Good day, ladies and gentlemen, and welcome to the Q1 FY 2020 earnings conference call of Triveni Turbine Limited. 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. If you need assistance during the conference call, signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishabh Dhara 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 Q1 FY 2020 earnings conference call for Triveni Turbine Limited. We have with us today on the call Mr. Dhruv Sawhney, Chairman and Managing Director, Mr. Nikhil Sawhney, Vice Chairman and Managing 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 will have an interactive question and answer session.
I now invite Mr. Dhruv 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 indeed, and welcome everybody. Good morning to the Q1 FY20 earnings call. We have a good set of numbers for you this morning. Our net income from operations had growth of 34% versus last year at INR 2.14 billion, and this resulted in an EBITDA of INR 468 million, which again had a growth of 39% over the corresponding quarter last year. Our profit before tax increased to INR 409 million in Q1 FY20, a growth of 41%. What was exceptional was the growth in profit after tax at 62% and resulting in a figure of INR 307 million. The EPS, not annualized for Q1 FY20, is INR 0.95 per share. Also encouraging is the strong outstanding order book at INR 7.2 billion.
The notable achievement is that our PBT margins are back to the levels achieved in the past years and which is in line with what I communicated to you in the last financial year during our earnings calls. I'll be referring to this a little more further on. The period under review recorded an order intake of INR 2.15 billion, and the mix of exports and domestic is virtually the same as it has been at 46. The order booking is lumpy domestically, and Q1 has been lower than last year. Of course, this is to do with the elections and general conditions. We feel that the subsequent quarters domestically will be better, and we're having encouraging inquiries from various sectors. The domestic turnover is higher, substantially higher at 84%. This is really owing to the preponed month of some product deliveries in the domestic market.
As I mentioned on a number of calls in the past, quarterly results should not be viewed just by themselves because in this capital goods business, there are times when there's a preponed month, and there are times when it just goes into the next month, which you've seen in some quarters last year. We're happy that this time it's a preponed month, which has resulted in a very good performance. I'll be talking more about the future a little later on. Inquiry generation in the domestic market is about on the same levels as we've had in the past. We've not had any slowdown, which has happened in other sectors. That is encouraging. The sectors that we are looking at domestically, we are having extremely good growth in the molasses-based distilleries, you'll be reading about this in the press and otherwise.
That is very encouraging. We expect it to continue for the next couple of years at an increasing speed. Process cogeneration and a little bit in the steel and cement sectors. In the aftermarket, again, it is lumpy, and some orders have got postponed to the subsequent quarters. Order booking was INR 619 million, which is slightly lower than last year. We expect this make up by H1 of the current year. The aftermarket, we feel, is very encouraging in the inquiry sense and our refurbishing business internationally in the lines of turbines. Not just our range of other people's turbines. It's a major growth area we're looking at in the future and something that we've been trying to break into for the last few years.
The inquiry pipeline in the aftermarket and refurbishment sector internationally is coming from various geographical segments, and that is encouraging, and it's really being due to the efforts we put in in the last three, four years of spreading our efforts through offices and through increased penetration in the international markets. The international product order booking has been higher than the previous year, and the orders in hand are good. At the end of Q1 FY 2020, the outstanding order book internationally is INR 654 million. INR 654 million, this is versus INR 517 million. It's a substantial difference in the quantum that we have. The company's achievement in the international market was commendable at growth of 26% year-on-year in the product order booking. This was in spite of a general slowdown.
Turnover, as I said, is lumpy, so that it is less in this quarter, but we expect to pick up in Q2, so we'll be on target at the end of H1. The inquiry book is strong. We see this coming from a number of areas. From South America where we had a little bit, but we've had very good penetration now, and especially from the Mercosur area. We are getting good response from Southeast Asia. Very much to our benefit is in Europe, something which we didn't get too much traction last year. That, again, is through our efforts in this area in the last couple of years. These are counteracting some areas which have gone down slightly.
