Ladies and gentlemen, good day and welcome to Triveni Turbine Limited Q4 and FY 2022 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 Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.
Thank you. Good day, everyone, and a warm welcome to all of you participating in the Q4 and FY 2022 earnings conference call of Triveni Turbine Limited. We have with us today on the call Mr. Nikhil Sawhney, Vice Chairman and Managing Director. Mr. Arun Mote, Executive Director. Mr. S.N. Prasad, President Global Sales Product. Mr. Sachin Parab, President Global Sales Aftermarket. Ms. Surabhi Chandna, Investor Relations and Value Creation, along with other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature, and a statement to this effect has been included in the invite, which was mailed to everybody earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcast or reproduced in any form or manner.
We will start this call with opening remarks from the management, following which we will have an interactive question- and- answer session. I now request Mr. Nikhil Sawhney to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir.
Thank you very much, Rishab. A very good afternoon to everyone. I'm very pleased to take you through the business updates and the earnings for FY 2022 for your company, Triveni Turbine. FY 2022 has been a year of many milestones for Triveni Turbine. The company has achieved its highest ever turnover of INR 8.52 billion, which is a growth of over 21% over the previous financial year. Similarly, on the order booking front, the company has reported its highest ever order booking of INR 11.8 billion, which provides very good visibility for growth in FY 2023. This is also coupled with the opening order book that we have for FY 2023 as of the first of April, which is a growth of over 52% over the previous financial year.
The company's domestic inquiry book has shown an increase of 57% over the course of this year compared to the previous financial year, and this has been led by sectors such as cogeneration, food processing, distillery, pulp and paper, chemicals, and a variety of different sectors, including cement, sugar, and oil and gas. International inquiry generation increased by 25% compared to FY 2021, and geographies which generated increased demand were from Southeast Asia, followed by Europe. A variety of different sectors, including renewable energy-based IPPs, as well as certain process industries, led to this growth in inquiry book. The total inquiry book has seen a growth of over 36% over the financial year 2021 and is queued to about 60% of the inquiry book coming from the international market.
Triveni Turbine has current orders and installations in over 67 countries and inquiries from over 110 countries, and so it is looking to expand its reach continuously to better serve its customers. The company's product portfolio is also well-poised in the near term, with growth in both the 30-100 megawatt segment, which it is revisiting with a renewed vigor, as well as the API market segment in which it offers energy efficient drive turbine technologies and products. The aftermarket segment is also showing good growth, both in terms of being able to have installations in a variety of new markets, be it in terms of large ultra-supercritical and supercritical technologies, large utility turbines, including applications such as geothermal and a variety of specialty applications in other rotating equipment.
The company is also adding capabilities across a variety of different internal functions, including human resource, manufacturing, as well as technology, and I'll be happy to go take you through these during the course of our interaction. As far as the financial performance is concerned, the revenue from operations for the financial year were at INR 8.52 billion, which I had already stated, which is a growth of over 21%. EBITDA for FY 2022 was at INR 1.92 billion, which is a 15% growth, and at a margin of 22.5%. PAT for the financial year 2022 is at INR 2.7 billion, an increase of 164% year-over-year, which was aided by an exceptional item of income which we have accounted for in Q3 of this financial year.
During the current quarter, the company acquired 70% stake in TSE Engineering (Pty) Ltd in South Africa for a cash consideration of ZAR 11.9 million, which is the equivalent of INR 57.6 million, to further strengthen the company's position in the aftermarket business in the SADC region. The board of directors has also recommended in this previous board meeting a payment of a final dividend of 85%, which is 85 paise per equity share of INR 1 each, and a second special dividend at 70%, which is 70 paise per equity share of INR 1 each for the financial year 2021-22. Subject to shareholders' approval. The EPS for the financial year stands at INR 8.36 per share.
For the quarter specifics, the revenue from operations increased by 33% over the previous quarter, the same of the FY 2021 to INR 2.37 billion. EBITDA came in at just shy of 497 million rupees at a margin of 21%, which is an increase of 71% over the previous financial year. Profit before tax at INR 441 million was an increase of 87% over the previous financial year. Profit after tax at INR 330 million was an increase of 42% over the same quarter the previous financial year. I've already taken you through the order book and the outstanding order book, but I feel it important to stress on this again.
The total consolidated outstanding order book stands at INR 9.7 billion as of March 31, 2022, which is higher by 52% when compared to the previous financial year. The domestic outstanding order book stood at INR 5.4 billion, and the export outstanding order book doubled in FY 2022 and stands at INR 4.3 billion as on March 31, 2022. The export order booking during the quarter, the details are part of our investor brief, was at INR 740 million, which is higher by 2%. During the full period of the financial year, stood at INR 4.7 billion, an increase of 122% as compared to the last year.
The company achieved, as I've already said, a total order booking of INR 11.8 billion in financial year FY 2022, and it is the highest ever in its history. As against INR 6.4 billion during FY 2021, which is an increase of 64%, which has been driven primarily by the export order booking, which is of course, as you know, with a higher margin. On the product side, the order booking during the quarter improved significantly to INR 2.2 billion, which was 75% higher when compared to the corresponding period of the previous year. The product segment turnover was INR 1.7 billion during the quarter, an increase of 32% over the previous year.
