Q3 18/19

Feb 12, 2019

Quarterly report

Ladies and gentlemen, good day, and welcome to the Triveni Turbine Q3 and 9 months FY19 earnings conference call. As a reminder, all participant lines will be in a listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you in assistance during the conference call, Please signal operator by pressing star and 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishi Baral of CVR India. Thank you, and over to you, sir. Thank you. Good day, everyone, and a warm welcome to all of you participating in the q 3 and 9 months FY19 earning conference call for Travany Dervine Limited. We have with us today on the call, Mister Nikkelsani, 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 like also like to emphasize that while this call open is While this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will have this call. We will we will start this call with the opening remarks on the management, following which we will have an interactive question and answer session. I 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, Risha. Good morning, ladies and gentlemen, and welcome to the 9 month, q 3 conference call for Srinito Bank. We have some good news to report to you and, of course, some explanations that we need to make. The good news, of course, is the fact that we have the highest ever turnover in the 9 months that we've ever had, the disappointing news and the news that we need to actually explain is the fact of our margins But let me begin with some of the operating results. The net income from operations of the company for the 9 months has been 9,000,000,000 rupees, which is a growth of 18%. Over the previous 9 months. The PAT stood at 70720,000,000 rupees, which is a growth of 19% over the corresponding period of 9 months. There was a 13% growth in the total order intake, which was at 645,000,000,000 rupees for the 9 months versus 571,000,000,000 rupees in the corresponding period. The 9 month period also saw an increase in order inflow in the domestic market by 26%. And the mix of the domestic order booking in the 9 months has gone up to 51% of our order booking as compared to 46% during the corresponding period of last share. The product order booking in the domestic sector has been 40% higher in the 9 months. And overall, there have been a growth of 10% in the product order intake during the 9 month period. The aftermarket segment has also performed very well with the growth of 22%, over the corresponding period of 9 months in FY18. And in terms of order booking, but while sales have grown by 14%, During the 9 month FY19 period, the mix of exports in total sales has increased from 44% to 51%. While the dub while the mix of domestic sales has decreased, of course, for 56% to 49%. The share of aftermarket in total sales is at 27 advocate as against 28% in the 9 month period. Even though the aftermarket sales has increased by 14% overall, from 1,590,000,000 rupees to 1,590,000,000 rupees from 1,390,000,000. The overall consolidated closing order book is at 753,000,000,000 during the 9 month period, which is 8% higher than as compared to the previous year and 96% higher than at the beginning of this financial year. The buyback, as you know, has been very successful and has been completed. And all the shares which were bought back have been extinguished on 5th February. 2019. In the domestic market, during the quarter 9 months, the total market and inquiry book has been at about 1.5 gigawatts, which is healthy. And we see we've seen a good traction in this 9 month period to date. There's certain circumspection over the next preceding months in terms of volatility given the impending elections, but we are confident that the overall growth in the market for the full financial year and leading into next financial year for the domestic market will be robust. Of course, it will not approach the markets back in 2011. But having said that, it is there will be a double digit jump in the market. Over the last financial year. On the export market, the product order intake has been healthy. Of course, it is lumpy from month to month, and we are confident that in the full financial year, we will have a very good performance in terms of order intake, covering a broad segment of operations from waste to energy and sugar price co generation, including other process for generation applications and geographies, which are also equally wide. In terms of the international data available, Trivini Turbine has emerged as a leader for bio for the supplier of steel turbines into the biomass sector globally and we're very proud of that fact, and I will delve in it further as I conclude my remarks. The order inflow on a quarterly basis has been lumpy as I talked about. And we believe going to the next financial year, asks the strength of our order book as well as the order intake augurs very well for the visibility that we have until the 9 month period 1 year forward, which is going to FY20. To touch upon the tissue of and this growth in order books is what has led to an increase in sales. Equally, at the same time, we've had a decline in gross margin and an increase in raw material as a percentage of sales to approximately 57.6 percent This is a massive concern for us, and it's something that is way beyond any expectation that we may have. As we have confirmed to our investors in the past, our expectation on the profit before tax margin, which is what we is is the