We're still getting substantial business from our main markets of Turkey and some parts in Africa, East Africa, and Nigeria where we are expecting some good business in the next two or three quarters. As I'm mentioning, the business is lumpy, but we are seeing order booking in the current year, FY 2020, to be better than what we got in the last year, and we've made a very good start. Not only is the inquiry book good, quite a lot of it is active. I think some of this is to do with our substantial design and development efforts. As I mentioned in previous calls, we have tackled two major areas. One is an increase in our product complex, an increase in our efficiency levels to meet customer expectations, and a strong emphasis on value engineering and cost reduction.
I think that has been a fairly substantial achievement in Q1, and you see the results in our PBT. More of this is expected in the subsequent quarters, and that is why we can say that we're looking at an increased top line in FY20 versus the last year, and an even better increase in the bottom line in FY20 compared to FY19. We are very happy that our margins are now coming back to the level that we were having in the past. These are the real efforts of both very strong supply chain efforts and our value engineering efforts to design and develop. Naturally, this comes through a reflection of your looking at the material cost, which has come down from 60% to under 57%. We are also happy to announce that our new test bed is now functioning.
This is one of the most modern test beds globally today. In the steam turbine area, I think we are probably the only one who's put up any new facilities like this. This is to encourage our further developments in R&D and value engineering and test them out before we put them into the market. Our relationships with international organizations, such as the University of Milan and the Indian Institute of Science in Bangalore, are even stronger than we had in the previous year. They're continuing, especially in our initial efforts of development of a whole new range of turbines in the future, CO2 turbines, which we are in the same realm as other major steam turbine producers globally. We are really on the frontier edge of looking at new technologies coming in the next few years.
I would like to go back to the outlook again and summarize this by saying that we're very optimistic of achieving a better top line and a better bottom line in FY 2020. This has come through our efforts of diversifying our efforts in a wide geographic area internationally and mainly concentrating on the international market rather than just on the domestic, which we did the shift, which we started about three years ago. On our joint venture, GE Triveni Limited management and investor expectations about the past performance and potential of the joint venture, GE Triveni Limited, were not resolved with GE, and GETL filed a petition with the National Company Law Tribunal, NCLT, which is given some interim relief. They're on the BSE website, which we put them up on the 13th. Currently, the case is being heard.
A case was filed by GE in the High Court of Karnataka, which has heard the petition and has got the matter back to NCLT. GETL, our joint venture, is pursuing business in both the domestic and international markets, and we have some good potential inquiries, which we expect to turn into orders in Q2 or Q3. The orders in hand in GETL are pretty controlled, and the execution of orders is going on well. In fact, in the month of July, we had a very successful commissioning of one of our old orders in Southeast Asia and Indonesia, and we expect more business from these areas as well.
I'd like to close my opening remarks by saying that in fairly tough international market conditions, both internationally and domestically, we have distinguished ourselves by our performance in Q1. We expect performance in the year, which is lumpy quarter to quarter, but for the year to be better than what we had in FY 2019, and certainly going forward into FY 2021 with the order bookings in FY 2020. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 would like to ask a question, please press star and one at this time. 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.
Thanks for taking my question.
Morning.
Morning, sir.
Sorry to interrupt you, Mr. Swaminathan. Your voice is very low. Can you come a little closer to the phone or increase the volume?
Is it better now?
Yes. Thank you.
Yeah, that's fine.
Yeah. Just wanted to get an understanding on the domestic market, given the backdrop of slowdown in the automobile sector. Basically, do we see a prolongation of equipment demand in the domestic market, especially from the core sectors like steel and other ancillary markets and all. Given the fact that real estate is also not doing too well, probably it will be a postponement in terms of domestic demand for probably another 6 to 12 months. Are there any other compensating sectors which can compensate the inflows there?
