Ladies and gentlemen, good day and welcome to GE Vernova T&D India Limited Earnings Conference Call. 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Megha Gupta from GE Vernova T&D India Limited. Thank you, and over to you, Ms. Megha Gupta.
Good evening, everyone. We welcome you all to the GE Vernova T&D India Limited Earnings Call for Third Quarter of Financial Year 2024-2025. I'm Megha Gupta from GE Vernova T&D India Limited finance and investor relations team. During the call today, we will discuss company's financial performance, including operational highlights, and we'll share key updates. Towards the end of the presentation, we will have a dedicated question-and-answer session.
Also, I would like to highlight that today's discussion may contain a few forward-looking statements which are subject to risk and uncertainties. These statements are based on our current expectations and actual results may differ materially from those expressed or implied. We encourage you to refer to our public filings and documents for comprehensive understanding of the factors that could impact our future performance. Now, I'll introduce GE Vernova T&D India Limited management team available on the call.
During the call, we are joined by Mr. Sandeep Zanzaria, CEO and MD of the company, Mr. Sushil Kumar, Whole Time Director and CFO of the company, Mr. Abhishek Srivastava, Head Business Operations, Ms. Kanika Arora, Communications Leader, and Mr. Nimai Verma, Company Secretary of the company. Now, I'll hand over to Mr. Sandeep Zanzaria to begin the discussion.
Thanks, Megha. Good evening, everybody, and welcome to our Third Quarter Earnings Call. The investment supercycle in the power sector is accelerating, propelled by the increasing demand for reliable power generation, grid modernization, and decarbonization efforts. Notably, India is emerging as a pivotal player in enhancing the grid infrastructure. Recent advancement underscores India's significant role in advancing grid modernization and sustainability.
Demand for our products remains strong as customers modernize and invest in critical grid components such as transformers, switchgears, control relay panels, software solutions, and HVDC systems, which are essential to ensuring a reliable electricity system and effectively connecting new generation sources. There's growing emphasis on improving grid efficiency and reducing T&D losses. India is also quickly adopting robust cybersecurity measures to protect its grid infrastructure from potential vulnerabilities. As the grid becomes increasingly interconnected and reliant on digital technology, safeguarding infrastructure against cyber threats is paramount.
These trends create significant opportunities for our company to leverage expertise and innovate solutions to meet the need of the sector. With this in the background, let me talk about quarterly performance. Our order book Q3 saw bookings of INR 20.8 billion, down by 12% year-on-year, compared to INR 23.7 billion in quarter ended December 2023. Last year, we had a significant order, and if you look excluding that order, the order book has grown significantly. The highlight of the quarter is the receipt of the orders from Sterlite Grid for 765 kV GIS, transformers, and shunt reactors for the renewable evacuation from an REZ in Gujarat.
Our order backlog stood at INR 107.8 billion, as of December 2024, was INR 62.7 billion, which is now up by 72%. This is a record high backlog which the company has achieved and gives a strong visibility of revenue for the next few years. Our Q3 revenues stood at INR 10.7 billion versus INR 8.4 billion in Q3 FY 2023-2024, up by 28%, with a notable increase in our profits. Our profit before tax for Q3 2024-2025 was at INR 1,899 million, compared to around INR 730 million in Q3 of the previous financial year. Cash and cash equivalent balance improved and stood at INR 8.6 billion as of 31st December 2024 versus INR 2.8 billion as of 31st March 2024.
The improvement in balance sheet paved the way for the company to generate cash of INR 1.9 billion during quarter three FY 2024-2025 and INR 6.4 billion for nine months FY 2024-2025 before dividend payment. Market dynamics continue to drive strong demand, and our focus is on maintaining profitable growth by capitalizing on this increasing demand for advanced grid technologies.
We have built a strong foundation in 2024 with solid orders and revenue growth, as well as significant margin expansion and cash generation. We will continue on this path with commitment to lean principles and operational efficiency. We thank you for your continued support. I now invite Abhishek to provide further insights.
Thanks, Sandeep. So, good evening, everyone. I will take you through the key operational highlights, the key execution successes that we achieved in the last quarter. The first project that we successfully commissioned was Reliance Jamnagar, the phase one of the New Energy complex that Reliance is building at Jamnagar. So, we partnered with them, and we were able to complete this complex and challenging project within the defined timeline.
Another key project, which is instrumental for evacuation of the large amount of renewable power being generated in Khavda, so we are partnering with Adani, and there we had commissioned our 400 kV GIS project, through which the power is being evacuated to other states all across India. Similarly, for Power Grid, we had commissioned 400 kV AIS switchyard at Lohardaga.
Another key success for us in the last quarter was the completion of Dhalkebar 400 kV GIS project. This project has been commissioned ahead of the hydropower plant's readiness. Once the plant is ready, this particular project will enable us to get the hydropower from SAPDC project in Nepal to India. This is another key transmission element which has been developed by GE. In addition to that, we have been instrumental in augmenting the existing networks. We worked with KPTCL at Hoodi, and also we had partnered and worked with Hindalco and NTPC and commissioned and augmented their transformer installed base and certain GIS base.
All along, our endeavor has been to strengthen the transmission network for the country, and we have been partnering with all the active customers and completing the projects up to their expectations. So, I hand over to Sushil to take us further.
