Ladies and gentlemen, good day, and welcome to the Triveni Turbine Limited Q4 and FY 2019 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then zero on your touch-tone telephone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rishab Barar from CDR India. Thank you, over to you, sir.
Thank you. Good day, everyone, a warm welcome to all of you participating in the Q4 and FY 2019 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, 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. Good afternoon, everybody, for the FY 2019 earnings call. The year under review has been one of major accomplishments. Our net income from operations at INR 8.4 billion has shown a growth of 12%. Our PAT has shown a growth of 4% at INR 1 billion. We have a strong outstanding order book of 7.2%. Our turnover is the highest in the history of the company, this is pretty much on target. Our order bookings also have been a record, we've had bookings of INR 8.5 billion in the year. I think the biggest achievement has been how we have fared internationally versus competition and in our market share. An international steam turbine power company has rated us now number 2 in the world globally.
Out of the global market, we've had 22% market share and the accomplishment is quite substantial because their third party is less than 10%. The market internationally has been lower than one had expected because of certain turmoils and certain geographical problems in many places, and also the shift away from conventional coal-based plants to the non-conventional areas. I'll come back to that in a few minutes. Our disappointment has been a bit in the fact that our new product introductions have had a cost overrun in Q4, and that is what has brought the margins lower. This has now been fully provided for. It was mentioned in Q3 that we were contemplating it. We are confident of our Q1 numbers and our numbers for H1 and FY 2020.
The overall order book, which is closed at INR 7.2 billion, is now quite firm, and we've done very good analysis on the same. Our new product introductions have allowed us the potential of entering new sectors and also new geographies. It was something that was well contemplated and is something that we felt was necessary a year and a half ago, and I'm glad we've gone through the research effort and the implementation in the field. In the export line, the renewable sector is growing. We are number one globally in the renewable sector from the same international power report. That is a substantial achievement. We are in the right line. The renewables, I'm including biomass, waste to energy, and of course, cogeneration such as sugar.
While this is not a line which has growth rates in other renewables such as solar or wind, it is very substantial, and it is continuing. Secondly, it's in all geographies. What is not happening in one place in waste to energy may be happening somewhere else. The international implementation of projects in the lines of biomass and waste to energy are bearing fruit in the orders on hand that we have in FY 2020. This is what has given us the confidence of being able to come back to our normal margins in Q1 and especially in H1 of FY 2020 based on our order book now and the measures taken for the cost reductions in the new introductions. The inquiry book, which is increased by 8% domestically, has come from the sectors of molasses-based distilleries.
You've all been reading in the papers about government's push on ethanol. This is continuing and expected to go on in the future. This is a key sector for us. Sugar, pulp and paper, and a little bit from the steel and cement sector. In our aftermarket area, we have had a growth of 13% in FY 2018 in terms of order booking, and sales have grown by 7%. The very good achievement that we see in the aftermarket has been in the international market, where we've had a year-to-year growth of 49%. Now the outstanding order book has got 51% of exports in it. The key segments of the aftermarket business have all shown growth, which is spares, services, refurbishment. In our product international market, we have looked at further inroads in Africa, parts of Southeast Asia, and in the Middle East.
We expect our diversification in geographies to help us in smoothing out problems that may be happening domestically. You know, there have been problems in U.K. with Brexit, there have been problems in Turkey, there have been problems in other parts of Europe. We feel we are diversified enough now with our new product introductions, having stabilized fully to approach our sales in a consistent manner. We can say that we are looking at double-digit growth in sales in FY 2020, and we'll double that in the margin growth for the next year. Our disappointment has been in the overall performance of GE Triveni Limited, our subsidiary.
This has been below our expectations. While the revenue was INR 777 million, with a profit after tax of INR 90, there have been some delays in customer clearances. The shipment of some large turbines have got shifted to the first half of the current year. We are putting substantial pressure on BHGE to increase their marketing efforts substantially in the international markets, and also provide further technological inputs to the JV, so that GE Triveni is able to realize its full potential, which we feel has a little bit to go. In design and development, the company continues to have a strong focus. With our dedicated development team, we are having further improvements in our efficiencies, which is the key, and making the products more cost competitive.
We have a new testing facility coming on board in the next two months. That will be helping us in the testing of our new turbine. The company's portfolio on IPR is building up consistently. We have a total of about 250 IPR that have been filed till March 2019. I would like to just end by mentioning that with the company's products having been installed and sold in over 70 countries internationally, with the focus of the aftermarket business picking up traction in the international arena, and with growth now in the domestic market, we see FY 2020 having sales traction in double digits, and more importantly, the double of that in our margin collection for the coming year.
