Ladies and gentlemen, good day and welcome to the conference call hosted by GE Vernova T&D India Limited for Q4 of financial year 2024-2025. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone 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 Q4 of financial year 2024-2025. I am Megha Gupta from the investor relations team. During the call today, we will discuss the company's financial performance, including operational highlights and key updates. We will have a dedicated question-and-answer session towards the end of the presentation. I would like to highlight that today's discussion may contain a few forward-looking statements, which are subject to risk and uncertainty. 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 a comprehensive understanding of the factors that could impact our future performance. Now, I'll introduce the GE Vernova T&D India Limited management team available on the call. During the call, we're joined by Mr.
Sandeep Zanzaria, CEO and MD of the company, Mr. Sushil Kumar, full-time Director and CFO of the company, Mr. Abhishek Shrivastava, Head Business Operations, Ms. Kanika Arora, Communications Leader, and Ms. Shweta Mehta, Company Secretary of the company. Now, I'll hand over to Mr. Sandeep Zanzaria to begin the discussion. Thank you.
Good evening, everybody, and welcome to our Q4 and full-year FY24-25 earnings call. India is aiming to increase its power transmission capacity by 35% by FY32, focusing on integrating renewable energy and securing a 24/7 power supply. As India enters an era of accelerated electrification, it underscores the critical need for strategic investment in dependable baseload power, a robust and smart grid infrastructure, and innovative decarbonization technologies to meet its climate goals. A flexible, secure, and evolved grid is key to supporting increased electrification and renewable energy integration. We are witnessing significant and consistent growth quarter over quarter, fueled by robust demand across our portfolio, particularly for transformers with gears, our advanced grid technologies, including HVDC and FACTS. Recognizing this opportunity and our role in enabling India's energy transition, earlier this month, we announced a strategic investment of INR 400 million.
This capital will be directed towards establishing a new manufacturing line for critical HVDC thyristors, VSC valves at our existing Palavaram facility in Chennai, and developing a new HVDC and STATCOM control facility in Noida. These expansions are designed to substantially enhance our capabilities to manufacture and test next-generation equipment vital for modern transmission systems, positioning us to effectively support both India's domestic energy goals and capture export demand from other rapidly developing economies. Turning to our financial performance, we had another quarter of robust demand, significant revenue growth, and EBITDA margin expansion. Our order book remained strong in Q4, and we saw a fresh order intake of 29.9 billion, up by 124% year-on-year, compared to 13.3 billion in Q3, March 24.
A highlight of the quarter was our order win with Power Grid Corporation to supply over 100 extra high-voltage transformers and shunt reactors for key transmission projects in India. Our Q4 revenues stood at 11.5 billion versus billion in Q4, FY 23-24, up by 26% year-on-year. On a full-year basis, our FY 24-25 revenue stood at 42.9 billion versus 31.7 billion, up by 35% year-on-year. New orders outpaced revenue, doubling the order backlog at 126.6 billion as of March 25, against 62.7 billion as of March 24. Our profit before tax and exceptional items for the quarter ended March 5 was at 2.5 billion, compared to INR 1.01 billion in the corresponding quarter in the previous financial year. From an FY 24-25 perspective, profit before tax and exceptional items stood at 8 billion versus 2.6 billion in FY 23-24, which is a three-times increase.
The cash and cash equivalent was at 10.5 billion as of March 31 versus 2.8 billion as of March 31, 2024. The cash generated was 1.9 billion in Q4 and 8.3 billion during the full-year FY 24-25. This combination of favorable demand trends and disciplined execution is accelerating our margin expansion and significantly reinforcing our confidence in the trajectory ahead. Our deeply embedded lean culture continues to be a powerful engine for operational improvement, delivering tangible gains across safety, quality delivery, and cost performance. As we transition into FY25-26, I am grateful for the unwavering dedication of our entire team. Their efforts are the foundation of our optimism for the future and our commitment to consistently create value for all our stakeholders. I would like to extend my sincere thanks to our valued customers, our dedicated investors, and our exceptional teams, all vital partners in our journey.
I now invite Abhishek to provide further insights.
Thanks, Sandeep. Good evening, team. I will take you through the key operational highlights, the key commissionings that we achieved in the prior quarter. Through the efforts that our team had been putting on the ground, we were able to bring to life some of the key assets for strengthening the national energy network of India. Just to mention a few, on a turnkey basis, we commissioned Tata Power Solar Bikaner, which is the power evacuation substation for their 450 MW solar park that they are establishing in Bikaner, a key asset for meeting the energy deficit needs and strengthening the backup from renewable sources. Another key commissioning was for Himachal Pradesh Power Transmission Corporation Limited at Hilli Substation, which is at a very tough terrain in the hilly terrains of Himachal Pradesh. This substation was commissioned successfully along with transformers and 66 and 220 kV GIS.