Thanks, Abhishek. Good evening, everyone. I'll be talking about the financial performance. And first, on page five of the presentation, talking about orders, we achieved an order book of INR 20.7 billion in this quarter, compared to INR 23.6 billion in the corresponding quarter last year, while apparently it looks to be a degrowth. But last year, as Sandeep mentioned, we had a significant order of INR 8 billion for HVDC transformer orders from UK Grid Solutions for our end customer in Korea. So, if we exclude that order from the last year, because this was one large exceptional order, so last year's order booking on a like-to-like basis was about INR 15.6 billion.
And from that INR 15.6 billion- INR 20.7 billion in this year, current quarter, this represents about 32% growth. Similarly, on a full-year basis, we achieved an order book of INR 77.8 billion, compared to INR 44.5 billion in the last year, which represents 75% growth. Some of the key orders that we booked during quarter three, they were related to supply installation and commissioning of 765 kV transformer, shunt reactor, and gas-insulated switchgear for a renewable energy company for Sterlite Grid in Gujarat, and the 400 kV 33 kV AIS package for a 1.4 GW solar plant from a renewable power generation company.
Another significant order that we had was for installation of 765 kV live tank circuit breakers and current transformers from a renewable energy company from a leading company today. Installation of 220 kV GIS substation powering for that data center in the Mumbai region from an EPC group. In addition, we had a few high-voltage product packages and a couple of large export orders, mainly from Portugal and Spain. Overall, we received orders from various customer EPCs and customer utilities power generation companies, as well as the export market, expanding our reach and our diversified customer base.
Moving to page six on the profit and loss performance, this quarter, we did INR 10.7 billion of revenue. This represents 28% growth versus the corresponding quarter in the last year. We achieved an EBITDA of INR 1.8 billion, compared to an EBITDA of INR 966 million in the corresponding quarter last year. This is a significant increase, almost about an 80% increase in the EBITDA for the quarter. Last year, the INR 966 million EBITDA was about 11.5% of revenue, whereas the current EBITDA is about 16.7% of revenue.
Again, a significant about more than five percentage points increase in EBITDA compared to the last year. Similar improvement in profit before tax. So, we achieved profit before tax of INR 1.9 billion, representing 17.7% of revenue, compared to INR 730 million, representing 6.7% of revenue. So, this was quarter three performance. Similar improvements and robust financial improvement is reflected on a nine-month basis. On a nine-month basis, we are achieving a revenue of INR 31.3 billion. Just to highlight, this INR 31.3 billion revenue is almost equal to the revenue we did in the entire financial year 2023-2024.
So, in nine months, we are able to deliver what we did in the entire financial year last year. And this INR 31.3 billion of revenue represents a 39% increase on a year-on-year basis. On the EBITDA front, as well, for the nine months, we are achieving an EBITDA of INR 5.6 billion, which is 18% of revenue, compared to INR 2 billion in the last year, representing 9.2% of the revenue, and a similar improvement in the profit before tax. Moving to the next page in terms of the composition of orders and revenue, so quarter three, we had an order booking of INR 20.7 billion. 85% of the orders were from the domestic market and about 15% from the export market.
On a nine-month basis, out of INR 77.8 billion of orders, about 61% of orders are from the domestic market and 39% from export. On the revenue side, we had INR 10.7 billion of revenue, 78% coming from the domestic market and 22% from export. On a nine-month basis, we had a revenue of INR 31.3 billion, 73% of which came from domestic and 27% came from the export side.
As Sandeep mentioned, we have the highest backlog of INR 107 billion now. Of this backlog, 68% backlog is from the private customers, and INR 29 billion, sorry, INR 29 billion or 28% of the backlog is from the central utilities and public sector enterprises. And a very small INR 4.5 billion or 4% of the backlog, broadly in hand, is from the state utilities. So, with that, we can now open up for the questions.
Thank you very much. We will now begin the question- and- answer- session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yeah. Good evening, sir, and thanks for the opportunity. My first question is on the gross margin. I think you reported a gross margin of 37%. Are there anything one-off in this quarter? Because the last time, I think we had ended one-off, so I'm just checking whether there's any one-off in this particular quarter.
No, nothing significant. So, it's a very operating margin that we had this quarter.
Understood, sir. My second question is on the HVDC Leh-Ladakh. Are we in contention, and why does it delay from the Power Grid to finalize the standard? Can you throw some color?
So, I'm with this I don't think we talk about specific project-related opportunities. Definitely, we have said it many times in the past that we are a serious player of HVDC. In fact, globally, if you look at GE Vernova, we booked more than two orders in the last quarter. So, yeah, we are quite serious about the HVDC business in the country and would aim to take a decent market share of that. Also, in addition to that, I think Leh-Ladakh is getting delayed because of multiple reasons, but probably that's more at the developer's end and not at the EPC end or the Power Grid end.
Understood, sir. Understood. Thank you, sir. That's all. Thank you. [audio distortion]
Thank you. The next question comes from the line of Umesh Raut from Nomura India. Please go ahead.
Hi, sir. Good evening and congratulations for the good performance in this quarter. Sir, my first question is regarding overall macro environment, which is currently kind of witnessing more of a moderation in public CapEx, and we have also seen moderation in power consumption growth in the first nine months of FY 2025. In your assessment, have you seen any kind of moderation in T&D ordering momentum in the domestic market?