With the strong order book and these projections, we feel that the next year will be an even better one than the record one which we have just been through in FY 2019. I'd like to end by mentioning the buyback, which had pursuant to the shareholders' approval by a special resolution. The company has bought back 66,666 equity shares at a price of INR 150 for the aggregate of INR 100 crores, which is 2.02% of its total paid-up capital from all the eligible equity shareholders. These shares were extinguished on the 5th of February 2019. Thank you.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Ashutosh Mehta from Edelweiss. Please go ahead.
Hello, sir. Good evening, sir. This is . Sir, two questions. First, you did mention about this new product introductions. Sir, it will be great if you can just highlight a bit on this new product and which new market or new geographies that you're targeting from this. Maybe something on what's the ideal market size that we are looking to tap for this. Then finally, if you can just highlight what is the kind of cost that we have incurred, because of which the margins have been lower in the last two quarters.
Okay. Let me just tackle your question on. It's a good question on what are the basic areas. We have concentrated on the renewable sector. We've modified our products to suit our customer base, mainly in the international market, in biomass and waste to energy. It's a blend between increased efficiencies and keeping our costs where they are. We had gone through a very strong testing program, and we've used international organizations in Europe, in Italy for this. They've suggested certain modifications, which have all been taken into production in Q4. In fact, we've written off all those expenses. We have a good profit base to write off the cost rather than depreciate it over the longer term. Secondly, we also have a good benefit on R&D expenses, which we get from the government of India.
It's about INR 22 crore we've spent, which we've already provided for in FY 2019. This expenditure is on testing.
On material cost.
On material cost. Mainly, it is to modify the turbines to suit various customer segments. These customer segments are all over. Every country is going for waste to energy and biomass. Waste to energy, particularly. Less so in India than it is in the international market, including Southeast Asia and some African countries. They seem to be a little faster than us in it. While this was something that was crucial to hit competition, and I'm very glad that we are now number one in this area.
Right, sir. That is clear. Thank you. Sir, my second question is actually on the data that you said, wherein we have a market share of about 22% in exports market, specifically between five megawatt-30 megawatt range. Sir, this is something, if we understand this right, are we saying that the five megawatt-30 megawatt, the market size is just about INR 2,500 odd crore globally?
Yeah.
Would that be a correct understanding?
Yes.
It's for the segments that we operate in. This does not include drive turbines. It doesn't include a lot of other systems. What we are defining is the market that we are currently catering to, and therefore, while the Chairman talked about new product introductions and we've talked about in previous board meetings about our approach into the oil and gas and API market, that is, of course, not included in these segments.
Sir, very fairly, we cater to most of the market.
Correct. This would be global, including India.
Yes. Global, including India. This is the global market.
One thing I might say that the international organization doesn't get very much data from China.
Okay.
I think you can take China out.
All right, sir. Got it. Thank you so much.
It includes Chinese manufacturers and all others.
All right, sir. Got it. Thank you, and all the best.
Thank you.
Thank you.
We take the next question from the line of Manish Goyal from Enam Holdings. Please go ahead.
Yeah. Good evening, and thank you so much. Just to clarify, you mentioned INR 22 crores was the additional spend on new product developments and which has been debited in Q3 and Q4?
No. Well, I would say majority has been debited. A little bit has capitalized, the majority is debited.
Okay. Going forward, you don't expect any more significant capital?
No. The figures I gave you for growth, both in margin and in sales, is after the full year and is taking into account anything that A little bit in Q1 that might be spilling over to the month of April, which we've already finished.
Right. This spend you mentioned was on the material cost as well as the additional testing charges, right?
You got it. Exactly. Precisely. These are the two. By testing, we mean testing overseas in University of Milan and others, and also in the facilities we put up in Sompura plant in Bangalore.
Sure. Also to have a more understanding on the margins front that in Q3, we did mention that the revenue mix was not favorable with higher sales in domestic products with some BOP element. For the full year, would it be able to quantify what was that BOP element which probably would have impacted our margins in FY 2019?
No, I don't remember.
Sir, can you repeat? What do you mean by BOP?
BOP. Balance of plant work related to the domestic product execution.
I'm not sure what is it. We have been selling turbine islands, which is the whole turbine island is the turbine plus alternator and other things. There hasn't been any extra project.
