Please note this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you, Ms. Nair.
Yeah, thanks. Good evening, everyone. On behalf of DAM Capital, I would like to welcome you to the Q4 FY 2023 earnings call of CG Power and Industrial Solutions. We have the senior management today being represented by Mr. N. Srinivasan, Managing Director, Mr. Susheel Todi, CFO, Mr. Ramesh Kumar, President, Industrial Division, Mr. Mukul Srivastava, President, Power Systems, and Mr. Ranjan Singh, Executive Vice President, Railways. I'll now hand over the floor to Mr. Srinivasan for his initial remarks, post which we'll open up the floor for Q&A. Over to you, sir.
Thank you, Bhoomika. Good afternoon, ladies and gentlemen. Let me first extend a warm welcome to you all for this Q4 and FY 2023 annual earnings call. I am Natarajan Srinivasan, Managing Director of the Company. I would like to introduce my colleagues who are with me on this call. Ramesh Kumar, President, Industrial Division; Mukul Srivastava, President, Power Systems. He's on a, he's on the call. Ranjan Singh, Railways, Head of Railways Business. Susheel Todi, CFO of the Company.
The Company performance. Standalone FY... I will be covering both FY 2022/2023 as well as Q4 FY 2022/2023. Standalone revenue and PBT before exceptional items recorded in FY 2022/2023 is the highest in last 11 years. All the businesses grew significantly over the last year with good margins. Order book on hand as on March 31st, 2023, aggregate to INR 4,319 crores.
Q4 performance. Aggregate sales for the quarter were higher at INR 1,788 crores, recording a growth of 27% year-on-year and 9% quarter-on-quarter. Profit before tax was at INR 252 crores, 14.1% of sales in Q4 of FY 2023, as against INR 131 crores, 9.3% of sales in Q4 of FY 2022. INR 274 crores, 16.6% of sales in Q3 of FY 2023. Margins were higher year-on-year on account of volume growth, softening input costs and procurement efficiencies. Free cash flow generated for the quarter was INR 263 crores. Order intake for Q4 of FY 2023 was INR 2,073 crores, and unexecuted order book as on March 31st, 2023, was INR 4,319 crores. This represents about 22% growth year-on-year.
FY 2023 performance. Aggregate sales for the year were higher at INR 6,580 crores, recording a growth of 28% year-on-year. Profit before tax was INR 927 crores in FY 2023, as against INR 502 crores in FY 2022. Margins were higher year-on-year on account of volume growth, higher sales realization, procurement efficiencies and higher other income. ROCE for FY 2023 was 47% against 34% in FY 2022. Free cash flow generated for the year was INR 749 crores. Order intake for FY 2023 was INR 7,828 crores.
Q4 performance. Industrial Systems Q4 performance. Aggregate sales for the quarter were higher at INR 1,196 crores, recording a growth of 25% year-on-year and 3% quarter-on-quarter. Profit before interest and tax was at INR 188 crores in Q4 FY 2023, as against INR 135 crores in Q4 of FY 2022 and INR 230 crores in Q3 of FY 2023. Margins were higher year-on-year on account of higher volumes, softening input costs and procurement efficiencies. Sequentially, margins were lower due to product mix, execution of foreign parties orders and higher input costs. Order intake for Q4 FY 2023 was INR 1,436 crores, and unexecuted order book as on March 2023 was INR 2,040 crores.
FY 2023 performance. Aggregate sales for the year were higher at INR 4,558 crores, recording a growth of 25% year-on-year. Profit before interest and tax was at INR 748 crores in FY 2023, as against INR 464 crores in FY 2022. Margins were higher year-on-year on account of higher volumes, better price realization, softening input costs and procurement efficiencies. Order intake for FY 2023 was INR 4,963 crores.
Power Systems. Q4 performance. Aggregate sales for the quarter were higher at INR 590 crores, recording a growth of 32% year-on-year and 23% quarter-on-quarter. Profit before interest and tax was at INR 75 crores, well, in Q4 of FY 2023, as against INR 27 crores in Q4 FY 2022 and INR 57 crores in Q3 of FY 2023. Margins were significantly higher year-on-year on account of higher volumes and favorable product mix. There are one-time warranty provisions in Q4 of FY 2022. Order intake for Q4 of FY 2023 was INR 637 crores, and unexecuted order book as on March 31, 2023 was INR 2,279 crores, 46% higher year-on-year.