Umesh, if we talk about up till this quarter, at least we are not seeing the quarter which is ongoing, we are not seeing any slowdown. But I would say just that I think we are not seeing too many. We know the same traction happening in the next quarter, but if we have a few new projects which are rolled out by the government on the TBCB space, then the traction will continue.
Got it, sir. So, do you think there is any postponement of ordering probably by another one quarter? That is what you are reflecting in terms of delaying TBCB tender?
I would not put it as postponement of one quarter because we still have like we are in the first week of February 2025 itself. I think we have a few opportunities coming in now itself. I think even next quarter, we might have the same momentum going forward also.
Got it, sir. Sir, on the export side, how you are assessing demand, especially from parent side and then from other beyond parent business as well, how you are thinking about getting larger orders, which we have received in the last few quarters? And if I talk about the probability of winning HVDC in the domestic market as well, I think how do you think you are currently placed considering that at a global level, at least in the Europe region, you have a very good strike rate of winning HVDC projects, especially even on VSC-based as well?
So, I'll first answer the export part of it. So, I think we constantly, with our parent, keep on evaluating the opportunities which are there in the export market, and depending upon which factories, which voltage, which type of product is acceptable, whether the Indian factories are producing that specific voltage, that specific technology, accordingly, we do a strategy of the participation. Second, I think India being a much better cost structure, definitely we are one of the preferred, but ultimately, at the end of the day, in that specific utility, the Indian factory should be approved.
And if you would have seen and if you would know that we are constantly expanding our export domain, and we are now quite engaged in practically a large part of the globe in terms of export. As far as HVDC is concerned, definitely we are winning large projects in Europe. I would put it as that our possibility of winning HVDC in India is equally good. We are engaged with the customers, and we're just waiting for a few outcomes to happen.
Got it, sir. Sir, my last question is on revenue side. If I look at our export revenue for the quarter, there was a drop of about 29% on a year-on-year basis. Was there any particular reason behind this fall?
No specific reason, Umesh. It just depends on the phasing of the projects, and as you see that we have booked significant orders from the export side in this year and in the backlog as well, so we expect revenues to pick up from the export side in the coming quarters.
Got it, sir. And is it fair to assume that with pickup and export revenue, our share of revenue from exports, you will have optically better margins to showcase?
When you're talking about margin, I think overall, we have always talked about the profitability at EBITDA level, and we talked about mid-teen to high-teen as a range, and we are already there. So, on a nine-month basis, we have an EBITDA of about 18%, which is rather on the higher end of the range. So, we'll continue to look for the improvement opportunities, and if we get the ways and means to improve, we'll continue to work in that direction.
Got it, sir. Thank you so much. All the best. I'll join back with you.
Thank you, Umesh.
Thank you. The next question comes from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, hi Sandeep. Congratulations on a great quarter. So, my first question is that the entire story around the renewables is well-known and established over the next decade. And given we have been also talking about and being bullish on the commentary, so some of our peers have announced large CapEx plans like CG Power and Hitachi.
So, as investors and analysts, we also wanted to understand your views on how you're looking at capacity expansion, whether within your plans there is possibility of brownfield expansion if the land is available. So, over the next 5-6 years, how do you think you will address the demand both from the global market and domestic market, given that the pipeline looks strong? So, what kind of investments have you planned out here?
Parikshit, as we said last time, also, that we are constantly evaluating these opportunities. In fact, there is an expansion which is already happening, which is happening at our transformer factory. And also, we are looking at other product lines as well where we can do the expansion. I think this is a constant thing which we keep on evaluating, depending upon the long-term demand and the capability and capacity what we have.
This is a constant evaluation process which keeps on happening. And at any point of time when we feel that we need to go for a greenfield expansion and all, we will take a new decision at that point of time. Just to answer, yes, in many of the factories, we do have space where we can do a brownfield expansion.
Given the current capacity, so what percentage or how much can you ramp up? I think I understand you're close to about 20,000 MVA + capacity. So, what kind of expansions do you think you can do in a brownfield manner?
So, that will also depend upon what kind of capacity expansion we want to do. Because if we put, for example, if I put three ovens, it will have a different expansion. If I put two ovens, it will be a different expansion. So, I think we have a pretty large space available at Vadodara if we want to go for an expansion. But that decision we will take when the time is right.
But would you like to quantify the, at least this year, CapEx, at least for FY 2026 and 2025, what kind of CapEx you have planned already for expansion?
I think the last call, Parikshit, we talked about $8 million-$10 million or about roughly INR 800 million of CapEx that we planned.
For FY 2025 and what about 2026?
No, no. That was for FY 2025- 2026, because FY 2025 is already largely over.
Okay. Just on the HVDC side, sir, you think that you're saying that something should work out? So, I mean, what exactly do you mean by that? I mean, the technology, I think you already have both LCC and VSC. So, do you think that even the current packages like Fatehpur, this Bhadla, so there already, I think the discussion is ongoing. So, are you okay to even take part of the package or so those kind of things can also happen?
Just to give you an idea, Fatehpur-Bhadla, yes, we are engaged. We are waiting for the outcome from the developer, but yes.
Okay. And you are also open to not I mean, if you're not okay taking the entire package, which could be INR 10,000-INR 11,000 crore, so even part of the package is fine with you. Is that the assumption?
We cannot discuss those strategies on a call right now.
Okay, sir. Sure. Sure, sir. Thank you, and those were my questions, and wish you the best.
