, if you could just talk about the competition intensity right now that is there in the market. The reason I ask this is because, when I look at some of the competitors, you know, the order inflow for them has been heavy, while we've not been able to grab that amount of order inflow. Just wanted to understand the reason for this and how do you look at the competition right now in the market?
Aniket, two things here which I know. First is that, yes, we have been selective in terms of our bidding strategy, definitely in the market. We look forward for the surety of payment, the price levels and everything. For example, this quarter, Mr. Sandeep Zanzaria was saying that some of the orders which were expected where we were L1 have got shifted to the next quarter, which is Q3. I think it's a combination of both things, our selectivity and also the shift in the orders. I would only say that, as the quarters are progressing, the competitive intensity is, I would not say to a great extent, but slightly coming down. That is one thing. We are seeing an uptick in the price also which is happening.
Okay. Sir, the second question was just to understand a bit from the order book. In this current order book, are there any projects that are slow moving because of, let's say certain contracts that we would have won in Rajasthan which are now getting related to GIB issue? Just wanted to understand any slow moving orders here.
Presently we don't have any contracts which have got stuck up with for GIB issues. In fact, there are projects which are stuck up for GIB issues, but there we are a product supplier, so the EPC or the end clients are accepting our product. We don't have a challenge on our factory because of any GIB issue.
Okay. Because in one of your remarks, you mentioned that a few INR 500 crores of orders have gotten deferred. You know, where do these orders fall in place?
Basically, sometimes what happens is that, we have been awarded the L1 and then the decision making by the process in the customer, like the approval of board, management, everything, takes a bit longer time, and that's how the order will not come by in the September, but might come in October or something like this. That's how it would have differed. It is nothing to do. These orders which are there with INR 500 crores have been retained, has nothing of, any GIB or, any of the environmental issues associated with that.
Okay. The next question is on the working capital front. You've mentioned that you have INR 250 crores lag and you plan to improve this going forward. If you could just highlight what sort of working capital days are you currently at and where do you think you'll end for FY 2023 and going forward?
Talking about the improving working capital for about INR 350 odd crores. One major increase as I mentioned was inventories. These inventories are mainly for the revenues of H2. At the same time, we had an outflow in the supplier payment due to reduction in the volume. The plus point is also there with smaller offset in the receivables. There were few payments end of September which were operational stocks for a limited period, and we hope to realize that in H2 as well. The endeavor is always to recover a large chunk of this INR 350 crores outflow which was because of timing of the requirement of the project under execution. To recover that possibly in the first week.
In terms of number of days of working capital, just let me just check if I have that data readily available. Sure. Give me a few minutes, and then we'll answer that with you as well.
Sure. Just maybe one last question, it's on the gross margins front. Like mentioned, if you adjust for the, you know, foreign currency variation, you still have that 27% mark. How would you look at the gross margins going forward based on the current order book that you have? Would we be revealing that 27%-29% mark?
We have a long cycle to get there and many a time the projects which are under execution, which is a project, change the margin level of the current fiscal year. In March, we will continuously communicate and let's look at the gross margin for a longer period. For the quarter, eliminating the Forex impact, it is 27%. However, if you take H1, eliminating the Forex impact, the gross margin is 20.6%, which is at the higher end of the range of 27%-30% which we have talked about. Endeavor is to first at least maintain this and try to improve further in execution. Our business dependent on many factors, including the unregulated price situation as well. Your earlier question on the working capital.
At present we have the working capital at around 80 days of revenue.
Okay. What is it that you're looking to bring this down for? Because you mentioned in your comments that by the next six months this will likely come down.
We'll try to cover at least half of this.
Okay.
Including this fiscal, that's 2023. At least half year plan to recover next year for the current year. Half of FY 2024, I mean. FY 2024 minimum one half of FY 2024 recovery, we are targeting timing.
Understood. Thank you. Those were my questions.
Thank you very much. Ladies and gentlemen, participants who wish to ask a question may enter star one at this time. Anyone who wishes to ask a question may enter star one now. We have a question from the line of Amit Anwani from Prabhudas Lilladher. Sir, please go ahead.
Hi, sir. My question is, with respect to the INR 18,000 crore prospect which you have mentioned. If you could just throw some color, which kind of, you know, product 400 kV, HVDC, any breakup you have factored in. Also with respect to central state or anything, any more color on this INR 18,000 crore prospects.
It's basically combination of project and product which is there. Normally this will be comprising of Power Grid projects. This will be comprising of TBCB projects. This will be comprising of huge utility projects. This will be combining product industry. From the street also there are lot of opportunities for direct products like the electrical transformers and control relay panels, breakers and other items as well. This is primarily consisting of this whole thing. I would try to quantify about the split between 400, 355, 220 and 150. But I really don't have available business. But I think close to about 50% will be coming from 400 kV and balance other rest of it will be contributing to balance 50% to overall volume.
This year, out of this about close to INR 2,000 crores will be getting contributed from HVDC. Next year this we expect it to be a higher volume for HVDC next year.
Okay. Next question is on the top line. You've mentioned about, you know, prospects representing 500 GW opportunity which is there till 2030. You mentioned about some report, you know, mentioning some great opportunity for the sector in coming 5, 10 years. How can we position T&D with respect to growth prospects in the next, let's say 3-5 years? Is there any assessment you have, sir?
Already, for example, all our factories which are there are delivering the latest technology which is there. Example, we are one of the key players in GIS. We have a complete product portfolio from 765 kV to 260 kV GIS offering. If I look at the breaker automation, there is a complete offer, the instrument transformer, transformers. We have a presence and I would say complete portfolio which is available. Also on the digital front, on the high capacity side, when I see we have the portfolio flexibility, STATCOM, station. All such technologies are available. I think we are just. On the other front also I would like to point out very clearly is that we would be selective in the market in terms of taking the order. Looking at two aspects.
