Ladies and gentlemen, good day. Welcome to the Triveni Turbine Limited Q2 and H1 FY 2019 earning conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rishabh Raj from CDR India. Thank you. Over to you, sir.
Thank you. Good day, everyone. A warm welcome to all of you participating in the Q2 and H1 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 has been 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 perspective with you with regard to the operations and outlook for the business. Over to you, sir.
Good morning, Rishabh. Good morning, everybody, to the Q2 H1 investor call for FY 2019. We have a happy set of numbers to report. Our net income from operations at INR 3.9 billion is a year-on-year growth of 14%. Our PAT has also grown by 19% at INR 491 million. Turnover in the first half has been at a record high. Equally encouraging is the 11% growth in order intake in the first half. A substantial initiative taken by the board was the buyback of shares of INR 1 billion through a tender offer at a price of INR 150 per share, for a maximum 6.6 million shares, which will be just over 2.0% of the total paid-up equity. The buyback represents 22.53% and 22.24% of the equity plus free reserves as per the last standalone and consolidated balance sheet respectively.
Let me just start off with the operations, and I'd like to comment on the buyback and also take you through the outlook in that regard. During the quarter, turnover for the quarter was slightly almost the same as last year. We really have always said we must look at cumulative results. For the half-year, which is what we had expected, the turnover is 14% higher, and we expect the year-end to be also closing at a much higher figure than last year. The mix of exports has increased from 48% to 57%, which is encouraging. This is part of the order booking of FY 2018. The aftermarket sales to total sales is about the same at 27% versus 28% last year.
One of the things that has happened is during the first half of the year, the domestic market has picked up very well, one, in terms of order intake and in terms of inquiries. This is spread over a lot of sectors. The domestic order booking, in fact, has gone up 41% over the same period last year. Of course, again, last year was a little lumpy, but there is substantial traction in the domestic market. This is something that I've been talking about. We're expecting it. I said I'd rather like to comment when we see the signs rather than when we expect to see the signs. One, we've seen the results, and two, I'm confident of the domestic market in the next six months and the next year. The overall consolidated order book is at INR 7.8 billion and is higher than last year by 11%.
During the half-year under review, as I was talking about the domestic market, which has improved. We attract all over. In the 5 to 30 MW global market in the first half of this calendar year, outside international sources have put our market share globally as number two. I think that's been a very substantial achievement and well-recognized internationally by researchers. This is spread over a large number of sectors, as I come to in a minute. To stick on the domestic market for a minute, we've maintained our 60% market share. The inflows have come from, as I said, a variety, which is chemicals, food and agros, cement, and also biomass power generation, mainly sugar.
Inquiry generation is also from these same sectors, we expect that to materialize both in order for the second half of this financial year and going into Q1, Q2 of next year. We are seeing a very good active dispatch program for the next one and a half years or so at least, visible now. The segments that we've talked about are also I particularly like to mention infrastructure, which is picking up steel and cement domestically. That you all know from what you're reading about the sectors in other companies. A lot of the orders are still under finalization on the active stage, which is why we expect the orders in Q3, Q4 to be quite good. In the aftermarket domestically, this has also shown good growth in order booking.
While turnover has improved by 11%, our order booking is significantly higher by about 20%. The total order booking aftermarket from the international market is now contributing almost 47% to the total aftermarket order booking. In the services sector, the refurbishment part is exceptionally good and it's showing very good visibility. We are looking at this as a future potential growth accelerator, mainly internationally, which is good. That's taken a long time coming, but it's our confidence which we've had in placing our export offices up. That's now seeing traction more in the aftermarket sector than in some countries like in Africa and others, where the economies are still under stress. The aftermarket is picking up more than the product. To now turn to the export.
During the first quarter of the current financial year, we registered a lower, as I mentioned in the last call, order booking. This is being now made up well in the second quarter, which is sort of what I keep saying, that we look at things cumulatively rather than going quarter to quarter. Again, we expect the same thing in Q3, Q4. If you look at the results as it will be at the end of the year, the international sector is doing well. I must stress here that the international sector in the power has been extremely stressed. I think we have done exceptionally well when you look at our competitors, our peers, and the various ranges in the power market. You've read the results of many others in this field, and they haven't been very encouraging.