FY 2023 performance. Aggregate sales for the year were higher at INR 2,023 crores, recording a growth of 33% year-on-year. Profit before interest and tax was at INR 227 crores in FY 2023, as against INR 145 crores in FY 2022. Margins were higher year-on-year on account of higher volumes, softening input costs and procurement efficiencies. Order intake for FY 2023 was INR 2,865 crores, representing a 33% growth year-on-year.
Consolidated results. Consolidated results include the performance of operating subsidiaries at Sweden, Germany and Netherlands, mainly Drives & Automation in Europe. Other non-operating holding subsidiaries, the Company has decided to divest its investment in only one subsidiary, QEI LLC in USA, and has engaged a third party to find a suitable buyer and presently expects to complete the divestment in the year 2023-2024. In accordance with Ind AS 105 – Non-Current Assets Held for Sale and Discontinued Operations , the operations of the subsidiary, including its assets, liabilities and net results are disclosed as discontinuing operations.
Q4 performance. Aggregate sales for the quarter were higher at INR 1,903 crores, recording a growth of 28% year-on-year, 9% quarter-on-quarter. Profit before tax was at INR 262 crores in Q4 of FY 2023, as against INR 135 crores in Q4 of FY 2022, and INR 285 crores in Q3 of FY 2023. Unexecuted order books of Drives & Automation in Europe as on March 31, 2023, was INR 138 crores.
FY 2023 performance. Aggregate sales for the year were higher at INR 6,973 crores, recording a growth of 27% year-on-year. Profit before tax was at INR 950 crores in FY 2023, as against INR 504 crores in FY 2022.
Summary. 2022-2023 was another record-breaking year, and the company built on its strength and delivered across financial and operational parameters. Several landmarks were achieved by the business, highest ever sales by Motor Division, highest ever sales by Railway Division, highest ever order booking for Transformer Division. The company also during the year declared and paid interim dividends after a gap of seven years. The company prepaid all its remaining term loan of INR 100 crore and redeemed the non-NCDs outstanding and has become debt-free.
The Board of Directors also approved a proposal to expand the manufacturing capacity of motors at its plants at Ahmednagar and Goa an outlay of INR 230 crore, and for transformers at its plant in Bhopal and Malanpur, an investment of INR 126 crore. India Ratings upgraded the company's long-term rating to AA and also the short-term rating to A1+. Between myself and my colleagues, we'll be happy to answer any questions. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We request the participants to restrict questions to two per participant. If you still have more questions, please join the queue afresh. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask question, please press star one now. Take our first question from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi, sir. Thank you for taking my question. The first question, if you can throw some, you know, of your comment on the order intake, because when we met at the analyst meet, which you conducted, you know, you talked about order intake continues to be strong and broad-based recovery is there. When we look at print, it's about just only 8% growth in order intake. If you can throw some light and some orders didn't get finalized. That's my first question, I'll come to the second question.
No, order book actually, you know, compared to what it was last year, this is quite substantially higher. In fact, given the numbers for Power Division, actually the growth is about 46%. The Railways actually, what happened, the order book would have been much higher. Some of the tenders which have to be finalized in March got postponed to the current quarter, so they will be made up in April, May. See, Motors actually, you know, we don't get orders get replenished month on month. Overall, I think the order book position is comfortable.
Got it. Sir, generally on the Industrial and talking about the profitability on both segments, one segment you have said that commodity softened and it helped the margins. On the other segment, you said commodity went up. Can you throw some light, you know, in terms of profitability, how, what's the outlook on both the segments in terms of margin?
If you see, analyze the last one year performance quarter-on-quarter, if you see first quarter margins would have been lower actually. I think the commodity but you see there are number of aspects. One is the commodity prices prevailing at that point of time. Commodity prices at which we book, we purchase, and then commodity prices, those when we charge it off the consumption, when we are using it, all these things are matters.
You know, overall commodity, the fact remains that commodity prices went Yo-Yo. Even now currently and actually the, if you see last few days, the price of copper has been going up and down. Therefore, there is no conflict or contradiction in whatever we have mentioned. The quarters in which the prices were higher, we have stated so. At the end of the Q3 actually margins really were quite high. Even in those calls I have mentioned because the prices, whatever prices we booked our, the software prices at which booked, they got charged to consumption. It also because if it coincides that some of the high priced orders that we have booked earlier got released in those months, then it adds both ways to our advantage. I hope I have made myself clear.
I got it. Sir, lastly, on the warranty provision, if you can throw why it was taken because we thought everything we are covering in terms of provision. What is the overall exposure as a firm price contracts in the overall order book? Those are my last question. Thank you.