I will rephrase it. Is it turnkey jobs, what we would have executed in the current year should be the larger pie in the overall domestic share?
I don't think that's so. What we are selling in the domestic market is pretty much what we are selling in the international market in terms of the turbine package. What we have done in the international market is we have changed things slightly because it's helping the margins. Now we offer erection and commissioning to the customer. We're giving him not a turnkey solution in doing the civil works and all, but we take on the supply of the turbine island erection and commissioning, and we also offer operational and maintenance if they want it.
Sure. Sir, in Q3, we had certain dispatches of nearly eight turbines which were delayed, and a couple of them were related to GE.
We were expecting it to get delivered in Q4. That has not happened yet.
No, you're right. All of them have not happened. They will happen in H1. Q1, I hope. Because you see, we are in the hands of. One of them is to GE Power, and GE Power has another customer. As you know, the international power business has been through a huge problem. You know the results of these major companies. When you go to these combined cycle type of projects where there's gas turbines and steam turbines, we are really a part of a package of a larger package there. We have to stick with the customer. It is a peak business. There's a limited amount that you can make a point for in one order.
I think that we have seen the light of the day now in Q1. We're expecting the dispatches in the next half year. Dispatches have happened within the year already. It's a question of now revenue recognition on the basis of FOB.
Oh, okay. Sir, just to get a sense on the aftermarket, the back-of-the-envelope calculation based on your order inflow and order backlog suggests that the aftermarket international revenues have probably declined in the current year. Would it be possible to give us a number? What is it and what was it last year?
Last year, the international aftermarket was about INR 64 crores. This year it's about INR 81 crores. Total aftermarket was about INR 192 crores last year. It's up by about 12. INR 296 crores.
Okay. It's actually not declined from the previous year.
We expect the same growth. We expect slightly better growth in FY 2020.
Okay. Last question. Sir, on the ethanol, basically what we hear is that the inquiries have been growing after the government support program. Would it be possible to probably give us a sense how much has been the inquiry, and how do you see conversion happening going forward?
The inquiries, the numbers are, there's no point in that because the inquiries come, and some people do it quickly, some people do it later. The more important thing is that the government of India has. We in the group have also put up one ourselves, a big one. The government has given incentives in terms of loans at a subvention low rate for the molasses-based distilleries. Quite a substantial interest subvention. They've shortened the environmental clearances also.
Secondly, the rate of the ethanol has been fixed. It is increased for molasses-based, the heavy molasses, and then cane juice. The projects are much more viable. We expect this to keep going up.
Thank you so much, sir. Thank you so much. Thank you.
Thank you. Before we take the next question, I would like to remind participants, please limit your questions to two per participant. You may come back in the question queue if you have a follow-up. Next question is from the line of Kirthi Jain from Sundaram Mutual Fund. Please go ahead.
Sir, firstly on this double-digit growth, you had highlighted that our order book has grown by just 4% on a closing basis. What gives us the confidence that the growth will be revenue double digits? Is it that the inquiries are so good that the order flow would be good, sir, during the year?
No, there are two things to that. One is the quality of the order book in terms of when it came in and when did it close and so therefore when the products will get dispatched is much more favorable and gives us an indication. Also, secondly, as you suggest, is the book and bill that we've already seen in Q1, and so that gives us confidence in the turnover. Of course, this is at this point in time. We will keep you updated as we go through the quarters.
Sir, just to understand, INR 20 crores kind of was the one-off for the full year, right sir?
Last year, for FY19.
Yes, sir. That should not be there in the FY20 for our number purpose. Correct, sir?
No, that number should be, like we said, we are expecting our PBT margins, which were somewhere in the region of 17.5%, to revert back to what we consider to be normal, is up approximately 21.
Correct. 2020, over 20.
Over 20%.
PBT margins of 20%, as we used to do historically, that's our target.
Yeah.
Okay.
We know that now because of the expenses having been done and the orders that we have.
Okay. Sir, domestic BTG market, capital BTG market, how you expect the growth for next year, sir?
Currently this year, in the five to the 30 megawatt range, 740 megawatts of turbines were ordered. Our anticipation was to actually exceed that little bit. Q4 was a little weak on the domestic side, as you know, because of the uncertainties towards elections. While we are sitting in May right now, we believe that Q1 may also be impacted a little bit.
It has been affected.