Thank you. The next question comes from the line of Renu Pugalia from IIFL Securities. Please go ahead.
Yeah, hi. Good evening, team, and congratulations for strong performance. My first question is to understand, while the last two years have been a sweet spot for the industry and the suppliers, where do we see this demand-supply situation panning out in the next 12- 15 months? Basically, coming to the question, this 19% PBDIT kind of OPMs that you've seen, where do you see them stabilizing over medium term given the capacities coming up in the sector? So, is the supply side keeping pace with demand, and how do you look at the broad demand-supply equation? That's the first question.
So, Renu, hi. Good evening. So, one thing, we are not seeing a very significant capacity expansion happening in, like you were saying, next 12-18 months. And when you look at our order backlog, practically today, we are touching a number of INR 10,000 crore, which is close to about like 2-2.5 years of our backlog is already there. So, if you look at about 2-2.5 years of run rate, we have a good backlog which is available, good, healthy backlog which is available.
Regarding the margin stability you are saying, so I think we have been in the roadshows which we have done. So, clearly said that we aim to be there at the high teens of EBITDA, and that is what the team will keep on working to ensure that this remains as our deliverable.
Sure. Second question is on the same in terms of the quantum growth of investments coming in the sector and companies preparing capacities in line with order book. How well do you think is the supply chain prepared to handle this kind of jump in the volume of business in the market? So, while companies may have transformer capacity and individually different capacity, the supply chain, you think, is there in place or you're seeing bottlenecks either on the tank side or other key components which may have a bearing on the execution run rate?
You are right. Today, there is a challenge on the supply chain side, and there are a lot of international vendors or there is a lot of international supply chain also on which the vendors are or the integrators or the manufacturers of the end products are dependent upon. So, just to say that if you put, for example, you double the capacity, I think the challenge to get the raw material will be equally high. So, till the time the investments are not happening on an equal scale with the supply chain side, this challenge will remain as one of the biggest for the industry, and the demand is not only growing in India but growing globally.
And the players who are there in the component side of supply chain, they are feeding to the whole world. So, their capacities need to grow significantly first before they are in a position to feed the consumers. Which today, we see that the capacity increase is not sufficient as it is.
Got it. And next would be, while you did indicate that for the year market, we'll have to wait and watch how the bidding happens for developers in terms of pipeline. But if you look at a slightly longer time frame of 12-18 months, how are you looking at the order pipeline for the grid equipment from both domestic and international market? And on this elevated base of inflows, which includes HVDC export orders also, we think we can grow double-digit cash in the next two years on the inflow side?
I think when we look at 12-18 months, I don't see that the market is going to have any impact of like a temporary blip of a project. If we have sustained a pipeline of projects which will be coming during these times in 12-18 months, it should not be difficult, including the HVDC part of this.
Got it. Last bookkeeping question for Sushil. If you can help us with a broad mix of products and projects in our revenue and backlog, even nine-month numbers would work on the revenue side and order backlog. How does it stack up today?
Yeah. Just give me some time. Maybe during the call, I'll try to share the details.
Sure. No problem. Thank you and best wishes, team. Thank you.
Thank you, Renu.
Thank you. The next question comes from the line of Suraj Malu from Catamaran. Please go ahead.
Hi.
Hello, sir. Sir, I just want to touch upon the gross margin. Can you help me reconcile the gross margin numbers? If you look at the first quarter and second quarter, the gross margins were 40% and 41%, whereas it is 38% in this quarter. So, I just want to understand the reconciliation between these numbers. If you can attribute this difference.
Yeah. So, last quarter, while the reported margin was 41.2%, but we did call out in the investor call that there is about INR 400 million of special income from a large project. Although it was operational, but it was, let's say, non-repeatable income. So, excluding that, our revenue on a run rate basis or the gross margin on a normalized level was about 37.2%. Compared to that, we have done 37.8% of gross profit in this quarter. So, there is a parity between what we did in the last quarter and what we did in this quarter. Overall, the blended nine-month gross margin is 39.8%.
This is in line with what we have been always communicating that initially we wanted to aim for like 35% margin and make an improvement during execution and deliver better so that we can deliver a mid- to high-teens EBITDA. Thankfully, we are in that range in terms of gross margin as well as EBITDA level.
Got it, sir. Just currently, as we have been discussing over previous several calls, because there is a demand-supply gap and there is lack of capacity, hence several factories of GE as well as other companies have their orders still, like the factories are full till 2028- 2029, and which is helping companies command pricing power. Now companies are announcing their CapEx, right? Over the next 1-2 years, do you see this pricing power going down and hence the gross margin decline after two years?
So, I think the first thing is that nobody is probably booked at 2028-20 29. Today, the average timeline for a project, excluding HVDCs, is like 24 months. So, whatever order you are taking today, at least in the domestic market, you have to deliver in next and if 24 months is the project commissioning, then the products have to be delivered much before that. So, I don't think that anybody is booking the orders for 2027-20 28-20 29. That is one thing.
Second, of course, definitely, yes, the pricing power is a combination of the market demand as well as the supply chain situation which is there. But I don't see that at least in the next 12- 18 months, there is any significant change happening. And we have to also understand one thing is that this pricing power which everybody is talking about, it is not because of the OEMs.
