Q4 19/20

Jun 15, 2020

Quarterly report

Ladies and gentlemen, good day. I'm working to provide you with a find a grantee on a consent form. As a reminder, all participant lines will be in the listen only mode. I there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance given the conference call? Please. I would now like to want to conference over to Mister Abidar from TDAire India. Thank you, and over to you, Mister Abidar. Thank you. Good day, everyone, and a warm welcome to all of you participating in the q 4 and FY 20 earnings conference call for. We have with us today on the call, Mister Drew Sawnee Sherman, Mister Nikhil Sawnee, vice chairman and Managing Director. Mister Aaron Motte, executive director, 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 broadcasted or reproduced in any form or manner. We will start this call with opening remarks from the management following which we would be we will have an interactive question and answer session. I will now invite Mister Nikhil Soni, to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir. Thank you very much. Good afternoon, everyone. And, in these very troubled times, I hope that you and your families are well. But firstly, as you all may know, and in the reiterations of the invested brief that we've sent out, yesterday. COVID pandemic is truly a devastating occurrence, and it was impacted not only economy and industry, but all of us and humans as well. So our priorities at this point in time for the company has been to ensure the safety and security of our employees and key stakeholders. But more importantly and equally importantly, actually, is to ensure that we are close connect with our customers that we understand their problems and work with them through whatever issues they may have in their businesses so that we can maintain our life cycle relationship with with our customers. As for the the virus itself, we as a business with our global outreach started feeling the impacts of this in late January, early February, where our heat station customers started deferring orders, or also deferring acceptance of their airlines to the extent that the flights are not ready, or they were talking about in terms of restriction, the movement of people were instituted by their governments. This led to, in further exacerbated in March with most of your upcoming into lockdown and that's having an impact both in terms of, dispatches as well as certain order bookings. As you know, India went into lockdown in the last week of March, but of course, it impacts the painful beginning of March onwards in terms of slowing down of dispatches as well as sentiment in terms of all the book. I have to say that while our operations were allowed to start in a sales manner from 3rd 3rd week of April. We in that 1 month while we were off, we're able to work in a extremely digitized format from a work on home work from home basis, which has given us incredible learning as to how we could be more productive and email in the times to come. In fact, during this 1 month while we were off, we were able to to bring our platforms of design and engineering completely on the cloud to be able to do not only R and D work and simulations, but also detailed engineering which call a collaborative mode. More than that, we were able to actually move or institute certain order booking procedures where we were able to gain orders completely remotely and even negotiate remotely with our customers both in India as well as outside India. And I will touch up on these during the latter half of my opening remarks. Equally, at the same time, and more importantly, we were able to commission turbines. In a remote manner, the way in which we have been able to use augmented reality and virtual reality tools to be able to ensure that we are able to get quality service to our customers while at the same time retaining IP has been truly commendable by the team. Having said that, I will touch upon some of these interventions and how they will impact Srini in the longer term further. In the investor brief, we've also given an insight into the Steam turbine market in general. And I hope that you would appreciate the market position that Srini shares While this is for the calendar basis, it is something that where Sivini has held a consistent market share over the last 5 years. But according to this market share, Savannah enjoys a 20% market share in in the calendar 1920 as well as for the period of between 2015 to 2019 for the units sold in the steam turbine market. Why is steam turbine market globally on overall has declined by a CAGR of 13 percent from 139 gigawatts in 2010 to 39 gigawatts. In the calendar year 2019. A majority of that has been due to the fall in the market segment above a 100 megawatts, which is the utility scale market. The 0 to the 5 megawatts to 30 megawatt market as well as the 30 megawatt to 100 megawatt market in which the company operates through stand alone and operations as well as through a joint venture has been largely flat. But below 30 Megawatt market has been significantly in has has had changed in its mix of fuel source being dominated now by the permanent renewable segment in which Srinita Bank enjoys her considerable market share globally. We also have a situation where savini turbine, as it has turned out, is the largest producer of biomass based turbine globally. With this market position, it reinforces our value proposition that we've been talking about that while the market between 0 to 30 megawatt as well as 30 to a 100 megawatts, I'm going to see a GI of 3% 2% respectively over the period of the last 10 years. The market has significantly moved from the fossil based market to renewable energy. Which is where our style of and value propositions of a value for money turbine benchmark that's logically with the global best. Really does compete extremely favorably. Let me give you a little bit of idea about the performance of the company over the past year and this past quarter. And give you insight into our views on the year to come as well as the future. For the financial year ended 31st March 2020. The net income from operations for the for the company on a consolidated basis stood at $818,000,000,000, which is a marginal decline of 2.6%. And we had a record that asked 1,220,000,000 rupees, which is a growth of 21.5%. Domestic sales should decline of 4.5% while export turnover of 3,920,000,000 rupees was lower by 0.5%. The total consolidated order booking stood at 6 stood at 700,000,000,000 7,000,000,000 rupees as of March 31 2020, which is lower by 3% as compared to the previous year closing order book. There has been a significant reduction in the manufacturing cost on account of cost reduction and value engineering undertaken in the manufacturing processes Similarly, there will be a reduction in certain administration expenses, including travel, as well as others. In the domestic market, are all the booking has shown a growth of 8%. And while the domestic market may have been grown, we believe that it will rebound in the second half