It will not be possible for us to. We don't want to share how much is on account of orders which are covered by price variation, which are not covered by price variation. Warranty actually it is an estimate, you know. When we feel we are a conservative company. We always would like to be conservative in our provisioning. When we feel that it is really required to provide some more for warranty provision, then we provide. That is the basis on which we take a call.
You have to also noted that this provision was made in last year, that is in the FY 2021, 2022. Not in this current year.
Good. Thank you.
Thank you. We take our next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yeah. Good evening, sir.
Good evening.
Thanks for the opportunity. My two questions. First is, what would be the growth attributable to price? What would be attributable to quantity, especially for your FY 2023 numbers? In broad flavor, you know?
No, no. We have three businesses. I don't know whether you're asking for the company or for any one of the business. It will not be possible to state for the company as whole. Each business, each product are different.
Is this for Industrial? Yeah.
We don't share this detail.
Okay, understood. Second question on the industrial motors market, sir. If you can highlight what is the kind of growth expectation going forward. Maybe you can split it also in terms of Low Tension, High Tension motor and what are the market share in FY 2023, if you have?
Ramesh?
Yeah. In LT motor, we have a market share of 33%. That is as per the IEEMA declared till January. For HT motors, we have 14.5%. This is also as per IEEMA data declared up to January. This is FY 2023.
Growth.
See growth for future?
For this year current year.
For this year, FY 2024, sir.
Current year, see, almost all the segments are growing. Only steel was last year was very bad. Otherwise water, wastewater and infrastructure, pharma. Pharma was flat, but ethanol, was sugar was growing very well. Last year and this year also it continues to grow this.
Lastly, on the railway tender will improve in the coming quarters. As you said that something got postponed, it does happen in Q4 FY 2023. Is that right understanding?
Mr. Ranjan?
Pardon me. Can you repeat it?
Sir, on the Railways, you mentioned that the some of the tenders got postponed from FY 2023. We expect it to happen in Q1, Q2 FY 2024, and we expect the railways to be much, much stronger compared to FY 2023.
Yeah. In terms of the order book, it will be better when the orders will be finalized in the Q1, Q2.
I can tell the number.
What is the growth expectation, sir, we are looking at?
Growth expectation of the business during the year?
Railways, sir, yeah.
We don't provide the details.
We don't give a separate disclosure about this. If you look at that March, some of the tenders got postponed in the first week of April, and we've been awarded around some very high value amount of the order in the first week of April. We can't disclose the separate number for the railway. You know, probably when we discuss in the analysts call, this is what we can tell you.
Understood, sir. Thank you and all the best, sir. Thank you.
Thank you. We take our next question from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.
Thank you. Congratulations for great set of numbers. I have two questions, both pertaining to the Industrial segment. If you could help us about the competitive landscape on both LT, HT motors, because we understand while incumbent like yours and ABB are almost doubling, but we see some of the recent entrants like TMEIC, WEG, etc, also setting up significant capacities. Just help us understand about the competitive landscape. That's one. Second is on the railways front, if you can help us understand how the changing landscape of the incremental growth shifting towards the 9,000 horsePower and 12,000 horsePower locos impact or benefit CG.
See, obviously, as you rightly said, WEG and these people are putting up the capacities. It is not just for the Indian market. I know today worldwide people are looking at Indian market, so people are shifting, whether it is ABB, you know, I don't know if ABB doubling, definitely not in LT motor or HT motor. They are maybe doubling overall their rotating business, which includes the automation. So, definitely the capacities are putting up by the people. As of now if you see, the number two is half of our turnover, so catching up time will take. We are also, as Mr. Srinivasan has said, that we are also planning for a capacity expansion. Hope I answered your question.
Sure. If you could help us, how does this impact the margins? Because today you're running almost at near optimal utilization. As these capacities come up, does this impact profitability?
See, these industrial products, mostly LT m otors, and the fractional horsePower motor s, these are all commodity, okay? Except for the time lag, for passing on the material cost to the market, that will take about two months to three months. Otherwise, it is realized when the material cost goes up, and also it will be passed on when the material cost goes down. It will not have any impact as far as profits are concerned.
The next question.
Yeah. The next part you had asked is whether the competitive landscape is changing due to the change in procurement methods of railway. This is on a PPP- type model, where the companies would be asked to manufacture the locomotives in the railway premises. One of the tenders is out, that is of 9,000 HP which Siemens has got. 12,000 HP is still postponed till August, we still don't know when it's going to be finalized. The supply would start to happen after two years. Till such time, we see a distinct continuity of policy of Indian Railways for manufacture of the current 6,000 HP locomotives, we do not see too much of a change in terms of our outlook for the next two years.