number that we look at internally. And our benchmark to keep it around 20% above that has of course been missed quite, largely to a large extent, in this current quarter. This is due to new models that were introduced into the market, which had a slightly higher cost than it was expected, which led to approximately 300 to 400 basis points, in terms of raw material consumption. The balance effect was due to market due to a product mix in terms of what was sold to the market from both an export to domestic perspective as well as in terms of the balance of client versus the product of lines to transition into the market. Having said that, we are confident that going into Q Four as well as the visibility of our order book into the 1st 9 months of FY 20 that this temporary movement and increases raw material, which has hit us all at once in this quarter would be normalized back to our normal expected margins. So having said that, we believe that even Q4 would have reversion to our norm. Now on GTL, the overall performance of GTL for the 9 month period, has been much below our expectations, both from the perspective of order intake as well as revenue. The JV continues to have a significantly lower than expected performance And this is largely driven by a deformerator by customers taking the for taking delivery of the orders, as well as in terms of placement of orders. We are, of course, constantly and continuously engaging the to ensure that we are able to capture as much value as we can from this segment, which we believe to be an extremely lucrative market and something that we would pay be paying greater attention towards. The JV itself has registered in the 9 months, a revenue of $358,000,000 with a profit of 22,000,000. And similarly, on the order booking front also, the JV pipeline has inquiries, which are an advanced stage of finalization, which have only finalized to the extent of $444,000,000 in the 9 month period. The design and development program of the company has been the core of the value that we've been able to create, the position that we have in the market, and the leadership that we have in certain segments and geographies. We continue to invest in creating new IPRs, new models, and continuous value engineering. The increase in cost that we had, which was driven by certain new model introductions included one time costs in terms of learning, as well as tooling, including, certain mistakes which may have been made in terms of getting the products to market. Having said that, the the learnings have been internalized. We have a full grasp of the situation, and they have been remedied already to ensure that q 4 can present a much better picture that we have done in q 3. Having said that, given our growth in order booking and our conviction in getting good orders in Q4 as well, our visibility for the next 1 year, which includes up to 9 months, FY 'twenty, august very well. I'd be happy to take questions from investors now. Ladies and gentlemen, we will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and 2 participants are requested to use handsets for asking a question. Ladies and gentlemen, First question is from the line of Sri Mandaduriya from Unifi Capital. Please go ahead. Good morning. My first question is on a a product mix. You mentioned that product mix has led to lower margins. So can you elaborate a bit more on that? What percentage of revenue was from these, new products, which have a lower margins? And, if that makes, likely to remain going forward. And, more so, if the margins are lower in these products, are these products more of commodity in nature? No, no, no, this is our question of commodity in nature. It is a question of actually translating the newer design developments onto the shop floor, the learning that happened to shop floor, the conversion of raw material at the shop floor level, as well as an installation of the, of the product. Our new product developments are technological intervention into the market. So these will continue. We we continuously introduced between, 5 to 7 new variants and maybe 4 or 5 new products itself into the market every year. And so we're quite confident on that strategy. It's just that certain models in terms of which had a very large increase in efficiency led to a higher cost, which we have trying to identify and have a mitigation strategy towards. And that's why we believe that this is to be temporary. Now new products always take comprise of a larger segment of sales continuously as we go forward because we are, our endeavor is to continuously improve on not only the efficiency front, but also to actually give a better value proposition to our customers. So from that perspective, new products will always have continuously have a high percentage of percentage share in terms of turnover for product? So if I have to ask you, quantify a number, a few crores, which would have been 7 of expensive products. Available? Like I like I told you, if I look at if if I look at if I look at the material cost at 57.6 percent, and a normal being somewhere around the region of about 51%, then about, 4 4 to 4 percent of 100 basis points could be attributed solely to this criteria. And about 1 or 2% was based on the change in, from quarter to quarter and lumpiness that happens in terms of product or product versus aftermarket dispatches, as well as the mix in terms of what exactly is getting dispatched. So that gets even out towards the