Of course, definitely, there is an OEM factor which is there. But there is a big jump in the raw material prices which is also happening, which is pushing up the end product prices. So, it's not that the OEMs are just unilaterally increasing the prices. The prices are coming. The push for the increase of cost is coming from downwards. So, that is what we need to understand. So, even if, for example, we understand that there can be a margin pressure if there is an overcapacity, but the pricing can come down significantly is not something which is going to happen in the short term.
Sorry, can you just repeat the last part? The pricing can come down if?
The pricing can come down marginally only if the supply chain situation changes. But it's not going to come down substantially.
Got it. Got it. Yeah. Okay. Thank you, sir.
I just want to clarify one more thing on the gross margin. So, because you asked about the reconciliation and order. So, in our business, the gross profit or gross margin on a quarterly basis can vary differently depending on the mix of product versus project, how much we are doing from export versus domestic. And actually, we should look at the gross margin on a long-term basis. And if you look at the nine-month performance, we delivered 39.8% gross margin compared to 34.9% in the corresponding nine-month period last year, which is roughly a five percentage point increase on a like-to-like basis versus last year.
And this is what actually we should be focusing on. And in the last question, Ms. Renu , Ms. Renu had asked about the mix of product and projects. On a nine-month basis, roughly 25% of the revenue is from the projects and 75% revenue is from the products. You can take up the next question, please.
Sure. The next question comes from the line of Subramaniam Yadav from SBI Life Insurance. Please go ahead.
If you can help us understand some color on the margins in domestic front as well as the export front, is there any benefit on the export orders what we have from the current?
Generally, the margin on export is better than the margin on the domestic side. There is a three to five percentage point difference. But of late, we have seen that the margin on the domestic side is also picking up. The difference is getting, let's say, marginalized in the last few quarters.
[unclear audio] on the gross margin, like you said right now, in the last quarter, there was some one-off. But in Q1 also, what we have seen is about the gross margin of similar level, only 40%. So, is there also some one-off from number?
No. There was no one-off in the Q1. It was only in the quarter two, which we specifically called up. And again, as I said, quarter- on- quarter, there will be variation. The aim is to maintain a gross margin in the range of 35%-40%. And blended, we are achieving 39.8% in the first nine months, which is a good performance.
Yeah. So, should the incremental new orders also, we can sustain this level of gross margin, 39% one-off margin for the new orders what we bagged this year?
Again, it's difficult to give future risk-take estimate on the profitability on orders. I think the aim is to maintain mid- to high-teens of EBITDA, and which can be clearly answered in the last call that we have 2.5 years of backlog. With that kind of backlog, we are confident our team will work to deliver that kind of EBITDA level.
Great. And lastly, if you can let us know the other income part, which was at INR 26 crore this time around.
Yeah. So, other income had a few components. The first one being the interest on the money that we deposit in banks and cash pool. We have about INR 8.6 billion of cash surplus at the end of December 2024, which is deployed in different instruments. So, that is one element of other income. The second element is the interest on the tax refund that we received from the government. And the third element is the recovery of some debts.
If you can quantify each other?
Roughly, let's say INR 100 million out of INR 250 million is the interest on cash pool. Almost in similar range, we have a refund from the tax, interest on refund. And the third element is roughly INR 40-50 million of recovery of debt.
Okay. Okay. Great. Thank you, sir.
Thank you. The next question comes from the line of Rucheeta Kadge from iWealth. Please go ahead. Rucheeta ma'am, your line is unmuted. Please proceed with your question.
Hello.
Yes, g o ahead.
Yeah. Hi. Very good evening. So, I just wanted to understand on the export order book, how much order is from the parent company out of this?
On a nine-month basis, roughly 75%-80% of the orders are from the group entities.
Okay. And so, our current order book, which is INR 10,780 crore, we expect to complete this in the next 2- 2.5 years, right? If I heard it right.
That was a generic reference that last year, our revenue was INR 32 billion. And since we have a backlog of INR 10.8 billion, so we expect that with the current rate, we have 2.5 years. It's a mathematical, let's say, calculation. But some of the orders that we have in our backlog, they have an execution range of 3-5 years as well. But what happens in our business is that while we execute some part from the backlog, we also have new book- to- bill every year, which adds up to the revenue.
Got it. Got it. And around there, we're just seeing your order inflow has been on an average INR 2,000-2,500 crore. So, we expect this run rate to continue or we see any slowdown there?
This year, we had out of INR 75 billion, we had about INR 23 billion of large export orders from the group entities, which is a one-off. Excluding that, we have order book of about INR 52 billion in the nine months, which gives almost INR 17 billion as a run rate every quarter. So, our endeavor is to maintain that. And we are working towards that. So, please consider that as a number while you extrapolate.
Okay. So, this INR 17 billion, we are confident we can do it for the next around one year at least?
That's always an indicator of the management. There are a lot of factors basically that decision-making happens at the customer level, market dynamics. But yes, our endeavor is to maintain or grow these kind of run rates.
Got it. Got it. And sir, on the employee cost, it's kind of flattish since a few quarters. So, do we see this growing going ahead or we are seeing that this should be around the same levels?
Employee cost has increased on the nine-month basis if you look at this. The last year, nine months, we had INR 2.7 billion or INR 279 crore. And this time, we have INR 310 crore. So, roughly 10% or 11% increase in the employee cost. But at the same time, this is lesser than the growth in revenue. We have 39% growth in revenue. So, with the increase in volume, there will be an increase in the employee cost. The effort of the management is to keep the employee cost as minimum compared to the growth in revenue so that we get operating leverage and get higher profitability.