Sure. Thank you so much for taking my questions.
Thank you. We'll take the next question from the line of Alok Ranjan from IIFL AMC. Please go ahead.
Thank you for taking my question. My first question is related to Industrial segment, where our order book has kind of remained flattish, 2%-4% growth in order book and order inflow. Is this a reflective of the system level ordering in that segment, or does this indicate the capacity higher capacity utilization that we have in this segment, and that's why we are not able to take the order inflow that we can?
Generally, I know if you have seen the volatility of the commodity happens too much, at that time, we also be very cautious in taking the orders as well as the channel partners. I know stocking also will be very cautious. That is the reason it is shown as flat or maybe a small growth.
Given this backdrop, sir, how should we think about the growth in this segment, Industrial segment?
First of all, we clearly don't give any guidance about the growth. You know, I don't think so we are disclosing about the growth. Yes, we're always saying about the double-digit on a higher side.
Got it.
Sectors are growing. All the sectors are growing, so investments are good. We are hoping that things will be better.
Perfect. The second question is on clarification. The note that you have posted in terms of divestment, the investment in wholly owned subsidiary, QEI LLC. Could you just help me understand, this is a wholly owned subsidiary of CG Power America, and we are divesting this step-down subsidiary. The line item that we have mentioned in the P&L, is that the reflective of the fair value and the difference in the net book value, which is there as on March 2023?
No, it is not reflecting that. It is just simply the performance of that entity.
Okay, got it. Whether we should expect any indirect impact of this divestment on India operations because of the selling of that entity, sir?
No, we don't see any impact.
Got it. Got it. That's all from my side. Thank you.
Thank you. Ladies and gentlemen, kindly restrict questions to one per participant. Your next question from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Good evening, gentlemen. Firstly, congratulations, you know, on the strong overall performance and further strengthening of the balance sheet. Could you indicate, you know, the strong order book that you've got, how much of that comes from the international orders, if any, in the order backlog?
International?
Yes, sir.
International m ay not be significant. Mostly all domestic orders only. You see, Railways are 100%, generally it's domestic, barring very few, very small portion for exports of some railways, et cetera. The motors also substantially, domestic. While I'm not putting a number, you can say substantially they are all domestic.
You know, I think in the third quarter this number was around INR 146 crore. That's why I was just trying to see if whether there has been improved traction from the international market or more flattish.
I think if you want, we have to just compute and then let you know.
Okay.
You can go by my word that, substantially all domestic orders.
Okay.
If it is Industrial, there are mainly domestic orders. In Power, we do that with export, which is usually around 10% of the order book, you can take it.
Okay. My second question is on if it's possible you can share the order intake of the fourth quarter of last year. Also connected with that, you know, we've seen a significant increase in the unallocable unallocations in the segmental performance. If you can comment on that also. Thank you.
The last year quarter four number you need the order intake number, right?
That's right.
That I think we can give to you separately.
You can take this, offline. We'll be able to share.
Sure. With respect to unallocable expenses are you talking about?
Yes.
I don't think so any increase in that number because last quarter we had a, that our interest reversal with regard to the NCD, so that it was around INR 18-19 crore. That is why it was minus in the last year. This year there is no as such other income, that is why it is coming positive.
Okay. Right, sir. Thank you very much. I'll come back in a bit.
Thank you. We'll take our next question from the line of Renu Baid from IIFL Securities. Please go ahead.
Yeah. Hi, good evening and congratulations, sir. If you look, last two years and the CG's journey has been pretty phenomenal in terms of turnaround and coming back on the growth trail. Strategically, what from here on, what are the top, three or four areas of focus for the management, say, for fiscal 2024/2025? We have outlined CapEx of about INR 350 crores, despite having a cash chest of INR 700 crores and generating almost a similar, FCF annually. How do you plan to leverage the value sheet to drive the next leg of growth?
Just be brief. In motors, if you ask, we have announced expansion to double the capacity. Therefore, we would really focus on apart from domestic market, we want to go focus on exports. We also would like to look at some large MNC orders for based on who are looking to source from India and based on China Plus One strategy. We want to manufacture, get into manufacture of motors for electric vehicles. These are the three or four directionally we want to work on with respect to motors. If you look at Power, you know, the demand, domestic demand is very strong. We have been studying the business both in terms of top line as well as bottom line, doing this business carefully, focus on margins.