of this current year. The domestic market inquiries were from cogeneration for about 70% while about 20% of company waste heat recovery segment. In the domestic market, the company witnessed certain postponement of finalization of orders towards the latter half. That are part of q 4, which resulted in a lower order intake by 32% over the corresponding quarter of the previous sale. The main segments we saw attraction were sugarco generation including distilleries and specific biomass, ITT food processing, and wage sheet recovery in a variety of different industries. On the export front, ex export of the booking was low by 23 which was impacted by the entire month of February March. We were anticipating certain large orders to come in, and it's it's in the latter half of Q4, which have unfortunately got differed due to the pandemic. The thermal renewables segment was a majority contributor of 48% of the total in export inquiry base, while process cogeneration contributed about 32%. On the order bookings from international market, the Asian countries before started feeling the impacts on February while Europe sent it from March onwards. And some of the export orders on the execution front, while some of the export orders were impacted because of the lockdown in India, which led to which led to, which led to certain order being stuck at port because, and therefore, lack of revenue recognition, sir. We work with the majority our clients on February onwards to ensure that we could defer their orders to a point in time where they would find it acceptable for them to accept it. As you must remember, we follow a very strict policy in terms of receivables, and we would not dispatch orders regardless of what, our customers may ask unless we are able to get payment security. And so really looking after our customers financial health, as well as their payment ability, we have to work with our customers to ensure that we come to a very reasonable solution in terms of when we would be able to provide them with the product and the commissioning services. On the aftermarket side, during FY 20, the aftermarket registered in order booking of 202,170,000,000 rupees, which is lower by 4%. Again, this was physically impacted by the last 2 months of of the quarter. The aftermarket turnover is sales was 1.86,000,000,000 rupees, which declined of 10% over the previous year. The share of aftermarket sales in FY20 was at 23% as against 25% for the financial year. Fy19. The performance of the aftermarket during Q4 FY 20 was restricted by international travel, which also resulted in a lower aftermarket business for the quarter by 25%. I joined venture G Savani, which operates in the 30 to 100 Megawatts segment, received orders during the year, fuel related to 861,000,000. This was a near 40% or 80% increase over the order bookings of the year, FY19. We received orders from both the international and domestic markets, and the inquiry base remains strong. This this joint venture currently has certain litigation between the partners, but the business is continuing. Orders are being quoted for and being received. One of the things that we have been able to to differentiate ourselves with our competition has been our design and engineering. The company has a very strong focus on technology and dedicates a significant market with resources in terms of personnel towards this endeavor. Both from a perspective of upgradation of current models and building a technology to further our efficiencies and also newer projects. The cost control and value engineering efforts that we started with here already showing results. On the reduction in costs as well as increase in terms of increase in efficiency that we are offering our clients. These will further improve in this current financial year. The company has also undertaken a very novel research and development project, I'd be happy to, explain to all of you. This is in the field of supercritical carbon dioxide. We believe that the chemistry of steam turbine would be disrupted in the years to come, especially for applications which require a condensing mode. We think that Sravany Turbine is at the forefront of global research in this front, and we with our partnership with the engineers of science at which has already been signed and formalized over the course of the past year, we'll move forward on this as a war footing. We believe that this will increase the value proposition to our clients by not only reducing the cost of the overall system, but also increasing the efficiency which could lead to a near 30 to 40% increase in the life cycle benefit to a customer. Of course, we believe that the commercialization and pilot of this is something that we need to work on very quickly, and we believe that in FY Twenty 2, we should have a very strong value proposition to take to the market. We've also done certain capacity enhancement in terms of our R and D from a infrastructure perspective in terms of installation of a little test facility with a dynameter. These are all these investments will help us in terms of becoming more efficient in our R and D to be able to meet the market, which we believe is it exists out there. But in terms of the outlook, while some revenue has been destroyed by customers from q4fy20 to both q 1 and q 2 of this current year, we believe that there will also be certain orders which will be pushed out from this current financial year to FY22. But with a strong order inflow that we anticipate and we already had within Q1 of this current year, which should exceed Q4 of the previous financial year. We believe that this current year will still be reasonably good. I'll provide some insights into where we think the risks may lie, towards a little bit later. The the impact of revenue from uncertainty in terms of travel and commissioning, we have factored in to give a guidance, which for the very first time we are able to give to our touch to our investors in a manner to give them a little bit of confidence about where we see the market and where we see the company going forward. In anticipation of what we are hearing from our customers today, which is reasonably pessimistic in terms of their acceptability. We believe that the company would still be able to to register a minimal details in terms of turnover, regardless of the impact that we may have in terms of revenue in Q1 and Q2. As you would imagine, revenue would be in in Q1. We are anticipating to be better than the revenue in Q4 of this finance last financial year. But we believe from q 2 onward, we should see a pickup. This is not counting any of any significant amount of book and bill for this current year. Which we believe should still be possible as we approach even the end of Q2. As you know, this company has ordered installations from over 70 countries and our focus on newer markets of oil and gas, etcetera, also leads to us leads us to our confidence in the fact of getting orders from the international market. The domestic market seems to be showing a great degree of weakness from an order booking