The aftermarket segment registered an order booking of INR 639 million during the quarter, growing by 57% when compared with the corresponding period of the previous year. The aftermarket turnover was INR 690 million during the quarter, a growth of 35% over the previous year. Aftermarket has contributed to 26% of the total turnover in Q4 FY 2022 and 27% in FY 2022, which is largely similar to previous years' levels. Despite the growth in turnover of products, aftermarket has equally kept pace, and we believe that this to be the trend going forward as well.
Inquiry generation during Q4 FY 2022 remains strong in both the domestic and international markets on a year-on-year basis, and we believe this will lead to very good visibility of orders in the coming year, which would give visibility for turnover in FY 2024. The total investments of the company as of March 31, 2022 stand at INR 759 crores, with INR 7.59 billion rupees. This is versus INR 3.41 billion rupees as of March 31, 2021. The net working capital for the company is at -INR 101.53 billion rupees due to higher customer advances of INR 2.8 billion rupees versus INR 1.68 billion rupees in FY 2021.
The global market has been steady if we look at it in the entire market from 0-100 megawatts. Though the 0-30 megawatts has seen greater growth, while the higher than 30 megawatt segment has seen a decline in the market over the previous financial year. Small-mini turbines domestic market share continues to be robust at near 50%, and international market share has also increased during the current year. Customer care business has focused on upgrades and automations as well as AMCs to further its business prospects, and will continue to do this so as to increase its sales as well as its reach to its customers.
I must point out that while turnover has grown by 21% over the financial year 2021, our profitability, which is at PBT level, has grown by approximately 18% over the previous financial year. The decline in margins has been led primarily by an increase in raw material cost by about 4.5% over the previous financial year, which has been driven by an increase in commodity prices, but also increased domestic sales as a percentage of turnover. Domestic sales as a percentage of turnover in FY 2022 was at approximately 70% of turnover, of product sales turnover. While in FY 2021, that same percentage was about 56%.
We believe going forward with an increased percentage of export as a percentage of our order booking as well as our carry forward order booking, this portrays a good visibility in terms of margins for the current coming quarters as well as financial year. More so is the fact that with a majority of costs already being absorbed into the system and being passed on in new contracts, we believe that we would always revert to our long-term averages of higher than 20% PBT margins in the long term and medium term and short term as well. With that, I'd be happy to take questions. Over to you.
Thank you very much. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. 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. Anyone who wishes to ask a question may please press star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead.
Hi, sir. Good afternoon. Congrats on a very good set of numbers. My first question is [audio distortion]
Sorry to interrupt. May I request you to use the handset mode?
Yeah. Hello, is it better now?
Yeah, much better. Thank you.
Yeah. Sir, just wanted to check with you regarding the breakup of order inflow between the 0 MW-30 MW and 30 MW-100 MW. How much potential is there for us? If you can just give some quantitative figures as to how much more can we grow in the 30 MW-100 MW range? If you can do that will be great.
I will get Mr. S.N. Prasad, who is our President for Global Products to comment on this. In the past quarter, we did not see any finalization of above 30 megawatt in our visible inquiry book. So both in the domestic and international markets. Prasad can give a little bit more insight, but you are very right, Ravi, that this market segment is somewhat new for us. We would be entering this and so therefore growth in this market segment would increase at a faster pace than our historical order booking.
Going forward, we feel that we would not like to segment the market between 0 MW-30 MW and 30 MW-100 MW, because it ends up just giving complications to a mixed message to a lot of analysts in terms of where the company stands. Having said that, we do see a very good participation in this growth. As you can tell from our order book, we do have a very strong order book in terms of growth. Prasad, if you can address Ravi's question in particular, about 30-100 megawatts and what traction do you see and where do you see Triveni's order booking growing in this market segment?
Yes. In 30-100 megawatt, in FY 2022, we have a good traction. In terms of inquiry pipeline also, there is a substantial increase in the inquiry pipeline. In 30-100 megawatts, the gestation period from inquiry to conversion, it takes little longer compared to sub-30 megawatt thing. When we get into FY 2023, yes, we are chasing some of inquiries, which we are confident FY 2023 will be better than FY 2022. In FY 2022, we picked up one domestic and one international order, which is a good acceptance in the market. FY 2023, based on the current pipeline, it will be much better than FY 2022, what we see right now. The traction is from all different industry segments.
Starting from process, cogeneration, steel and everything.
Okay. The 30-100 megawatt or rather hereafter I'll call it the higher range. Basically that is more from exports or are we seeing the inquiry piping is more from exports or domestic also are we seeing in terms of ordering, in terms of inquiry?
Yeah, both. Both domestic and export, the traction we are having.
Okay.
Ravi, as you can see our domestic inquiry book has increased quite substantially by over 57%. There's broad-based inquiries which are coming in from a variety of sectors. Larger turbine orders tend to come from either large-scale process industries or from the steel industry, and both of which are seeing good fixed capital formation.
Got it, sir. Typically the margin profile at an EBITDA level for these kinds of orders, the higher rating orders, they are better off than the lower rating. Is my assessment right on that?