There also we have announced some expansion, which of course, which is not a great capacity. It'll take up our turnover by another INR 1,000 crores. If there are any opportunities, we are looking at to further expand the transformer capacity. Here, the idea will be to position yourself to cater to the domestic demand, which is, in my view, which is expected to grow at least for the next four years to five years. As far as railways is concerned, you know, we have always been a product company. We are trying to fill the gaps in technology. For example, we are strong in propulsion. There are certain areas in propulsion where we have gaps, we are trying to source technology for that.
We also would like to see how we can, if not directly, if f irst will be to participate with other people in a consortium approach for the large tenders which are coming, project orders. If that is not possible, whoever has got the orders, whether we can work for them in a subcontracting manner. Internally we are positioning ourselves with equipping ourselves with respect to acquisition of technology and then skill gaps, et cetera. All the three businesses have got good opportunities for growth. This is how we are trying to step the efforts to increase our growth.
Got it. Any updates on the EV side or still WIP and we need to see, will take some more time?
WIP only, so it will take some time.
Got it. Secondly, I think last year we had started on this journey of operational excellence, lean manufacturing, factory productivity, related initiatives. Where are we with respect to this journey? Are the benefits now fully accrued in the P&L, or we think there could be some more headway in terms of the operating margins from these initiatives for fiscal 2024?
This journey has no destination. It will keep on going.
Correct.
There is no destination. We can't say we have completed everything and then we are finished. Of course, we, the major initiative which we are starting, which will still continue for at least for one more year. Thereafter, whatever we have learnt, we will continue to apply and operate. Some of the margins which we have, we are seeing, you know, higher margins, at least a certain portion is attributable to all these gains, whether it's, you know, account of operational excellence, lean, then, the productivity increase, et cetera, is certainly on account of this. This will continue.
Got it.
We are also adding our capacity without incurring much CapEx, you know. That is also helping us.
Sure. One last question, if I can ask. Would it be possible for you to briefly share how was the product category-wise growth number? Say transformers, switch gears, motors, railway, and the consumer portfolio?
No, we cannot share.
Just the growth rate. That should not be a problem.
Yeah.
Thanks much, and all the best, sir.
Thank you.
Thank you. We'll take our next question from the line of Harshit Patel from Equirus Securities. Please go ahead.
Hi. Thank you very much for the opportunity, sir. Sir, my first question in order on our CapEx plan. Apart from motors and the transformers CapEx that we have announced, in the first quarter, you had also spoken about doing some debottlenecking to release some 15%-20% of the capacity at a CapEx of almost INR 230 crores. Sir, while we see our overall CapEx numbers for FY 2023, that number seems very weak vis-a-vis that guidance. Sir, could you please explain the gap in that?
No, gap is, you know, it is taking time to implement the CapEx. We have taken more time, because of either because we want to optimize little further, or because we want to combine it with certain, in some cases, with the expansion proposals so that overall economics will be better. That's it actually. It's, there is nothing w e have not withdrew any CapEx. There might be in terms of timing, the best way of doing it in sort of today, maybe in sort of tomorrow along with other CapEx, et cetera. Each SBU is taking their own position, it will happen.
Right. Understood. Sir, my second question is on the railways front. Could you give us our FY 2023 sales order and order book for the railways business?
We are not providing the same in details because there are segments which is served by Power Systems as well as in Industrial Division. Normally we are not providing the breakup of Railway Division as a separate order intake and backlog.
No problem, sir. Just lastly, the when I look at our overall liabilities front, the discontinued and the liabilities for the discontinued operation is almost INR 714 crore. Could you explain why this number is so high? Anything you think that we'll have to pay in the future. Is this INR 714 crore entirely pertaining to this QEI LLC that we are going to divest?
No, it is relating to many other, dormant subsidiaries, right? Those subsidiaries are under voluntary liquidations or are under, at NCLT levels. As of now, we do not see any liabilities are payable against that INR 714 crores.
Okay, understood. Thank you very much for answering.
We can share the numbers for railway if you want. For the full year it's INR 1,120 crores for the railway.
That is part of the Industrial.
Yeah. It is for the 2022, 2023. It's a part of the Industrial Systems.
Okay.
Our order book remains at around, including that the order which we got it in the first week of April, it comes to around, INR 970 crore.
Okay. This is INR 970 crore are total orders or the outstanding order book?
Outstanding orders. Order book position.
Order book position. Okay. This entire thing pertains to only Industrial Systems, right? Power Systems would be on top of this.
Yes. This is only we talked about the railway orders.