Keeping that in mind, I think our performance is even stronger and is a great credit to the team. It's also a credit to our foray two years ago in moving internationally and taking the decision to incur the capital and the personnel costs in moving forward. We are going to continue with these pushes. We're not really looking at opening new fronts, but we are consolidating our export bases and having them reach out further in the regions. That's proving to be a very efficient mechanism for order booking and more importantly, inquiry generation. We now have current orders and installations from over 70 countries. We are focusing on about five or 10 new markets in the next six, nine months. We're confident of some breakthroughs here as well. The focus internationally is biomass waste to energy.
There's been some slowdown in combined cycle and the oil and gas sector. The inquiry base here has picked up very substantially, and you are aware of the international oil prices and which don't seem to be coming down in the near future. We expect good businesses from these sectors. This leads me on to today's trading, where the combined cycle is even more relevant. Because of the slowdown in this sector internationally, this has affected the order intake in the first half of this year. We have an extremely active pipeline, both domestically and internationally, in the 30 to 100 MW, above 30 to 100 MW steam turbine field. We're confident of the closure now before the end of the financial year. That is also going to give us a fillip for our performance in 1920 for TGL.
These are the orders that will be executed in this line. I can just talk on our buyback. The boards considered this as a very efficient way of returning returns to the shareholders. We have good confidence in our future order bookings and our growth. There is no problem of liquidity, and we finished our CapEx programs. These have been the drivers, and the confidence that we have on the future order bookings are both in the domestic and the export market. This is helping us. Considering that we've achieved well in the toughest market of the last six, nine months, and we expect the market to be better, and we expect our market share to be at least the same, we are confident of achieving better results.
A very important part of our push in the last six months has been the achievement of substantial gains in the technology field. We've had a new series of models and blades, and we've had them now validated from the best organizations globally who cater to the power field, University of Milan and others. Their validation is something that is very useful in terms of order bookings in new sectors internationally and in terms of our further research program. We now are feeling that we have both the technological strength and the marketing reach to pursue the program of both product sales and aftermarket sales globally. This technical program is going to be further added, as I mentioned, because we are having in the first quarter of Q4 of this financial year, a testing bench coming in with a 3 MW dynamometer.
This is something that very few turbine companies have it in Asia. We are both technically moving in the design field and self-validation. We have very strong partnerships locally with the Indian Institute of Science, which is encouraging for us and with the IITs in various parts of India. The outlook, as I have been referring to, is good, and in fact, we expect a record year in our order booking in the current FY 2019. We expect FY 2020 order booking to be equally good in terms of reach and growth because of the active inquiries and the spread of the inquiries. The second encouraging factor is that this is happening from many sectors. It's not just concentrated on one sector. If some economies go up and down, and we've seen that in one of our markets, that is Turkey, it's been compensated by others.
Even we have managed to keep our market share in Turkey quite good. The new geographies that we're looking at are both going to be in Asia and Latin South America and parts of Africa. The consolidated order booking position is with you, I'd just like to highlight a few points that we've had an 11% growth in order booking, as I mentioned earlier. Our closing order book now is 11% higher than it was at the same time last year, with the aftermarket having contributed 22% growth over the last year. With that, I'd like to open the floor to questions.
Thank you very much. Ladies and gentlemen, we will now begin the question-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 will take the first question from the line of Anand Bhavnani from Unifi Capital . Please go ahead.
Thank you for the opportunity. Sir, just wanted to understand, other income for this particular quarter has been much higher, and even for the next one, other income is.
This is the operator. I'm so sorry to interrupt. Sir, would please request you to use the handset mode while speaking, as there's a lot of disturbance from your audio.
Yeah. I hope I'm better now.
Yes, please go ahead.
Yes.
Yeah. Please carry on, please.
Yeah. Just wanted to understand other income line, there's been a sharp rise in H1 this year as compared to last year. If you can comment on this and help us understand if it is sustainable or if there's some one-off in this first half?
Yeah. This is normally we follow hedge accounting in respect of our foreign exchange exposures, we remain very substantially hedged also. There had been some exposures which were not covered in the hedge accounting because there were some requirements to be fulfilled. This is as a result of settlement and restatement of that. These basically represent foreign exchange gains.
This is like one of the years from rupee depreciation. Would that be the right way to think about it?