That's a good question. I mentioned it a bit in the opening remarks, but let me focus on it, because the first question is that I think the general feelings of the industrial sector is not really comparable to our sector. That's the first part, especially not the automobile. Second is that our response in Q1 and in the past and the active inquiries that we have in hand also don't match with what's happening with the sector generally, even in capital goods. Let me just go into this a little more. One of the really major growth sectors for us is in the ethanol distillery business. As you see, the government is very keen on this, and the industry is very keen. That much has given a substantial amount of funding, which has already been approved.
Most of these projects, lower funding has already been approved. The Triveni Group itself has got some substantial figures in this. The number of new distilleries coming out to fulfill the ethanol demand, as we try and go from a current level of 6, 8 to 10 up to some 20% in the next 3-4 years, will require substantial orders of steam turbines as well. That's a very good sector. Secondly, even in the sectors of cement and steel, which have been our traditional sectors, while we may not be seeing definitely any new equipment or greenfield equipment, the waste heat recovery part is quite good, and the returns there are good for these sectors.
That's why the efficiency improvements that they embark on are not very capital intensive, don't require lots of funding, and are not having a very large project but have a steam turbine component. The inquiries we are seeing from there also helps in balancing what may be happening in sectors such as the automobiles, which have nothing to do with any steam turbines. Looking at both these elements. We don't expect any dip in demand anyway. We may even see some slight growth, but super small. However, we again say that while this is there, our main PBT growth is going to come from the international market because the domestic market will remain competitive.
Got it. In the domestic market, out of your order book, how much of it would be contributed by core sectors? Even rough numbers is fine. core here means cement, steel and-
You know, that varies. I think you take the broad brush because it changes from quarter to quarter. What I'm saying is it augurs well for Q1, Q2, Q3 anyway, and that's what is important.
Got it. Ethanol, how much would it be contributing? I mean, even ballpark numbers, 20%, 30%.
You can come to us, but the more important point in the ethanol is that it's increasing.
Got it.
It has increased in Q1 and Q4 of last year.
Got it. In terms of the GE joint venture, so basically now that the case is ongoing, just wanted to know regarding the continuity of the joint venture, is there any threat to that? If it has any rub-off effect on our 0 to 30 megawatt range which would have seen some very good traction over the past few years because of the GE brand being there on the overall export market. Is it like there's not going to be any impact on the 0 to 30 megawatt range?
Well, I'd like to take this question now, and I'm sure some others also have it. The first thing I have to say is that as you all will realize, the matter is sub judice. I've made my opening statement. In that, I'd like to add, the business in the JV is continuing as it was. I mentioned an important fact that we commissioned a substantial order in the international market in July in the joint venture. We are actively pursuing inquiries which are on hand and are receiving more inquiries. We are not expecting any disruptions. Orders on hand are there, and the performance in Q1 was good. You've seen the impact in the CCR results of Q1. As I said, we're looking at receiving orders in the JV, some orders in Q2, Q3.
Okay. I mean, are we as a joint venture seeking for further orders going forward? Or is it that given the fact that there's a case going on, you're not actively pursuing for fresh orders?
No, we're not. We are pursuing some further orders.
Okay. What is the fixed cost from Triveni's point with respect to the JV as of now, sir? How much will it be?
No, we have no fixed cost for the JV.
Okay, sir. Yeah. Thanks a lot, sir. I'll come back to you for more questions.
Thank you.
Thank you. Next question is from the line of Sreemant Dudhoria from Unifi Capital. Please go ahead.
Thank you for the opportunity. Sir, I have three questions. Sir, first question is in continuation with what the last person asked. In the joint venture, currently, are we managing it solely or is it currently being managed jointly? In terms of procuring the business in the joint venture, are the efforts still on or is it that we are only doing the existing business?
I think I answered this question, that it's an independent entity. The joint venture is being handled the way it has been handled in the past. It's continuing, and it's looking for business, and it has some active inquiries.