Got it. Got it, sir. Thank you so much.
Thank you. The next question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi. Thanks for the opportunity once again. My first question on the employee expense again , I think the last quarter, there was INR 120 crore, and this quarter, it has come down. So, can you just help us with that?
Sorry, your question was not clear. Can you please?
My question on employee expense, I think in the last quarter, it was INR 120 crore. It has declined in this particular quarter. So, what is the run rate which we should assume on quarterly basis?
So, quarterly basis, the run rate is actually the average of the nine months. So, INR 310 crore for the nine months. And if we divide by three, roughly INR 105 crore is the run rate.
Was there any reason, particular reason for the employee expense to spike in the Q2?
There were specific employee benefit-related reserves that were made in the last quarter.
Understood, sir. Is it possible to quantify what proportion of the order is of long duration? And what would be the fixed price contract in our order book?
The long-duration orders are roughly INR 30 bilion-INR 35 billion. Those are related to the large export orders that we have booked. The rest of the orders have the execution timeline of 18-24 months. I don't have the exact number, but maybe on a very high level, 30% of the order backlog should be on a variable price contract.
30 %?
Yeah, 30%. But at the same time, I would like to highlight that we have been always talking about the conservative approach. So, at the time of making costing and bid, we do keep enough or sufficient inflation in the costing.
Is it fair to assume that in the longer duration contract, we have some price duration clause?
We don't have that specific details, and it's difficult to share all those details.
My last question, sir, on the can you just confirm the CapEx number if I heard you correctly? Did you mention CapEx would be INR 8 billion in F25 and F26?
No, we said INR 800 million, roughly INR 80 crore.
Understood, sir. Thank you, sir. Thank you. Thank you, and all the best.
Thank you. The next question comes from the line of Amit Anwani from Prabhudas Lilladher Capital. Please go ahead.
Thank you. Thanks for the opportunity. My question pertains to the platform opportunity which we have been highlighting in the past. And it was kind of quite substantial. Wanted to understand your view again on the platform. We are hearing that many tenders are in the pipeline. What is the visible market in terms of value and what kind of conversions or wins we are expecting for GE T&D?
So we are looking at the market size. We are looking at about close to about INR 3,000-INR 3,500 crore of market for STATCOM. And yeah, definitely, so we are in the process of participating in bids for STATCOM. And depending upon the outcome, we will be declaring the results from presenting.
Okay. Okay. Got it. And second question on the other expenses and overall expenses. We have been talking about that we're focusing on operational efficiencies. And we have seen the results in their numbers. Is there further scope on the expenses to be optimized, rationalized further in upcoming quarters as well?
As we are growing fast, we are growing to 39% increase in revenue. I think the overall employee expense and other expenses will increase, but our effort will be to maintain the increase less than the increase in revenue so that we get better operating leverage.
Yeah. Lastly, we saw one of our this nine months, this quarter of INR 2,300 crore exports. Is there any further pipeline for the next 12-15 months? Are we expecting more export orders from the parent?
We continue to work with all the opportunities that are available in domestic as well as export market. And for sure, if there are opportunities, we'd like to secure. So it's difficult to give a projection of the larger opportunities because it's difficult to predict a win. But our endeavor is to do as much better as we can.
Awesome. Thank you. Thank you. That's it. Yeah.
Thank you. The next question comes from the line of Jonas Bhutta from Birla Mutual Funds. Please go ahead.
Yeah. Hi. I hope I'm audible.
Yes.
Yeah.
Yeah. So firstly, congratulations to the team for a great set of performance. Just one sort of question. Between December 21 to maybe January 25, NCT would have sort of given around INR 3 lakh crore kind of project approvals. And if I exclude the HVDC bid, that would sort of tantamount to roughly INR 2 lakh-odd crore. Now, within that, maybe GE T&D's addressable scope is 35%-40%. What would be your best guess into how much of that opportunity has already been awarded?
I would like to do some math and Jonas, maybe we can come back, but difficult to give this number offhand.
Basically, just trying to get a sense that for the recent past, the NCT approvals were running far ahead of awards. Have those two caught up?
No, so. Now the government is talking about the commissioning up till 2032 is like INR 9 lakh crore, right? New investments.
Yeah. But that would also include the past, as in they would have included CapEx done starting 2020 or 2022 as well.
No, no, no, no, so if the government is talking from like 2024- 2032.
Understood. Fine. Probably we can reach out separately and try and get a handle on that. That's it from my side. Thank you.
Thank you, Jonas .
Thank you. The next question comes from the line of Shreyas Chandak from Investwell Agents. Please go ahead.
Hello, sir. Am I audible?
Yeah.
Thank you for the opportunity. So my question is on the broader side on how the parent is looking at the India business, especially after the stake sale. Also keeping in mind that our competitor has announced a CapEx of approximately $250 million over the next 4-5 years, while we are talking about a CapEx which is much smaller at around INR 80 crore for the next 12- 14 months.
I think we are significantly important for our parent. Of course, if you look at our manufacturing facilities, we have practically the latest technologies, latest factories. We have everything what is manufactured at Grid globally is also manufactured in our Indian factories, including all the ranges. When we talk about transformers, control relay panels, software solutions, CT, CVT, wave traps, GIS, AIS, everything. We are pretty important for, and that's why you see there is a large amount of export volumes which are also coming to the factory from the parent. I hope that answers your first question.