perspective. The international market is significantly better for us and we believe we are optimistic in being able to get some of these orders in the next couple of quarters. In fact, while under lockdown. We've been able to secure orders from countries such as Italy, for the city of Milan, for basic recovery projects, and other countries which were in the middle of lockdown as well as, with high degree of, COVID cases in their countries. While this impact will last, we believe, from Q1 and Q2, as we open up more as an economy and as a globe, we think that we should be able to gala all the impact demand, which we are following up on on a regular basis with our customers. The digital format in which we've been able to engage with all our customers and clients consultants and EPC companies has truly progressed in a more, confident position in being able to project the long term growth of this business. We believe that our strong order backlog not only provides visibility for this year, but any carry forward provides us greater visibility for the years to come. The significant reduction in established costs, both from perspective of, salary as well as administration, which comes to a total overhead, we believe we'll be well mitigated with our efforts towards digitization. Therefore, on the worst case scenario, we believe that while we may see a revenue decline in this current financial year of between 10 to 15%. Of course, our attempts are to see a lower lower growth, lower D growth than that. We believe that the profit growth may be also at the similar lines. This is driven by the fact that there will be significant cost reductions, but also they wouldn't be certain reversal of provisions that we have taken during the previous year in terms of, a variety of different factors we treat. And get alleviated in this current financial year. With that, I'd be happy to take questions. I'll leave it over back to you. Thank you very much. Ladies and gentlemen, we will now begin the question answer session. Anyone who wishes to ask the question, you need to press star and 1 on the. If you wish to remove yourself from the question, you need to press star n t. Participants are requested to use handset by asking a question. Collection to the sender. We take the first question from the line of Ravi from Spark Capital. Please go ahead. Thanks for taking my question, sir. First of all, if you can give more color on, individual geographies and to how the demand, say, inquiries, ordering is final. Geography is really helpful. For example, Europe is a sizable segment of, like, course for you. While the pandemic uh-uh, are in the geographies. So, given the fact that, falling oil prices have been there, how drive their way demand can be. And if you can touch up on how do you say you're on those dividends? So I have to I have to tell you that India has possibly the the greater and greatest and most stringent lockdown that we've seen in any of our global markets. And so, therefore, you can't use India as a proxy in terms of how work has been happening in other countries. Have you said that for the financial, for the financial year, FY 'twenty, we saw significant orders coming, and there is significant increase in our orders, specifically from the Latin American market as well as certain parts of the, of Turkey and Europe and Southern Europe. We believe that as we know, our markets change depending on requirements of our customers. The current inquiry book seems to suggest a strong order bookings from Southeast Asia, which we were not able to garner in q 4 because that was the first to go on the lockdown. And we've been and, indication that we currently stand is that these are reviving quite quickly. Having said that our market segments which rely most mostly on thermal renewable as well as on process for generation, more tube in the export market towards thermal renewable. Has very strong, incentives from a climate change perspective, which is a more massive trend in terms of investment into these sectors. So as we look forward, our international order booking will be stronger driven by Southeast Asia. We believe that, that Europe, which is already contributed to our order thing in Q1 would still remain strong because it which is a very heavy investment in the waste to energy segment. I'd like to revisit these are geographies and market segments. Yep. Yeah. And, Michelle, I'd like to add a few, points to that, the time right on the market. One segment that we have found actually, which is going against the trend is in the oil and gas sector. We are getting a lot more inquiries than we bought in FY 'nineteen. And you might ask, how is that to be oil prices down? Actually, oil companies are looking for better fields and where they were, having difficulty in, establishing and taking our credentials they've all opened up because the number of inquiries, some inquiries we're getting has almost doubled from from what it was in the past. They're getting very good traction in oil and gas. We will notice that we have a very small market share in the oil and gas side market. It's fairly small. So we see a good growth of orders in that spectrum. Of course, it is not very substantial, but a very good growth compared to FY 'nineteen. The second place which we are seeing very good traction is this consultant. We managed to have a lot of very good webinars, and they have come back to us with this online format much, much better than we had ever got when we were visiting them physically. So we believe that this is the opportunity is that the new way of work is is what's my, that's handed sort of status inquiries we are getting from them in areas in, various different places, South America, Central America, in Southeast Asia, as you said, is much more than we had before. How much will we actually turn into orders in this year? It's something that we'll have to see. But we are quite happy with the marketing efforts that we've put in, in the last 2 months during the lockdown. No, Ravi, I must add them that is, is the fact that once one is an order booking. The other is it doesn't execution of orders because customers still have confidence in us to be able to execute. As you know, the orders that we take, for the product as well as on the supervision of erection and commissioning. And while we do this supervision of direction and commissioning both from a physical basis, the the the confidence that we have to do it on a on a combined physical as well as remote basis has actually led to a very apt solution for, our customers, which who find it actually a very compelling value proposition. Got it, sir. Got it. And my second question is with respect to and a trial of pricing, currency depreciation, and a lower raw material cost. So does currency depreciation and the lower raw raw material cost translates into better margins for you, be given the current situation. And whether is there any pricing pressure from the customer's plan that can offset the benefits that you can see from currency depreciation and your operating cost? You know, we are