This helps us to improve the reliability of power in the state of Himachal Pradesh. Another key turnkey project that was delivered was for Renew Solar Food. This is for their hybrid renewable park power evacuation. The 400 kV switchyard was commissioned in a record time along with the power transformers. In addition to turnkey substations, we have also been actively partnering with other players in the market and our customers through supply of direct equipment and commissioning of the same power transformers. We commissioned the 500 MVA transformers plus 765 kV ICTs for Dushan Jawaharpur. This is a 660-megawatt double-unit power station for meeting the needs of Uttar Pradesh. Another key thermal power project was also commissioned by us in the last quarter through our transformers, which was for Dushan at Obra.
Another key transformer asset, which was put to use, was through commissioning of 500 MVA ICT for our customer, IndiGrid and Viva through KSE at Kallam. UPPTCL Shahupuri, another 500 MVA three-phase transformer, was commissioned for, again, the state of Uttar Pradesh. In addition to this, we also commissioned gas-insulated switchgears at TGCL Raipur. The 220 kV bays were commissioned. GITC Kutch 400 kV GIS is for Gujarat Industrial Power Corporation Limited, which is for, again, evacuation of renewable power. Mumbai Veritas, which is a data center project for 220 kV GIS, has been commissioned for them. By doing all these commissionings, we have been partnering with our customers in building the transmission network for the country, and we remain committed to that. With this, I hand over to Sushil to take us further.
Thanks, Abhishek. Good evening, everyone. Moving to the page on order intake. This quarter, as well as the year, has been a very strong period for us in terms of order booking. As Sandeep mentioned in the beginning, in this quarter, we booked INR 29.9 billion of orders, which was almost two times what we did in the corresponding quarter in the last year. In fact, more than two times. Many key orders that we booked were from a very diversified set of customers and in various products and project categories that we operate. As we see on the right side of the page, we secured orders of 765 kV power transformers and reactors from Power Grid. Similarly, we secured 765 kV power transformer and reactor from Sterlite. We also secured orders from Adani Group for 400 kV GIS.
Again, AIS substation from Jindal Group on the 400 kV side. We secured transformer orders from Jindal Group as well. In addition to these GIS and transformer orders, we have secured orders on CRP and SCS business on the 765 kV and 400 kV substation from one of the EPCs from various EPCs. We also secured orders on advanced distribution management systems from Torrent Power and Dakshin Gujarat Vij Company Limited. These were largely on the domestic side. On the export side, we continue to maintain the momentum. We had various wins on AIS and GIS equipment side from various markets, including Europe, Southeast Asia, and Africa. Very robust quarter. If you look at the overall year performance, our order booking almost doubled from INR 58 billion last year to INR 107 billion in this year.
In this 107 billion, as we declared in the past, there was about 22 billion of large export orders from the group company and about 8 billion of digital software-related orders from Power Grid Corporation of India. Those two were the large orders for about 30 billion. Excluding these two large opportunities as well, the momentum has been very strong. We were able to improve our order booking from various customers from 58 billion last year to 77 billion, excluding the large orders. Moving to the financial performance, we've largely covered that in the beginning speech. The momentum on revenue is strong. It is in line or tracking the order booking momentum. This quarter, we had a 26% increase in revenue, reaching up to 11.5 billion of revenue.
As the revenue increased for us and we maintained control over the fixed cost, there is a significant improvement in the operating profitability, which is the EBITDA. We have 2.5 billion of EBITDA, representing 21.9% of revenue for the quarter. This quarter has been good in terms of overall profitability, especially on the gross margin side, mainly because we have been successful in executing the orders which were profitable, improved the mix towards the profitable order, and a very strong execution demonstrated by the GTA. All these factors have led to the improvement in the gross profit for the quarter. Similar trend on an annual basis, 35% increase in revenue, reaching up to 42.9 billion. Overall operating profitability, which is EBITDA, is 8.1 billion on 19.1% of revenue. So far, we have made communication about our aim to achieve mid to high tier of EBITDA.
Happy to announce that we have actually delivered the higher end of this range that we have been communicating regularly. We talked about cash performance. We generated 8.5 billion of cash during the year. This has led to a cash and cash equivalent of 10.5 billion at the end of the financial year with us. On the last page, page seven, we have given a regular split of orders and revenue between domestic and export market and also given a breakup of order in hand from private, central, and state utilities. With this, we can now take up the questions from the investor community.