For the second question, yes, we have been constantly saying that we have not yet reached the level where we are able to utilize maybe apart from one product line, we have not yet reached the full capacity utilization in many of our plants. We are constantly monitoring the market. Whenever there is a requirement of CapEx, we will be definitely investing in terms of that CapEx based on the market requirements.
Okay, sir. That helps. Thank you.
Thank you.
Thank you. The next question comes from the line of Inderjeet Singh Bhatia from HDFC Securities. Please go ahead.
Yeah. Hi. Thanks a lot for the opportunity. My first question is around guidance or indication given earlier that exports and domestic could become 50/50. Do you still stand by that? And by what timeline we're looking to kind of reach that number either on revenues or on order book?
We have never specified a number of export versus domestic. We always communicated that both markets are important for us, and we continue to work in the direction to doing as much business as we can. So there is no specific guidance that we have given, I'll say.
Okay. Second is, if I look at the order book growth, and we take any rough numbers, we'll end the year with roughly around INR 11,500 crore-INR 12,000 crore order book, which would be a very significant step up in our over the last year. Do you think revenues will start to kind of mirror some kind of a step up or at least continue the current trend rate going into next year based on how the execution is kind of expected to kind of go?
Yes. So as we have increased the order book as well as order in hand, so we'll make effort to increase the revenue. That's certainly possible .
Okay. But the last question is, again, continuing on this whole CapEx or capacity side, you did mention that in some of these years, the capacity utilization is still not reached at threshold level. Do you think with the existing order book, maybe towards the end of FY 2026, you would be kind of reaching those kind of thresholds where you would have to start making or planning for new CapEx? Or if I may put it other way around, that the current capacity can support what kind of revenues?
Well, we are into a combination of project and product business. There are a lot of things which we buy, and we've integrated as a part of the product and then sell it to the market. So it's very difficult to give you a number saying that, okay, this is the optimum revenue which we can get with this capacity. So that is the first thing. Second, as I said, yeah, there is a constraint.
And as I said, the strategy is also that we are constantly evaluating the capacities and wherever CapEx is required in terms of debottlenecking the capacities. That CapEx is being planned and is being carried out. Definitely, we are not waiting for things to happen, but wherever the bottlenecks are getting created, they are being removed so that at least capacity can increase with minimalistic of CapEx coming.
Got it. Thank you.
Thank you.
Thank you. The next question comes from the line of Suraj Malu from Catamaran. Please go ahead.
Hello.
Suraj sir, your line is unmuted. Please proceed with your question.
Hello, sir. Sir, as we discussed earlier, the current cash balance is around INR 860 crore. And now, quarterly, we are generating additionally INR 200 crore. So how do you plan to deploy this cash or use this cash?
So there are various options. The board is evaluating, and we will share them with specific decisions from the board. But at present, we continue to invest in the cash pool and existing income securities.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Shrinidhi Karlekar from HSBC. Please go ahead.
Yeah. Hi. Thank you for the opportunity. So may I ask, which all international markets do you directly participate to get orders?
So we participate in the Middle East. We participate in Africa. Not so much in the Middle East. We participate in Africa. We participate in Southeast Asia. We participate in Latin America. We participate in part of Europe. So these are all the direct markets. We participate in Australia as well. So these are the markets which we are directly participating in.
Here in these markets, sir, so at a GE entity level, how would it get decided which entity to bid? Is it at a product level where cost competitiveness is higher and the global parent kind of decides it?
There are various factors in it. For example, India-specific voltages, for example, 400 kV- 45 kV, 130 kV- 3 kV. Our factories would be churning out different voltages. Different factories would be having different voltages. Also, then there are different technologies which are there.
For example, somewhere it might have dead-tank technology. Somewhere it might have a live-tank technology. In India, we have live-tank technology. We manufacture live-tank technologies. And then also, obviously, the question comes that because most of the market is catered to a utility, I think which entity is qualified, which voltage is there, which technology is there. There are multiple factors which are there at play when it is decided that from where we bring this to the parent.
Understood, sir. And sir, have there been efforts to get more and more end- utility customers' approval for the factory and the technology?
Yes. It's a constant effort which we are doing. And if you see that practically at one point of time, we had no presence in Europe. But now, with a few of the European utilities, we have also got the Indian factories qualified. So that's a constant effort which is being done.
Right. And, sir, related question, what we have seen is that there has been a significant ordering in the Middle East region for the T&D project, and some of the large Indian contractors have won these prestigious orders. So just wondering, is that an addressable market for the company?
So wherever it is, for example, the Indian factories are approved by the Middle East utilities, yes, it is definitely an addressable market.
Right. And sir, last one, just for clarification. So did you say that 75%-80% of the international backlog is from the parent while the rest is one which you directly won?
Yes. We said order book, not the backlog. Order book in the current nine months .
Correct. Okay. Understood. Thank you for answering my questions, and all the very best.
Thank you. The next question comes from the line of Umesh Raut from Nomura India. Please go ahead.
Hi, sir. I have only one bookkeeping question. So if I look at, I think, nine months of cash generation for us, I think it is very strong. It is higher than the nine months of EBITDA for us. So now, if I look at cash balance, it's closer to INR 8.6 billion. But I think it has jumped significantly on quarter-on-quarter basis. So how much of a balance we have received from GE Vernova cash pool?