No, the total order book on the unexecuted order book we have mentioned now.
That's INR 4,400 crore.
Yeah. 4,319. That will be mentioned in our press release.
Yes.
Go on, please.
Okay. Sure, sir. Understood. That too would be also known. Thank you.
Thank you. Participant who wishes to ask a question at this time, press star and one on your touchtone phone now. Take our next question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.
Yeah. Thanks for the opportunity, sir. I have a question on the capacity utilization for the LT and HT motor. You highlighted roughly 80%-85% of utilization last quarter. What was the number at the end of Q4?
It's almost similar.
It remains the same.
On quarter-on-quarter basis, we have seen, you know, the growth. Is that roughly driven by the realization growth? Is that a fair assumption?
Volume and price both.
Volume and, price and also product mix.
Okay. Okay. Fine, sir. Fine. Yeah, that's all from me. Thank you.
Thank you. We take our next question from the line of Dhiren Merchant from Aurora Limited. Please go ahead. Dhiren Merchant, your line is unmuted. Please go ahead and ask your question. If you have muted yourself on your device, please unmute and ask your question. Mr. Dhiren Merchant? As there's no response from Mr. Merchant's line, we move on to the next question. The next question is from the line of Abhilasha Satale from Quantum AMC. Please go ahead.
Yeah. Thank you for giving the opportunity and congratulations for the good set of numbers. My question is regarding Power Systems segment. We have seen around 33% increase in the order intake for this segment. And even order book remains strong. What has driven this kind of increase in the overall orders? How is the outlook for the current year, and what is your average execution period for the same?
One is, you know, the reasons for the increase is actually purely investments that are being made in the energy sector. The Power sector is witnessing lot of investments. Therefore, as a result, demand for the, our products gaining momentum. I think as I said earlier, the demand will continue to be strong for this year. What is the third question?
Average execution period.
It depends on the product, no? Some can be executed in three months, some can be in seven months. Depends on the type of products. We cannot generally say one time period.
Okay. Okay, fine.
Yeah.
Thank you. We take the next question from the line of Mayank Chaturvedi from Equirus Securities. Please go ahead.
Yeah. Thank you for the opportunity, sir. I just wanted a clarification on the railways number that you alluded to. You said, railways business as a whole achieved a sale of INR 1,120 crores, or is it only from the Industrial System segment?
It is INR 1,120 crores out of the industrial segment.
Okay.
If you add Power, it could be a bit more.
In the last quarter, you said that it would be an 80 crore revenue generated from the Power Systems. Would it be closer to that number?
Yes, yes. Right.
Okay. What will be the orders in flow for the railways business for FY 2023?
FY 2023 order intake was INR 1,113 crores.
This is only from the Industrial Systems business?
Yeah, yeah.
Okay. Does not include the orders that you received in the first week of April, right?
Yeah. Also was received in the first week of April.
Okay. What would be the orders that we received in the Power Systems segment?
No, the order that we have received this year.
In Railways.
No, no. In FY 2023, sir.
In FY 2023 in Railway segment?
Yes, sir. Yes, yes.
It should be in the range of, I think, INR 200 odd crores.
1,130 plus 200, right? For the railway business.
We said sales was 1,123, and approximately INR 200 odd crores would be the sale that has happened extra from the Power side.
Okay, sir. Okay. Thank you so much. That will be all from me, sir.
Thank you. Anyone who wishes to ask a question at this time, press star one on your touchtone phone now. Take the next question from the line of Sanjay Kumar from iThought PMS. Please go ahead.
Hi, sir. Just wanted to understand the end user or the application for the transformer CapEx that we are putting up. That'll be the first question. In the previous quarter, you had released a presentation where you had mentioned the drivers for Power segment. One was the TBCB projects or the transmission of the 300 gigawatt renewable energy. That should be roughly a INR 20,000 crores opportunity, right? Just the transformers piece for transmission of 300 GW.
I'm not able to understand your question. Anyway, I will ask Mr. Mukul Srivastava, our business head, to answer if he has understood your question.
Oh, same here. Can you please repeat your question?
For transmission of 300 GW, Ministry of Power came out with a detailed report mentioning the transmission capacity needed. You had also quoted that TBCB projects worth INR 2 lakh crores is expected in the next five years. Of this INR 2 lakh crores, what will be the transformer opportunity?
Transformer opportunity will be close to around 10% of that.
Okay. That's what I mentioned. 20,000 crores. All of this should be 400 kV, 755 kV, right? We are putting a capacity for 220 kV, is what I understand at T3 Bhopal.