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 touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Umesh Rao from Nomura, India. Please go ahead.
Yeah, hello, sir. Good evening and congratulations for the strong set of numbers again for last quarter of FY 2025. My first question is pertaining to existing backlog of closer to INR 127 billion. How much of that is executable within the course of, say, next 18 months? And how much is beyond 18 months?
As I explained, INR 30 billion, in fact, INR 38 billion or INR 40 billion of this INR 127 billion largely are the projects which have a longer tenor. As we communicated earlier, these have a tenor of three to five years of execution. Excluding that, we have about INR 85 billion of orders which are executable within one and a half year to two-year time frame as per contracts with the customer. Nonetheless, on top of the backlog, during the execution, every year, we also have the orders which we call as book to bill, meaning the orders are received as well as executed during the same financial year.
Got it, sir. My second question is on the HVDC projects. Could you please share a timeline for new projects on the HVDC side, especially for FY26? At the same time, you must be also forming up budgets for FY26. Any color on the outsourcing contracts that you can anticipate from parent side?
I think, thanks, Umesh, for the HVDC part, you would have seen the transmission committee meeting one of the projects had gone for the approval. I think there was some discussion on, can there be an alternate to be studied as batteries to be put as an alternative to? I think probably let the committee work out. We expect at least one to two projects to get decided during this year.
Okay. Is it fair to assume that Kavda, South Olpart, and one package from Rajasthan is at the front in terms of ordering timeline?
Yes.
Okay, got it. My last question is on the bookkeeping side. If I look at our other expenses for the quarter, those were at about 12.6% of sales, slightly on the higher side. So, any one-off over there?
Yeah, there is about $150 million of those that we have made for certain litigation matters.
Got it, sir. Thank you so much and all the best. Very well.
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Good evening, sir. Thanks for the opportunity. Congratulations on a very strong set of numbers. My first question is on the strong gross margin. What explains such a strong performance on raw material and gross margin? Gross margin for Q4 was 42.3% and 40% odd in FY25. Are there any one-offs or any large project which we did which explains such a high gross margin? Any color on the sustainability of this gross margin, EBITDA margin as we go forward?
Thanks, Mohit. Good evening. As I talked in the beginning, this quarter has been very strong in terms of revenue as well as profitability execution. We did deliver 42% gross margin. Various factors which lead to such a high performance that include better pricing. The pricing has improved in the last two years. As a strategy, we are moving towards product orders rather than focusing on turnkey orders. That leads to a better margin profile. The mix is improving. Also, the contribution of export revenue is also increasing. Generally, the exports were always better in terms of margin profile. The last point I will say is that the GE team has done exceptionally well, has been executing very strong, and has been making, let's say, improvements during execution as well. These are multiple factors leading to the gross margin, improved gross margin for the quarter.
Nonetheless, for our kind of business, quarterly gross margins can vary because of mix and various other factors. I think the right reference is to look at the gross margin for the full financial year. For the full financial year, we did deliver 40.4% of gross margin. This is about 6% improvement versus the last financial year. We believe that our endeavor is to sustain this kind of gross margin and EBITDA going forward.
Understood, sir. My second question is, you announced a new factory for building HVDC components and stacked comms. Is this factory a necessary condition to participate in the upcoming HVDC and stacked comm domestic opportunity?
No, Mohit, it was not a condition. The condition is basically for the whole project, you need to meet the minimum criteria for Make in India. This is going to help us in, of course, localizing, improving the competitiveness, and also giving more comfort to the customer that we are more local in terms of technology as well.
Understood, sir. Thank you and all the best, sir. Thank you.
Thank you. Our next question comes from the line of Subhadip Mitra from Nuvama. Please go ahead.
Good evening, sir, and thank you for the opportunity. My question is with regard to the overall industry size. If we move beyond HVDC on the non-HVDC high voltage piece and on exports, how do you see the overall TAM growing? Are you still looking at maybe a 20% kind of a CAGR in the non-HVDC space? Similarly on exports, some color on that, please.
No, sir, I think, yes, of course, what we are looking at is the government plan of about INR 9 lakh crore for up till FY2032. That gives a lot of confidence. Also, what we see is that there is a lot of growth in terms of the energy transition story globally. It was first, Europe opened, then Australia, and now even the Middle East is also opening up. Yes, definitely, the TAM for the export potential is also growing.