Great. Sir, my second question is on our margins. I see that margins have improved and one of the prime reasons has been lower cost of goods, which has come down to 57%. If I were to compare with Q1 of last year, it was 52%, it was 60% in Q4, and it's 57% now. What is the number that you think is more realistic and can be expected to be going forth?
As I said, because the business is lumpy, to give a firm figure for the year is difficult. The important point is that the trend that has happened, which is reflected in the lower raw material percentage in Q1, is what is making one be able to give you a question that our margins are back to normal. That is what is there when you look at the projected performance in FY 2020, which we feel is going to be better than what we achieved last year.
Sir, just again, I didn't follow the answer. I'm just trying to understand.
I can't give you exact figures of what the figures will be. Yes, Shivan?
No, to ask you a question. I was just looking.
Our expectation is.
That material cost should be in low 50s. The reason is that we had certain exceptional costs which were taken when material costs were at 60%. As you know, with this current quarter, the booking of aftermarket as well as the domestic market was higher, therefore those have also suppressed margins. To give you an indication, the previous exceptional costs which we had taken are out of the way, as was stated, we believe that margins will normalize and it will also be supported further by a change in the execution mix between international and domestic, as well as the aftermarket, which would further strengthen. After all, margins are somewhere in the region that we've always expected it to be this quarter, and it's something that we're confident going forward as well. There.
Sir, lastly, on other expenses. Other expenses are INR 25 crore versus INR 28 crore in Q1 of last year and INR 31 crore in Q4. Q4, I understand we had new product introduction expenses, so that was the higher side. Whether this INR 25 crore number is sustainable or there's some one-off gain here and other expenses should rise going forth?
No. There was lower exports in this quarter, which is one of the reasons of the other expenses. We expect to get back to where we were earlier.
Okay.
This is not really significant.
Sure. Lastly, sir, on order book. Generally, order book is more of an indicator of revenues a year hence from.
Yeah
the current quarter.
Yes.
With the order book degrowing, how do you look at, let's say, next eight to nine months? Do you see?
I want to correct you there. We are expecting an increase in outstanding order book by H1 and certainly by the end of the year. There's no decreasing order book. The order booking expectations in FY 2020 are going to be better than what they were in FY 2019. We are definitely exactly opposite to what you're saying. There's not a decrease. The quarterly dips are not important. We have very active inquiries. Just like dispatches may be postponed, sometimes order bookings are going from one quarter into the next quarter. I've already given a clear indication of our expectations in H1 and in FY 2020 as a whole. An increased order booking.
Thank you.
Thank you.
Perfect. Thank you. I'll come back to you.
Thank you. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.
Good morning, gentlemen. Congratulations for the good set of numbers.
Good morning.
My question again is on the JV ratio. You mentioned there was an order inflow book in July. Could you give us some color on that?
No, I'm sorry. I think you got it wrong. We commissioned an order. It wasn't an order in flow book. It was an indication of business carrying on that I said, that the JV is executing orders normally, and we actually successfully commissioned an order, an important one with an important customer. This is just giving you an idea of where the JV is today and how it is carrying on.
Are we looking, going and pursuing for fresh orders or?
Absolutely. They are. We are expecting some success in Q2, we'll see.
Okay. It's more just to remind the partners about the past promises, and this JV will continue with business as usual. Would that be a fair assumption?
You have to understand that my comments are actually taken where they are. The matter is sub judice. We have our petition is with NCLT, and their order is on the BSE website. That's what I'd like to leave you with.
I understand. The doubt that we have is would the JV end completely?
No. Not at all.
Okay. Thank you so much. That was very helpful. The second question is, you spoke about ethanol being a strong driver for domestic orders this year. Would it be helpful if you could just help us quantify in gigawatt, what is the size of the opportunity and what's the market size that you are looking at?
No. You see, one can give some very fancy numbers if you look at where we are going from 68% to 20%. In the sugar and other industries, the timing of how these people approve their projects, get environmental clearance, and then place the orders is not easy to project. The important thing is that this is a substantial increasing trend. We have a product that is ideally suited in this market, and we've had very good success, and we have extremely good market share. These are the two things that I would leave all of you with, that our market share is good. We have the right type of product, and the government is going more and more into ethanol being made from B-heavy molasses from juice.