Having said that, the inquiry book is quite strong in certain sectors where we see, for example, in cement, we're not seeing much greenfield expansion there, but there's an enormous amount of expansion happening in the waste heat recovery segment. Steel has dried off a little bit, but other process industries such as food, pharma, ethanol, et cetera, are doing quite well. Of course, then you have the added impetus of certain renewable-based industries such as municipal waste incineration, which is coming in in a small manner, which makes up a much larger percentage of our order book internationally. We're quite happy with that. Now these are all, of course, inquiries and leads. The issue will be conversion, we are looking further at a growth of the market from 740 megawatts to at a double-digit rate.
Okay. Double-digit means annually, sir? That's the broad indication.
Yeah. Low teens. Yeah.
Okay. Sure, sir. Thanks and all the best for the next quarter.
Thank you.
Thank you. We take the next question from the line of Shree Mantoria from Unifi Capital. Please go ahead.
Yeah, thanks. Sir, firstly, what was the contribution of these new products in the quarter for top line?
That's difficult and a little bit of it, this is a little sensitive.
A broad number would help.
We haven't really worked it out. Maybe offline you can try. I haven't really got a figure in front of me from the team. It's not really the sales so much as some of these, as one of the person asked as a question, is the raw material costs and which we've reduced very substantially and the testing globally. That affected our margins.
Okay. Given that you have plans to enter into new geographies, are there any new products to be launched in the pipeline which is in the R&D right now?
Yes. To answer your first question a little bit better, in Q3, there were nine turbines, and in Q4, there were 13 turbines in this range, and there are certain turbines in Q1 of this year, which have also been accounted for within the total lot as we have suggested. Going forward, the fact is that, like chairman suggested, the re-engineering and the revalidation has been carried out, we're confident about costs, the costs that were to be incurred have been absorbed already within the figure for this year.
Okay. What I was trying to get is better clarity. Going forward, when you sell more of these new products, would the margins be similar to your historical margins in these turbines?
Margins will be similar, of course, our business is a dynamic business. We are a technology-driven business, which is continuously striving and aiming to innovate, therefore, we have to continuously introduce new products into the market. As it so happens, in this particular product introduction, we had certain problems, which we have addressed both structurally, process-wise, as well as through a variety of different cost measures.
I think one of the things that I might mention is that through this experience of Q3, Q4, we figured out that testing was a risk factor. We have spent this money in now having indigenous testing in Bengaluru, which is already operational in May. We had to outsource this to Milan and other places, which, 1, have a higher cost. 2, the costs are variable, because they are on hours and things like that.
They don't own the risk.
Secondly, you can't do it again and again. Here's the iterative process. Knowing that our R&D is continual, we had the cash flow and everything to incur it. It takes a little time to implement. This is all over in Q1, the expenditures and the commissioning of these testing. We will continually be doing this. We are confident now about the stability of margins. Of course, there will be a difference between domestic and international, and that is a fluid point. We are attacking all geographies. What I didn't mention is, we find that maybe we get better traction domestically in future order booking in FY 2020, where we are more confident. I think after the election settles down from Q2 onwards, we should get an improvement in order booking in the domestic market.
Okay, thanks. You had to do some CapEx to set up this testing infrastructure in Bengaluru?
It's already been done.
What was the CapEx towards setting up this facility?
We mentioned INR 22 crore.
About INR 8 crore.
Yeah. This is a question of both cost and CapEx. It is under 10. It is not the amount of cost, it's the time it takes.
Okay. All the new products that you would be looking to launch in the future, this facility would be helpful. You need not outsource the testing going forward.
No, that's exactly right.
Great. Thank you. It helps.
Thank you. We take the next question from the line of Ravi Swaminathan from Spark Capital. Please go ahead.
Hi, sir. Just wanted to get your views on the pricing environment currently. Mainly, has the pricing improved or has it deteriorated or has it remained stable? Given the fact that I noticed that our gross margins year-on-year has seen a kind of compression, and this is in spite of the fact that after-sales growth has been pretty good relatively and the rupee has also depreciated, which should benefit us because of export.
A very good question. On the domestic front, we've seen low pricing for about six years now. Five years at least. This is driven by, at the same time, a decline in the market which has happened over the same period. There is intense competition and there is pricing pressure. Having said that, we never take orders at losses or subsidized projects. The fact is that, yes, we do have a considerably lower margin in the domestic market. Internationally, up until about a year ago when we had a sort of a depreciation on the rupee, you had a somewhat volatile pricing environment. It changes from sector to sector, country to country. It's very difficult to say because demand is not homogenous and therefore pricing is not homogenous. In India, we can confidently say that it is a very weak pricing environment.