Understood. Is there any, I think one of the previous questions also asked about whether there is any budget for outsourced exports to the parent for this year, any indicative number?
No, sir, we don't give the type of a guidance of a number that for the export, what could it be.
Understood, sir. Would it be fair to assume that it should be somewhere around that 30% kind of a mix, which is what we are seeing currently?
That is what is always our endeavor to maintain that kind of a ratio.
Understood, sir. Thank you so much.
Thank you.
Thank you.
The next question comes from the line of Renu Baid Pogalia from IIFL Capital Services. Please go ahead.
Hi, good evening, team. Many congratulations for the strong performance. My first question is, I'm just understanding a bit more on the order pipeline prospects. Last year, almost, as Sushil also highlighted, the INR 30 billion plus orders came in from large orders, exports combined. When we look at, A, on the export-based orders of INR 7.7 billion, how do we see this pie increasing in the next year? Overall, as a combined pie of almost INR 10,000 crore plus, do you think, given the projects in pipeline, domestic, international, we will manage growth in inflows in fiscal 2026? That's the first question.
Renu, yeah, that will be the—of course, as Sushil also said, that we had two large one-off projects, which was one export order, which was like INR 2,200 crore, and two digital orders close to about INR 800 crore. Basically, we were looking at INR 3,000 crore. If you really look at this last quarter, also, we had some exceptional—I will not use the word exceptional. This is actually normal. Power Grid decided to go for a bulk buying of transformers and reactors. Of course, we were able to secure a large part of that market as well. The endeavor will be always to grow whatever we have achieved this year on the base number, and then try to see how we can increase because at the end of the day, we need to keep the revenue also growing.
Sure. Within the order prospects for fiscal 2026, how do you see, because the last couple of years have been transformer-heavy? If you can throw some light, how is the broad prospect even on the substations, especially the GIS part? Hearing pretty big numbers on that side of the business. Do you expect the pie of the order pipeline to materially shift toward GIS or projects in fiscal 2026, or would it be similar for transformers, switchgears, and the rest of the other solutions like STATCOMs?
That is the plan. What we have is that also to increase the pie for switchgears, also with STATCOMs, HVDC, so control automation, AIS products. The endeavor of the team or the focus is that not only transformer reactors, but the other parts of the business also to keep growing.
Sure. Secondly, on the pricing side, as in clearly, last 18 months have been the dream brand for any transformer company in India in terms of demand-supply mismatches. Stepping in 2026, 2027, how do we see the pricing environment and the gross margin mix that we have seen for 2026 for ourselves based on the backlog and execution timeline? How comfortable are we to sustain and see improvement in this?
I would say that the pricing is stable as of now. Maybe we do not see much improvement coming there. If there is an increase in raw material prices, we are able to pass on. Now the incremental growth in pricing is not so much there. It is still not going down, and we are looking at a stable pricing environment.
Sure. Stability in pricing itself is a tall task. Fabulous if you're able to maintain this, good. Lastly, what would be the next switching products and projects for fiscal 2025 closing backlog?
Renu, I don't have that information readily available. Maybe we can probably share it subsequently in any other form.
Sure. Done. Thank you. Thanks much and best wishes, team. Thank you.
Thank you.
Thank you.
Our next question is from the line of Amit Mahawar from UBS. Please go ahead.
Thank you. Sandeep, I have two quick questions. First is on the export mandate. If I understand the exports right in the order book and in the turnover, and considering the opportunity we have, which are the end markets primarily for parent, maybe top three or top four which you're catering to? Do you think there is a very, very long-term demand pipeline here? That's my first question. Maybe whatever qualitative color on exports, considering all the global locations of GE Vernova.
Thanks, Amit. Earlier, as we have said in various presentations earlier, we used to focus more on Africa and Southeast Asia, but slowly, slowly, we expanded to Latin America. And then we have also expanded to Europe now. Also, if you really look at, for example, a large order which we got from Korea, Algeria, so it's basically the demand which comes from some geography. And then when we get engaged with the global team, we are able to capitalize on those large opportunities. These opportunities take time to build in. These are certain aspects which cannot be openly discussed on calls, etc., because of its confidentiality. Today, for any such large opportunity, Indian factories are really the strength for GE Vernova T&D India to go and take these orders.
I would put it as that the whole, we have a very extensive geography in which we are playing. Definitely, the Indian factories, because of its cost competitiveness and all, we play a very important role in the overall strategy for the electrification.
Very helpful, Sandeep. Maybe in the intake of INR 32.6 billion this year, in export, if there is a number for U.S., you want to give us. Thank you.