Yes. They are business related. Secondly, sir, looking at the fact the rupee is depreciated very substantially, whatever hedging positions we are taking as of now, coupled with forward exchange premium of about 4.5%, it puts us in a much better position.
It's about 4.5% on the dollar, about 8% on the euro.
Sure.
Second question is about our overall H2 kind of outlook. You are very committed, but if I were to compare last year H2, it was roughly 20 to 28. Are we expecting to have a similar split this time around?
No, I don't want to get into figures. I've given you because we know you're never sure of when the orders get actually finalized. Certainly, we have much better active inquiries. So order booking, we are confident we'll be keeping up the pace of what we've done in H1. Now, exact dispatches will of course, we expect the year to end much better than it was last year in terms of turnover. Exactly what percentages I wouldn't be able to really comment on just now.
Sure, sir. Sir, inventory-wise, if I see, there's been a build-up in inventory. If you can comment on it, like in terms of number of days, inventory at the end of H1 FY 2019 is 200 days as compared to 185.
Because we are a capital goods company, please don't look at that. This is primarily driven by the turnover, which is going to come in Q3, and it is based on certain finished goods inventory, which is to be dispatched at the end of the quarter.
Right.
Very frankly, this is a matter of They need to be done by the end of the year. Because they are orders that are in hand with a particular order of GE Triveni, which is to do with GE. It is a combined cycle plant, and we've talked about it earlier. Now this is moving well, so we expect to dispatch in the current financial year. You'll see a change going forward, certainly by the end of the financial year.
Sir, last year on GE Triveni joint venture, you mentioned that there was a delay in particular order and-
This is the one I'm talking about. This is the one that's adding to it. Same thing.
Okay. Is that sitting in the inventory?
Yes.
Okay. Sir, just a small request from our end. We get wonderful data for the consolidated entity in the press release. For GE Triveni also if you can share details from opening order book and order booking sale, it will help us tremendously.
Yeah. Well, actually, because the Triveni Turbine part is only one part of the whole GE Triveni. We don't go into the same amount of detail. We take the projections and what we talk about the future. We do take whatever we are expecting GE Triveni to achieve in terms of both turnover and in terms of order booking.
Okay. Sir, GE Triveni, do you expect as a whole FY19 to be better than FY18?
FY19 will be better than FY18, yes.
Okay, sir. That's all of my questions , no more questions.
Thank you.
Thank you. Next question is from the line of Anupam Goswami from Stash. Please go ahead.
Good morning. Hi, good morning, sir. Just wanting to know, sir, due to government mandate on sugar ethanol, we see a lot of distilleries being set up. What are your thoughts on that? How much orders are you anticipating on those distillery plants being set up?
Well, it's a good point. I had it actually in my opening remarks, but I'm glad you brought it in. Yes, it's really going to benefit us in two ways. One is that with the movement of making ethanol from B-heavy molasses, and from cane juice, the gas saving is higher. The power generation capacities, the gas available for cogeneration goes up, and then you have more capacity of turbines and more number of turbine possibilities. The second is the distilleries themselves have a power requirement in which some of them are able to wheel to the grid. This will come in in 1920. By the time these distilleries are getting all their permissions and their environmental clearances, et cetera, the Triveni Group itself is putting up some. It is a very encouraging time for Triveni Turbine.
Got you. The order will start coming in from 1920, you said, right?
Well, it might start a little bit this year, but mainly next year.
Okay. Sir, could you repeat your market share in the international market and also the aftermarket kind of mix there?
No. You see, aftermarket is almost impossible to get the total market. It's very difficult globally because there are local players and there are OEMs, and there are third parties like us who do work for other OEMs. There's no data flow captured in that way, both domestically or internationally, especially. Same is the situation in the product line. While we may, as I said, we vote on our, it's difficult to really talk about market share because many things are not reported. You're looking at 75-80 countries. It's not something. We're more sure of talking about the domestic market where we know all the inquiries.
Sir, since you could defend the industry, we just wanted to have an idea on the which of the proportion of your revenues come from which industry. Could you share that data?