Sorry, Umesh, your question is not clear. We don't receive anything from the cash pool, and that is not counted as a cash flow. Generate cash flow from operations, and whatever surplus cash we have, we invest in the cash pool. I hope I'm able to answer your question.
There is one asterisk mark where you are suggesting that cash and bank balance includes a balance with GE Vernova cash pool.
This means that the total surplus cash that we have is INR 8.6 billion. Part of this is invested in the cash pool, and part of this is in the bank FDs and current accounts.
Okay. And how much of this cash we have received as a part of customer advances to you?
I don't have that number immediately, so maybe we can share that later.
Okay. Okay. Got it, sir. Thank you so much.
Thank you. The next question comes from the line of Parikshit Kandapal from HDFC Securities. Please go ahead.
Yes, sir. What will be the share of export orders in the order backlog now?
Parikshit, I don't have that number immediately. Maybe we can share it later.
Okay. And sir, what will be the automation share of the order book? We have seen some automation orders coming, and most of the orders you announced there is a part of automation there. So over the period, are you seeing an increasing trend of share of automation increasing in the order book? And also, if you can quantify that.
So I think the mix of the automation business is growing and so are the other businesses. But probably the mix remains the same in the overall. Normally, we don't disclose the mix between the various product lines.
Okay. And sir, just one more question on the execution now. So we have seen a significant ramp-up in order inflows. And still, in terms of quarterly basis, we are averaging about INR 1,050-INR 1,100 kind of executions. So when do you think the next set of execution ramp-up will happen, or whether in the near term this kind of execution and with trend rate will continue? So how far we have crossed that INR 1,000 crore but still not going there in terms of like INR 1,200-INR 1,300 crore in line with the order inflows, large order inflows which we have seen over the last few quarters.
Parikshit, if you look at the ramp-up from last year to this year, we have seen about a 40% growth. As the order inflow is growing, there is a delivery timeline which is being defined by the customer as well. But looking into the order backlog which we have, definitely the quarter-by-quarter revenue is going to grow. It's going to grow maybe in the next quarter or the quarter after that. It's difficult. It is not possible for us to give a forward-looking statement, but yes, it's going to grow.
And just the last question on exports and revenue. Again, we have been in the range of INR 250 crore-INR 300 crore in this quarter. There's been a blip while the export order inflows have been very strong. Last year, INR 1,800 crore inflows. This year, almost INR 3,000 crore in nine months. So again, when do we see the big ramp-up happening in exports revenue on a quarterly basis?
So if you look at the big orders which we have received this year, when we had booked the order, we had said that these orders had to be executed up to five years. So then it's a timeline of five years when the execution which is going to happen. But yes, I think this year itself, we will see an uptick in the execution of export orders as well.
Okay. And on a mix side, exports will be in terms of inflows, we have been averaging about 30% in terms of inflows. So do you endeavor to maintain that? Because this quarter, there has been a blip, almost 21%. So do you think on a more long-term basis, 30%-35% potentially could be the mix in terms of new order inflow from exports?
Yeah. I think that will be the target to keep that. 30% should come from exports.
This is excluding parent or you're including parent in this?
Including parent.
Okay. Okay, sir. Sure. Thank you,
Parikshit, Thank you.
Thank you. The next question comes from Vinod from PhillipCapital. Please go ahead.
Yeah. Thank you for the opportunity, sir. You just mentioned that this 2024- 2032, INR 9.2 trillion. As on date, how much is already awarded and how much is the pipeline left in that INR 9.2 trillion? Can you give some kind of a color?
Vinod, I think it will be difficult to give a color at this point of time, but I would consider that majority of it is still to be awarded.
Okay. So my second question is, you have worked with PGCIL and as well as the private customers. So how would you rate the PGCIL and private customers in terms of margins and payment cycles?
I think I would rate both of them equally because whether you look at so ultimately, of course, to win an order, you have to be competitive. Whether you have to be at Power Grid level or private, that is one thing. Only the process of buying is different that somewhere you have a tendering process as well and somewhere you have a negotiation base.
But in fact, on the commercial payment side as well, we had said earlier as well that in order to de-risk the company, we try and get more secured payment terms. So whether it is private or Power Grid, of course, everybody knows that their payment is much secured and they are a better paymaster in terms of number of days. So today, looking into the competitiveness and the security of the payment, both I would rate it equally.
Okay. Because what I understand is the private sector probably is more competitive when they bid because Power Grid has the advantage of cost of funds. So in that case, does the private sector squeeze the vendors more compared to Power Grid?
This is a bit tricky because it also depends upon the type of competition and the type of deliveries which is being required, whether it is Power Grid or private player.
Okay, sir, and sir, in terms of assets, you prefer RTM asset because I think their costs are passed through and then probably less of a squeeze on those kind of projects?
So when we are supplying either to Power Grid or a private developer in terms of RTM or TBCB, for us, it doesn't make any difference.
Okay, sir. Thank you. Thank you so much.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Megha Gupta for closing comments.
Thank you, everyone, for joining the call today. We hope the insights provided by our speakers have been informative and valuable to you. We value the trust and support of our investors and analysts and ensure to remain committed to maintain transparent communication and fostering strong relationships. If you have any further questions, do not hesitate to reach out to me or our communication leader. Thank you.
Thank you. On behalf of GE Vernova T&D India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.