We recently have been able to pass through certain costs, I think that we'll see how we're able to do that in the longer term. Only time will tell. In general, globally, the pricing environment is tough. Having said that's why our efforts towards value engineering and cost reductions is extremely important.
That was the real driver for having this testing and keeping on doing R&D. There's no option in it. As you've seen, the power producers in the higher ranges have gone through real turmoil and they've had huge capacity reductions and layoffs and all that. They're now competing in our range as well.
Got it, sir. This 740 MW that you had mentioned, that is related to 0 to 30 MW, right?
Yes.
Yeah. If you can give a flavor of the larger range that is 32 and above.
I don't have that data with me, but I can say that I wouldn't imagine it to be more than about 200 MW.
In domestic market.
In domestic market.
Yeah, very low.
Is there a scope for it to improve?
That is a large greenfield expansion that happens for larger industries will happen in the higher range.
That's why I said we've been a little disappointed in the order inflow in the JV, but some just to do with the environment and we are putting pressure on BHGE in the international sphere.
Internationally, are we in a good position, say, in a couple of orders, four, five orders?
We will know more in the next few quarters. We are undertaking a deeper survey of the larger range in the JV range.
Got it, sir. Yeah. Thank you.
Thank you. We take the next question from the line of Nandan Vartak from Wealth Management. Please go ahead.
Good afternoon. Thanks for the opportunity. My question is about the same, GETL potential. If you can give some idea about potential revenue from GETL that we are expecting.
Of course, the fact is that the expectations are high. We also have high expectations. As we see a soft or very low growth in the below 30 MW market, we have high expectations in this segment, and so we're going to be looking at it very aggressively to see how we can expand our coverage, expand inquiry so that we can get better visibility and therefore ultimately more orders. We know that we are cost competitive and we have, as we pointed out, a very good global market share below 30 MW, and so we should be able to get good market above. I think some work is required and we'll have to get back to you on that.
Okay. Another question is about global market size of biomass segment that we are market leader now. What would be the size of global market?
The fact is that data doesn't break down exactly in that manner. I can confidently tell you that near 90% of our international orders are in the renewable sector.
Yeah. The difficulty in the renewable, you have both waste to energy, coal gen, and biomass. Pretty much it depends on the particular geography. There's more growth in waste to energy.
Okay. That's it. Thanks.
Thank you. We take the next question from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.
Good evening, gentlemen.
Good evening.
Could you help us? In India, we are seeing orders coming from the refinery side, and last year you had a breakthrough order for KNPC.
Are you actually seeing potential of getting orders from the domestic refining segment or any of these drive turbine opportunities on the international arena that you could?
Good question. In the international sphere, the first thing is to get yourself registered and pre-qualified. It has taken a long time, but we were with the Kuwait National Petroleum. We are in a few more other countries now in the Middle East, we've been registered, and in Southeast Asia. We are now in a field where we will be, and with the oil price having gone back to comfortable levels, they are starting to have newer inquiries coming out. We're expecting them in FY 2020.
You're right. There has been downstream investment in India, and which is largely led through EIL. We have missed one opportunity because of lack of approval of EIL, which is very stringent in terms of pre-qualification. I think that is through now.
Yeah
very optimistic on looking at this market in India as well. I don't think the demand is as large as you make it out to be. It's a segment which, for us, will be much smaller than, say, molasses-based ethanol distilleries or sugar cogeneration or pulp. Internationally, it's a much larger market from a downstream perspective.
Sure.
Fertilizer will be a larger segment in India, but those are more on the DPR stage at this point in time.
Sure. My last question is, you are expecting a double-digit growth in the revenues. If you actually stretch yourself a bit further, are you expecting that the orders in fiscal 2020 could be high double-digit, which will actually lead to a further acceleration in the growth rates in 2020?
Well, this is now the million dollar. We do expect a very good growth rate in order booking in FY 2020. We have some expectations from the domestic market, as I said, there is some impact of Q1 being slow because of the election. I think our order booking for FY 2020, budgeted right now, is on a higher basis than what we achieved in FY 2019.
We're also looking specifically at certain good breakthrough orders coming from our refurbishment segment. Refurbishment is unpredictable from a margin perspective, we're hopeful that it will be at least product level, if not better.