U.S. is a very different technology. U.S. is basically dead tank technology, whereas India is a live tank technology. U.S. market is mostly catered from U.S. factories only. India is not, so from India, our exposure to U.S. market is very, very limited.
That explains it. Second question, and last question is, if I understand last 10-15 years of transmission equipment business in India for GE Vernova, do you think the current capacity you have—and I understand the profitability is very, very healthy—take a five-year view, and do you think the demand that we are projecting in India, I mean, we also have valued it to INR 9 trillion and roughly 30-40-50% of the equipment size, right, if I'm not wrong? Don't you think next four to five years, the growth is very, very set as an industry? Considering your mix and localization, the best time is yet to come. That's my last question. Thank you, Sandeep.
Of course, I think yes, the best time is yet to come. It's going to come in one year, two years. We have to see. We expect a very large growth, and we should be an important player to deliver that growth in India's ambition for Viksit Bharat 2047.
Sure. Good luck and best wishes, Sandeep. Thank you.
Thank you, Amit.
Thank you. The next question is from the line of Suraj Malu from Catamaran. Please go ahead.
Hello sir. Thank you very much for this opportunity. Sir, my first question is related to the previous question. Can you help understand the export orders that we have won from the U.K., France, Dubai, over the past four, five quarters? Is there end usage in those geographies, or is there a potential that this will be supplied to the U.S.?
It will not be supplied to the U.S. As I said, the U.S. has a different technology. What we manufacture in India, the AIS, the live tank breakers and all. The end user is in Africa and not in the U.S.
Got it, sir. My last question is, the current order intake that you have taken, are these in the similar gross margin levels that you have delivered recently?
Good evening, Suraj. We typically don't share the profitability on the orders that we do because of the price sensitivity and information for the competition. Yes, the endeavor of the management is to perform better. If you look at our trajectory of revenue and profitability, the focus and aim of management is very clear to maintain a good margin. In our strategy, we have always complicated cash over profit and to do a business which is risk-free and a sustainable business.
Got it, sir. Thank you very much.
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Thank you, sir. Thanks for taking my question. My first question is on the CapEx of INR 140 crore on stacked common HVDC products, Vex and all. I wanted to understand what is the current capacity utilization and with this CapEx, by how much the capacity will expand. I understand that the capacity expansion will come on stream here within Chennai by 2027. Just wanted to understand, is it fair to assume that the prospects have increased because past two, three quarters, you have been highlighting that we have sufficient capacity to meet growth for one and a half years, and there might not be major CapEx requirements. Yeah. That is my first question.
Amit, I think we have also clarified that in the disclosures that we were manufacturing when we were doing the Champak Rukshetra project, the valves in India. After that, because no project came for a few years, we had in Chennai. We had actually closed that capacity. Now, because of the market growth and all, we are starting or we will be investing, and then we will be starting. Today, on the HVDC valves and control side, there is no existing capacity. Whatever we are adding is going to be the new capacity.
Just to add on to what Sandeep said, this CapEx announcement is in addition to INR 80-90 crore that we communicated earlier. INR 80-90 crore is for our existing business lines to de-bottleneck and increase to take the maximum, let's say, benefit of the assets that we have and deliver more from the existing factories. Overall, put together, INR 140 crore plus roughly INR 80 crore, we have now announced overall CapEx in the range of INR 240-250 crore.
Yeah. Second question on the product versus project, you highlighted that there will be more focus deliberately towards product by you guys. I wanted to understand if possible to share the product versus project for revenue. Considering the current order book you have, can we expect for the next one to two years, there should be more product inclination in the revenue and order book? Any sense on that would help?
Yeah. Amit, in this, I'll say that I don't have the breakup of this project versus product immediately available. As a strategy, we have communicated since the last few quarters that we want to move more towards the product side because, first, the product orders are more profitable rather than a large turnkey project. The second part is they carry less risk in terms of execution. Nonetheless, having said that, it's not that we are completely out of the project market. We do sell the products to the EPCs who are in turn taking the turnkey projects. We are present in the market, but indirectly. I think this strategy of moving towards product has really helped us to streamline our operations and deliver better profitability in the last couple of years.
Yeah. Lastly, if I can hasten, we had a large order win of almost INR 3,000 crore and INR 11,000 crore in flow. Are there further large orders in discussion for the next one, two years?
Amit, that's an ongoing process.
Yeah. Sure. Thank you so much. Thanks for answering. Yeah.
Thank you. Ladies and gentlemen, if you wish to ask questions, you may please press star and one. We have the next question from the line of Inderjit Singh Bhatia from HDFC Securities. Please go ahead.
