Ladies and gentlemen, good day and welcome to the analyst call for ABB Power Products and System India Limited Q3 Results. At this moment, all participants are in listen only mode. A question and answer session will conduct towards the end of the call. At any time during the call, you may click on the audio question tab below the media player and join the queue to ask questions. Please join the queue early in the call to ensure we address as many queries as possible.
Please note that this conference is being recorded. I now hand the conference over to Mr. N. Venu, Managing Director and CEO, ABB Power Products and Systems India Limited. Thank you and over to you sir.
Good evening, What about the presentation? So good evening, everyone. Thank you for joining us for the call And I hope all is well at your end and you continue to take all necessary Precautions to keep yourself safe and your family members safe. So, I am going to want to refer to the slide numbers. We already uploaded in the Stock Exchange, just for your information, okay.
And if you are able to see the slides also good. And as our country appears to be slowly getting back on track And we see active COVID-nineteen caseloads are coming down day by day and more and more people getting vaccinated. You probably have seen yesterday, we have reached a very important milestone of 1,000,000,000 doses of vaccine. And that shows that we have more of the vaccination rate is really improving across the country. And while the vaccination is improving, we also see green shoots of economic recovery are also starting to become more visible now with core industries such as electricity, steel, cement, Natural gas, fertilizer starting to improve and with demand and economic activity picking up, Business confidence also surged.
We also see the business travel is also going up. And we share the same optimism like all of you are feeling. And we are feeling much better about the state of economy As well as business than we were at the start of the year. So let me refer to the Slide number 4. We retain our focus on keeping our people safe and healthy.
As they say, Prevention is better than the cure. There is no better way to prevent than by spreading awareness. We have continued conducting regular training sessions, Consultation to our people, partners and also employee families to combat the spread of the COVID-nineteen virus, Reduce HSE hazardous at workplace or sites as well as prevent any ailment arising out of a new normal. We have had special sessions to import awareness ranging from life saving rules to proper ergonomics and posture. That's to ensure our people don't neglect basic health while adjusting to new way of life.
Our work is underpinned by safety, integrity and quality, which are our licenses to operate And it continues to reverberate with our customers as well as through our high service standards. We are glad to be recognized by leading industry players such as Tata's Our values and commitment to safety showing us that we are on the right track. Moving to the next slide, Slide 5, As you all may be aware, growth of critical material. On top of this, there are shortages ranging from Microchips to coal hindering forms in unleashing their full revenue potential Since these are base elements for our industries and for our revenue related things. In this scenario, While we have seen a steady rise in our orders, our revenue has been impacted even though we have had a meaningful order wins.
We are about 64 crore worth of revenue impacted due to pandemic induced delays stopping us from testing a full recovery. Yes, we managed a credible performance in sync with market realities. As you can see, we have More green in both year on year as well as quarter on quarter. And long term fundamentals appear solid. Demand in the September quarter was driven by rail, data centers and utilities helping us further strengthen Our position in both segments of the future are what we call a high growth segment.
The principal change of our orders Pertaining to renewable energy with solar and hydro projects generating significant demand for high Voltage and grid integration products. Transformers grew strong interest from rail and metro companies alongside Top utilities to cater to rising power demand. We put unwavering efforts at stabilizing our supply chains and improving efficiencies. At the same time, we made solid headway towards our sustainability goals in this quarter. This year as you recall some of you we have announced our 2,030 carbon neutral strategy and we have set Ourself has a short term, medium term, long term targets to advance the energy transition underway in India As realized around the world, we have committed as part of our short term targets 100% renewable energy consumption, but all over offices and project side by March 2022.
And I'm happy to share that as of today, we have assumed 100 at 1 of our factories and we are very much on the way to reach our target by March 2022 in the remaining Part of our factories, etcetera. In addition to that, we have completed all energy audits And SF6 management plans among other measures required to implement the transition to 100% fossil free operations in all of our other factories as well. We strive to champion the urgency and pace of change needed to reach net 0. Achieving the promise of copper neutral future means integrating large scale renewable energy, overcoming complexity and capacity issues And cutting waste. In that direction, I To reward excellent environmental strategies and overall performance of manufacturing units, I'm happy to inform that one of our manufacturing Factory located in Malaysia, called the Common Operators Unit ranked the highest among 33 global units for LED lighting, solar power generation and its use.