a customized product, and so there's no menu price for us to become a customer's perspective. Any currency depreciation benefits us. To the extent of raw materials, again, we are customized. And so we are not the raw material buyers. We buy from our vendors as well as, subcontractors. And so, therefore, there's limited raw material benefit availability, I think, into our system because we have longer term rate contracts. There may be certain cost outs that we may be able to get just based on efficiency and scales. From the spectrum of market pricing, we do not see current pressures and we are continuing with what we believe are appropriate pricing, for customers in different segments and geographies. God is coming at that we we because of these cost reductions, and, increased coverage. We think we'll be able to balance the the the expected drop, possible drop in turnover with these cost reductions and so, not have much effect on the margin. Got it, sir. Yeah. Thanks a lot. I'll be coming back in with you. Thank you. Take the next question from the line of Alan Bernani from Unifi Capital. Please go ahead. Thank you for the opportunity. I have two questions. Sir, one was you mentioned that for, inquiries the outlook for export market is much better than domestic. So just wanted to understand, this you know, expectation, has it changed post COVID in terms of potential orders or you still are having the same level of discussions and that the the discussions you anticipate to materialize into orders, how's the outreach in post COVID? They're both. Yeah. Please. Yeah. So, you know, it's a, we are having a very strong inquiry. And we're having a much closer interaction with our customers at very high levels, such as the dementia industry, even see. What we don't feel that there will be, a drop in orders. What we are, expecting is that the delivery will go into FY Twenty 2. So that's the that's the risk factor for the current financial year. Not order booking domestically, that they will place but they may because of their own problems in other areas such as not financing, but, in getting the project jobs and getting the site managed because of the, various restrictions, that had come about because of COVID nineteen. That it may take longer for them to implement the project on their own. So by an art delivery, we can actually make it quicker. The the project may not come off in in Y 21. But order booking, even domestically, will not be too bad in the, FY 20. 29. Okay. And, sir, if I see your inventory levels, now the inventory year on year is down by 20% to 173. And if I were to reduce the inventory for the delay in shipment due to COVID, you said about 50 crore worth of revenue was missed. And with a gross margin of 50 percent, I removed 25 crores from the inventory to normalize it for COVID. So normalized for COVID, the inventory is about 148 versus 217 crores last year. So these low levels of inventory to me indicate that there is a lot of deferral, for the year. Otherwise, we generally ship in 3, 4 months So these No. Actually, the reason the the reason is, you know, as we talked about over the course of the past year, that there was a significant attempt to reduce and streamline our manufacturing operations to get it more modular, to get it in a manner where we could reduce cost. We've continually talked about how we can reduce our manufacturing costs. 1 of the outcomes of manufacturing cost reduction is a greater degree of standardization amongst of the profile of the product that he that he sells. So therefore, the inventory does come down to the extent that we don't have so many unique pieces out there. This is being a concerted attempt to bring it down. And this is something which will be sustainable and does not give a direct, you know, influence in terms of, revenue going forward. They but though you you you are right that they were to carry forward of orders from q 4 to q 1 of about 50 calls, And at but at the same time, like I said, once we started getting indications from customers of deferral of orders, we also slowed down our production cycle So there's a order which may be actually placed or executed in q 2 of this current year, which may have been executed earlier. We said that we would be able to minimize that impact on our inventory levels. Okay. So so the changes that you're done standardization to reduce number of SKUs as compared to, let's say, previously held inventory levels What should be the new normal? Should it should then eventually, I'll be 10% over 2025. What's the number that we should I I I think it's possible to put a figure on this. I it's difficult to put the sticker on this, but I can tell you that this exercise, which has been a 2 year exercise, they will be going to this 30 and now. But as you know, we are developing we are r and d developing more cost efficient and the the both from the efficiency in cost standpoint models and variant So the standardization process is both what we have and what we are introducing. So this is a dynamic process. So it's difficult to just give a a a standardized reduction answer, except to say that the cost reduction is an ongoing process. Okay. And lastly, sir, we have had excellent cash flows in the year. And this cash is filled out. So what is the plan, with this cash? So very, very good question. You know, we have about a 195 in cash and investments as of the end of, Q4. And we believe that this will only build up in Q1 and Q2 going forward as well. The board didn't consider anything in this current board meeting, because we believe that, by until we are come to grips with the entire situation in a practical manner, we could then take decisions. We think ultimately, you know, sense we should be considered by the ball would take the form of what they considered in the past in terms of being able to give money back to shareholders. Okay. I'll come back in the queue. Questions. Please press star, then one on your touch screen telephone. Waiting for the line of. Please go ahead. Hi, sir. Thank you very much for the opportunity. Samiq's first question would be earlier. You have mentioned that the domestic 0 to 30 megawatts market was around 7.50 megawatts. In FY 'nineteen. So, sir, could you give us a flavor of the market size of FY 'twenty? And if you could give us a little bit more flavor how was the market for additional segments such as sugar, dosage cogeneration, biomass, cholesterol energy, then that would be very helpful. Okay. So we don't give market breakups. I think we can do some research. But the market in India was approximately a 1000 megawatts a little bit shy of that in the below 30 megawatts segment. So as you know from your, as you know from the other industry, that you've been looking at here, it's extremely difficult to tell what the market is and the timing of the market. In the segments which we operate in the year FY 2021. So we we're just going on our inquiry dates without, having, we're not worried too much about, the market. We we feel that our domestic market share it's going to be better in FY 