end of the year. So so this 4%, would not be repeated in court? Would that be the right think about? Exactly. You're being you're coming to the point that I that I alluded to that we believe this to be a one off and temporary in nature. We believe that it Q4, you would already see a reversion back well, back to normal. And going forward into the next financial year, these same products, would be reverting back to the normalized margin structure. On that, the follow-up, you mentioned that we continue to have new newer products coming in. Kind of a continuous process. Why is it that in this particular quarter? Has had an impact on raw material. It is that the number of product companies was way too high. No. I think I think you have to say that this was this was a mistake made by us and the that we've realized this consistent, and and adopted it into our system a practice. The fact that this, happened by itself is something of a matter of concern for us. It was also driven by a certain cost increases that happened, as you can see, because the majority was exported. By local manufacturers, which has also been absorbing to our system and new products, which have been quoted, are already been increased in terms of our cost base. So we are assuring margins on that front. So I think the fact that as far as the company is concerned, we are quite confident that this blip in terms of, margin structure for the products of new product introductions would be taken care of going forward. Okay. And on GP in front, I see that there's a difference between 6 months 9 months number. So it seems that in 2, 3, one of the things is also the profitability for Q3, in isolation, seems to be quite high. Based on the 9 month numbers that you shared and the 6 month number that you shared previously. Yes. You know, some GTL has, has 2 components of, of sales. 1 is the product itself, which is directly related to the order book. The other services. And the services, of course, carry a much better margin. Those, are not reflected fully in the nature of, of the order book as you would understand. So but of course, they actually they are very profitable, and these services are provided to GTL customers only. Okay. So it's kind of, it's around 60,000,000 of revenue for, like, 30,000,000 of profits. The numbers are not, Aaron. Is that right? It's No. It's it's it's driven by high margin, high high value high margin, execution, as well as a certain, a a reversal of provisioning that will happen in the past And so, this will happen in the future also where you would see certain profit being written back just because due to conservativeness, we may have actually, taken certain write offs based on our assumptions on the customers, or just on project execution. Follow ups as we serve participants waiting for their time. Also, reminder to our participants that you are requested to limit your question to 2 profile Thank you. The next question is from the line of Casey Dalby from Enamed Asset Management. Please go ahead. Good morning, sir. My first question is on, GET E lipids. Given our performance for now, almost years in GATL, what is our next strategy in the industry? And where do we see this, you know, JV, you know, from growth perspective leading us into the new markets? Rakesh, thank you for that. I think that know, our expectation on the joint venture from the beginning have always been very high. We believe that the market between 30 to a 100 Megawatt is equally not much larger than the below 30 megawatt. And so therefore, the value that we wish to create in equal if not more than what we've created in the below 30 megawatt space. So you're right that, that, this way, they may have been underperformance in the segment. But we're very conscious of that and conscious of the interest of, everyone on the call. We will, of course, keep you informed, every quarter at matters progress, but we are pushing very hard to our partners for a continuous an aggressive push of all the products of the joint venture in all the markets. We will revert back to you. Of course, like I said, it is also below our expectation of total growth But if you look at it in terms of return and equity and the amount of money that the company's put in there, it has insufficient. But any, sir, any kind of mean, we can see in the future in this, JV, because, we've been strong in our market, you know, with a 30 megawatt, and there were quite high expectations, you know, about 30 megawatt given GE's type. And it has not yet rectified due date. That's that's the only concern we have. I think there are conversations which happen continuously. There's never a a stable form of any partnership because it has to react to the market. It has to react to circumstances. And I think that we are continuously in dialogue to see how best we can save value for our shareholders. And I think that is what is this concern to us to see how best Srini can approach the market, how it can participate in the market, and how it can be a, a leader within this space. Of course, we have a very amicable and they close relationship with General Electric. And so we are in continuous dialogue to see how we can adopt and adapt this joint venture to see how best it can be on a high growth trajectory, how we can actually realize more profit and ultimately greater market share and sales. Yes. And so the last question, again, on hopping on the operating margin part, Is it particularly related