In addition to making notable headway in decarbonizing our operations, During the quarter, we proactively constituted an environmental, social and governance, ESG Committee of Directors to track our performance and increase shareholders value. In today's Board meeting, this has been decided. And as you know, Our company, our technology and our portfolio shall enable carbon neutral future for our So we are taking a leading role in not only announcing the carbon strategy, carbon 2030 carbon strategy, but also Taking the leading role in announcing the committee of directors at the board level to track the performance of the ES. So sustainability is at the heart of our purpose. Adithaachi Energy, Georgia, and in power grid system is at the heart of a purpose.
And we are energized and motivated by the shared goal of Accelerating a carbon neutral future, solid generations for the generations to come. Moving to the Slide number 7, resolute in our vision and goals, within our control, we have ensured a well performance besides making headway in segment that will advance the energy transition. We have ensured inclusive skill development under various programs and initiatives. Be it supporting young women in engineering colleges Financial aid and career opportunities are advancing diversity and inclusion at workplace under our Diversity 360 program. Collaboration internally and externally is a key for us to co create solutions that benefit society.
And collaboration is also extremely important during this changing energy transitions. If you look at the whole picture of social, environment, mental and economic value in our growth, we have continued to add our voice and thought leadership on key issues at prominent forums to beat the narrative on energy transition and transformation. Moving to the Slide number 8. So, we believe that electricity will soon become the back It is, as we can see, crucial to the sustainable development of societies and industries. It needs investments in the evolution of our power grids as well as in brainpower.
Education is A fundamental driver of the change we are seeking, since the start of our standalone operations, we have been investing in We are building solid underpinnings for the sustainable energy future. In the same fashion, in the quarter under review, we partnered with Premier Institute IIT Rupki on Smart and Sustainable Campus Energy Ecosystem. The project includes The setting up of an integrated energy and digital platform, involving intelligent and futuristic energy, transport and waste management systems that can minimize harm to the planet. Our smart electric grid lab at National Institute of Technology Warringville Was inaugurated by the Honorable Education Minister, Mr. Dharmin Poddam.
Our aim is to create the right educational framework And facilitate to ensure talent that can facilitate reliable and clean power power. And we have made some progress There to drive sustainable development, which takes me to the economic environment in the coming September quarter. So moving to the Slide number 9, I think here most of this you know better than me, but just to Tell you from our perspective, India appears to be on a recovery path we see across the industries. The country is projected to be in the fastest growing major economies in the current financial year. The Indian government expects double digit growth in the financial year 2022 And the growth rate is expected to sustain for the next decade or so.
COVID cases are coming down, core sector output is going up, This is a good news. However, we have many risks for which we must remain possible. Vaccination rate is going up, But yet to be fully vaccinated, while the risk of infections around the festive season remains, we need to be cautious on that. Speaking of the operating environment for business, the aftermath of the first and second COVID wave has resulted in a soaring demand, While supply lines are being stretched thin with the tropic ingestion at ports. Fuel prices and record high And core inflation, which excludes food and fuel, likely indicates impending inflationary pressure.
While electricity demand is expected to grow between 8% to 8.5% in the financial year 2022, Risk of power crisis emanating from coal shortages may dampen supply. The good part is The government has assured that there will not be any shortfall on the coal. So that's a very good news on that. So while we have a great opportunities in the pipeline, but we cannot be wholly sanguine yet. Moving to the next slide and the slide number 9, slide number 10.
In the Q3, all the headwinds I have discussed not We remain the partner of choice for our products, services, and software Solutions, transport and industries alone grow about off the order book and predominantly through direct sales. We continue to make headway in our key focus areas such as renewable integration, metro and rail and all essential drivers Our business growth and also in line with our Vision 2025. We catered to about cumulative 1 gigawatt of 1 of cumulative renewable orders during this quarter alongside pegging 150% jump in our performance in railway and metros And 5% increase in the industries compared to the last year. We see a slowdown in some industries start Start investing in the CapEx. Our contribution to power quality, however, left much for wanting.