No. In general, the margin profile is driven more by the geography of customers rather than the size of turbines. In typical domestic orders would tend to carry similar margins and export orders would tend to carry similar margins regardless of the type of turbine. As you would understand, these are customized products, so depending on the level of customization, the level of complexities, margins would go up as well. In general, geography is a better teller of margins than the range.
Got it, sir. Got it. My final question is in terms of the ongoing war in Europe, and there are talks of recession in U.S., are you seeing any signs of that, or is it still we are seeing very good growth in terms of inquiries and pipeline, et cetera?
I'll let S.N. Prasad come in on this as well, but we had to reduce our order book by about INR 40-odd crore in this past quarter because of certain orders that we took out for certain steel mills, which are currently being invaded in Mariupol in Ukraine and in other parts because of just lack of visibility. Directly, the Ukrainian market is not a very large market for us, so for direct orders. In terms of its impact on a broader basis, we've seen high commodity prices and therefore long gestation projects are on the table. This stretches from pretty much all geographies.
Europe in specific, which may be more impacted by this war, the investments into renewable energy are probably getting a renewed focus. One of the orders that we picked up in this past quarter was from the largest waste-to-energy producer globally. This is for a 29.5 MW turbine, 20 km from the Eiffel Tower. You know, it's a very prestigious order for us. Investments into renewable based application and renewable based projects in Europe continues to be strong, and we play a very strong role in that growth. Prasad, would you like to comment a little bit about how, if the war is impacting other markets?
Yes, sir. As you rightly mentioned, in this quarter, we have taken out around INR 40 crore of orders, what we picked up from Ukraine in Q3, because of the visibility and the current scenario. We don't know whether these projects will go through or not. Even though we have all advances in place, we have taken out from our booking. Sir, in Europe, as you mentioned, yes, the municipal solid waste and process cogeneration segments are doing quite well. U.S., our presence is not that strong. So even whatever anticipated recession in U.S., whatever it is, it may not impact us for FY 2023 numbers. We have not considered those markets into our listing, either Russia, Ukraine or U.S.
The balanced market where we are operating, especially in renewable energy markets and process cogeneration markets, they are quite strong. We are hopeful there will not be any downfall in that side of the market in that.
Got it, sir. Thanks a lot, sir. Thanks a lot for that.
Thank you.
Thank you. A reminder to our participants, please press star and one if you wish to ask a question. The next question is from the line of Ankit Babel from Shubhkam. Please go ahead.
Good afternoon. Sorry I joined late, so pardon me if I'm asking any repetitive question. My first question is, what kind of order inflow growth you are expecting in current financial year, that is FY 2023. This year, I guess your order inflow was around INR 1,184 crores in totality. On this base, what kind of growth or what kind of absolute numbers you are targeting this year?
You know, we don't specifically talk about this, but the growth in our inquiry book, which is over 36% over the previous financial year, would give you an indication of what our ambitions are in terms of increase in order booking. Our targets are set. The market is tough. There is competition. It's not as if this is a very easy market to compete in. We do have a very strong value proposition, we believe. Our attempts are for good growth in order booking. I think you'll see. If you see, half of Q1 has already gone by and we're very optimistic on what that tells us for the coming quarters.
Okay. You did mention about that the margins will improve because of the better export sales in the coming quarters and also from the aftermarket products. Considering the order book which you have and the expected order flows which you're expecting this year, from a top-line point of view, I mean, what are your views? How much growth can we see there on the base of, say, INR 80 crores?
Well, that's why I tried to allude to earlier, which is that on the base of INR 850 crores, we had an opening order book of approximately 650 odd crores, which is opening of 640 odd crores. There's always a book and build in Q1 for product and aftermarket for up to Q3, which lends towards the turnover of any financial year. Given the fact that we have an extremely strong opening order book, which has increased by over 52% to INR 970- odd crores.
While some of these are long duration contracts in the 30-100 megawatt segment, which will spill over to FY 2024, including our visibility of good order booking in Q1, we believe that there will be substantial growth in this current financial year. Inquiry generation in this financial year gives us confidence about order booking this current year, which leads to confidence for FY 2024 as well. On the margin front, like I said, I think we did a very good job in terms of being able to preserve margins in FY 2022, despite the fact that we had large commodity price increases. We had chrome ingot prices increasing by over 60%-70%. Steel, copper prices increases as well.
Absorbing those costs and at the same time dispatching turbines, which are predominantly for the domestic market, I think we did well in terms of being able to preserve our PBT margins for the full financial year at about 20%. I must tell you that as a steam turbine is a customized product and the margins are different from order to order. While quarterly you will see variations, for the full year, it is a better indication to have this break up like I told you. The fact that you will have higher dispatches in the export market compared in FY 2023 as compared to FY 2022, leads us to believe that with great degree of confidence, that margins shouldn't be the biggest pressure.
Having said that, in this current financial year, which is FY 2022, we expanded our employee base by over 10%. And this is in a variety of high value added segments and roles. We believe we will continue our growth in personnel in the current financial year as well. Therefore, there will be increase in sort of capability building and capacity building from an HR and personnel perspective, which we believe gives us good visibility to not only get more orders, but to execute these orders in the coming years.