One is the payment capability of the customers. That is one thing. The payment security is must. Second also it should be a profitable growth rather than just a blind growth which need to be done.
Okay. Can we expect some growth in 3-5 years in the second?
Yes. I would not like to put a number to it, but yes, we expect a growth from different areas.
Thank you, sir.
Thank you. Ladies and gentlemen, you may now press one to ask a question. Our next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.
Good evening, gentlemen, and pardon me if this question is repeated by anyone. This question is on the competitive landscape and market share. If I look at the results which have been announced, where Hitachi has shown a 32% growth in the new orders, CG Power has shown a 58% growth in the orders for their power T&D division. Whereas, when I look at GE T&D, there is a drop of 30%. As an outsider, it seems like there is a significant loss in the market share. Actually also we understand there was an HVDC, but that was in first quarter.
If you could just help us understand about market share and the reason, that would be very useful.
Yes. Hi, Bhavin. Sandeep here. I think one of the things what happened was that there were few orders which were, I would say, negotiated that we were relevant. That's close to INR 500 crores. The final ordering has not shifted to this quarter. That was one of the major impacts. Because of this, you see a drop in the numbers.
Okay, sure. One is to add INR 500 crores to the current INR 500 crores of orders that we have booked. It'll be more or less like a INR 1,000 crore kind of a number.
Exactly. Because, you know, we always carry. So every quarter we would be having this phenomenon where we carry certain amount which we deem relevant, but it doesn't get divided into that. But it's not beyond INR 500 crore. It is always this phenomenon, but not to this extent.
Understood. What would be that normal, normalized at 11 that you would be seeing every quarter? Just to understand, and do a more, like-for-like comparison.
Normally it's somewhere between INR 150-200 crore is what we kind of. It also depends upon quarter to quarter, but there are times when we carry somewhere between INR 150-200 crore to the next quarter. This time there was slight delay in customer processes, the value being close to INR 500 crore.
I understand. Second question is in a slightly related question. PowerGrid in its analyst meet mentioned about INR 24,000 crore of project held up due to the Great Indian Bustard, which can be cleared only once the verdict comes in. If you could give some color on what's the kind of projects which have been held up. Alongside, if you can also help us understand what's the competitive landscape, because some of your peers have started announcing capacity expansion. What's the kind of capacity utilization that we have? There are a few questions in this.
Bhavin, for GIB issue, I think there are two types of projects which are there. One which is already awarded and which are stuck up. I just explained, I think, prior to your joining. In that we have few orders, but first those products have not got stuck up because the customers are accepting those products and there will be clearing somewhere and we'll be using that. This is one aspect of it. Second, yes, I agree that because of the GIB issues, the upcoming pipeline of Rajasthan has got stuck up lately because in the last quarter itself we were expecting that the decision should come and the whole pipeline should move. It has been stuck up and now it has still not moved.
We expect that in next two to three months, that whole pipeline of about INR 5,000-7,000 crores should be moved for the GIB issue which is stuck. Because it's not only the transmission projects which are stuck, there are few generation projects which are stuck. There also we have lot of, you know, product capacities, whether it will be circuit breakers or automation or transformers which are stuck. So that is another aspect of it. Regarding the, for example, the capacities which are there, I think today, we have sufficient capacity, I would say, in the factories. Only thing is probably, for example, they require some few rectifiers and et cetera to be added.
This can be added at any point of time, depending upon the situation or depending upon the uptick in the market which is there. What I've been saying is that, for example, this, you know, a host of pipeline of projects have been available because in last about since 2020, there has been constant shift which is happening. Whatever projects got announced in 2019, sorry, in 2020 got shifted to 2021. From 2021 and 2022, it is now getting shifted to 2022, 2023. There are actually three projects of Khavda and Rajasthan again shifting. There are new projects for next year. For example, you know, there is a close to about INR 30,000 crore project.
INR 30,000 crore not for us, but for the complete transmission space, which includes lines, et cetera, everything, has now recently been announced by the government in the new transmission committee. That, you know, the visibility of pipeline is there. There is a constant shift of pipeline which is constantly happening. That is something, you know, which is making it unpredictability a bit higher.
Sure. I understand, sir. Alongside, I mean, an extension of this, I mean, historically, we've been talking about states differing on the ordering. Are you seeing any reversal in the deferral, and are we seeing any states and if you could name some of these states where we are seeing a positive traction?
There's not much of a traction in states. There are few opportunities which have come up, but they again got deferred because of budget issues, et cetera. One was, for example, OPTCL. We are seeing few opportunities in Odisha, something coming up in Gujarat. It's, I would say, it's still not something. Earlier we used to see that states used to contribute close to about 40% of the minimum market of transmission. Today we don't see anything of marked value coming from any of those states.
Sure. Yeah. These are all my questions. Thank you so much for taking the questions.
Thank you.
Congratulations from our side.
Thank you very much. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Sushil Kumar, I'm sorry, Mr. Suneel Mishra for closing comments. Please go ahead, sir.
Yeah, thank you, Rochelle. Thank you everyone for your participation. With this we conclude today's conference call. In case you have any other questions, then please feel free to contact me or Mr. Anshul Madaan. Thank you again.
Thank you, everyone. Thanks.
Thank you very much members of the management team. Ladies and gentlemen, on behalf of GE T&D India Limited, this concludes this conference call. Thank you for joining us. You may now disconnect your lines.