Hi, gentlemen. Am I audible?
Sir, you're audible.
Yes, you are. Sir, congratulations on fantastic set of numbers. Two questions. One is you highlighted that there was a large INR 8 billion software order. Now, are there any more such orders in your order book? Do these kind of orders come at a much better margin profile than your existing product orders?
Inderjit, I think you know that the digital part of the grid is also growing. Of course, we expect many more opportunities to come in the future. As of today, we don't have any live tender ongoing, if that is the question. As a practice, we don't disclose segment-wise margins, etc. It will not be possible to disclose the margin strategy for the digital.
Fair enough. Just a clarification, I think one of the previous participants had asked about this INR 240 crore CapEx. Did I hear that right, that that's a commitment for next year?
Yes. So, Inderjit, these are the CapEx announcements. As you see, this INR 140 crore announcement has a longer timeline to be implemented. These are announcements that may be implemented in the next one to two years.
Got it. Okay. One last bookkeeping question. In the balance sheet, there is some related party loans given to related parties around INR 400 crore. Could you just throw some light on that?
We have taken shareholder approval regularly to invest surplus cash to the cash pool, which is managed by the GE Group. Any surplus cash which is available with the company to the limit approved by the shareholder is invested there. This investment is actually the cash pool that we have given to the cash pool leader. Just as a reminder, our entity borrowed from the cash pool for quite a number of years when we were in debt. Now, since we are in surplus, to make an efficient working capital management and cash management, we are investing part of the available surplus funds to the cash pool because, A, this gives us a rate of interest which is as per the market terms. Plus, there is a lot of flexibility. It can be called upon any time on demand.
It can be broken in terms of the liquidity requirement of the company. All the advantages have been disclosed in the notice to the shareholder, and it was duly approved as a mutual related party transaction in the past.
Thank you. Thanks a lot.
Thank you. The next question is from the line of Pramod Jayan, an individual investor. Please go ahead.
Thank you. Congratulations for the wonderful set of numbers. I just want some clarification. In the last conference call, you had spoken about that Leh Ladakh HVDC project which was there. Sir, can you please share some update about that?
Presently, it's with Power Grid. We don't have much of an update on that project.
Okay. Any further HVDC project which is there in the pipeline which you're bidding for, and there's some news might come from there?
There is one HVDC project which is there under bidding, which is from Kavdar to South Olepar. In addition to that, there was one HVDC project which was proposed in the National Committee of Transmission, but then because some alternatives have been asked to be studied, so probably that has been delayed.
Okay. Thank you. Thank you very much.
Thank you. The next question is from Dhavan Shah from Alpha Accurate Advisors. Please go ahead.
Yeah. Thanks for the opportunity. The HVDC side, do you have the excess capacity to cater any of the future HVDC contracts if you get anything? That is my first question. Second is, can you do both LCC and VSC in HVDC?
Dhavan, what was your first question?
First question is, do you have the excess capacity in HVDC, if you can share, if you get any contract in future?
HVDC has a number of products. That includes valves, controls, transformers, etc. Every product has a different capacity. HVDC per se is not one single capacity. HVDC is an addition of multiple capacities which are put together.
Let's say if it comes up with INR 20,000 crore or INR 25,000 crore of HVDC contracts, wherein the transmission opportunity is roughly INR 10,000-12,000 crore kind of the opportunity, do you have that kind of capacity to cater that kind of capacity?
We have that capacity.
Okay. Can you do both LCC and VSC?
Yes. We can do both LCC and VSC.
Sure, sir. Yeah. That's all from my side. Thank you.
Thank you. The next question is from the line of Jayanam from Saltoro Investments. Please go ahead.
Congratulations on a great set of results. I wanted to understand from a supply chain perspective, whether it is CRGO or any other key components that go into transformers, whether it is extra high voltage or whether it is HVDC, what are the challenges that we are facing, and how are we, given the kind of growth that we are having? What are risk mitigation approaches within that? That's my first question.
No, the supply chain, yes, definitely. Today, in this very uncertain world, supply chain is a big challenge. With the explosion of demand globally, yes. We have teams who are constantly working to mitigate those challenges, to very closely work with the suppliers, the transporters, the supply chain teams, etc. It is a very focused task, but we have been able to successfully negotiate and execute till now, and the teams are dedicated towards that.
Are we planning to backward integrate given the kind of demand that we see for the next five to six years? Or do you see supply chain to be a meaningful challenge as you scale up and look at probably integrating key components because many of our peers are doing the same? We just wanted to get a strategic bird's eye view as to what is our thought process.