to, I mean, relating to, any export, kind of product or was it product related to domestic market, sir? Product development. I think that it had it was not unique to where the where the client was or where the app what the application has been, the learning was from a perspective of new technology introduction into, into our product line, which we not only internalized and got the cost structure understood. There's a mixture of many costs that go into it. It is not only, a one design development costs that were built in. There were certain learning, costs that were built and that also factored into the manufacturing process. And so we believe that a lot of that has been internalized, and we will see in Q4 that is the result that we can we'll have to wait for to show you. Sure. Thank you very much and wish you better. The next question is from the line of Rahul Gare from Court of Securities. Please go ahead. Hello? Your lines are muted for questions. Yeah. Hi, sir. Sir, good morning. Thanks for taking my question. Sir, can you draw some light on the on the domestic market? Like, what's it what is driving the the growth? Is it, the the cogeneration part of the business, or is it, daily basis? Okay, sir. Many you have many different segments which are performing at this point in time. You have the largest segment, of course, which is, again, a lot of traction in the news, but may not be providing, absolute value to the revenue is the distillery market, which is where we've got, 50 new inquiries, totaling in excess of 200 megawatts of orders, I'm sorry, of inquiries in the last 9 months. So that's a very robust sector, which, of course, comes along with the sugarco generation market. But equally, you have the paper market, the waste sheet recovery market in cement. You have the waste to energy market, which has this sporadic which is, which has lumpy orders. But all in all, from a market perspective, we have increased our market share in in the in the 9 months period, but the market has increased slightly, but we are of expectation that given our inquiry book, that, that we can see some good growth of maybe 10%, 15%, 20%, in the coming year. Right. And so similarly on the international market as well. So because we have seen a bit of a volatility in crude prices, especially in last 1 year. So is or anything, you know, interestingly demanding to this, whether in Middle East or, you know, some other parts. So any any change in trend that you are observing? Because our Q1 was quite robust in that end. So just coming from the You're right. But you see, because, well, you know, our our our total turnover, so the is that it's it's lumpy in terms of, getting ordered in international market. The trend is, of course, quite clear But as I alluded to earlier, the real strength that the company has and what has been recognized even by international journals And and is it, is it leadership in the biomass segment, which include which is renewables, which is which includes, waste to energy specifically sugar, sugarco generation, and other projects which which are renewable in nature, which don't really follow the same CapEx trends, which are related to oil. Those are mainly funded based on availability of raw material, and funding. The funding is actually quite available for these renewable projects. Correct. On the broader process cogeneration markets, those are, of course, subject to the CapEx cycle that you talk through. And of course, those will be, lumpy because of that. But having said that, our focus is largely on the biomass market, and we are very successful in that space. We're able to provide a distinct value proposition to our customers and back it up with a good degree of service. Because as you may have noticed is that our international aftermarket has increased quite, conspiracy. And we feel that this will continue in the coming quarters and we would be able to, add to the growth that we're seeing in our total aftermarket segment, which is extremely profitable to us. So interest in biomass would be roughly close to close to 85% of the product sales in an ex service business. In the international arena. Yeah. Well, I mean, it it it it's it's significant maybe somewhere around what you're saying. It's, of course, you can just walk through the portal. Correct. Fine. Fine. So thank you. If there's anything, I'll come back and back to you. Thank you. Thank you. The next question is from the line of Anupam Ghoswami from Stifel. Yeah. Hi, sir. So you talked about, 15 new inquiries coming from a discrete settlement. And, sir, I wanted to know any of this inquiry has turned turned into all the books order for you? Yeah. Many, many have. I I don't think we can go to the numbers exactly, but many have. We have a very strong market share in this, segment. Let's say by a 100 k. So, you know, how an an investment of maybe 60 crores, how much percentage would come for you guys? What is the scope of when and See, that's what I told you. The fact is that even though 15 new inquiries may have come the total megawatt of this of the inquiries is about 200 megawatts. So the fact is on average, it is 4 to 5 megawatts per, per per distillery. And so on average, it's a 60 kilobytes D or 80 kilobytes So that gives you an idea of us of red stands. And can you quantify the amount? Sorry? Can you quantify the amount of what what would, like, 4 to 5 megawatt be, for you guys? What kind of order size? I think you're