'twenty one to what it was in FY 'twenty. So I do have to say one day from Saturdays' practice, do have to say something on market segment for us, which is a very large segment globally, which is a waste to energy segment, which constitutes a solid municipal waste incineration market. Is very small in India. We do have 3 or 5 projects that come up and nowhere near what we need in terms of size and scale for a country of our size to put it in parallel. China had nearly 60% of its orders that were placed in this segment for the year last year, only in the sorry, from the last quarter, last quarter were placed only in the waste to energy, solid municipal waste, incineration segment So that is a growing market globally. As you know, it's something that India also needs to do, but there are reforms which are necessary before that market can develop. The the second market which is growing, which we keep hearing about is the ethanol, the distillery ethanol market, and the biofuel market. And there, we have a very prominent position. And, but how that's going to grow will depend on government policies on on on on that. But the the plan is, of course, you know, to move from our current 5% to 10% and then further up to 20%. So, they're both medium term, long term. They have a very, very good situation. Sure, sir. Understood. Sir, on the, my second question would be, sir, our aftermarket order intake was around 2,200,000,000 in FY 'twenty. So could you split it a bit in domestics and export? Approximate numbers will be fine, sir. It will be about half or it'll be about 6040 domestic to export. Sure. It's similarly for the outstanding order book. What would be the split? I think that outstanding order book was 1,200,000,000 on the aftermarket side. No. You you see the aftermarket? I don't feel that relevant in terms of what the the aftermarket order book is because very frankly, there's a very short duration, execution projects. And so I will not get executed very, very quickly. In fact, our largest booking will happen in the aftermath segments, as you can imagine, reading all the up to q3q3 order intake and the aftermarket segment get executed within the You bring up a very important part, which is the fact that we have called the booking of someone in the region of 2.2,000,000,000 rupees annually, which is only increasing. With our greater, installed base. This is a market segment that also provides us any sense of contribution or PBT in the level of about blended in the region of about 35 to 40%. And so very frankly, we are extremely pleased that this is a growing market segment and our international presence from the aftermarket side is also only growing. The cash generation is is over a 100 calls just from this market side. I mean, I'd like to just add here that, you know, some of the some of the, remestas have asked us that, you know, you've had fairly, flat growth in the last 2, 3 years, and what do you see the medium term going forward? What this COVID lockdown has shown us is that in certain segments in the aftermarket internationally, the scope is enormous. I just take one of the refurbishments that we sort of inquired we are getting, from customers because we are looking to get better value at quicker returns, they're going to be focused rather than, a new project. And, the the scope here, the market share could be, you know, 5, 10x, It's that's substantial. We had customers, Internationally, you are saying, why you won't be doing it on Steam Therabine's Pizza looking at compressors and pumps, you're very happy with your way of operations remotely. And and so, that is a segment we are steadily feeding the actually, our order booking in that. In the q 1, it's gonna be more than it was in the other quarters of this one. I FY 20. So there are some areas that we are seeing that are, you know, entirely have a high growth such as oil and gas and the aftermarket internationally in the refurbishment area. Right, sir. Thank you very much for the elaborate response, sir. That was all from my side. Mister Patel, does that answer your question? Yes. Yes. Yes. Very much. That was all. Thank you. We take the question from the line of Katie Jan from Sundar Mutual Fund. Please go ahead. In terms of, Q1 you highlighted, the order flows have been a good, sir. Any quantification can you do and, what are the segments from there? We are getting orders. And also in terms of FY22, how you see the order booking and the various, you can see orders if you can highlight, that would be field filter. That is the first question. And second question is, sir, given that, over the last 2 years, we have done a incredible performance in terms of, the cash flow from operations. What is the plan in terms of bringing a new adjacency product or what is the plan to add products, you know, into our basket. Any other engineering product, is are we planning in the other preventative identity? If we can highlight, that would also be the real concern. These are the two questions from my tech. And do you want to take that? Hello? Can I answer that to the Sorry? I'm just. I'd I think the second question for us, if that's fine. I wanted to just touch upon the fact that, But very frankly, that is, I think, the the the greatest challenge that we have is how do we expand, our market so that we can provide a a sustainable visibility to revenue growth. And therefore, not only are are we looking at internal R and D processes, but we are also looking at R and D based projects outside to cater to greater and bigger market. We will, of course, be at mechanical equipment line, which should utilize you not only our capabilities from a design engineering perspective, but also manufacturing. And so we keep all that in mind while looking at, new product lines, etcetera. But we believe that we have to be technology leaders in the field, and so, therefore, it closes many options which which, which the market may proceed to be, a root for training growth. But this is something that we look at consistently and constantly, our efforts in terms of being able to do this on the product cases, such as our development and the certificate of carbon dioxide line, as a market which is enormously large. More than that, in the aftermarket side, actually, it presents many, many different opportunities. These are not capital intensive and also I think that touching upon the previous, question that the previous investors question that we talked about aftermarket we've talked a lot about augmented reality and systems such as that. But, really, by what we've seen with with any program over the last couple of months is that it is a changed normal. Way which we do work has fundamentally changed, and we talked about we talked about augmented reality. The team has really pulled up itself and come up with very novel low cost solutions where we can provide with a high degree of consumption capability, accuracy in being able to do to to to Ghana, refurbishment based, solutions on these formats. So we're quite confident that product lines will grow, both naturally as well as