As of today, we are not planning to backward integrate any of the component-level manufacturing.
Got it. I wanted to understand in terms of our order book, the mix has been about 34% is central utilities, and last year, if you look at it, it was about probably 27% for the central utilities. In terms of our mix in the orders, do you see that meaningfully changed? Do we see the share of private kind of inching even more towards 70% or 80%? What is the sustainable order mix that order backlog mix that we are planning to have?
I mean, today—
Sorry, go ahead.
Please go ahead, Sadhu.
Okay. Today, a large part, because earlier, what used to happen is Power Grid used to get RTM projects and all. Today, a large part of the order gets decided on the TBCB route. It depends upon the competitiveness in the TBCB route, whether Power Grid is winning or whether private players are winning. Accordingly, we have to choose our customers. It is not that by design we can say, "Okay, this should be the share of central utility, and this should be the share of private sector." It depends upon whether central utility wins more or private sector wins more. We align ourselves according to the market conditions.
Understood. I just want to add on. I think it's important to see here in the chart that the share of state utility is very small, and this is one of the strategies we have communicated in the past. We are kind of neutral to central utility or the private customer because both are good in terms of education and working capital management. Understood. If I can squeeze one last question, is there—you talked about demand opportunity, now these things, but what are a few risks overall on a macro perspective that you're seeing because everyone is increasing capacities, all our peers? From a demand-supply realization, like you said, there is no more room for improvement. Given how the industry evolves in the next two to three years, what are a few risks that you are looking at and closely tracking?
As we said that, of course, supply chain management, yes, that's a big risk because not only about the availability but also about the political situations which keep on developing globally as well. In addition to—that's a challenge which we keep on having, and we keep on mitigating. That's a kind of a job which you do daily, weekly, monthly, yearly, quarterly. That is something which is there. Apart from that, what I see is that I think energy transition story globally is something which is not going to go away just like that. I think from demand or market perspective, we don't see that there should be a challenge at least for the next three to five years or maybe 10 years. It should be a much stable market. That is what we are anticipating.
Understood. Thank you so much, and all the very best.
Thank you.
Thank you. The next question is from the line of Nandini Agarwal from Globe Capital Markets Limited. Please go ahead. Nandini Agarwal, your line has been unmuted. You may proceed with your question. As we are not receiving a response from the current participant, we will move to the next question, which will be from the line of Mahesh Patil from ICICI Securities. Please go ahead.
Yeah. Hi, sir. My first question is on the STATCOM. How do you see the STATCOM opportunity in the medium term? And if I'm not wrong, we haven't done any STATCOM till date.
Yeah, Mahesh, you are right. In the long term, we see that, of course, STATCOM is going to play a very important role because more and more renewables are getting added. Obviously, the need of STATCOM cannot be just ignored. It is going to become a very integral part of the grid. Yes, we have executed multiple projects globally, but we have not won any project in India. We have done in India a few FACTS projects which were there, but we are into active discussions with various customers. Let us see.
Okay, sir. Sir, my second question is on the royalty payment. Just wanted to know how much was the royalty payment this year and how much was it in FY 2024, if you can provide?
Royalty payments have been given on a very consistent basis in the last five to seven years. There has been no change in the formula, and it's linked to a certain formula of revenue, etc. During the entire year, we have made a royalty payment of roughly INR 640 million, roughly INR 640 million.
640. Okay. Sir, if you can, how much was this last year?
Last year was around INR 350 million.
Okay, sir. Lastly, wanted to understand if you are, how are you trying to widen your existing portfolio? Can you give some color?
I think for widening the portfolio, of course, definitely, it's on two sides. One is on the customer side. More and more customers, we are trying to expand the customer horizon by including more renewable clients. Of course, we have a lot of new companies also entering into the TBCB market. Also widening in terms of, for example, export market. We have already talked about that in the last two, three years, we have been able to enter a few of the new geographies. There are a few technologies as well which we are waiting in India to mature, for example, SF6-free and all. Once that happens, definitely, we will aim to be a leading player in that as well.
Okay. Thank you. Thank you so much.
Thank you, Mahesh.
Thank you. The next question is from the line of Moksh Ranka from Aurum Capital. Please go ahead.
Hello. I would like to know, in the HVDC, in the whole transmission industry, are we facing any constraints regarding transmission towers? Because I think there are very few manufacturers there. Could you provide some color there?
Moksh, we are not a transmission line company. We are basically transmission. We do substations and HVDC terminals and things. We have zero presence in transmission line. We will not be able to answer.