We don't give the split up, but I'll give you the spread of the industry because actually it's not important because these shifts from time to time and quarter to quarter. We actually have an approach of having a risk mitigation strategy where we really concentrate on all. Looking at this mix and looking at our spread is what gives me the confidence of telling you about the record of order booking potential for the current year and what we feel is order booking in 2020 as well. Today we are in a pretty good growth path, something that inquiry-wise and all was scenario three, four years ago, in the domestic market where we were not very much internationally. It's good days.
Understood. Okay, sir. That's all. Thank you very much.
Thank you.
Thank you. Next question is from the line of Kriti Jain from Sundaram Mutual Fund. Please go ahead.
Sir, firstly, my question is with regards to there is a short term in the power market. We are seeing spikes in the energy stream markets and some demand improvement is also there. Are the inquiries improving on the industrial power side to put us more captive on the domestic market? Secondly, sir, if it's not, are there any weaknesses, sir? Domestic, we are seeing the potentially that we have grown significantly. If it's not, what is hindering our growth path, sir?
No. Please understand that our growth in the international market has actually been quite exceptional, given the fact that the market internationally was under tremendous strain, as you know, from all the way from 500 megawatts down to our five megawatts in the steam turbine market. We've done very well. Now, our growth in the international market is looking at new markets and new sectors, and also pushing the range of products with new technologies. This is what is bringing our growth. Market projections are difficult to get on a global basis. Domestically, we're able to see much better visibility in where we are going. That is where we are saying that we see the domestic market now which has actually delivered results to us in the first half, and going forward is very encouraging.
Principally on the export side, we focus on the renewable sector, which is biomass-based independent power producers, the sugar market as well as which is one of our most important markets is the waste to energy and the solid municipal waste incineration market, which all of them actually are very dependent on funding availability. While the stress in that credit market is sort of eased, we see that improving, but it's a very consistent demand from this segment. It changes geographically year to year and quarter to quarter, but we think that we're in a good space there and we have very good credentials. We have very good market share in that specific space, and we're quite confident of growing quite well.
The further factor is that the renewable market is not really going down. The stress that's coming internationally is on conventional power. The move is one, the renewables. The second is on the environmental control. Landfills and waste is a big factor all over the world, not just in the developed world. Lastly, our technology and our position already in both the domestic and international market, for these sectors, our products are quite appropriate.
Sir, secondly, the buyback quantum, it will put us in a net debt question, right, sir? Still what is the rationale for the buyback, sir?
I think, as I mentioned in my opening remarks, it's the most beneficial way of return to the shareholders. We don't have any liquidity or CapEx aspirations anymore, and we are confident of the order booking and the position in 1920. These are the drivers.
Okay. We could have done through open market purchases also, right, sir?
The board felt that this was an appropriate way to actually go through the process of buyback.
Okay, sir. First question, are we seeing improvement in the industrial power requirements in the domestic market?
Yes. As I mentioned, base industries are seeing the requirements rise in terms of capacity utilization, not only in terms of order booking, but also in the inquiry book.
We do see sectors such as cement, paper, steel that are very strongly there. We see now a strong uptake in the distillery and agro-processing markets. In general, the overall inquiry intake even for the quarter is up by nearly 70%, 75% over the previous year. It is encouraging, even though the fact is that you have to remember that over the course of the last several years, the market in India has declined substantially. Even if we look at very large increases, we still need a couple of years for us to get back to where it is.
Got it. Domestic is slightly also improving, sir? The pricing transmission is slight there.
Margins are the same.
Okay. We will benefit because of the operating leverage. Our expenses will be amortized over a larger revenue.
Exactly. Our overheads will be less. Secondly, we have a good customer base. We have a good customer base, we have a good track record. That's what we are encouraged with.
Sure, sir. Thanks a lot, sir. All the best for the future, sir. Bye-bye.
Thank you very much.
Thank you. Next question is from the line of Bhaskar Chaudhry from Entrust. Please go ahead.
Yeah, hi. How do you plan on funding the buyback?
We have the liquidity. We already have the Alaska 342 . I think we hold current investments of about INR 75 crores as of now, with the kind of our sales collection forecast, et cetera, we have, I think we are very comfortably placed.
Okay. Got it. How much free cash flow then are you targeting to do for the full year?
Looking at the fact that we do not have any capital expenditure program. Basically, whatever is the internal accruals which come in, they form a part of the free cash flow itself.
Yeah. Do you have a number to that?
Sorry.