vertically. From a perspective, all the booking, yes, there was a order booking moved from q4toq1, the market segments that in India that we see comes from, like the chairman talked about ethanol in India, as well as certain, other waste heat recovery based segments, which are the largest, contributors. We believe this the carry forward with the order which will not book in q 4 would translate into q 1 of this year. I do have to say that in this entire period of q 4 of the last financial year and the and q 1 of this this year, we would probably lose about two two and a half months of both order booking and, and, and revenue. And so if we normalize that over the course of the year, we have to work very hard to to pick up on the demand that is there still in the market. But I'd like to just add, to this, but your important question of what were you looking at, this is being considered at our board level just recently or 2 days ago. And, we, have the board has cleared a substantial increase in our R and D expenditure, something over 52, maybe 80% over FY Twenty. In this time because we find that there will be great opportunities of diversification in the mechanical space that we are in. Not just in the, areas of refurbishment, which I told you. But in the, associated product lines that are coming out to, CO2 program. So we we are looking at this much, much more positively. And because of the fact that we have a a good cash flow base, and we have a very stable market and, increase, reception from our international customers in all these lines. So the company is is is is taking a a very positive and maybe slightly aggressive look. At the diversification possibility. Sir, in terms of order flow, we'll be be able to reach a 800 crook at the flow for the year? I mean, how would you be challenging to reach to 800 croc and the powder pro for if I could do one, sir? What is your thought on it? We think that from the from the I I know with customer auto booking. Like I said, I think that over the period, we may have lost, some on a steady pay basis, a a a couple of months over Q4 and Q1. And so that will definitely have its impact aftermarket, we are definitely looking at a growth year over year because Q4 was was subdued, and there was there was a spillover of orders coming in. On the product side, while we are confident of, certain orders coming in through H1, we really need to see to what extent the the the the virus lingers on in the second half of the year. And to what extent it actually impacts business But Harish said that we should be, not more than, 5% 10% around the number, if you get. To add your, you know, I'm looking around at the other industry and the the sort of, you know, responses we get in, in in forums such as CII and others from other things. And we are much more positive about, FY Twenty 1 order bookings, and most of the assessments seem to be, in, and even in the capital goods space. Now how much confidence to have is very difficult to say as So Nikhilani mentioned about 82, but we will get we believe we will get very good visibility by the time we have Q1, investor call. But more than that, I think we have a higher opening book order book in in 31st March 2021, then we did it, 31st March 2020. Sir, in food industry, like, lot of companies are making good profitability in the recent times. Are we seeing a good traction from industry. Yes. Yes. Yes. We are. Yes. We are. I think as well as the light and and allied segments of other processing such as chemicals and, even fertilizer, etcetera. Thank you. Before we take the next question, I'd like to remind participants, please limit your questions at home for participants. You may rejoin the queue if you have a follow-up. We take the next question from the line of Manish Cohen from inam holding. Please go ahead. Yeah. Very good afternoon. Thank you very much. Just, you did talk about, like, in terms of a new initiative in aftermarket. Just want to get a sense that aftermarket is more personalized and market. And so now we've been not able to travel a lot. We'll probably have some kind of a restrain 8% contacts. So how do you see, that market changing for you, or you'll be able to grow it? So this is exactly what I'll take a look. When we talked about how our augmented reality solutions are working out, we are we are surprised ourselves as to how it actually, it can be to provide customers confidence, to be able to, for us to deliver our solutions, on the track. Of course, we need, on the ground channel partners, which are agents, network already provide. Right? So we already do have a network of physical on the ground. So it will so you are right. We still have to have a certain degree of physical customer, the physical presence in front of the customer. And we are working through all of that, and we believe and our current, estimation is that by the by by the latter half of the year, there should be some easing of travelers and that we factored in that, into our estimation when we look at the but very, very frankly, until even end of Q2, we are not looking at any travel and so only this will be met through digital means which our customers are are quite, open to accepting. One more thing I'd like to give. We have reoriented, empty, and now we are going to have, engineers travel for longer period overseas. There will be so they'll spend more time there rather than making quick trips back and forth. 1, it is much more stable to do, and 2, they'll be able to have much more coverage. I if they go to Europe and they have Sanganbita, then they can cover many countries rather than coming back to India. Also, it takes care of their, 14 day periods and all the, sort of, problems that this may happen. So, our people are all geared up to do so, and I we've tested this up with customers, and they're all happy to give us both the compensation and facilities for us to stay there that they are saying that you're one of the one of the people who have given this initiative, uniquely. And, we are very pleased that this is coming from a developing and sort of nation like ours because they're not having the same sort of vaccine, not having it from China or from Japan and not even from Europe. So it's been taken very well as services initiatives. And so we've now said we will do this, but we want them to stay longer. They said, please do that. Whatever you want from us, we are willing to extend it. Sure. And just what the clarification in the opening remarks, it was mentioned that, on contract, we are getting a lot of inquiries in oil and gas sector. Is it for, direct service and, Yes. So if you can register. Drive service. Yeah. Drive service. And that is why, yeah, what was the reason for that? I I'm saying 2 things. One is we've we've it's a long process to get qualified from places like, South other. So this has now come through in the last half of FY 20. So once once you get qualified, then you're allowed to court. And so you get the inquiries. So we're getting much bigger inquiry base. The second is that, you know, earlier getting the brand of