talking about 5 to 2 crores, approximately 3 crores, somewhere around that. It's it's like I said, the volume is good. The values are low. Okay. Okay. Got it. And, sir, any, sir, what kind of inquiries are you looking at from the next domestic market, as as you can see, we said that paper and cement industry is also growing at that level. So how is sustainable, you're looking at? See, our strategy has been quite clear is to maintain our market leadership in Indian and to continuously grow our international and export markets to to be able to have a greater presence, have a greater absorption overhead, have a greater scale of operations and then also, of course, get better margins. The international markets really do offer us that. The domestic market is important in terms of being able to ensure that we are competitive in what is the loop, what is the lowest cost, lowest price market globally. So, very frankly, we are present in every sector and and face every inquiry that comes into the market. And so we're fully aware of which segments and which sectors have inquiries and which are wondering. Given that and given the status of our inquiry book, we are optimistic that there will be growth. We are we are over any hump of the bottom of the market, but really we're not looking at rapid growth of, you know, 50, 60% coming to the market anytime soon. Thank you. The next question is from the line of Abhishek Panisha from Ygrene Securities. Please go ahead. Thank you, sir, for the opportunity. So my question is regarding the EBITDA margins. If you see on Actually, your 2016, 2017, 2018, the margins have been 15 21 to 22%. However, the gross margins have been between 43% to 48%. There has been wide variation in that. This is because of the product mix in different markets, as well as ownership. Can you comment on the margins which are there in these segments on ballpark basis? No, I think it's better not to get into those numbers because you know, pursue, you hold us to those numbers, but having said that, there's a bit, it's also very competitive in nature to give. As you know, investors aren't the only people who attend these calls. So but having said that, international markets are substantially better in terms of margins than the domestic market. Aftermarket is substantially better in terms of margins than the product market. Also, you bring up the question of EBITDA and, and gross margin. What you would see is that that given, an increase in operation and turnover, the fact that we've been able to maintain and and constrain and contain our overhead has also been something that we've shown coming into this quarter. We believe that going forward, the increase in our turnover will be maintained at the same overhead level. But more than that is is that, the depreciation of all our plants, etcetera, have all been fully taken into, into the numbers at this point in time. And so even from a net margin level, we see reversion back to a 20% norm is what we have, a plus is, is something that, is is in our calculations. Okay. So going forward, if you are going to see double digit growth in the revenue front, then our costs are not going to increase that much. So we are going to see better margins. Factor that we have to continuously spend on sales and marketing and and and administrative overhead with regard to, making sure that our presence in international markets is consistent and able to get us the orders. Now there's a certain degree of, fixed overhead in a certain variable, but having said that, you should you should have a better absorption is what I alluded to. Okay. And another thing, sir, we have basically moved to HR campaign. And because of that, so we have said previously, we see that it is going to basically make our margins, basically the products gain and loss which we see would be more normalized. Can you comment on that? How do we see that? Well, that's, in fact, I think you see our results right now, you'd see, other comprehensive income of about cros out in our numbers which lead to a total comprehensive income somewhere in the region of about 3031 31. 31.3 crores from a PAD of 22.8. And this is these are the unrealized gains on on hedge, which will be, which will come as part of income going forward. Of course, we will take new contracts as we go forward. And so this number will continue to remain, and other comprehensive income, and then we would be regularized into our profit once it's realized. Okay. So on realization basis, it will come into the P and L. Otherwise, it would come into the comprehensive income where Am I correct in my understanding? You know, all these MDMs, which are getting into OCI as of now, we get into we we become a part of the operation your revenue as in when the product to which it pertains to gets dispatched. Okay. Okay. So we are not going to see difference in the margins. No, no, no, no, no. In fact, actually the factors that, if you look at it, we've done a hedge book now. Of course, the factors that the rupee, the orders that were executing right now from export were hedged at a level which may have been done, say, 9 months to a year ago. The large depreciation, the rupee has largely happened in the last 6 months. It should be captured in the orders going forward. Thank you. The next question is from the line of Ashutosh Mehta from Edenweiss. Please go ahead. Hi. This is Ahmed. I just have one question on the new models we've carefully launched in