Roughly.
Look at it's more than sufficient for all plans that have been disclosed by the board, including buyback.
Okay. Just a related question, you said there are no CapEx plans as of now. How does one look at utilization, if that's the correct word?
Good point. In previous conference calls, I had mentioned to you that in our business, the CapEx you cater to at low cost, quite substantially is capacity enhancement. Capacity enhancement comes in really through your base factory where you do the assembly and testing, and also supplier base. We spent over INR 200 crores. We have enough capacity today for an expansion of maybe 30%, 35%. For many years, we have no requirements of any CapEx to fulfill orders.
We've done very major. We've put up a new factory at Sompura, which is state-of-the-art globally. All the machinery that is there is actually top quality today from the best manufacturers globally again. They're all working, and they're all tested, they're all producing. Now, one can confidently say that because it's been in operation now for the last year.
Okay, sure. Thanks.
Thank you.
Thank you. Before we take the next question, I would like to remind participants, please limit your question to two per participant. You may come back in the question queue if you have a follow-up, as we have people waiting for their turn. We will take the next question from the line of Ravi Swaminathan from Spark Capital. Please go ahead.
Sir, thanks for taking my question. I just wanted to know what is the current domestic market size in megawatt terms, and what it was last year at the same point of time, between zero-30 megawatts and 30-100 megawatts.
I don't have that figure, but you could get it from I haven't got the comparative figures. It's a good question. We'll have to simulate that. Could you get in touch with us? We'll give it offline. We'll get the figure to you.
Sure, sir. In terms of inquiries, you've mentioned that it has improved. How many gigawatts of inquiries are there currently in the domestic and the international markets? Same, if you can give the comparison compared to last year also, even ballpark numbers would be fine, sir.
Ravi, we maintained the inquiry book because in the domestic market, it was tuned around 1.5 gigawatt-1.7 gigawatt.
Okay.
Internationally, our inquiry book is still solid in the range of more than 2.5 gigawatts.
Okay. How it was previous year, sir?
It's a growth. It's not a quantum growth, but it's definitely improved from 1.2 to 3 from domestic. You see, the difference is, if you look at the numbers, they don't tell you the story. There are lots of people who put in budgetary quotes and don't do anything about it for a year or 2 years. It's put in as an inquiry because it is actually sent them an offer. Now, a much higher percentage is becoming, one, very active and substantially active. As you know, these are part of projects, and they're dependent on the projects taking off, which is not really only on our supply, from their clearances and their findings and all.
The percentages of what we call committed active inquiry commit with this and the active inquiries is much better now.
Okay, sir. Sir, in terms of exports, you had mentioned that there is a global weakness in terms of the conventional power. There is a kind of a mismatch given the fact that global economy is on a recovery path. Some of the major economies are doing well. We just wanted to know your sense as to why when the major markets are growing, still there is a demand weakness for both conventional and the renewable power also.
No, it stems from credit availability to the sector. The fact is that biomass and waste and renewable projects have credit available. Credit is not available for coal-based projects, and this is driven by large adoption to the Paris Climate Accord, et cetera. More than that is our sector, which is industrial power generation, is dependent on capacity utilization at the industrial level is quite sufficiently underutilized in the developed world. In developing countries, we do find demand, and that is something that we're approaching quite aggressively. We believe that while order booking in the global market may have been subdued, going forward, there is likely a greater appreciation for certain more orders to come through because there seems to be a better growth in the market.
Okay. It's more a function of just like how it is happening in India, that is the steel, cement, and other industries of the world, there is a lower capacity utilization because of which, in spite of growth in the market, still orders are not satisfying as of now, but it's likely to improve. Is my understanding right in that sense, sir?
I think you're right. It's difficult to generalize that statement, but in certain pockets are completely very right.
I can say that when I talked about stress, I meant the market even in large power in India. You see that affected the total power market going up to whatever, 1,000 megawatts, et cetera. That market is not so relevant to us, even for Triveni Turbine or the Triveni, because we are really limited to the industrial power, not the utility market. The factors there are really in our favor. The upturn that is happening globally, whether it happens in the large power market or not, it's certainly happening in the industrial market.
Okay, sir. In our exports, how much would be your conventional and renewable, or it would be majorly renewable dependent on export market? How would it be, sir?