So we aim to increase our share there in the months ahead of months in the coming. Moving to the next slide, Slide 11. Exports remained healthy contributing more than 80% to the order book in this quarter. And cumulatively, if you take 9 months, our exports are in the same range as we have been talking about between 20% to 25%. So exports cumulatively 9 months we are around 22%.
Among others, orders for the exports in this quarter, we received break So high voltage orders from key utilities in South and Latin America, Eastern Africa as well as in order for our power system studies from an FMCG Company in South Asia. Our service portfolio continued to deliver as we received a first of its kind Automation order from Haryana State Utility booked our biggest online dissolved gas analysis Orders from Coastal Gujarat, 1st WellCare Remote Asset Management order in the renewable energy sphere in Asia for a 7 15 Megawatt Solar Photovoltaic plant in Rajasthan. And the grid automation and cybersecurity orders for power stations, metals and petrochemical companies in addition to several others. Our consultancy business attracted companies in power, aviation, textile, manufacturing and specialty intermediate for synthetic studies. Customers' trust remained rock solid despite difficult market conditions.
Moving to the Slide 12, Our 3 plus strategy that is protecting our people, preserving business continuity and preparing for the new norm Put in place at the peak of the pandemic continue to support us in walking uncertain market conditions. Even amidst Commodity market and supply lines, turbulences, we delivered a credible and sustained performance. As of September 30, 2021, our order backlog stood at INR 4,896,500,000 which will unblock the revenue stream in the coming Months quarters. Our profit before tax was INR 47.2 crores while net profit was over 6 14% year on year at 34.3%. Operation EBITDA stood at R55.6 crores in the September quarter with EBITDA margin at 0.5%.
High inventory buildup in our factories mainly for our high growth products due to the supply line trends, deferment of Revenue and high input costs impacted our cash flow. We had to borrow intermittently during this quarter. Easing of port congestion, stability in commodity markets, input costs are likely to bring relief and improve our short term liquidity positions. Moving to the slide number 13, our priorities I had as been also telling you in the previous quarters, often say we are invested in India for the long term. While we aim to introduce new products to capture a bigger share of the market, Our goal is to localize our portfolio, build indigenous capabilities.
We will continue to make in India, all India for the rest of the world. Our key focus will remain protecting our people along with them building our capabilities in high growth segment Such as rail, data center, renewable, HUDC and Smart Life, etcetera. The Indian government has an ambitious target in each of these segments which I talked about. We will concentrate on accelerating our growth for service, digital solutions and exports, Leveraging our strong local footprint. We have comprehensive portfolio of future ready and state of the art products, Software, services, systems to cater to them.
Commitment to lowering the carbon footprint of our operations, Product localization, digitalization of the grid will be part of our yardstick to measure our success. Nothing is complete with our people, their safety, their growth and their upscaling will remain in focus for us. In this energy transition, it's crucial that we take on the challenge of accelerating the pace of change. We see ourselves playing a leading role through our digital and energy platform as the partner of choice to our customers All the industry to advance the sustainable energy future for power. Moving to my last slide, It's very important slide as you see that you may already be aware that we are already using a Bitauto Energy slides, you may already aware that globally our promoter company, Hitachi Energy went live on October 13, 2021.
That means they have changed the name globally from Hitachi ABB Power Grids to Hitachi Energy Limited globally. So In India, we are in the process of securing approval from the Ministry of Corporate Affairs for a change in the local company name To align with the global entity, as you know that our shareholders have already approved the name change And while I would hold sharing more information on that until the change actually happens, I can say that I and my entire team are very excited To start this new chapter in our history, our new purpose of Hitachi Energy is advancing the energy future for all. We are advancing the world's energy system to be more sustainable and secure. As a pioneering technology leader, We collaborate with customers and partners to enable a sustainable energy future for today's generation So with that, thank you ladies and gentlemen. I would now like to open the channel for your questions.
Thank you.
Thank you very much. We will now begin the question and answer session. To ask a question, please click on the audio question tab below the media player. Click on okay on the pop up to mute your webcast, proceed with the Q and A session. The operator will announce your name when it's your turn to ask a question.
We will wait for a moment while the question queue assembles. Our first question is from the line of Abhinit Kulkarni. Please proceed with the question. Abhinit Gulkarni, your line is unmuted. Please proceed with your question.