The sugar element of cane is being diversified further and further, and the government wants this to fulfill the demands of the cane farmers and also help the balance of payments and the environmental position by having blended ethanol fuel.
Sawhney, the last question is, you have in the past spoken about cement waste heat. Could you speak about the waste heat opportunity in the steel? That's my last question.
A little bit there also. There is a little bit happening there.
Actually, we would want to understand how large would be this opportunity on a megawatt scale?
That's difficult to put out. Again, you know the sector from your other analyses. There's no point. We don't even go there as to when it happens. All we know is that there is this demand, which is good, and it's appreciated by the customers, and they want to look at it. The timing is really very much in their purview, therefore, it's difficult to answer your question in terms of the quantified demand and when.
No, what we were looking, you mentioned six to eight MW per million tons of cement plant. Some rule of thumb on the steel side. That's what we were looking for.
I think you could contact our people, but I don't think that, as far as I know, because the different types of steel plants vary. So it's difficult to generalize, I feel. However, you could contact them. I think the important thing is that this trend is there.
Sure. Yeah. Thank you so much for taking my questions.
Thank you.
Thank you. We have many participants, so please limit your question to two at a time. Should you have a follow-up question, we would request you to get back in queue. Thank you. The next question is from the line of Kshitij Jain from Sundaram Mutual Fund. Please go ahead.
Hello?
Yes, sir. Please go ahead with your question.
Hello. Yes, good morning.
Yes, sir.
Good morning, sir. Congratulations for good performance, sir.
Thank you.
Sir, second, my thing is that, sir, with regard to sugar and ethanol business, currently, all the Tier 1 companies or who have a good balance sheet have done with their CapEx program of 2023, like our own company, which has done with their distillery expansion. Given that now the companies which are to do with their first round of CapEx are relatively a lower balance sheet quality company. With this background and given the customization happening in the system, do you expect the CapEx momentum to continue in the ethanol space?
No, I think what I'd like to clarify is that the government has a substantial scheme of funding which they've already approved. The applications that governments have already given, which they had in the last six, eight months, are very substantial, and which they've cleared. Majority of the funding for these is coming from the subvention interest that the government has already approved and budgeted for. The clearance from the funding institutions here particularly is not comparable with normal funding. Your fear of the fact that they may not really have a strong balance sheet doesn't quite apply here because of the viability of the project with the participation of the central government. Secondly, the state government is also very keen on promoting it in terms of offtake of the ethanol.
Lastly, the oil companies, oil marketing companies, are also projecting increased lifting of ethanol in the current year and in what they're going forward.
Sir, in terms of aftermarket-
Yeah, sorry.
In terms of aftermarket, any improvement we should see given that we are working on the newer, our competition turbines also we are working. Should we see improvements there?
Yeah. Just a minute. I want to just close my thing on the ethanol so that it's very clear. The increased ethanol for FY 2020 and FY 2021, this is a demand structure. India is a very small participant in this compared to other nations of the world. We're coming up a lot in that. Steam turbine demand as far as distillery production is there and is very good. This is a natural corollary of the government having taken up the initiative of a big push in the ethanol sector. That's the counterbalance for us. As far as the general industrial scene is concerned in manufacturing.
As far as our efforts in refurbishment and service of other model turbines, again, this is an approach which takes up time, but we are dedicated resources now, both in the technical design side, in the execution, and in the marketing side. We are seeing good traction coming in terms of inquiries. One of the fortunate things that we have is that we've spread our geographical and segment-wide marketing efforts for products to a wide range of countries. We're tapping this to also help in this area. We have a dual approach there, where we are going now very strong in marketing for the product and marketing for the aftermarket.