It's major renewable. Overall, very major renewable. You're correct there. That is the focus and that is the factor.
Okay, sir. Last question, bookkeeping question. GE Triveni order book revenue and PAT for the first half, if you can give, would be very helpful, sir.
I think the revenue and PAT has been mentioned in the investor brief. The closing order book of GE Triveni is INR 162 crores.
INR 160. Okay, sir. Yeah. Thanks a lot.
Thank you.
Thank you. Next question is from the line of Anand Bhavnani from Unifi Capital. Please go ahead.
Thank you for the opportunity again. Sir, just wanted to understand our gross margin in H1. Was there any impact due to raw material price increases?
No, you see what happens is that, as you know, we have two basic segments, which is product and aftermarket. The amount that it changes would change your gross margin, but it would normalize by the end of the year. Essentially, the fact is that we believe that this current year would have a better margin than last year, would have a higher turnover than last year. That is the way that you should look at it. It will normalize by the end. It would affect that.
Okay. Sir, in terms of our export revenues, everything is built in rupee. Am I correct in my understanding?
No. You see, substantial amount is billed in foreign currencies. That's why we, as mentioned earlier in the call, we have hedged, and we've hedged now going forward, as we mentioned, about our forward rates of four-and-a-half on the dollar and eight on the euro. That's a substantial upturn, and that's something that's been there for in the past as well. It's not something today. Major revenues are in foreign currency in exports. Only some to the Indian EPCs are in rupees.
Sir, any margin difference between Indian and export business? The gross Indian exports.
Yes, quite substantial.
Because our exports have increased to 57% in H1 FY 2018, whereas in FY 2019 they were lower at 48%. Despite that, our EBITDA margin in India hasn't been there. What am I missing here?
You can't just look at these things. It's all very lumpy. One generalized statement on margins being higher, but if you see the year as a whole, I think, no, if you look at H1 versus H1, you see at a net margin level, we have a growth of more than 2%, from 17% last year to 19.2% this year.
Sir, that is other income driven. I would actually look at operating margin, which is 19.4% in X1 versus 19.1%, 0.3% increase, whereas the jump in exports is quite significant. Exports is 57% versus 48% last year. If you can help me understand what's the margin difference ballpark. Is it a 5% margin difference or 7% or 3%?
I didn't go into that. We've answered the question on the other income. You really have to take that into account when you're looking at the margin difference. In any case, when you're following hedge accounting, whatever are your MTM gains, losses, et cetera, they all form part of the revenue. Basically, everything, all foreign exchange gains, et cetera, is nothing but a part of the revenue itself.
Okay. That's very helpful. Sir, lastly, I wanted to understand the buyback price of INR 150. How was it arrived at?
The board considered this matter looking at the trading and the potential, the company feelings of the future, the confidence that we have in the future. They feel this is an adequate return to the shareholder.
Sure, sir. Thank you very much.
Thank you. Before we take the next question, I would like to remind participants again, please limit your question to two per participant only. We will take the next question from the line of Abhishek Kela from Vibrant Securities. Please go ahead.
Hello, sir. Thank you for the opportunity. My question is regarding the market segment of 3,200 megawatts. What is the market situation previously and our outlook in this segment going forward? The order book question you have already shared, that is answered.
Well, as I said, the market position going forward is much better. We have a good state of inquiries again, which have become active. Both internationally and domestically, the order booking potential, which is for FY 2019, the balance of this year, is better than what it has been in the first half and definitely for 1920.
Okay.
To answer your question specifically, this applies both domestically and internationally.
Sir, what would be the market size previously, two or three years back?
Oh, at the peak it was very high, the last two years it was hovering around 200 odd MW per annum domestically.
200 MW per annum domestically. On the export side?
We don't know the data. It is much, much larger.
Yeah.
That is not something that-
Okay.
Very substantially large.
Yeah. Our present order book position which is there, so it is more towards the domestic market or on the export side?
Order book is for export.
It's 100% for exports?
Not 100%, it's majority exports.
Majority exports. In the domestic side, we are seeing any traction in this front?
Yes. As I mentioned, we are seeing traction in the inquiry active base. Very much so.
Okay. Thank you, sir. That's it.
Thank you.
Thank you. Next question is from the line of Pawan Parekh from Renaissance Investment. Please go ahead.