Abhinik, it seems you have muted a microphone. I request you to please unmute your line and proceed. There seems to be no response from the line of Abhinit Kulkarni. We will proceed with our next question, which is from the line of Saurabh Shah.
Hi, can you hear me?
Yes, sir. Please proceed with your question.
So, couple of questions on the financial slide, which is Slide number 11. So, in terms of now, Hopefully, if COVID doesn't come back in a meaningful form, which affects our operations. What kind of Revenue lines do you see for the next 3 months or how should we look at a normalized kind of number For the revenue from INR850 crores, last year it was INR915. So do you see this trajectory kind of going up sharply or you expect this to be Similar in the next 2 or 3 quarters, how
are you
seeing the order execution timeline minus, of course, any COVID surprise?
Okay. So thank you for the question. As you know, we don't give being a listed company, we don't give any forward looking statement. But I'd like to give you a little bit of pointers so that you understand. I think with the COVID, as you rightly said, hopefully it's behind us and we don't see Big waves as we have seen previously.
And we expect that the revenue to come back to pre COVID level Slightly better than the pre COVID.
Okay. So the order kind of intake Going up especially on a Q on Q basis, do you expect that to accelerate? I'm not talking about in the next couple of quarters. So just Given the way we had announced the demerger and the focus, are you seeing a slightly higher uptake in the revenue growth rate at all? Or you still think it would be In the INR 1,000 crores range only.
No, we see, as you can see, over the 9 months cumulative, we'll be already seeing uptake in our revenue. And if you really look at the 9 months year on year, there is already 11.5% increase in the revenue, right. So that is considering the COVID situation. So definitely, we will look at that, updating that.
So where do you see which segments do you see the highest growth coming from? Not necessarily reflected yet in the order book, but in terms of new tenders being put out, where do you see Most relevant growth for the business in the next 4, 3 years?
I think the next Growth segments are very clearly we have been articulating. 1 is that the rail segment is definitely a big growth. Rail segment is one is that Cross country, one is that India's rail based ambition of net 0 by 2,030. So that is accelerating 100% electricity Electrification of the rail, so that is a definite growth area. In addition to that, we see also the cross country electrification And we see a regional rail.
And then also we see some of the metro rails. Today, if you really look at China and Metro Power Systems, SCADA Systems. So that is a definitely growth area for us. And then one more big area where we are going to see is that the high speed rails. So those are very big projects and that will really see a huge amount of growth in the rate.
That's a one segment and the renewable will Continue to have the growth. As you know, the Government of India's target is to have a 4 50 gigawatt by 2,030. So even if you take a factor, so we need to do at least 2 to 3 times more than what we have been adding the renewable right. So that is a huge amount of opportunities and growth for us. And then the data centers, third one is the data center is So high growth segment with the data privacy loss coming in.
So this has a Hi, both things. In addition to the traditional things, as and when the industry CapEx starts, so we will see those things are also coming
Thank you, Suraj. Just given, as you mentioned, these 3 growth segments and this So what kind of margin profile do you see? Because year on year, again, we see a slight dip in the margins. So from 7.2 to 6.5 in terms of operational EBITDA, how do you see that going forward? We expect to see if you look at us new Kind of orders, renewables, you mentioned data centers and all that, but it sounds like they are certainly much more private sector oriented.
Do you see better margins going forward
So again, we don't give a forward looking statement, but we have been always saying that We have a clear strategy and plans in place to bring this operational EBITDA to a double digit Range over a period of time in a sustainable manner.
So what would be your kind of
I know it's not a statement of when it would happen, but what would be your target? Will this The next year, 2 years, how do you see that?
Yes, next 2 to 3 years.
Okay. Thank you so much.
Yes. Thank
you. Our next question is from the line of Kunal Sheth. Please proceed with the question.
Yes. Hi, sir. Thank you for the opportunity.
Yes, yes, Kunal. Go ahead, Kunal. Yes.
So I just wanted to understand what can be The growth rates in each of our end markets, if I were to think from a 5 year perspective, and therefore, how should we think about ABB Power's growth rate In that time period, what I'm trying to understand is that as we understand apart from data center, the metros, the renewables Are anywhere between 5% to 10% kind of growth market, if I understand correctly. I would love to your thoughts on this one. And what should be the multiplier at which ABB Power can grow?