Sir, in the domestic market, we have seen order intake for the first quarter dropping. Do you expect that for the full year, we should be able to make it out, and the order inflow should be better compared to last year?
I think what we talked about is that while Q1 was impacted severely because of the elections, where there was an inquiry buildup, we see that in Q2 and Q3 going forward, that should normalize. Having said that, we are not looking at any demand dip. In fact, we should see a growth in the market. To what extent, I think we'll have to wait till the next couple of quarters. From an external perspective, the company gets between five to six fresh inquiries every month in the sector, so there's sufficient demand. About 25% of those will be converting.
Sir, this 5-6 number which you're putting, what was it like last year? Just to understand better.
I'm just saying what's the demand is. I'm not certain, but the demand is very strong.
Okay. Thanks, sir.
Thank you. We would request participants to please submit your question two at a time. The next question is from the line of Dhaval Shah from Girik Capital. Please go ahead.
Hello.
Yes.
Congratulations on good set of numbers.
Thank you.
Yeah. A couple of questions from my side. First, we've elaboration on the domestic demand drivers. Can you throw some light on the export side as well? What is driving that?
Yes. As I said, you see, we are fortunate in the export market, which is quite a difficult industrial scene to bring in the right sectors. As you know, in calendar year 2018, an international market survey organization classed us as the largest renewables. In the renewables space, we were the largest suppliers of steam turbines in the 5-30 megawatt market globally.
Okay. Wow.
We were having some 26% of the market that they established in that year. There are just two players in the top, and the third player is about half of us. This market, which has waste to energy, it has biomass. It's still there. It is growing slightly, but it is not dipping. In fact, more and more people are coming up with these demands of both waste to energy and municipal waste and biomass. It's fortunate that they are in our megawatt size, because they are difficult to have very large projects for biomass. That's why we are encouraged in this line, where we are not looking at coal-based demand in the steam turbine area and in the renewables space demand. We are differentiated very much in that.
That is how the international market is also looking at it, both in developing and in developed countries. This is the direction we should go in.
Yeah, perfect. Which geography are you seeing this waste to energy and biomass led demand? I understand Europe is a good demand. There's coming good demand from Europe. Which other countries or continents you are seeing this?
Well, we've gone through the past. We've seen good demand. We're fortunate in having renewed success and interest in South America, maybe where it's quite far away, but we're very competitive and we've got orders and we have very good inquiries there, Southeast Asia and as you mentioned, Europe. There's also some demand coming in parts of Africa. Quite a lot of that is adding to it.
Sir, is this backed by government's new rule or anything or initiative backed by the government that you're seeing across the board waste to energy?
Yes. It's both. Some places where they don't want landfills, they're going on the municipal waste. There may be some issues especially in the developing areas. Surprisingly, we're finding it in one or two countries in Africa, which are taking a lead in this. Small demand. These things all add up, where they're wanting to move to protecting the environment. It's a combination of the project being commercially viable by itself, and not depending on government subsidies, and governments push in the environmental area for people to not leave the waste lying around.
Can this opportunity give you a sustainable growth for next two, three years? Do you have that sort of visibility, this entire biomass and waste to energy segment?
Not only do we have that confidence, we see an increasing trend here.
Okay.
We definitely do. The answer is very positive, and we see an increasing trend.
Oh, very good. Sir, last question on the domestic front. You mentioned one is the ethanol, which I understood, and the second is the refurbishment deal for waste to heat from cement and steel. Now, what could go wrong for your demand driver on the waste to heat front? The other portion is government backed. There is funding secured, as you mentioned. On the private side, which is at the discretion of the private players, what could go wrong?
Timing.
Sorry?
Timing.
Timing. Okay. The demand is supposed to be certain.
Yeah. Absolutely.
Okay.
Absolutely.
Great, sir. Thank you very much.
Thank you.
Thank you. Anyone who would like to ask a question may press star and one. The next question is a follow-up from the line of Sreemant Dudhoria from Unifi Capital. Please go ahead.