Okay. Sir, what is the outlook on the API business? Any breakthrough orders you're expecting in this year?
Yeah, that's a market segment that we have low market share in. We see a very good potential in that market. I think that specifically we will only see good growth in this market going forward. Our registrations are high and we've had good traction in FY 2022, and we believe that that will only increase in FY 2023. This market is quite consolidated in terms of the number of buyers that you have and the number of clients that we have.
Without being too specific because there is a degree of competitive information in a lot of this, a lot of what we're talking about, we believe that this is definitely a segment of growth for the company where we are offering extremely competitively priced, energy efficient turbines for our end user market. This really does play into the broader theme of providing very efficient, energy efficient turbines for us. Prasad, would you like to comment a little bit more on the API segment?
Yes, sir. API segment, as you rightly mentioned, our market share right now is a minuscule market share. Because of our approvals there across the globe, and our inquiry pipeline is quite strong in API. As the quarters to come, years to come, this is going to be a interesting segment for us, that's it.
Okay, that's helpful. Lastly, one question, in the recent press release, there was an announcement that one of your promoter, Triveni Engineering, is selling some 22% stake in the company. Out of that, around 10%-12% would be bought by the existing promoters in their individual capacity. Just wanted to understand, the remaining 10% would be sold in the market, or it would be like any other promoters willing to buy it out, or what will happen to the remaining 10%? How the sale process will happen in that 10% stake, sir.
Okay. You know, since I'm an interested party, I'll get Surabhi, who's our Investor Relations Manager, to answer that question for you.
Sure. The board of Triveni Turbine has been informed of the announcements made by Triveni Engineering, and these are in the public domain and on the stock exchanges. We have been informed of the promoters' wish to acquire the 10%-12% stake in TTL that you also mentioned about. The process is being run by Triveni Engineering, and it is our belief as well that the balance amount is available for minority shareholders. The board of Triveni Turbine views this positively because it will help expand the liquidity and the free flow of the stock. The transaction has been informed that it'll be at the arm's length pricing, which is market driven. Those are the comments on the promoter stake sale, et cetera, announced by TEL to TTL.
One confusion. The floor price was decided at INR 171 for the promoter to buy it from the Triveni Engineering. But there has been no pricing decision or any information on the pricing for the remaining 10%. Would it be market driven?
Yes.
Any timelines for that?
That's correct. The terms and conditions say it's at prevailing price or a floor price, and hence it's a market-driven pricing.
Even for the promoters also?
Whichever is higher. The language that if you see the announcement mentions that it'll be minimum of INR 171 or market price, whichever is higher. Prevailing market price, whichever is higher.
Okay.
Hence it is market linked.
Okay. That's helpful. Thank you so much.
Thank you. Anyone who wish to ask a question at this time, they may please press star and one. The next question is from the line of Bimal Sampath. As an individual investor, please go ahead.
Yeah. Yeah, good afternoon.
Good afternoon.
Yeah. See, first question is, in the press release you have mentioned that, the company is adding manufacturing capacity. Okay. How much, I mean, are we, is it a big, this thing? Last time you had said about INR 35 crore. Is it the same thing or are we looking at, adding-
Board has not approved any other CapEx. The CapEx as we have is as stated. That capacity expansion is underway and it will be already completed, and it would be done significantly.
Yeah.
In the coming quarter, which has expanded our capacity from, I think, about 150-160-odd turbines to over 210-215 turbines.
Yeah. Okay. That is about 30%-40% we have increased, correct? Still we'll be left with lot of cash.
Yes.
Any decision, I mean, board is contemplating or have anything in the pipeline? I mean, because buyback also.
No
No, about the cash.
Board has
On the books.
Yeah. The board has not contemplated anything. The board in its previous board meeting has announced both the final as well as special dividend, which complies with our dividend policy of distributing the 30% payout ratio on net profit.
Right. On that, South African acquisition-
Yes
... it is basically for aftermarket only, or even in future it will be a production base?
It will not only be a production base, to the extent that it will be full-fledged manufacturing. There is a workshop there which will deal with the local market in terms of a variety of different requirements that steam turbines may have, which can be done locally. It will be ably supported, of course, by the home manufacturing base. We believe that there may be some further CapEx in this entity in the coming years, which will be large, which will be met only through internal accruals of that specific entity itself. I'll let our President, Global - Aftermarket, Sachin Parab, tell you a little bit more about this particular acquisition, its visibility, but also on the general aftermarket outlook both for South Africa and globally.
Over to you, Sachin.
Yeah. Good afternoon. To answer your specific query about South Africa, this acquisition is primarily meant for our aftermarket business, and we do not contemplate any manufacturing activity there for the product business. This is definitely going to support all the customers of Triveni Turbine in the SADC region. Indirectly, it's definitely going to benefit our product business. Primary objective of this acquisition was to build our refurbishment business, which is our multi-brand service offering. The target, the objective, was to better service our customers and give them the confidence that we are closer to the customers to take on more jobs, more complex jobs, and a variety of jobs in the refurbishment business, which is, as I said, the multi-brand service offering.