the last couple of months. How does the addressable market change for us both in India and export market? Because, I'm sure we amortize most of the, development cost following a conservative approach. But how will it help in terms of, adding the addressable market for for us? Oh, do you see, like, Amit, as you know, we we continuously add new products. But if you're talking from a perspective, the increase in cost and the lower margins on the on these specific products, which have impacted our Q3 results, those would those will be absorbed. Those are absorbing wouldn't impact. Even though the same products will be dispatched and sold. And a part of our order book right now, the cost structure has been revisited and has been normalized back to what to the margin expectation that we have from our regular product lines. This is, and in fact, actually the same products could would by and large have, if not, the normal margins could even have higher margins going forward. No. No. So I understood that, and I appreciate. I think that's not my concern. I think that's fine. The only thing is, you know, I just wanted to understand how does it does it add to your addressable market have can we say that after The 3 or 4 points to this, is the all technological developments, as you know, turbine is a customized product and the multiple variables that you have to consider, which the client is, is considered as part of his operations. But paramount amounts, everything else, which concerns the company is 2 things. From a customer's perspective, is the robustness of the product? And reliability, and secondly is the efficiency. From the company's perspective, of course, is the cost and the the the, the delivery and structure by which can install and erase the the the product itself. So very frankly, developments which happen for condensing needs are different to what it is from the extraction needs but the new developments that we do come out with incrementally either address a newer market that we can cater to, which may be needs such as our API developments, which is the oil and gas market or certain other drive market segments, which we've talked about, all could actually expand in terms of higher efficiency markets, which allow us to compete more effectively, was the competition and eliminates, well, we always consider seems to be our primary competition, and that's what we benchmark versus. That helps, Nikhil. That helps. Thank you. Thank you. The next question is from the line of Ravi Swaminathan from Star Capital. Please go ahead. Sir, just wanted to know how the pricing environment is there in the domestic market. Given the fact that, market has seen some growth. So as it improved compared to last year, Pricing is unique. It's a customized product, so it actually changes from customer. In general, what we try to say is that in the domestic market, it is a lower price market than it than we find in actually every other export market that we have. We, of course, benefit from the fact that we have certain export incentive that come through to us. But even then, the domestic market is by far the lowest priced market between segments and actually within industries, you can have a wide variation in margin and prices, uh-uh, within sugar, 2 customers can order very different pricing. They're difficult to comment on what are the price level. But, as a whole, it is a low price market. Got it, sir. No. Compared to say previous year, has it, improved? I mean, generally, when the pie expands the pricing Yeah. But the pie is not expanded substantially enough. If if I if if we look at it in terms of year on year in the capacity that exists, I think like we may have told you in the past, in the below 30 megawatt segment, the peak that we may have seen was about 2000 megawatts Mac in 2011. And the markets that we've seen, over the last 3, 4 years have ranged between 600 or megawatts to 7.50 megawatts. Maybe going to about 88.50. So really, we're quite quite away away from any peak capacity, which will allow us to expand in pricing. But having said that, of course, as you would understand, getting product pricing, if getting product margin is is quite unique to Srini in the in the rotating equipment space because, of course, once you do have a customer, you get substantial revenue from them, from a life cycle between 25 to 35 years from the aftermarket. Got it, sir. Got it. And in terms of, expenses related to after sales, which we were we were doing outside the India, So, basically, past 1, 2 years, we have expanded in terms of offices, etcetera. Every kind of, I mean, plateaued out and those expenses? And, are we Yeah. We will not see any increase in those expenses. In fact, we will see better scale going forward because we'll have better revenue and order booking from those markets. And so we will, we'll have better absorption. But we're quite optimistic on especially the aftermarket segment from the international market. As you rightly point out, that is a market which takes more time. Our inquiries are quite robust, specifically on the refurbishment segment, and our offerings were also expanded and our and our and our reach into customers has also expanded. And so the quite optimistic in that we should have good success is coming into the next year. Got it. And, any new offices we had open over the past 12 months? I think our coverage is good now. We don't feel we feel that we'd always like to be conservative