So again, So we will give you a bit of pointers for you to make an assessment. So we are very consistently saying that Our strategy is to grow higher than the market. Okay, the market is growing as a percentage and we are growing higher than the market. Want to grow ahead in the market because we are taking a lot of actions, proactive actions and that's the reason in that. So there are some segments Are going high single digit now, right now.
And we see they are slowly moving to close to double digit Things as the economy is going up and also the headwinds coming out of the COVID will slowly recede. So All these factors put together so that these segments will start moving towards single digit to slowly coming to the high double digit we're coming to the double digit side of that. So that is what we have our assessment. We also see energy Transition is a big thing coming in addition to the thing what we talked about. And energy transition is enable Lot of investments in the grades, in the power systems.
Now just a quote I have on recently released report on the International Energy Agency who released the report on India's prospect and as per them To take care of this kind of challenges and the growth elements, India need to add the power system The size of Europe in addition to the existing systems. So that's the kind of the growth We are seeing in the view of the decarbonizing energy transitions, interconnections, HVDC, etcetera. That's right. Now we have I've been also telling you maybe we are the very few companies we never stopped investing even during the COVID. So as we are talking, our investments are going in various factories close to 100 to 50 crores of the investments are happening And expanding localization, expanding our portfolio, not only for the local market, but also for the exports.
Sir, would it be possible to put a size to each of our end markets, very rough number?
No, we have not been giving those sizes, Kumar.
Sure. No problem, sir. And sir, my second question is pertaining ABB India and Hitachi Power, If you can help us refresh the difference in end markets that we are catering to, I wanted to understand from a context of spaces where there are applications for both LV and HV where both can participate. Do we collaborate or how does that relationship work?
So again, Hitachi Energy Limited or Our end customers are very clearly defined. So, we are utilities, industries, infrastructure transport And also the new segments such as data centers, mobilities and renewable integrations etcetera. So our portfolio, whole of our company portfolio lies on 4 businesses that is high voltage, entire high voltage And then the next one is transformers and the third one is a grid integration. Grid integration we mean is We mean the substation, the HVDC, the power quality and then e mobility is part of our grid integration. And then the grid automation, then we talk about substation automation, then SCADA, enterprise software, asset performance, that's all of us So there are some areas.
So this is our portfolio and end markets very clearly defined. So there are areas where Take for example, a data center. In the data center customer approaches us with both the high voltage and electrification. So we do coordinate wherever possible collaborate with the authorities. But there is no compulsion on us that we have to only go with some X or Y So while there is anti competition from ABB to us, but there is no Reverse the anti completion loss is there with us.
So we are free to offer our things. But having said that, we will try to know wherever possible to collaborate and co create these kind of things.
So if I understood it rightly, there are certain products which are overlap in terms of where both You and ABB India are present because our understanding was that the portfolios are clearly defined and bifurcated into different end markets as in LVHV?
There are no products are overlapping between us and our previous company, Kunal, so all the products are clearly distinctly different. So what you're talking about applications, take for example, data center. So, what other previous company can do and what we can do, there may be some overlapping here. But other than that, the products are very Clearly the finance agreement.
Thank you. Thank you so much, sir, and best of luck for the future quarters.
Thank
you. Our next question is from the line of Renu Baidu. Please go ahead with your question.
Yes. Hello. Am I audible, sir?
Yes.
Yes. So good evening, sir. I have few questions. So my first question is on the performance. If we remember right, in 2Q, we had Almost INR 200 crores of split in revenue due to COVID second wave.
In the Q2, we were expecting relative improvement in the pace of execution. However, again, because of supply chain challenges, it's 64 crores short of expectations because of these constraints. So effectively as an RV somewhere looking at execution phase slowing down for us for external matters or We're also seeing customer readiness to access these deliveries being tough. And by when should we expect Revenues coming back to close to the INR 1,000 crores level in terms of the overall trajectory. If you can help us give some more insights on this.