Sir, in terms of postponement, can you give us some sense of how much was postponed in the domestic market in Q1? Given that there's some postponement, so should we expect Q2 to be soft from domestic market perspective?
I don't want you to go there. As I said, it's not worth looking at individual quarter results. This has been fortunate for us, and we've had exceptional results. More importantly is to notice my statement of the projections for both H1, which we are confident is going to be better than last year, and the end of the year, which is also going to be better. That's our answer to that. That while the lumpiness in a quarter may remain as far as dispatches or the booking, the trend is upward in both top line and bottom line.
Sir, my second question is on the overall other expenses. If I see in standalone and consolidated numbers, this is for FY 2019 as a whole, I see other expenses are INR 120 crore for consolidated, whereas other expenses are higher at INR 131 crore for standalone for the full year FY 2019. Consolidated having lower other expenses is a bit surprising. Can you help us understand what's the reason for this INR 11 crore difference?
In general, what other expenses are certainly influenced by the amount of exports in a given year. It includes everything from packaging and other aspects of transport, including certain selling commissions. They change from quarter to quarter. The difference, of course, again, between consolidated and the standalone would be the difference in the executed orders and the jurisdiction to which they are executed. Therefore, if you look at Q1, where there was another question earlier, it is basically based on the fact that we have lower exports in this current quarter. Now, of course, in future quarters where exports may pick up, this number will increase. At the same time, those are also high margin orders. Net-net, this is explained by the revenue mix.
No, sir, it's more about if my other expenses at standalone level are X, at a consolidated level for the full year in FY 2018, it should be X plus something. Here, X minus something. It seems other expenses are negative for our subsidiaries. Can you help us understand?
Yeah. I think it is very simple. There are transactions between the holding company and the international subsidiary companies. When you draw up your consolidated financial statements, these cancel out. Are you with me?
Okay. Yeah. There is some translation effect and some cancellation of charges between the companies.
That's right.
Still, they'll go lower. I guess translation would have been a big impact. Maybe we had some currency gains last year due to translation and other expenses.
No, you haven't got me correctly. Let me explain to you again. All these foreign subsidiaries are helping the holding company in terms of marketing. There are some transfer pricing between the holding company and the subsidiary company. Therefore, the standalone expenses would always be higher. When you draw consolidated financial statements, all such transactions between the holding company and the subsidiary companies, they cancel out, and hence, the total expenses of consolidated financial statements would be lower than the standalone financial statements.
Okay. This will always happen each year for us.
Always. Always happen. As long as you have foreign subsidies helping you in marketing.
Okay. Thank you.
Thank you.
Thank you. Next question from the line of Dhaval Shah from Girik Capital. Please go ahead.
Sir, just I have one follow-up question. Sir, you mentioned some source of data on your market share in the waste heat. Can you please repeat that?
McCoy.
The international market survey, you mentioned something.
The company is McCoy.
Which one, sir?
McCoy.
Okay. This releases the data regarding the market share.
Yeah. It actually, they're called the McCoy Power Reports. It's global, and it goes from five to 1,000 megawatts in different segments. Small, medium, and large, and company-wise and region-wise and everything. It's a subscribe base. We've asked them for those. This is the results of the calendar year of which I was giving you.
Okay.
Yes, it's been something that we are very proud of.
Okay. It'll be M-A-Q-A-E, right?
Sorry?
How do you spell it?
M-C-C-O-Y, McCoy.
M-C-C-O-Y. Okay. Great. Thank you.
Thank you.
Thank you. The next question is from the line of Lalaram Singh from Vibrant Securities. Please go ahead.
Good morning, sir.
Good morning.
I had a preliminary question on the business. What % of our business in terms of revenue is solely product, which is turbine, and how much is super turbine and generator together as a TG?
Our turbines, we are not in the drive. A very small percentage are drive turbines. They're almost all in turbo alternators. A very small percentage are drive. Well over the 90% are in turbo alternators.