No. We are putting a capacity for transformer which can make 220 kV, 400 and 750 kV oil transformers, because this is the way in which our winding machines are there, and this can cater to all three ranges. Firstly. Second thing is TBCB projects are also in the range of 220 kV also.
Okay. Okay. Okay, cool. So the second CapEx is at Malanpur. There the PPT states that the capacity addition is for 145 kV. What will be the Which sector will be the driver for this segment, sir, the smaller, low power transformers?
See, actually low power transformer, I mean, in, this is our internal classification of identifying it as low power. Actually, this goes up to 50 MVA transformers up to 145 kV range. These are largely used by the utilities, within the distribution network or the transmission network of the state. This is a large driver.
Okay. Okay. Second on motors. I've heard that NPCIL has approved us as a vendor for primary coolant pump motors. Is that true?
Yeah.
Are we yet to be onboarded for this?
No, you are right. We have been approved as a second vendor.
BHEL has been supplying or has been asked to supply so far. What will be the opportunity for us, in nuclear sector, sir, from NPCIL?
The opportunity is big because the first order which we have received for 10 numbers, last year, at the back end of the year. It will be at least 40-60 numbers. Tenders will likely to come in next maybe two years' time.
40- 60, and, one motor will be, approx value, sir?
Can't tell you that.
A lot of range at different-
We can't share that, you know.
All right. All right. All right. That's it from my side. Thank you. Thanks a lot.
Thank you. We'll take the next question from the line of Vikas Srivastava from RBC Financial Services. Please go ahead.
Yeah. Thank you. Just wanted to get a flavor again on the consumer product. If you could get, I know you won't give any forecast, but when do we expect this to get into our segmental reporting, turnover crossing 5%? A general outlook for the next two, three years in terms of how material or substantial will it become for the overall CG business? Whatever the best you can share, and what are the regions we have introduced our products or whatever is there in the public domain in terms of introduction of consumer products and how it's been received in the market?
The purpose of launching this is CG is a well-known brand, a well-known brand not only in industry, in the household also. A known household brand, that is the reason. We know this business very well, and we had the channel partners who were doing this business earlier. That is the reason we have launched. We can't give you the exact numbers, but we have done significantly well in last year for two products which we have launched, the pumps and the fans. Maybe we will be adding some more products, expansion of these, you know, product range. We have a big plans for this business going forward.
Thank you. Participants who wish to ask a question may press star then one on your touch-tone phone now. We take our next question from the line of Manish Dhariwal from Fiducia Capital Advisors. Please go ahead. Mr. Manish Dhariwal.
Yeah, thank you for this opportunity. So sir, as you rightly noted, that, you know, company is a very, very strong brand and is also very accepted. It's one of the most acceptable brands even in the households. You have tried to grab the opportunity. Sir, you must have obviously observed that the consumer side of the business, which was earlier held by some private equity players, that they are undergoing huge problems. The management of your company have also stated that you have a very strong, you know, inorganic acquisition appetite as well. Given, you know, these kind of market scenarios, can you throw some light on how your growth aspirations will be met by, say, inorganic ways?
Met by?
By inorganic, by maybe acquisition or some sort of, some acquisitions.
No. I think one thing, you know, the philosophy, every inorganic or organic opportunity we evaluate. If it makes commercial sense, we go ahead. That is the simple logic. Even CG itself for Murugappa was an acquired opportunity.
Exactly.
I don't know whether I have answered your question. We have to evaluate if it makes commercial sense, and if there is an opportunity, we can pursue that.
Right, sir. Sir, like, see, sir, second question would be, you know, like on a little strategic perspective of maybe about a three year to five-year outlook. Basically, your case study in how, you know, a turnaround can be done in a successful manner. I think, all the losses that the organization had undergone because of its wrong management practices have been kind of recovered. Now, so, sir, I guess in some level it was the low-hanging fruit. Sir, going ahead, sir, would be, you know, very helpful if you could share as to how, you know, you are looking at the future and, the, and what kind of share of the revenue can be contributed by the new initiatives. Over a period of five years. I'm not looking at a short-term thing, sir. We are long-term investors. So, we would like to understand.
Sir, this is actually a Q4 earnings call. You are asking me to answer some questions.
No, sir, but this is the only opportunity you give us, no, sir, to connect with you.