So I think as you talked about, it's kind of different set Challenges in this quarter and that's the reason we have we did miss it. But from a customer side, I don't see You know, any of those limiting factors because I see many of the customers are in fact asking us to accelerate, Accelerate the pace of executions, etcetera, in that. There could be a single digit percentage of the customers not Lifting because we also have a strict cash over revenue policy that even though if customers willing Until customer pays, we will not be in a position to ship it. So that is always has a single digit percentage thing in there. But I think having said that, we do believe that the customers Looking at taking the material, we would look we are cautiously optimistic to come back to The pre COVID level what you're talking about in this quarter onwards.
But at least do you see the headwinds on execution and because of these Total regions easing out from 3Q, 4Q onwards as we are already in the second half of the fiscal year. How do they take for some more time?
So headwinds on the especially on the sports, etcetera, I don't think it will go away overnight or on the next Couple of months of things like that. But what we have also taken action is that better planning, better booking of the ships well in advance, Taking extra actions to book those kind of things. So those actions in our view should mitigate that problems.
Got it. So secondly, with this transition to Hitachi Energy, how far are we now with respect to complete Control coming in the hands of Hitachi. And if you can share some view in terms of by when are we expected the closure of this overlap of Tech and IT charges, which we have with ABB. And also, by when do you think should be the remaining 20% acquisition of the stake Happened in the JV by Hitachi globally.
Yes. Yes. So let me you asked the 3 questions. Renu, let me just on the transitions to Hitachi Energy. As I told you, I've shown you my last slide.
Globally, we have done on 13th October. So we have completed when I said completed means Our name globally has changed from Hitachi ABB Power Grids to Hitachi Energy Limited. So that is what it's about. So there is no change Our strategy, there is no change of our line of business. There is no change of our way in which we serve our customers,
So not from the business perspective, but just from a 3 year transition of that from a JP
structure of the portfolio to
the capacity So
that is one. So second, when it comes to India, I also told you it is under process, so we will slowly come back. 2nd, the Hitachi ABB Power Grid joint venture, which was supposed to be for 3 year period, That is, we started last year 2020 July and it will go up to 2023 June. So, until that, the remaining 19.8% stake, which ABB was holding it, they will retain with that. And please note, this Minority stake is only at the group level, at the global level.
Group level.
Yeah. So,
that is for 3 year period and it will stay there. So, and the third is the IT cost you're talking about. As you know, we I've already explained last time, our right now we are under the TSA exit cost with ABB is Providing the IT services support, but at the same time, Talali, we are building our own state of the art world class rebar system globally. And those things will continue until 2023.
Okay. Until 2023 till the JV structure exists?
Yes.
Got it. Sorry? And lastly, if I can on the yes, no, I just clarified those overlap of the cost continue until this JV structure of eightytwenty continues with ABB, right?
Correct.
Yes. So lastly, on the business side, two things. A, you mentioned the transport industry now are almost 50% of the orders that we have. How large have they now scaled up in terms of revenues? And we were expecting that these portfolios from a long term Obviously, it will be 50% or higher.
So broadly, is this mix broadly look sustainable for us in revenue terms as well? And secondly, on power quality, where you highlighted compared to some of the other focus areas, power quality witnessed some decline. So is this more because of the timing of the opportunity coming in the end market with the customer and delaying revenues? Or probably we have seen increased competitive pressures or probably loss of some orders from the competition?
Yes. No, ore quality in our view is purely a timing perspective. That is that's one. And then Your first question was the industry's growth is sustainable. And we were saying especially on the transport and industries, right.
And I was also telling you in the beginning to another colleague One of the high growth segments where we are looking at is the transport and we will see a multiyear growth with so many drivers I talked about in that. So, basis which and also slowly the industries are making a small, small CapExes. And with that, we should be in a position to see this It's not at least 50%, but very high visibility of this.
Got it. Got it.
Thank you and all the best, sir.
Thank you.
Thank you. Our next question is from the line of Umesh Rawat. Please go ahead.
Thank you so much for the opportunity. Good evening, sir. So, sir, my first The question is related to the gross margin for the quarter, which is at around 41%, which has increased on a year on year basis Despite raw material prices has went up significantly. So any reason, particular reason why, I mean, the gross margins improved Year on year, despite the commodity variations going against them.
Okay. Our CFO, Ajay, you are
in the call. Yes, yes. Thank you, Venmo, and thank you, Umesh, for the question. And so let me give a color to this. So in the current quarter, if you see compared to the earlier quarters, Our gross margin improvement has mainly come because of the product mix.