and make that our competitive advantage in having a low overhead cost is maintained versus our competition. Got it, sir. Yeah. Thanks. The next question is from the line of Anan Dahlani from Unify Capital. Please go ahead. So it seems there's a response from the line. We'll move to the next question. From the line of Abhishek Pamesha from Ygrene Securities. Please go ahead. Hello, sir. My follow-up question is regarding the capacities which we also at the current capacity, how much revenue can we do? Oh, well, you you you we have actually, expanded capacity quite significantly with the with our new facility at Sumpura. Which gives us the flexibility to manufacture, somewhere in the region of about 200, auto vans a year. From about 120 earlier. Now having said that, so at a capacity utilization basis, you'd say that we are in the region of about a little over 50%, 60% somewhere between that. And so we have, that that answers your question. But of course, we get about 25 to 28% of our revenue aftermarket, which is not really constrained with this capacity. So you have to look at our infrastructure from the perspective of product sales which comprise about 80% of our turnover or 75% of our turnover? So in that way, the 50, 60% is lesser than that, the 50, 60 and you are basically telling me about the current numbers which we are having, correct, which includes everything. Yes. Our current sales is at is at this level. Capacity, I should see from the product segment itself and in the aftermarket also the spare segment. Yes. You never had. That's the the whole aftermarket. Okay. But that's a potential. I I think that you what you should largely see is that this business is not, either capital intensive nor capacity constrained. It is a technology business, and it's an investment into technology which would further grow the business and the the sales of the company. One of you are calling it earlier pointed out as to why new products are being sold. And this is Nagi for this requirements are also changing, and so we have to continuously stay on the ball to ensure that that we're able to meet customer requirements and and are able to do that quickly and deliver it within the time plan that is required. Correct. Correct. And for the services plan, it would be basically people's capability only? Well, they they they software and a certain infrastructure that we put up for testing, but it is largely people. And and it is manpower and skilled, dependent. So we do have a very, elaborate, and a very thought through, training program at all levels within the organization, and we and we ensure that everyone is competent. And of course, similarly, it it it is with our hiring practice as well. Okay. And the future capacity expansions which are going to be incremental, I think, so because we have set up a new facility And therein, we are we're just now establish 1 line, single line. Yes. Yes, sir. Right. 2 bays are open in a new facility in the the flexibility is there for another fee to be opened. Okay. So the increment investments are going to be very incremental and the ROCs are going to be much bigger both investments? Exactly. You see the factors our plant has come online, in the last year or year and a half. And so you've seen the depreciation of that being taken right now. Over a period of time, we're confident that the utilization of the new facility would also allow for better absorption And so, only once we reach a certain level of capacity utilization in this plant or in the first way, we'll be even think about going to the next And then your question comes up in terms of incremental investment, and higher return on capital invested for the new land. But until then, I think we can see a better performance on both metrics of return on equity and return on capital. Okay. Okay. The next question is from the line of Anant Arani from Unifi Capital. Please call sir, which is October order book. If I were to see quarter on quarter addition in order book in Q4 FYI, it was 2 57 then Q1, it was 2.3, Q2, it was 2 60s and Q3, it was 189. So, like, the price has been down for 3 quarters in a row, oil based. So are we seeing some overall business environment and is that the cost or is it this is the kind of heat plan and it's kind of lumpy, and it can be explained entirely by lumpiness. Yeah. It is it is entirely lumpy. If we look at, high expectation on Q4 order booking, it is it's substantially better than Q3. If you look at it earlier in your basis, that's really the way that we should look at it because order book is built up through the year for execution in the following year. I don't see that as a trend as you are seeing it. I know the numbers are appointing to that. But Yes. So, like, the 250,000 number for 2018, let me see if kind of number anytime, let's say, like, 1 or 2 years, right? No. No. That's, I don't think that's a lot difficult number to achieve. So we are our expectations are to exceed that, most definitely. And why we wouldn't be setting up capacity if it wasn't for our expectation on market. We know that the Indian market really hasn't reacted that strongly and it's something that will be poised at, and it's keep getting deferred. So it's poised for about substantial growth and And we believe our penetration to the export market is continuously expanding. And so, therefore, we will only get better traction there and and and better order book. So specifically on GTL, the order we