Hi, sir. Sir, of late global currencies have seen a lot of volatility, and if that continues, do you think that is a risk to the record order inflows view that you have, and what could be other potential risk to this outlook?
No. One, we follow a fairly hedged policy in our foreign exchange management.
Sir, I understand that when there's volatility in currency, a lot of the orders go on hold.
Correct. You're right. In some countries like [Inaudible] have had more volatility than others. Because we have a very diversified market in terms of these over 70 countries in various sectors, certain projects have to go forward irrespective of the difference. We recently got an order from Turkey, where the currency depreciated very substantially by 30%-40%. The project had to go forward.
Any other risk that you foresee to this outlook?
No, we don't at all, because the risk mitigating factor is two. One is that we are in the right sector, mainly the renewables internationally. Secondly, we have a diverse business segment and geographical spread.
Sir, in your opening remarks, you mentioned that there's some slowdown in combined cycle order in the international markets.
There was. Now it's picking up.
Okay.
It was in the past, the last nine months.
One year. Okay.
We are now seeing traction again. This is why we are confident.
Why was there a slowdown, sir? Any specific reason?
That's a bigger question on the combined cycle, as you know, is gas, and it's more with the other players of GE, Mitsubishi.
Okay. Great, sir. Thank you and all the best.
Welcome.
Thank you. Next question is from the line of Ashutosh Mehta from Edelweiss. Please go ahead.
Hi, sir. Thank you for the opportunity.
Hello. Thank you.
Yeah. My question is related to the CPP market domestically. What will be the current size, and how do we expect this market to grow over the next 1-2 years?
Which market? I didn't get that.
The CPP.
Captive power plant market.
Captive power plant. As I said, you see, one, it's happening across the sectors, from biomass to paper to the cement and food and steel. It is across the sectors. All these places are having captive power. When the projects are coming up or they are expanding or there is a lot of brownfield and lot of unutilized capacity is being now streamlined across capacities. We are seeing this not just in the infrastructure sector, as I mentioned, but in the other sectors, looking to how the distillery is suddenly going to boom in the next one year. They are same thing. You already are covering steel and cement, and so you know what's happening in those sectors.
Right, sir. Second is just a bookkeeping question. What will be the quantum of the Forex gain which was recognized in Q2 on translation?
Roughly speaking, it was approximately between four INR crores to five INR crores.
Okay, sure sir. Thanks. Thank you.
Thank you. Next question is from the line of Manish Goyal from Enam Holdings. Please go ahead.
Yeah. Good morning, sir.
Good morning.
Industrial segment, like you mentioned, that steel and cement is seeing a recovery. In 2012, when the markets were quite strong, the contribution of this particular segment was quite large. If you can give more sense as to how big is demand emerging and, as mentioned by previous speaker also in terms of captive power, we have probably, are you seeing requirement coming from process cogen and waste heat recovery and other things? Second related question in terms of what is the current revenue contribution coming from this particular segment, industrial segment, and how do you see this growing?
Well, Manish. It's extremely positive. Whether it comes back to the 12, 13 levels, of course, we have the capacity, we'll be even more thrilled. We've got extreme traction started in the first half of the year. I would like to really, even internally, look at that more when we get the orders in Q3 and Q4, looking at FY 2019-2020. We have put in a fairly optimistic scenario for contribution from this sector going forward in the next six to nine months, and that's going into next financial year as yet. That's quickly because of the strength of the discussions that customers are having with us on their projects, specifically the industrial projects that you're talking about.
Okay. Any sense as to these particular segments, how much would be the revenue contribution? Just to get a sense that what kind of delta it can provide in the coming year.
To give you an idea, I think these sectors that you're talking about are largely based on coal-based or non-renewable-based power generation in terms of.
Right.
what you find is that the growth in that market could, I would imagine, maybe double or triple the outstanding inquiry book that
Yeah
that Triveni Turbine has.
We're very substantial.
Yeah.
Manish, just to add one point. The inquiry books, the sectors what we discussed about, particularly infrastructure like steel and cement.
Yeah
we are seeing contraction. If you look at our inquiry for the domestic market, we have close to 20% of the inquiry, which was almost nil a year back. We are seeing a lot of visibility from the inquiry standpoint, which we believe that will be converted into orders very possibly.