So it is a product mix that is helping us for the gross margin improvement. And compared to the earlier quarter, if you see, our exports and service has improved compared to earlier. That is also contributing for the gross margin improvement. But largely if you see, it is on account of the product mix.
Got it, sir. Got it.
And sir, going
forward, because we are targeting
Just to add to our CFO, we are showing this Slide 9 continuously how Our strategy is to go towards more products, services and software and those kind of things. You can see that our Product services has much more bigger share of wallet than the projects. So that's also our strategy to move towards a high growth segments and also towards a good margin segments.
Got it, sir. Sir, so going forward, do you see structurally our gross margins remaining About 40% say and are we consistently improving because we are targeting higher share of revenues from exports as well as from services?
Yes. I don't want to put a target on the gross margin. As I told you, we have taken a target of ourselves to complete operational EBITDA at double digit margins. So that is what is our endeavor to do that. So we will do all that.
We will also do operational improvement, but we will also look at The gross margin improvement by adding more value added digital service, etcetera.
Okay, okay. Sir, my second question is, if you can share some light on the competitive intensity, Especially since last 3, 4 quarters, because one of the player, domestic player is coming back aggressively in the market into the power product So how do you how you are seeing the competitive intensity right now?
I think, no, when it comes to competition, so we have seen all these players before also. We will also see Players after that. And our view is that the competition is good for the sector, good for the customers. And what we also always ask for is a level playing field. So we have very clear strategy to bring the differentiation in front of our customers, Differentiation in terms of the technology, differentiation in terms of digitalization, differentiation in terms of decarbonizing efforts of other customers.
So all this thing would give us a due respect and due share in the market And that's what we will look at it. We always compress a little bit there, it was there also previously.
Okay. So, my third question is about the in the previous calls, you have mentioned the HODC pipelines in the near term considering 3, 4 projects which are under discussion. So just wanted your view on the Timeline and second on the high speed rail metro project with high speed metro project, high speed A rail project between Ahmedabad to Mumbai where initial package ordering has been done and now some tendering work is expected to start. And you have mentioned previously in the call that there will be a synergy in between Hitachi and the Funding agencies because of the same parentage or same country that is Japan. So basically just wanted to know your view on the ordering from the JSR opportunity and in between, but which particular products we are expecting orders to come in for
So let me ask you your first question. I think first question on the HVDC is a very important question. We have been telling very clearly the energy transition is quite big. The HVDC technology is an extremely important technology In making your grid more flexible, make robust and enabling the penetration of the renewable even more in that. So basis which we also said that we believe at least 1 HVDC project to come for bidding in the market For 1 per year, at least for the next 3 to 4 years.
This is what we have been telling and we are consistent in that. And we see that while we're talking, One project is under bidding. There are other couple of projects are under various stages of approval To come for a bidding and that's exactly where it is. So, this is which we are taking a lot of actions here to localize some of the equipment and bring the more Skills and improve our efficiencies, etcetera, to take care of those things whenever it is available for us.
That's number 1.
Number 2 is on the high speed rail, now we are part of the Hitachi's ownership. So we do qualify for this, where the Japanese fund is there as a step component as part of wherever our portfolio comes, let's call it the step component. We do qualify for the step component of those projects. And we are working with our companies in In Jafan on this HSR, basically the high speed rail project Ahmedabad to Mumbai. And right now, as you know, the civil has been awarded and then the work is going on.
So these electrical and the balance of systems, cadence, Things like that will come maybe in the next year or something like that.
Yes. Thank you. Mr. Raut, request you to join the queue for any follow ups. Also participants are requested to limit your question to 2 per participants.
If time permits, you may join the queue for any follow-up. We have the next question from the line of Jeetu Panjabi. Please proceed with your question.
Yes. Thank you so much for this Presentation. I've got a few pointed questions at a high level, right? So I heard you say that you want to grow at a rate You expect to grow it faster than industry. I'd love to understand how you articulate your competitive advantage, your source of competitive advantage To do that, 2, when you sit down with the Japanese Hitachi bosses over there, how would they Calibrate success for this company in India and how would you personally calibrate success In your eyes as well.