are spending at the end of the Q3 is I think the same order that was pending at the end of Q2 and we thought it might, there might be some uptake of that order in Q3 itself. So given that this recurring lag, do we have, ability to then charge extra for these kind of orders where the customer is delaying Of course. Of course. Of course. Quite substantially. Okay. And then lastly, you're locally I think you're paving and oil and gas at the segment to kind of penetrate. If there's any customer addition or any inquiries or any breakthrough in our efforts to get in the hunt. I'm very happy you asked about that because currently oil and gas and drive has a very low percentage of our order book. And we are very we have pushed quite aggressively into that segment, and we are poised quite well to actually take good orders within the segment going forward. As you know, the drive market in oil and gas is pretty much the size of the below 30 megawatts segment and power generation. And so that could allow us to actually compete very effectively. The problems that happen in the oil and gas market, as you would understand, is that you have very large consolidated buyers who have very set practices in terms of how they procure. They really are not cost buyers, and that's why this market is very lucrative. So therefore, they actually to get in from a registration perspective takes longer. And we have been quite successful in these registrations with very large customers And so now we are getting very active inquiries from them. And so it is a matter of time before we take some success. Sure. We'll help them back in the corporation questions. Next question is from the line of Gerard Mushana from the Malvernicities. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Three questions. So, so, primarily, firstly, I mean, can you comment on our current working capital position post, you know, at the end of 31st December or specifically our inventory and data levels. Okay. So the as as I told you, there's certain, well, actually, they are Each turbines and inventory has finished goods, going into, q 4. Of which 6 have already been dispatched. 1 is in the process and 1 is for GTL. So very frankly, that the the inventory is the working capital as well under control. We had some good refund from GST, etcetera, this quarter. So that is, that that is, been well expected. Even though it will defer for some period. But, working capital is fine. It's it's all within control, and we have no debt in the company. Okay. And the receivable cycle and all the, you know, right now, there is no stretch that we are seeing there. You see, largely to receivable, we we run a a policy whereby we, take take full payment on this either through cash or through LC. So if the RTC goes on our books, those are always backed by some form of guarantee. And different times that we do not have that security, it may only be in aftermarket segment. Which has such high margins that those have already been factored into when you've actually taken the orders. Okay. And, sir, is it possible to, to quantify the order book of G Three VINI JV currently? 400. Oh, order bookman 60 Yes. 164 crores. Okay. And, sir, on the domestic market, sir, do you I'm in work any outlook on the larger value pro, you know, products that we used to get in the wasted recovery space, especially from steel and cement sector, So do you see them rectify, you know, anytime over the next year or so? You know, the cement sector is is seeing growth. It's it's coming up lumpy right now, but the market is quite large. So I think that we have tapped maybe 10% of the market right now. I think that will have, a good market going forward. It's, of course, driven by their capacity also, which I think will will come about over a period of time. So it will be a consistent market for us. In steers and we have not seen the waste sheet recovery market pick up the call and practically over the last year, and it has declined. But there are, of course, sporadic orders based on certain capacity increases that people may see. Okay. And, sir, finally, on the key international markets for us, how is the demand outlook guiding into next year, FY twenty That's it's actually quite strong. You know, if we if we look at it in terms of specific geographies, it's very strong, and you would be quite surprised that even your as a very strong, market for us in certain areas. As as I told you, as I said earlier, our key focus, of course, is on the renewable side of state turbines and our applications there. And so, you'd have to look at geographies where where where, where that is being pushed. Reminds of participants, anyone who wish to ask a question at this time, they may please press star in 1. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you, and over to you. Thank you, ladies and gentlemen. We look forward to speaking to you next quarter as well. I think what you can take away from this call is that we have a robust order book and confidence on, an increase in sales, not only this year, but next year. As well. We're also, quite confident that the lapse that we may have had in terms of margin for Q3 would be significantly Remedy by q4 and normalize very into next year. And so we look forward to addressing you in the future. Thank you. Thank you very much. Ladies and gentlemen, on behalf of Praveni Turbine, that concludes this conference. Thank you for joining us you may now disconnect your lines.