Okay. Got it. When you receive these orders, typically, is it standard order turbine, right? That's what it means.
No. When we receive an order, it's for the turbine island, which includes the generator, sometimes a condenser, and various other ancillaries.
Okay. Thank you.
Thank you.
Thank you. The next question is a follow-up from the line of Srimant Deshoriya from Unifi Capital. Please go ahead.
In the last call, we had a discussion around targeting the oil and gas sector in the U.S., which actually gives a good margin and payments are timely. Any breakthrough for us in the oil and gas sector in the U.S.?
Well, you've talked about a huge potential area for us. In the oil and gas sector, registration is a very long process, and we're having some very good results coming in. We're not targeting really the U.S. in the oil and gases yet. We're targeting the MENA and Southeast Asia at the moment, which is substantial oil and gas production. We are getting very good responses from the customers. It takes time because the procedures are very lengthy, and the various agencies involved with this are quite strong. The response has been very good. Domestically also, we are making a good amount of progress. We've now achieved our EIL and others are on board. They've okayed our product line.
Given that globally in oil and gas space there are only a few companies which do EPC work. If we get approvals in MENA, would it be right to assume that we might get approvals with the same vendor for other geographies as well, or it's a separate process altogether for other geographies?
It's generally geography-based because the approvals are given along with the customer. You may have one person, but an Aramco is only for Saudi Arabia. Where you may have the same consultant in another, you can't use the Aramco one in Pertamina, for example. Both are such substantial buyers, and the encouraging thing is that the competition is limited, and the field is still quite substantial, and we are starting from a low base, or very low base.
Okay. The press release also mentions about a new line that we have in Bangalore, which is helping us lower the operating expenses. Can you discuss a bit more about it as to how many lines total do we have in Bangalore? This new line, what percentage of our production comes from this new line? If there are any plans to add any further lines to cut on operating expenses? Any color on that?
Yes. It's a good question. We are really redoing most of our product lines, the new ones with increased efficiency and lower cost. It's both efficiency improvement and value engineering for cost. We are expanding it to most of our lines in this. This is an ongoing process. Substantial progress has been made, and very good progress is expected by the end of FY 2020. Quite a lot of it should be finished by then, most of it.
Can you quantify, how many lines do we have and how many you have completed?
I'm giving you the spread from five to 30. This helps more in the Actually, there are different initiatives in the lower and middle range and in the higher range. We are having different approaches for different market segments, but it's more the philosophy of having better productivity and lower cost.
Sir, if you are to quantify these efforts, what % margin?
I think you can't really. It depends on the market also. It's not possible to give you a forecasted figure of where they would come out. I have to leave it at a statement of how we have achieved a better margin and why we expect a better margin for the FY20 than what we've achieved earlier.
Okay. Sir, if I may make a small suggestion. When we interact with you, we get a lot of qualitative insights, but frequently, in terms of quantification, we are left with, we have some sense, but we can't quantify. Like, for example, this particular effort, we can't quantify. If from here on, whenever we do a call, our heartfelt request, kindly give us some quantification of whatever business aspects that we discuss.
I hear you, but it's very difficult, so I can't really move on this because it's a very diverse line, and it's difficult to actually forecast this with any manner of certainty in the short term. I think it's a type of business where you can't go the route that you're wanting to go. It's not a question of the effort. It's a question that we don't say or do things that we're not confident of, and we have to do the diligence on that. Even internally, it's difficult to forecast.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.
Thank you very much, everybody, for a very interesting set of questions. I'd like to leave you with some very positive projections based on our outstanding results for Q1, which have been very good on both the top line and especially on the bottom line. We are looking forward to continuing this trend and having good numbers in H1 on margins and on overbooking and our sales, and also in FY 2020, coupled with very good initiatives in aftermarket and new areas of moving into oil and gas and moving into the after-sales service of other people's turbines. Thank you very much for joining our Q1 call.
Thank you. On behalf of Triveni Turbine Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.