This will definitely help us grow our inquiry pipeline for the aftermarket business in the SADC region in Africa. It will also give us an opportunity to access the other markets in the African continent with our manpower base in South Africa. In general, this is a stepping stone for our growth for the refurbishment business in the African continent. As mentioned by our VCMD, to dwell on the aspect of aftermarket outlook, we have a very good inquiry pipeline from different parts of the world, including Africa. The Indian market too, we have seen a very good traction in terms of inquiries for the refurbishment business as well as our parts sales and service business, which is the Triveni Product Support Group.
We are quite buoyant that FY 2023 will see better growth than what we achieved in FY 2022 for the aftermarket business. Thank you.
Thank you. That's all. Thank you.
Thank you. The next question is from the line of Priyesh Babaria from Batlivala & Karani Securities India Private Limited. Please go ahead.
Hi, sir. Good afternoon. Am I audible?
Yes, good afternoon.
I have only two questions. First is regarding, it was the previous.
Sorry, Priyesh, your voice is breaking.
Hello? Hello?
Priyesh, request you to come in the network area, please. Your voice is breaking.
Am I audible now?
Yes, yes.
Slightly better.
Yeah. My first question is regarding capacity utilization. What is capacity utilization as of now, as we make around 200-220 steam turbines per annum. What is the current capacity utilization as compared to previous year in financial year?
Okay, the second question.
The second question is regarding market share. The domestic market share is around 50%. What is our international market share as of now?
Okay. I'll say second question first, and then I'll ask Arun Mote, our Executive Director and CEO, to talk a little more about the capacity utilization and any constraints that he foresees in that front, including the capital investment and by when it would be operational, et cetera. From a market share perspective, as we said in the past, we aim to maintain a dominant market share in the domestic market. This is part of strategy so that we're able to have the appropriate cost structure, which is necessary for us to leverage it globally. Internationally, our market share is dependent on our visibility.
We do not have full visibility in the international market, and so the market share to the extent of the order that we do see is quite high, but we do not see a majority of orders. Therefore, it is very difficult to read anything into what is our market share internationally. We tend to say the growth in our inquiry book is more reflective of our operations internationally because that tends to give us. Because once you do get an inquiry, that is half the battle with the customer. That means he's accepting you as a supplier. So that is the answer to that question. Arun, could you give a little bit more light on any capacity constraints or what is the capacity utilization that we have right now?
Good afternoon to you. This is Arun Mote. As regards to the capacity, as our vice chairman has said, we have about 150-180 numbers of turbines that we can make in the current capacity. We are adding one full bay in our new Sompura plant. The execution of this expansion is already under way, and we should be able to complete it by mid-August, end August. This will give us capacity between about 220-250 numbers of turbines, varying between all the sizes. Here, the handling capacity will be close to about 300 tons. So that would mean not only 100 megawatts, but even the bigger ones can be handled, which can be for the refurbishing area. This is the internal infrastructure.
As regards subcontractors, we are increasing our subcontractors by 25%. We are giving preference to our
Old employees who have retired by helping them locate facilities, helping them in expansion, helping them in getting finance, and that's how things are working out. We will be increasing the subcontractor laborers business as percentage substantially in the coming year. We have no extra addition of capital except what our Vice Chairman has said, about INR 35-INR 40 crores for expansion of these. As regards to manpower, we already recruited 60 persons in Q4 and part of Q1, and we expect the staffing to be complete for our expanded business by August to September.
Okay. Okay, understood. Fair enough. Thank you. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Ankur from Kosal Capital. Please go ahead.
Yeah. Hi, thanks. Sir, just wanted to understand the 1,300 MW market since, you know, now it's a standalone opportunity for us. What are our plans to, you know, compete with stronger companies? Obviously, up to the 30 MW segment, we have a good market share and a good hold. Like, how do we plan forward? You know, because this is expanding our market size. If suppose, the 30 MW success can be replicated into a 100 MW success, it would be a great thing for the company. Sir, can you throw some light on the plans which we have on how we are planning, you know, overcome the challenges that you face?
Yeah, that's a very, very good question because the 30-100 megawatt segment has historically been a market which is 1.5 x the size of below 30 megawatts. There is a substantial increase in market size in the applicable market size for Triveni to enter to operate in a standalone basis. We're quite excited by that. There are two or three different issues around that. One is in terms of technology. From a technology perspective, over the last 10 years, while we had a joint venture which ran and did execute projects within the 30-100 megawatt range, as far as the executed projects from that joint venture were concerned, over 50% of the installed executed projects were done on Triveni technology.
We do have references in that technology range, which is applicable for the market in which we operate, which we are addressing. That is one. We further continue to do technological development in this range, both in the lower, say, 30 - 45- 55 megawatt segment, as well as higher, to be able to get energy efficient, cost efficient products to our customers, which is the same methodology we use in the below 30 megawatt segment. The blade profiles and the structural analysis and the fluid dynamics that we would use would be common to a large extent amongst these product ranges. As you would know, the market segment above 30 megawatts for us is the same principal market, which is industrial in nature, where it is heavily customized.