Sure. Yeah. Thank you so much for taking my questions.
Thank you.
Thank you. We take the next question from the line of Ashi Anand from Allegro Capital Advisors. Please go ahead.
Yeah. Thanks for the opportunity. The first few questions were with relation to the new product introductions. Just wanted to understand, is this a brand-new product that's going to allow us to cater to an earlier untapped market altogether, or is it just a new variant that's going to help us gain share in the market that we already cater to?
It's the latter. It's a variant of the share of the market that we're already in. The variant is very important because you could call it a new market. If you look at the whole market of waste to energy, you have to hit many sectors of it. You need product adaptations to satisfy the customer's requirement in terms of cost and efficiency and certain features. We're not a mass production shop. There's a bit of value engineering, there's a bit of R&D, there's a bit of new technologies that you have to keep up to date with all the time.
Okay, excellent. This actually leads into my second question. I was under the impression that we were constantly innovating, tweaking, trying to bring out greater efficiencies from our turbines. Therefore, is this a one-off kind of an expense, or is this more in the nature of an ongoing kind of an expense? Therefore, why have you called this out in this particular year?
No, you see, it is ongoing. Sometimes you want to make quantum jumps in attacking a particular segment of a market that you may not have touched. It is ongoing, but as I said, we have now completed the loop of doing it, testing it.
Validating
validating, going and refining it again. This is something that takes time to actually fully implement. It is a very high-tech line, the steam turbine, and we have 100% engineering and R&D in our own facilities. We are not dependent on any outside source for this knowledge base. The accumulation of this is now complete in terms of the process. We are quite confident of being able to adapt our products to the future needs of the customer.
Okay. I just want to confirm, the program has been successful. It is just that it has cost more than we were originally expecting.
Right.
You will be introducing this product into the market.
We have already introduced it.
Perfect. Excellent. If I could just squeeze in one more question.
Sure.
You have made a comment saying that in international, the bulk of our orders or revenue is actually coming in from the renewable segment. Would it therefore be fair to say that in process cogen and waste heat, we're getting a lower share? Any particular reasons for that?
No. Waste heat is part of renewable.
Yeah. We include waste heat as renewables. Anything that is not using a thermal.
Fossil fuel.
Carbon-based fossil fuel.
Fossil fuel.
What process cogen is right about?
Sorry, go on.
You are right about your reading that our market share in the process cogen would be much lower.
Any particular reasons for this?
One is coverage. The second is the risk averseness of people making decisions. As you see, these segments of renewable energy are more entrepreneurially driven, and people make decisions based on payback as a decision-maker themselves, as opposed to process industries, which are more managerial in terms of decision-making and risk-averse. Having said that, we've had very good with some of the largest buyers out there on the process cogen side in the paper or even oil and gas side still do, and we do get entry. It's a question of coverage, and I think that will expand as we get installed bases in more geographies. Continuously, we will aim to get a better share. Very frankly, you should know from a demand perspective that process cogen globally is not as large a segment as renewables is.
By the way, when we talk about it, this is a question of being number one or number two. We're in a pretty high visibility area now.
Thanks a lot for the answers.
Thank you.
Thank you. We take the next question from the line of Anand Bablani from Unifi Capital. Please go ahead.
Sir, if I were to see your consolidated performance, I see that share of profit of joint venture is INR 2.3 crore in Q4. Can you share with us the reason for sharp improvement here?
There was just some dispatches that took place at that point in time. As you pointed out, the earnings of the joint venture was somewhere around, PAT was about INR 9 crores. The adjustments because of certain expenses or income being booked on both sides was negated out, ultimately it came because of revenue that was incurred in Q4, which is specifically towards certain aftermarket revenue.
Okay. There's no one-off any reversal of charges or of that nature. It's pure business income.
Yes.
Okay. Sir, secondly, if I were to
No reversal.
Sorry?
Sorry. No reversal.
Secondly, sir, if I were to see our order booking in export segment, in FY 2017, it was INR 300 crore. In FY 2018, it was INR 420, and in FY 2019, it's INR 416. Year-over-year, order booking in exports has in fact de-grown a bit or it's flattish. Any particular reason, and has this order booking in FY 2019 of INR 416 crore in exports met your own expectation, and what is the outlook for-
No, you're right. Our budget was, of course, higher, our anticipation, as the Chairman put it, is to grow faster than this. Having said that, even at this pace, the market is somewhat soft, and given our global market share, it is tough to fight for every order that goes ahead.