I know. I have sometime back I've answered a question, you know, how do you or what are all the growth areas, how are you looking at, et cetera. Business by business, what we are trying to do is I've said, at this point of time, we are not doing anything new. We are only trying to consolidate and strengthen our core. We want to consolidate our Industrial Systems, Railways and Power Systems. In all the businesses there are good opportunities. Our first initial attempt was to regain the market share which we lost, which we have done. Now we are trying to see how we can consolidate and strengthen our position. If there are no opportunities here, we should look for immediately. This is what we are doing at this point of time.
Thank you, sir. Thank you so much.
Yeah.
Thank you, sir, and all the best, sir.
Thank you. A reminder to participants, if you wish to ask any question at this time, please press star followed by one on your touchtone phone now. We take our next question from the line of Mayank Chaturvedi from Equirus Securities. Please go ahead.
Yeah. Thank you for the opportunity again, sir. I just had a question on the motors business. With the softening commodity prices, have you passed on that price benefits to our dealer network?
See, I told you that there will be a time lag when the price goes up, recovering will take about two months to three months time. Obviously, when the price goes down drastically. Again, the, you know, as I said, it is a commodity product. There is a competition. We need to pass it on very carefully. Our realizations will be, you know, the margins, protecting our margins. The realizing or passing on will happen.
Like, you know, why I ask this question is because I was going through the price list that CG Power comes out with for their dealers. The price that's been come in effect since for April 2023, what I can observe is it's 10%-15% higher than what was in effect for FY 2022 or FY 2023. That's why I asked this question. Is it that instead of revising down the prices we have in fact increased our prices or something like that has happened?
In quarter four, if you see the prices have gone up, no? gone crossed, $9,000. Even it went up to $10,000. It's come down.
Right.
Generally the practice in the industry is that every year the price list is revised and the discounts was what we pass it on based on the commodity price.
Okay. All in all the prices have been revised, of course, and the discount to dealers remain the same.
Yes.
Realizations must have gone up, of course, then. Hello?
Yeah.
I think he answered your question, right? That's why too much of volatility in the commodity prices. Depend on the situation, you know, we decide everything. I think he answered your question. As of now, there is a price revisions are not there. What are the prices were there, those we are there for the 2022, 2023.
Okay. Thank you, sir.
Thank you. We take the next question from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.
Thank you for the follow-up opportunity. The question is on the consumer product piece. If you could help us, the market share that we would have at the exit quarter of for the pumps and the fans business, and how do we see the growth given that we are a smaller market share?
We are able to hear you.
Sir. Mr. Vithlani, please go and ask your question again.
Okay. The question is on the consumer piece. Could you help us with the market share in the pumps and the fans at the exit quarter of the March? Given that you are much smaller in starting, how what's the kind of growth we see and are we incurring losses being the initial stages?
We are not incurring losses. Growth is obviously it is multi-fold because we are a very small player. As you rightly said, we are just beginners. We are at the single digit market share as of now.
Okay. Is it possible to highlight the market share for the pumps? Is it like 7%, 8%?
No, not up to that level. It is little less than that and fans also. Both are below 5%.
Okay. Would you be able to share a three, four year perspective, what's your aspirational market share in each of these products and the efforts we are taking to achieve that?
I think we have been telling that three to five years our target is around INR 1,000 crores in the absolute numbers.
Great. Yeah. Thank you so much for taking my question.
Thank you. We take the next question from the line of Alok Ranjan from IIFL AMC. Please go ahead.
Sir, just one question related to the two Industrial and Power Systems segments. Is it possible to help me with the replacement order and the new project order, like the growth that we have in FY 2023, the two segments? Is it possible to give some sense like how much we generally get from the replacement demand and how much from the new project demand?
There is more of new projects only. The replacement is because, you see, motor's life is almost about 20 years. Okay. The replacement market is generally catered by the channel partners, so we will not get to know exactly how much is going for replacement market. To the best of our ability to estimate, is about 20%-30% is replacement. The rest of the market is for the new projects. New projects and new OEMs who manufactures the equipment.
Got it. Can we infer that, sir, in that case, for our company, the services portion will always be kind of, you know, very low, like FY 2022, I think it was closer to 1%. It will remain kind of, maybe, low single-digit kind of.
Service revenue you're talking about?
Yes. Yes.
Yeah. Generally, yes.
Got it. Thank you, sir.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd now like to turn the conference back over to Ms. Bhoomika Nair from DAM Capital for closing comments. Over to you, ma'am.
Yeah. Thank you very much. On behalf of DAM Capital, we would like to thank the management for giving us the opportunity to host the call, and also the participants for being on the call. Thank you very much, sir, and wish you all the very best.
Thank you.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining with us, and you may now disconnect your lines.