Our product philosophy and design philosophy of being modular and being able to execute these projects to a high degree of customer confidence stays consistent. The second part, which is a little bit more difficult, is the sales aspect and marketing aspect to get customer confidence to be able to quote. This is a process that happens slower, but our ambition is over the medium term to have equivalent market share as we do have in the below 30-megawatt segment to the higher segment as well.
We are making all efforts both in terms of our agent network, customer engagement, as well as having a greater on the ground presence, which will be supplemented by our aftermarket business to give greater customer confidence in the higher megawatt segments. The higher megawatt segments tend to be driven by companies which are larger in nature and therefore have supply chain departments which process orders as opposed to smaller companies which are more entrepreneurial in nature in terms of placing orders. There's a greater degree of customer confidence that has to happen from a branding perspective as well. We are aware of all the steps that we need to take.
The journey will be slow, but we are confident that we would be able to get there.
Like, just a follow on. So just I'm trying to understand the use case. Let's say there is a cement company, which was using Triveni's, 30- megawatt or under 30- megawatt product. Now because, you know, the expansion of capacities is also taking place at a larger scale, they might enter into a captive power plant, which is, you know, let's say 50 megawatt or 75 megawatts. Is Triveni being invited for that tender? Or, as of now, that is getting difficult for us?
No, no, that's yours. It's as if you have an insight into our inquiry book and order negotiations, you know? No, no, we are fully participating in all these discussions and ordering processes. S.N. Prasad, can you give a little bit more color on this?
Yes. When we are participating in these markets where we have supplied the machines in sub-30 megawatts, obviously customer gives the inquiry for us in that 30-100 megawatt segment. Some of those success what we got in last year also. One of the order is a similar success like that. We are focusing on building the inquiry pipeline and increasing our visibility. Once that is there, the sales process and what customer differentiation factors more or less in sub-30 megawatt and above 30 megawatt more or less similar grounds in terms of.
Service capabilities and the sales network and all those sort of things. We are confident on that. Since the sales process is more or less same, once the inquiry pipeline is built up, we'll be able to see the success at a faster pace.
Okay. Okay. Is the margin profile of this range, because, you know, obviously, we are entering as a challenger or a new company, is the margin profile like, you know, Triveni claims, that, in under 30 megawatt, we are the only company who is making profits on our product, on the product business. So in the above 30 megawatt range, how will be the pricing intensity and how are we planning to compete? Like, will it be within the existing margin range of the company?
Yes. I mean, the thing is, Triveni Turbine doesn't directly compete on price. We offer our customers a value proposition. Reduction in price doesn't take place as you imagine, because these are customized products. The price for one customer is always going to be different from a price to another customer. Having said that, the pricing philosophy is similar among all product ranges. There is no discounting that happens based on market entry. It's more from a perspective of geography in terms of customer expectations and the competitive intensity within certain geographies that determines the margin levels.
Okay, thanks on that. Second question on capital allocation. Like, what I can imagine is that Triveni Turbine largely is a working capital negative business, and it doesn't require that much capital, you know, even to expand or to gain service, because in general, we are getting advance receipts from our order bookings. Now, like, considering the one-time payoffs which we got from the settlement, and, you know, the cash generation which has happened because of a good business year, I was pretty surprised that Triveni is going ahead with a heavy cash balance sheet going into the next year.
Like, what would be the considerations which the board has discussed in the meeting, which allowed them to take a stance that we want to run a capital heavy balance sheet in spite of, you know, the business favoring a non-capital intensive business.
You're right. The direct question of the higher cash balance was addressed to the extent that the company decided or the board maintained the dividend policy as a percentage of payout ratio, the payout ratio of over 30%, which incorporated the gains that we had made on the exceptional item in Q3. I think specifically, the cash balance question is something that will be looked at dynamically. It is only something that we've seen a large jump. 31st March 2022 has seen a cash balance of about INR 759 crores as opposed to INR 341 crores as of 31st March 2021. This near doubling has only happened over the past year.
We'll have to wait for a little bit to see how this whole thing plays out from a perspective of capital requirement of the business. You're right that the business does work on a negative working capital basis. It does not have huge capital investment plans. Currently nothing has been brought to the board and neither has the board contemplated on this direct matter. We're conscious of it. I have to say that we're conscious of the matter, but it hasn't been addressed specifically.
Sure. Thanks, team. All the best.
Thank you.
Thank you. The next question is from the line of Amar Kedia from Ambit Capital. Please go ahead.
Yeah, hi, Nikhil, and congratulations on an excellent set of numbers for FY 2022. My first question is that within the product and the aftermarket business order inflows that you have reported, is it possible to get at least a rough breakdown of the export and domestic split for the year or yeah, for the year?
Between the aftermarket and product?
Yeah, or any one, because then we can work it out backward. Any one business, if you can give the split between export and domestic.
Yeah. Amar, in general, I don't think we give that breakup, but let me talk about it in a different manner. The margin level in both export and domestic in the aftermarket segment, which is for spares and service, is pretty much the same. There may be a little bit of difference, but that's dependent on order to order. The refurbishment market segment has a slightly lower margin, but the international domestic markets have similar margin profiles. Export will be slightly higher, but it is not as significant as it is on the domestic or on the product side. Product has a much bigger difference in terms of domestic and international markets in terms of the margin profile.