Yeah. 20% is a good figure.
From almost no base.
Okay. Maybe we would probably in our revenue, this number, 15%-20% maybe revenue contribution from industrial segment.
No, that will come in 19-20 when the orders will come in.
Okay. Fine. Thank you so much, sir.
Give us a lead time.
Thank you. Next question is from the line of Tanashit from BNK Securities. Please go ahead.
Yeah. Good morning, sir. Thank you for the opportunity. Sir, I have two questions. In international markets, which are the key countries that are contributing to the inquiry flow currently?
No, it's spread all over. Some of the countries We are strong from Southeast Asia. We have had a revival in parts of Africa and the Middle East, MENA, North Africa. We are also seeing traction in Europe. Also, the SAARC region is pretty good. Actually, if you look at it, I'm covering probably Latin America for us is a little less, but otherwise the rest of it, fairly evenly spread. Less in Europe.
Less in Europe.
I mean, the growth is less in Europe because that market isn't that growing that much.
Sir, out of this list that you gave, where do you see the sharpest delta in terms of pick up in inquiry base?
It's spread across many sectors and many countries.
Okay.
I'm giving you a broad spread of where it may be and where it is. Fortunately for us, it's spread. I don't have one or two APACs that are so substantial to stand out.
Sure. Sir, my second question is, when we decide to enter a new international market, usually what are the key variables that go into deciding which market to enter and when? Generally, what is the time and cost involved in breaking into a new market?
Well, now, for example, we've already done that two years ago. It's very fairly hypothetical. We're not looking at opening new. We've already covered 75 countries with our spread of offices that are present. It's not something that we're considering now. It actually was something that was there two, three years ago, and it's borne fruit. It's academic.
Okay. Incrementally, we are not looking at adding too many countries.
No. We don't need to. These offices are good enough for us catering to surrounding regions.
Sure. Thank you so much, sir, and best of luck.
Thank you. Next question is from the line of Sri Manjan from Unifi Capital. Please go ahead.
Thank you for the opportunity. Sir, just wanted to understand what was the capacity utilization in H1 last year versus H1 this year?
Well, capacity utilization in steam turbines is not very relevant at all. As I'm saying, we have steam capacity for 20%. It's not a charge on the P&L much. It's really not something that is a big determinant. Secondly, you are not just capacity of ours. We have a lot of good partners and subcontractors, and bought out equipment. We'd have to consider all that if you looked at the whole sales of what our products are and their capacity utilization. That's not really a determinant. You could say that capacity utilization is improved, but there's vast potential.
Secondly, sir, in terms of currency benefit that we'll now be having in exports. For fresh orders, would we be passing the benefits to the customer, or would we be retaining internally?
No, this is a customized product, and every pricing of a product is uniquely done. It would be difficult to imagine that all the currency benefit can be captured by the company, but I think it's unique, and it all depends on the competitive scenario for each order. It's difficult to forecast, but we think that we would benefit as a company, both from the perspective in the short term as well as long and medium term from this rupee depreciation.
Sir, just wanted to understand what are the margin difference between exports and domestic markets? Percentage if you can ballpark, give us a sense of it.
We don't go into those figures, but the exports are better, much better.
Lastly, sir, order for GETL was pending. Can you give a ballpark sense of what is the size of order?
No, as I said, there are active inquiries coming about. We give you the order on hand, but it's safe to say that we expect them some to close before the end of the financial year.
Sir, in the opening remarks and in the press release, it was mentioned that an order is just pending for deliveries.
I think that's a dispatch. That's a particular one for a customer. I think you can just leave it at that other than going into the. It will be dispatched in the current year. It's part of the inventory.
Okay. Size is not possible to share?
No, not really.
Okay. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for their closing comments.
Thank you very much, everybody, and thank you for joining in. I'd like to just end by saying that today we're poised at a very unique time. We've had a record H1, and we're looking forward to further records in the future based on our active order books domestically and internationally, and the product lines that we've established technologically, which cater to this market of 2018, 2019 and 2019, 2020. We look forward to a great 18 months ahead. Thank you.
Thank you very much, ladies and gentlemen. On behalf of Triveni Turbine Limited, we conclude today's conference. Thank you all for joining us. You may disconnect your lines now.