The market has dropped in the last three years. The overall world market has dropped because the fossil fuel market has dropped. We are fortunate that we are in a line where it is slightly expanding, but the overall market in 5 MW-30 MW is not the same as it was three, four years ago.
Sir, can you quantify all for us so that we have a better sense of how.
There's nobody who has figures for the whole world market. There's no source. There's no tables that can be got. We can know that the orders placed are less. I wouldn't have the figures, but we can try offline to see what the estimates may be. Basically, the real question is that we have not seen a decline in the renewables. We've seen an increase in the renewables market. There we can see now that we have a new range of product for this market, we are able to forecast some increase in sales in FY 2020.
Sure. Sir, lastly, Triveni had product development expenses in Q3 and Q4. Are any new further products being contemplated which can lead to similar expenses in FY 2020?
nothing that has not been planned.
Okay.
Nothing that is We continuously have to spend on research development, testing, training. nothing that is unforeseen. These were really unforeseen.
they were out of our hands. This is why we bought everything in-house now, so that we are enable. The risk factor comes when it's not in-house.
Okay.
We've decided that is not worth it in the long term when we are going to be continually doing this. Exactly to answer your question.
Sir, lastly, in these product testing and product development expenses, we see a lot of it is cost of goods. Eventually, these cost of goods, is it primarily for the prototype development which we don't sell?
No, we sell everything. Prototype is also sold.
You see, you develop it and you value engineer. It's a question of reducing costs continually. We're not having a write-off.
Okay. Maybe it is the margins are not as good as the company feels. Would that be the right way to think?
Correct.
Okay.
That's what you call prototype for the first off.
Yeah. Okay, fine. I'll come back later.
Thank you. We take the next question from the line of Lalaram Singh from Vibrant Securities . Please go ahead.
Hello, sir. This is Abhishek Pamecha. Thank you for the opportunity. My question is regarding this, can you provide the breakup of domestic order inflow between the product as well as the aftermarket for FY 2019 and FY 2018?
Say that again, please. Domestic product and aftermarket.
Inflow breakup between product and aftermarket.
Product and
It is-
Yeah. Product, the aftermarket has gone up by 7%.
Okay.
Product is -1% in the international sphere.
Okay. For domestic?
Order booking domestic. This should be working.
Domestic has gone up by 7%, whereas I'm talking about the product. Domestic has gone up by 7%, exports have come down by 1%, and if you look at aftermarket, in the case of aftermarket, there is an increase of 13% in aftermarket.
This number which you have given me is for domestic markets between product and aftermarket. Product has grown by 7% and aftermarket by 13% in FY 2019.
No, I think that's the overall.
That's the overall.
That's the overall.
I think we are-
I'll just give you that. That is the case.
Why don't we take it offline. We'll give you the figures.
You're absolutely right, though.
Yeah, it's approximately
This is aftermarket domestic and aftermarket exports. Domestic has come down by 5%. In the case of aftermarket, domestic has come down by 5%, and aftermarket exports has gone up by 49%.
Aftermarket exports have gone by 49%.
The domestic has come down by 5%. I've mentioned that in my opening remarks.
Okay. For the domestic market, aftermarket has grown or degrown?
Degrown.
Degrown.
In the case of aftermarket.
It's not a market. Order booking is.
Order booking, yeah. This is also lumpy. It goes up and down. Okay. Do you have any other question?
Nothing. Thank you, sir, for the opportunity.
Thank you very much.
Thank you. We take the next question from the line of Ashwini Sharma from Prabhudas Lilladher. Please go ahead.
Yeah, thanks for the opportunity. Sir, on the international markets, what would be our current inquiry pipeline? If you can just give me that number.
It's quite healthy. I think it's about two and a half gigawatts.
Yeah.
That's it. It's about two and a half gigawatts.
That would be mainly from the renewable side or?
No, this is everywhere, but it is definitely more skewed towards renewables.
On the domestic side, what would be the number?
I would say, I don't have the figure in front of me, but I'm going to guess it's somewhere around about a gigawatt.
One gigawatt?
Yes.
Okay. Thank you very much.
Thank you. We take the next question from the line of Ashutosh Mehta from Edelweiss. Please go ahead.