I don't know if I'm answering your question, but it's a roundabout way of saying the same, giving you an answer.
Okay. All right. Second is, I mean, this drive turbine market, and you've been there and these approvals, and I remember, I think, a few years ago, you had received one large order, either from Kuwait or ADNOC. I don't remember the exact one, but I think this was about three years ago. Maybe if you can take a minute or two to just tell us what has been your overall progress on the drive turbine market ever since you started getting those approvals?
Okay. Great question. First, the drive turbine market order that we talked about was with Kuwait National Petroleum Company several years ago. It was a successful installation, and of course, that led further to better registrations with customers. As Prasad had talked about in this call itself a little while ago, our market share currently is minuscule, and we're making great strides in increasing our presence. Some of that is reflected in our order book directly, and the rest is reflected in our inquiry books. This is not only in international markets, but also within India itself, which has requirements for drive turbine energy efficient drive turbine installations for both upstream and downstream oil and gas processors.
We see a very good market here. This along with the. We pretty much have four growth avenues for the company right now. One is of course the refurbishment and aftermarket sales that we've talked about previously. We have the 30-100- megawatt market segment, which is growing well with increased focus. The API market segment of drive turbines is going to grow because of our very low market share. Again, to give you an idea, the entire market for drive turbines, in our opinion is approximately the same value size as the below 30- megawatt segment. That's pretty much doubling our market size there also by approaching the API segment more aggressively and more comprehensively.
The last, of course, is the fact of the below 30- megawatt growth, which is happening through increased fixed capital formation and increased spend on renewable energy, which is happening through the form of decentralized power generation, especially for renewable energy. Those are the growth avenues. For the past year, we've seen a growth in the order book, opening order book by 52%. That gives us good visibility, even though some of those orders will get translated into FY 2024. That combined with our opening order book and build gives us good visibility on growth in this coming year. This will be added also by the API market segment, which has somewhat shorter duration dispatches.
Thank you.
Yeah, Mr. [audio distortion]
Hello. Yeah. Sorry. My other question is on your working capital. This year obviously has been exceptionally low on the back of very strong customer advances. That's also a function of the order inflow, right? How do you see this panning out? Do you expect your working capital to remain at such low levels, or do you think that as the order inflow overall normalizes, the sales come back? Yeah.
There are two, three areas behind this. One is of course increased customer flows, the second is our reduced inventory level. What you saw in FY 2021, even when we had negative working capital, that was because of a reversal of inventories and the fact that we got even more streamlined in our modular manufacturing process and design process. You know that there are multiple implications of that, which is both in terms of cost reduction and raw material saving, etc., and manufacturing cost saving. That also led to negative working capital in those years. We don't see a buildup of inventory which is gonna be disproportionate to our growth in sales. Inventory will grow to the extent that sales will grow.
You'll see that to be order booking we believe will continue to grow and have a good growth. Therefore, in the short, medium term, we don't see a reversal in this negative working capital. At worst, if it comes to a situation we don't have a receivables cycle which is poor. Receivables at the end of Q4 is always higher than it is in other quarters because usually Q4 is a high dispatch quarter. Having said that, it's all largely under control. We don't seem to have an issue there, given the fact that we get good customer advances of anywhere between 15%- 20%- 25%.
Thank you, and all the best.
Thank you.
The next question is from the line of Alisha Mahawla from Envision Capital Services. Please go ahead.
Hi, sir. Good afternoon. Thank you for taking my question. First question was, for the order book that you have right now, the inflows or the closing order book, how much of the growth is because of increase in prices or what is the volume led growth?
You see every turbine is customized. Let me answer this question in another way. If you look at the increase in raw material cost from about 50.5% to about 55% in this previous financial year, that 4.5%, out of that 4.5%, approximately, 2.5% was driven by increase in raw material cost directly. Another 2% was driven by, or a little more than 2% was driven by the change in product mix, for being heavily domestic market focused.
Majority of the growth in order book has come because of volume led growth.
Okay. Sure. Understood. With respect to your book to bill, 0.7-0.8 kind of book- to- bill is what we will continue with, because you were saying there are some orders that may spill into 2024.
I don't know about 0.7, 0.8, but we don't typically give the breakup as to how much carry forward is going on to FY 2024. Majority, I would say over 90% would be executed at this, in this current financial year. They will of course be book and bill for product in Q1 and aftermarket all the way up to Q3.
Okay, thank you.
Thank you.
Thank you. The next question is from the line of Aditya from Securities Investment Management. Please go ahead.
Yes, sir. Yes, sir. Hi, Nikhil. Thanks for the opportunity. Just a few fundamental questions.
Right.
How do the company enter into after sales contracts? Do we need to enter into after sales contract while we sell our turbines? If not, do we hire agents or a separate sales force for these types of contracts?
You see every order is customized, and so we aim to maximize the engagement with the customer. If the customer wants greater confidence during the initial sales process to include spares which are outside warranty spares, we'd be happy to engage on that. Otherwise, the conversation starts. We need to handle the customer for the life cycle of the product. Which stretches anywhere from 20 years- 35 years for turbine, maybe 40 years for some turbines. The engagement is continuous, and the engagement on the aftermarket services, like what I did talk about right now, a majority of push on aftermarket services right now is happening on three verticals.