training to oil and gas is not easy. Now they're looking at a value proposition because of the oil and gas market, the the pricing hasn't gone down. They want the value proposition And with the fact that we've already got orders and we have executed orders, they're much more confident of looking at us. So we are the consultants are on board, and this is very consultant base as well as the, the, customer. So that is why. And this is actually they're much during the the lockdown, these are quite tough discussions going on. Sure. And last question on the the new supercritical carbonized technology. So you did that, it's going to be a a completely new set of customers for us, or is it that we are probably going to leverage on existing customers and existing facilities? How would it work? No. There'll be a new list of customers and the current list of customers. They're they're it it's even got a very good defense environment where we are in touch with the the 10 forces, on this, the CO 2 right now. And, this is, we are right there with the top, international, companies, in in the whole, space, So this, and we have a very good partner in, as you know, in the Indian Institute of Science. So I think it's a good initiative. It's a little early to say when we are going to be flooding the market, but we want we've accelerated this program in the past few months. The application would be for power generation and all the process. Oh, yes. Yes, madam. Yes, sir. Yeah, ma'am. So small power changes? No. No. It is it is for all all types of power generation. It it is, it's It is essentially if you look at a commencing mode of, of a screen turbine, it is for applications that that that can apply. Thank you so much. Thank you. We take the question from the line of Bhavan declining from SBI Mutual Fund. Please go ahead. Yeah. Yeah. Thanks for the opportunity. So my first question is when I actually look at, you have a commendable performance on the cash flow front, but, you have actually skipped the dividend for this year, it would actually appreciate your thoughts on this. I think you tried to allude to it because another gentleman had asked the same question. The board didn't consider it at this point in time because, very frankly, they want the situation, they want the the arts perspective and, and forecast, of business to sort of come through. And you're just trying to be a little bit more conservative. Ultimately, as we've often treated here, we believe that it is important for training to maintain its high return on equity, etcetera. And, therefore, if we are not able to spend the money, it should be returned to shareholders, the philosophy remains the same. And I think we can provide greater visibility as we go through the year in terms of what what this cash will do on Savenie's balance sheet or not. Okay. The second question is, can I actually look at some of your competitors? They are act they are focusing more on design engineering outsourcing and and you have a very strong R and D team so any thoughts on the outsourcing of design engineering, this can actually add to your industries? You know, we believe that, that we want to be technology leaders ourselves. It's the same thing as as being outsourced manufacturers. It's a low end of the value chain. They may be they may be a margin in there, but it's not sustainable margin in the terms of the business going forward. It's we think it's better spend for us to use our design and engineering as well as manufacturing expertise to work on products in in which we have a control over or service and if we have a control over. Uh-uh. And the second major question, because we've now been able to benchmark our R and D with international firms during this over the, you know, in in a global market. And our costs are something less than a fist. So, you know, they need outsourcing. We need more in house because it's it's much better quality. It's quicker. And, it's more customer oriented. So we do outsource a bit, but our costs are so much less than international R and D in our life. Just last question, you mentioned about the board actually approving significant increase in the R and D budget. So if you could throw more light on this in terms of maybe numerical terms if you could highlight it. No. I think you when you see the figure in the in the in our annual statements, you can make your own assumption there. Sure. And and how large is your R and D team and Are you planning to, at least? Minutes. Yes. Okay. So how how large would be your R and D team currently? But I don't know. Would you like to come in? Yeah. The total engineering strength we have about 70. Out of which the development is a which is r and d is about 25 to 30 depending on how it's done. And the balance are for engineering and, team is also for, technical to account the reverse engineering and the refurbishing portion. So that's how the total engineering strike is. Okay. So so about credit card is for new product and, 25 to 30 is for the new product. Okay. And and balance actually is engineering and, aftermarket the market. Yeah. Absolutely. But as a percentage of our total strength, it's quite large because we only have about 4, you know, the Yes. The work I've sent is less than 100. So, you know, you can see the where we are doing. Thank you. We take the next question from the line of. Please go ahead. Hello? Thanks for the opportunity. I just wanna understand in terms of the accounts for the new orders, from the international market. And, in terms of the payment terms and the additional timeline, are there any changes you have seen, you know, now after this kind of scenario chain now, please? The international the the payment terms, we don't compromise on. The commercial terms and, which basically is, minimizing any liability that we have, but also maximizing and ensuring that we are 100% payment security before it gets guys from us. So that is something that we will not accept in in in any manner. The the but very frankly, there there was not change specifically from previous renowned. These are well established norms, and I think that, we are fully capable of of, of meeting them and happy with that. I don't know if the chairman wants to come in. No. I think that's, That's correct. Is that so? I I think we have a a president, marketing in there. Is it that's right, available? Yes, sir. Yes, sir. Good. And So now as international markets continue to be, focus area for us, now incremental pipeline, while you're talking about the sectors, but Like, what are the kind of these customers who are and how is their financing that, you know, for these projects? And it's that, you know, So very good. You know, I I I don't know if you have the option to read the industry, but very frankly, our market segment, and specifically, our customers are heavily in it's in our entire, like, our our our livelihood, from a renewable segment, a formal renewable has financing available. It's not it's a quest they may not have incentive depending depending on geography to geography. But that balances out over the