Yes, sir. Thanks for the opportunity again. Sir, in one of the questions, you highlighted that you are expecting double-digit growth in the sales in FY 2020. Now, sir, you also said that Q1 in terms of order intake is likely to be a bit weak. Sir, just to do this calculation, I think-
Better than last year. I mean, it's going to be weak, but better than FY 2018.
Okay. Sir, just a simple thing. I think we need to have order intake. It needs to be front-ended in order to be a double-digit growth for FY20 overall. I would believe that for that thing, you would have a fair amount of visibility as to amount of order conversion in the first two quarters. How is that?
Yes, that is right. You hit the nail on the head. The only way we can do that is to talk about book and bill in the first two quarters. From the inquiry pipeline and what we've achieved up to mid-May.
Correct. I would believe that visibility is fairly high.
That is our analysis today to say this. Otherwise, it's not possible.
Right. Thanks. Secondly, sir, what would be the current capacity utilization for both of your plants?
We've got plenty of capacity. We've got 40% more, 50% more.
As you know, we put up the new factory Sompura.
Yeah.
We have a lot of capacity. We can take large orders from the JV, we can take large orders from 5-30. There's no problem there. Yes.
Mr. Mehta?
Hello.
Mr. Mehta, does that answer your question?
Hello?
Hello. Sir, we couldn't hear you for a minute. If you have a question, you need to please repeat, sir.
Yeah, sorry. Sir, I was asking that since you mentioned that you have a spare capacity, so that is on account of since you can work on two-shift and three-shift basis, that is how it is the extra capacity?
No, even in the two-shift, some machines are one-shift, some are two-shift, and the others are assembly, and we have a very good lot of suppliers, dedicated suppliers around us in Bengaluru, so we have their capacities. This is why the capacity utilization is not a problem. As you know, we have a very low CapEx, which we put up the plant with, so there's no further expenditure needed on any CapEx to increase capacity. It's a question of getting the order.
All right, sir. Thank you.
Thank you.
Thank you. We take the next question from the line of Nandan Vartak from Wealth Managers. Please go ahead.
Yes, thanks for the follow-up. Actually, my question was about CapEx only. What we have done in FY19 and what would be in FY20?
Nothing very-
No significant CapEx coming up.
Just what we finished in Q1, very small.
Okay. What would be maintenance CapEx range, if you could-
Sir, it's virtually nothing. INR 5 crore-INR 7 crore.
Okay.
Well, less than INR 5 crore.
Okay. Thanks a lot.
Thank you. We take the next question from the line of Anand Bablani from Unifi Capital. Please go ahead.
Sir, in terms of order book for GETL, what's the year-end figure for FY 2019, and what was it at the end of FY 2018?
We don't see it. No.
While we get the figure, I think it's suffice to say that our order booking has been weak, as we pointed out.
We will get it to you offline. The booking has.
One order.
Yeah. The order booking in the year has been disappointing, as I said in my opening remarks, for FY 2019 and GETL.
Okay. In terms of the way we have order booking in terms of crores given for rest of the business, anything you can give us in terms of.
In FY 2018, we had a booking of INR 390 million and a net order and closing order book of INR 154 million. Sorry, INR 1,540 million. This year we had an order booking of INR 479 million and a closing order book of INR 1,272 million.
Okay. Sir, overall from sugar distillery, can you give us a sense of what's the order book that you already received?
We don't have that break up over here. We're really not going down sectorially.
Okay. Sectorially in sugar broadly, can you give us a sense whether the order and inquiries have started flowing to the extent that we have anticipated, let's say, six months earlier when the policy was first announced? Or is it weaker than?
It's different from distillery. Sugar cogeneration is a little lumpy and dependent on other factors in terms of availability of gas, et cetera. I think that that also finds a stable.
That's been on par to our expectation.
As to our expectation. The distillery is what has exceeded our expectation. That also, we'll have to wait and see as to if that continues. For the last two, three months, we haven't seen anything in this segment because of elections and if there's going to be continuity to government policies.
Okay. Fine, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.
Thank you, everybody. Thank you very much for the conference call FY 2019. I'd like to just end by saying that we look forward to FY 2020 very positively. We're seeing a much better performance on both top and bottom line for the new year. We have a good inquiry book on the basis of which we're able to make these statements, and we have successfully implemented our variant productions and our testing. We are in good shape for the coming quarters after the election of Q1 is stabilized in the next month or so. Thank you very much.
Thank you very much. Ladies and gentlemen, on behalf of Triveni Turbine Limited, that concludes this conference. Thank you all for joining. You may disconnect your lines now.