One is upgrades, which is upgrading on the same footprint, either changing rotors to have better rotor dynamics and efficiency so that there's a better value proposition. A very quick payback. I mean, a matter of months payback to customers. Second is a higher degree of automation, which enhances our service offering and gets new service streams onto the customer. The third is a more integrated offering to take greater liability, which is through AMCs. Now, all of these offerings differ from customer to customer and where in the sales process cycle it happens. A lot of this is dependent directly on our capabilities. It's very difficult for an extensive agent and sales network to do it, but we do leverage our sales agent and sales network as well.
There's a combination of everything, but it depends from order to order how it happens.
Yeah. Can we do repairs and overhauls for turbines which we have not installed also? Are we also receiving orders for those?
Yes. That is a whole market segment called refurbishment, which we call as third-party services.
All right. The company was in the process of commercializing all the supercritical CO2 turbine.
Yes.
Will this address a completely new market or is it an improvement of the existing turbines that we?
No, no.
Typically see in the same market?
It's fundamentally a different product. It's fundamentally a different market segment. There is certainly a cannibalization if you do look at it from a condensing model perspective for steam turbines. This is something that we believe prototyping is over. Piloting is currently underway for certain applications, and this is a medium-term project for the company where we would be able to show really world-beating technology and a very strong value proposition as well. We're very excited about it, but it's not something that's gonna give any revenue in the next couple of years.
Right. Thanks.
Thank you. The next question is from the line of Amit Mahawar from Edelweiss. Please go ahead.
Yeah. Hi, Nikhil. Nikhil, I just have one question on the-
Hi.
On the aftermarket now. Our business is now almost INR 220-230 crores aftermarket and almost 27%-30% of revenues. Generally, in last 4-5 years, the way we've ramped up our sales force, like in India, out of India, how have our market share would have grown, broadly on a global scale? Four, five years down the line, what is our general target on, you know, positioning of aftermarket as a percentage of sales or the global market share? Thank you.
Thanks, Amit. Amit, you know, it's very difficult to have market share data on aftermarket because majority of sales go directly to OEMs and are not reported. We look at absolute growth in this business. With the assumption that very frankly, as far as the global market. Because what is our market? We're talking about rotating equipment is our market. It's not only limited to steam turbines. We have a negligible market share, so therefore there's only room to grow. For us, the benchmark is absolute growth here rather than any market share growth. That, I think, is not meaningful for us.
Okay.
What is meaningful for us.
Yeah.
In the market share that we do have for our own steam turbines, Triveni branded steam turbines, that we are servicing. We aim to have that in excess of 95%. Where we are servicing our own turbines, that is, that market share is very important to us to ensure that we have a long-term committed relationship with our customers. It doesn't happen always, but it's very important for us to maintain a very high level there. The growth in this business, it will be proportionate to an extent on the installed base that we have, and so the increased offerings that we can give our customers.
The larger installed base, the larger the offerings that we can have on the aftermarket side, and that will continue to grow very well. We cannot really price gouge this market because we want to have a long-term relationship with our customers. It's very important that margins are high regardless. You know, there's no reason for us to be excessively greedy here. We have to ensure that the customers are happy with paying what they want to pay. That's for the steam turbine side. As we expand this onto other ranges or ranges where Triveni turbines are not directly the market segment that we're talking about, which is in the refurbishment side. Here it would be a question of what is the value addition that we play at.
We could have very low value addition services that we offer, such as overhauling or all the way up to life extension and upgrades, which requires much more technology and possibly much more liability also, which also then afford much higher margins. We don't view this business from a market share perspective, we look at it from absolute growth, and we aim that we have to grow this market considerably in the years to come. I think we'll have very good successes in the coming quarters, and it'll give you an indication as to how this business will grow. We seem to be hitting a threshold in this business where this will independently grow off the product business itself.
Fair. Thank you, Nikhil. Maybe one bookkeeping. Vis-a-vis in the current revenue, what is the share of Triveni serviced turbines as a percentage of sales in aftermarket vis-a-vis say four, five years ago? That will be helpful. Thank you.
Yeah. You know, Amit, we don't give the breakup of aftermarket between refurbishment and sales. In general, if the entire business is growing by upwards of 25%, our own installed base. I mean, the sales of our own turbine services happen on a lag, you know? The fact that we've had 20%+ product sales growth in the current year doesn't mean that the Triveni Turbine-based aftermarket has grown by 20%. Our growth will be sort of like with a three-year lag. To that extent, that is the extent that the Triveni-based services has grown, which is with the lag.
The refurbishment has grown far quicker, and we believe that will continue to grow far quicker going forward.
I understand. Thank you.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you.
Thank you very much. Ladies and gentlemen, we're very happy to end Q4 on a very positive note. We are extremely optimistic for the year to come. I think indications of order booking and revenue in the coming quarters will give you an indication of the growth that we see, not only for FY 2023, but for FY 2024. Triveni Turbine, I think is placed at a cusp right now for growth, both from a technological as well as HR perspective. There will be some challenges that we will face along the way, but we think that as a management, we are very well placed for the future. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Triveni Turbine Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.