course of several years. Germany may have a strong, uh-uh, waste recovery and, renewable focus, currently, and and then we move to Italy and Portugal next year and and certain parts of Southeast Asia may be picking up based on their own, push towards, having more processing of, urban municipal waste So the funding, I think, for the segment exists. The demand exists because there is that much, waste available. So I think the market is steady. It's it's tricky for us. I think another point that you have to keep in mind is that international orders typically for us uh-uh, a much firmer in terms of delivery and shorter. So very frankly, international order that we would get in Q1 will be secured within the current financial year. Thanks for that answer. And another thing, sir, on the aftermarket now, what's the question that you've been doing for? You know, when this kind of an, a scenario is emerged, their travel is becoming more and more restricted. Now it may become normalized in the next second half. But still, customers might try to look for some of the options which are more local in nature. So how you are seeing that scenario in the aftermarket is currently, going forward? Yeah. If I could just answer that, we've we've adjusted to this and customers have adjusted to this extremely well. They're paying us very well for an on an an early and daily basis, remote. And so they are willing to, have, after we are training them. So rather than them going to local people, they are very happy with with paying for a training of their own site staff and having us to provide this remotely. And as mentioned by my chairman, with the AR and VR and new tools coming in, This is a much more efficient system and a much more cost effective system. And for us, the revenue stream could actually be much more rather than less. And, the margins are very good. So it's a win win for both the customers and us. And on the local side, we're using our agents who have the facilities of, providing local, support in the various areas of medical mechanics. So as you must remember, you see, even in in in all international contracts, we only do, the supervision of reduction and commissioning. So the actual physical labor for the election commissioning is provided by the by the customer opportunities stated by us to our agents network. And so it's the same way now from a perspective of spares, these are already designed well known by us. So, really, we don't even need to visit sites for for installation of stairs. The service revenue moved into online mortgage. So therefore, there's a different form in which the delivery of that service is happening. From the refurbishment side, as I as as we were talking about, based on to the tools that are now available at the low cost basis, with augmented reality allow you a certain degree of precision and being able to, actually work on overhauling and taking dimensions from, from a remote area such as Bangalore, which site as far as, Europe. And it's working reasonably okay. Of course, we will get better dismissed from the value proposition with, with further strengthened, but it really changes the way in which we do business. And that is I think that we've been trying to say is that the way that we're gonna be doing business is different. We're gonna see how this moves, but the indications are that it will truly transform the way in this in which our company currently operates. And as you know, 2 years ago, we started on remote monitoring, we wanna we we we had thought of that as a big opportunity of, enhancing after sales ads and service and remote monitoring. We'd already started on that. So that has been very useful. And our, you know, we have the instrumentation facts ready. We have the software, and we're increasing our are, the best part of this r and d moving into another phase of remote monitoring and, analysis of the future. Of of, the installation that we have. And this has been much better taken in by the customers now that they have to go on a remote mode in any case. So thanks for the detail, sir. If I just needed one, the question, So I just wanted to understand about the domestic market. So why you are, you know, are you in the you give an understanding of domestic market So one is in terms of any kind of all the cancellations you, might have a new charge in terms of your other sessions with the customers. Plus now, the adviser is the domestic market. I know it's too early, but, you know, the entire traffic household would have worked for a house now to her longer time frame. So how do you see that, recovery happening in the Indian market? Yeah. That's all for my question. So so if I can just take that you know, the the the greatest degree of order booking, which we may have in Q1 that is obviously maybe from the domestic market. But as we look at the full year, and this is primarily driven by the pushover from q 4 to q 1, as well as some pent up demand. But as we look forward, the inquiry levels that the domestic market has and, international customers seem to suggest that they may be pushing these further out And so therefore, the lack of confidence comes from our current estimation of speaking with customers to where, they send. And but but having said that, very frankly from the renewable biomass, bioenergy segments, which, which we've already talked about, the value proposition is quite consistent because we do need to implement some of these. From the captive, CTP market, the captive power plant market, in areas such as chemical pharmaceuticals, food food processing, there's a very strong demand. And equally, the expenditure that is gonna happen in the PSU segment from fertilizers and oil and gas. So all in all, the demand is coming due to pressure timing. We are not able to give, consistent timing at this point in time because we believe that that is going to be really back ended towards the year and maybe even following it to FY22. A significant amount of growth. I think we've covered everything. Yes, sir. Thanks a lot for taking my questions. Thank you. But ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for that closing comments. Okay. Well, thank you very much ladies and gentlemen. I hope all of you are well and families are well. This is a very concerning time, for everyone. We believe as a company, we have showed certain resilience and the management team, and and the entire team actually has Tarita, Bina will be working very diligently and in a safe manner to ensure that we are able to meet the expectations of our customers. Firstly, and then also first to our investors, and the largest stakeholder group. We believe that we are are in the process of a great transformation with Infini Irvine, which will, which will position us very well for the years to come. So we're quite optimistic as to where we stand right now. We look forward to giving you further updates over the next quarter call. We should be towards the end of July, beginning of August. Thank you very much. Thank you. On behalf of. Thank you all for joining. You may now disconnect your lines.