And what would be the most difficult part of the journey to get there?
Yes. I think very, very sorry, very good questions. So On the competition side, our competitive advantage, which you talked about, I think we are continuously as I told you, we are continuously investing, Investing in the localizing of the footprint, investing to bring the sorry, let me just take a water. Sure. Investing in the localization of the footprint, Investing also to bring our products, which so far we are using a complete imported products to localize it.
And third one is, we are also improving the skill sets of our people because the shift in the Energy transition is making the total portfolio is totally different digital artificial intelligence based And so on and so forth in that. So that's the reason we are saying that we are able to now able to take care of the competition with this kind of Multiple actions already in place, both localizing it and then improving our broadening our portfolio. And in addition to that, exports also one of our key strategy we said. Exports is over a period of time, we go to 20% to 25%. And I'm happy to tell you that within the 9 months period, we already reached a 22% of exports in that.
So that is how our overall competitive advantage is that. So how do you see the success from our shareholders' standpoint, our majority shareholder, global shareholder? So it's a very important for us to know that how do we increase our shareholder value and how do we increase our customers, How do we improve our customers' processes, efficiencies? How do we decarbonize it? How do we ensure that we bring the more diversity?
All this It's part of our KPIs, which is also part of our global shareholders who will see that successful of that. So sustainability I talked about is a key important element, right. We are a technology provider decarbonizing the whole of energy system. So we have to set ourselves as a benchmark. So that's the result we announced that by 2,030, we want to be carbon neutral in our operations.
In that the first step is By end of this fiscal year, all of our factories, project sites, offices will be powered through 100% fossil fuels. So these are the things we are setting ourselves as a target so that we are able to walk the talk on this And able to set ourselves as a benchmark in that. So we also committed started a committee of the independent director sorry, committee of the Board of Directors On the ESG, all these things are quite important in the decarbonizing efforts of energy systems. So the success is stakeholders value and taking care of our customers and our people.
And I think the one part is what in this journey will be the most difficult part That hinders you from getting there. What would be the biggest challenge to overcome and to get there?
No. The biggest challenge is that we always have this kind of uncertainties Like, we have seen the COVID wave 1, wave 2, we see the sudden lockdowns of support, etcetera. These are the uncertainties We are the best, so we got to be more resilient, able to take care of those kind of things.
Okay. Super gracious. Thank you very
much. Thank you, operator.
Thank you. We'll take the next question from the line of Priyank Cheta.
One last question.
Yes, this will be the last question, sir. Jan Cheddar, you may please
proceed with that question. Yes, am I audible? Yes, please. Yes, sir.
Yes, sure. So thank you, sir, for the opportunity. So I understand you have been elaborating every quarter As to how the synergies between Hitachi India and Hitachi Global Parent has been improving. So if you can help us understand more How the business prospect has changed and if particularly if you can highlight on how the Business share on the Lumada platform has been going to end the progress on that.
So as again, we have So as again, is there any crosstalk? Okay. Yes, sir. We have been saying that we started this Synergies only after we became part of the Hitachi ownership because until that it was the antitrust, we were not supposed to exchange I'll share the information. So we started doing that and the low hanging fruits are this like high speed rate And those kind of things we are working very closely with them and seeing the movement on the ground is going very well.
And we also said that the IoT platform, Itachi has invested very heavily on the IoT platform, a very respected IoT platform globally. We would like to leverage that IoT platform and offering our enterprise software suits on IoT platform. So we've been also discussing and doing some pilots here And making progress in that. So we have a very clear milestones on that. So We are on track as far as those synergies are concerned.
Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. N Venu, Managing Director and CEO, ABB Power Products and Systems India Limited for closing comments. Thank you and over to you, sir.
Thank you. Thank you, operator. Once again, ladies and gentlemen, A very big thank you for your patience and taking time from your busy schedule or attending into this conference call. Please reach out to us if you need anything. We are happy to provide and engage with you.
And I'm really looking forward to this upcoming investors call. Hopefully, we will see Each other face to face and until that please take care, stay safe And also take this opportunity to wish you all a very happy festival season, Diwali and etcetera. Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of ABB Power Products and Systems India Limited, That concludes today's session. Thank you for your participation. You may now exit the meeting. Thank you.