I understand that, but since you are in the industry, I thought you would be first and you would know firsthand if you are facing any constraints. Okay.
No, we are not.
Okay.
Means we don't operate, so we don't know if there is a constraint there or not.
Okay. Okay. Thank you. Okay. That's my only question.
Thank you. The next question is from the line of Parikshit Kanpal, Pharm from HDFC. Please go ahead.
Yeah. Hi, Sadhu. Congratulations on a great quarter. My question is on services part of the revenue. What would be the contribution of services doing to ramp up that as a share of revenues?
Parikshit, giving a quick question.
Of course. Yes. Go ahead, Sadhu.
Currently, the service revenue is sub 10% for us. As the overall order booking has been growing, the overall share of services, the volume of services, is also growing.
Sir, the second question is on this INR 250 crore of KTIC. What kind of asset terms or revenues can we look at adding from there over a two- to three-year period on an annual basis? What will be the reservation here for export markets? Any reservations here? How will you allocate between local demand and global demand from this?
Parikshit, I think you would have seen that we have, out of that INR 240 crore, INR 140 crore is for HVDC. For HVDC, of course, I think looking into the demand situation and all, we have to first put in and then see how do we support the export market as well. Today, primarily, the major driver for investment is growth in the domestic market. You would have seen that when we have put all the local factories for switchgear, transformer, etc., they have helped us in export market as well. Today, the primary driver for this investment is the domestic market.
Sir, any color on what could be the share of data centers? Is it increasing in the overall mix in the order book? How do you see that shaping up as huge investment is expected in data centers?
Today, the data center market is basically, it's like about 300 megawatt data centers, etc., which is at 220 kV. You don't, of course, we see a very large potential of data center coming in. Today, because our order intake is jumping very high, like, for example, since last year, for example, from 2024 to 2025, we have grown by 100%. Obviously, the data center market, even if it has grown by like 50-60%, it is still not a substantial market. Today, the TBCB or the transmission part of the business is growing much, much rapidly.
Lastly, the challenge of cash now with the.
We are totally connected with most of the data center companies in India, and we are executing multiple projects on data centers. It's not that we have ignored, but I expect as the size of the data centers will become more and more like bigger data centers of 400 kV. People are talking about gigawatt data centers that will require 765 kV. There our market share and our overall offering in terms of value will be much higher.
Okay. Sir, lastly, on the cash, which we have on the books, and then next year also there will be cash approvals, how do you intend to deploy the capital employment?
Yes, sir. Parikshit, we have announced INR 240 crore of CapEx out of INR 1,000 crore that we have. Additionally, in Note 10 of the financial statement that we circulated, the board has recommended a dividend of INR 5 per share. If approved by the shareholders, that will lead to an outflow of roughly INR 130 crore. We are consciously reviewing and meaningfully deploying cash in terms of the CapEx that we need and also return to the shareholder. We will continue to work in this direction.
Okay. Yeah. Yeah. Sure. Thank you for sharing this.
Thank you. The next question is from the line of Sagar Gandhi from Invesco Mutual Fund. Please go ahead.
Sir, my question pertains to the INR 140 crore CapEx that you announced for HVDC. This is primarily for domestic projects. Do you also foresee that post this capacity is commissioned, your ability to bid for projects will be more competitive, which is not the case currently? If you can throw some light in this direction.
Yes, I think that was one of the most, the objective of putting the local capacity was, of course, to feed the domestic market. I think we are seeing a big growth expected in the domestic market. In addition to that, yes, obviously, when we put the capacities locally, it provides us more competitiveness. It helps us in winning more.
Okay. Thank you. Thank you so much for answering this.
Thank you, sir.
Thank you. We have a follow-up question from Janam from Salturo Investment. Please go ahead.
I just wanted to ask, one of the previous participants had asked about asset terms for the INR 240 crore CapEx that you are doing. Could you just share what kind of asset terms roughly we are looking at? Am I audible? Hello?
Yes, Janam. See, asset term is difficult to give as Sandeep explained in the earlier question, that a significant part of this is for HVDC. HVDC projects are very large contracts. Asset term can be multiple. Obviously, for an HVDC project, this is not the entire investment. It has to be seen in entire existing now. Giving asset term is difficult considering that this is not a separate business line. Nonetheless, I think you would see that the company has been very cautious in terms of investment. Obviously, the management and board has decided this investment because it is giving a good opportunity and a good return on investment. Got it. Thank you so much.
Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to Ms. Megha Gupta for closing comments. Over to you, ma'am.
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