Good day, ladies and gentlemen, and welcome to the Q1 2021 Analyst Conference Call for Hitachi ABB Power Grids, listed on the stock exchange as ABB Power Products and Systems India Limited. As a reminder, All participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. N.
Venu, Managing Director and CEO, India, Head of the South Asia Region at Hitachi ABB Power Grids. Thank you and over to you, sir.
Thank you, Stephen. Good evening, ladies and gentlemen. Thank you for joining us for the call. I hope all is well at your end. It is a difficult time for every one of us given the widely Studying 2nd wave of infections and ongoing health crisis in the country, we have to stay cautious.
We cannot lower the cost. Now we can make gestures about recovery. What we can do is leverage the learning from the previous year to march on and stay resilient. We have suffered in the crisis and we will remain resolute and perseverance to build that better. We have uploaded the presentation in the stock exchange.
I'm sure all of you have it, and we are also sharing on this. I will be referring the slide numbers as I'm going to talk to you. And right now, slide number 2, In this unprecedented crisis, protecting our people is our main goal. We are mobilizing all of our resources across India to help affect their employees and their families with beds, oxygen, testing, etcetera. We are setting up teams of doctors and paramedics, arranging PPEs for frontline workers and increasing the frequency of awareness sessions for our workforce and their families.
We are also in talks with NGOs to expand existing health care facility to handle more patients as part of our CSR activities. We have continued voluntary master team of employees to identify as in the market carriers And we'll be initiating the vaccination drive for all our employees at our various locations in association with hospitals and healthcare centers. I'm very happy to inform you that as of now, More than 85% of eligible employees in our company have already got vaccinated. More than 85% of employees over 45 years old who are eligible previously on that. So Since we support essential services, as we are in the business of providing mission critical technology services to our customers and our offering is manufacturing led, we cannot switch 100% to remote work.
However, we are ensuring COVID-nineteen Appropriate behavior across our factories, across our project sites to limit the spread up infections. Safety, as you all know, is our license to operate. We have also achieved 12,000,000 safe incident free man hours for 5 years in terms of the number of years in one of our businesses that is Grids and Power Quality Solutions are the substation business across our 135 project sites. Moving to the next slide. Despite the unparalleled crisis, We have achieved a stable top line in the 1st 3 months of the year 2021, that is from January to March 2021.
We booked orders worth INR848 crores, driven by industries and value rates. We were also the preferred partner for supplying the transformer for the Indian Railways and Banglades Metro. In some place, 135 crore of orders where we are L1 were deferred by our customers. Driven by The extensive use of remote management and digital solutions, our revenue increased 26% year on year, reaching INR 1023.8 crores. This was coupled with diverse product mix ensured resilience in performance in the challenging market conditions.
Profit before tax, there were no exception to items this quarter, was a repeat INR 53.7 crores, driven by an unwavering focus on operational excellence and strategic cost out measures Justin and our sales position. Profit after tax at RMB39.4 at the close of the quarter was up 34.9% year on year. Moving to the next slide, Slide number 5. We utilize all levers to drive industry dialogue and Transition to Economic Recovery and Clean Energy. We hosted segment specific virtual customer engagement Conferences under our flagship Energy and Digital World banner.
In this year, with participation over 600 customers. We won a key industry order to ensure reliable power, asset performance were chosen by cybersecurity audit by large city distribution companies. We also commissioned a project for Tata Power in Mumbai with a transformer using Easter fluid instead of mineral oil upholding environment friendly power generation and reducing fiberglass. On top of this, we set up the state of the art remote monitoring and Reliability Service Center, Powerex, Thank you, Mr. Stanson, our Digital Capital Chief.
As you recall, our strategy of 2025, where we would like to provide more digital product system services in line with our strategy we are investing in this kind of capabilities. The center will offer our customers an advanced maintenance platform to improve their power assets, overall reliability and uptime. We also partnered with 6thama Foundation under our corporate social responsibility program to launch the Women in Engineering Program. This initiative will facilitate education for girls aspiring for a career in engineering. Women are often underrepresented in the academic and professional staff of engineering.
With Saxena and our employee volunteers, we will advance inclusive talent development for a better and brighter tomorrow. Moving on to the next very important information on the Slide 6. Now more than ever, Pioneering technologies are needed to enable a future carbon neutral energy system. We have committed ourselves to help our customers accelerate their energy transition. In April this year, we had the global launch of TECONIC, a portfolio of products, services and solutions that will contribute towards a carbon neutral future and accelerate the Green Energy Transition.
As the first big step towards economic, high voltage portfolio contains no SF6. It has been proven to reduce more than 50% of carbon footprint So the total life cycle. So sustainability oriented design, econics will further evolve beyond the high voltage products through a portfolio of products, services and solutions across Hitachi ABB Power Grids to deliver superior environmental performance compared to conventional solution. While we initiate all this, it has clearly not been easy. Moving to the Slide number page, And this is I'm sure you all know better than me.
We are all dealing with the 2nd wave of COVID-nineteen in a sudden way. The barely number of cases continue to rise. It has already touched 400,000 cases. We are facing supply chain disruptions, again due to a lockdown and curfews and also due to the non availability of some of the essential things like oxygen for industrial use, etcetera. As a result, industrial growth is affected, We all know that during times of uncertainty and volatility, investment is held back.
We are also seeing that while power demand is solid, Generation is coming under greater and greater load. Business activity is flat, inflation in contrast is rising. The pandemic has delayed the recovery process, but we are optimistic that it will not bend the long term story of this country. Hopefully, we will soon overcome the ongoing health crisis. The shortage of vaccination and health care facilities and the rate of induction will plateau, we could then anticipate the beginning of the respite we are Longing for.
We could then start moving towards normalcy in a day to day life and in business. Moving to Slide number 9. In the 1st 3 months of this year, COVID-nineteen headwinds notwithstanding, We remain the part of Chai for our products. We are also entrusted with some highly challenging projects, not just within the country, but also outside of this country. The majority of orders came from industries and the transport segment for direct engagement for the EPC Group.
Areas such as power quality, renewable integration, e mobility, data center are essential drivers of our business growth and form part of our near term vision. Of these, the government's ambitious ambition of 20 fourseven power for all, higher penetration of renewables, 1st for 100% rail exploration by 2023, 30% EV penetration by country and region of digital India with more and more data center provide the tracks for Hitachi Power Digital Journey. We have continued to make progress in each of these to varying degrees, even during the 2nd wave of the pandemic, be it through ensuring renewable power utilization for key industry players, increasing electrification for transport, ensuring quality power for data center or bringing Indian Railways closer to its data center closer to its carbon neutral ambition. Moving to the next slide, Orders driven by, as I told you, industry and railways have sequentially grown over 2.9% and compared to the last year, we are down. As you know, last year, we had a big order of IOCL.
While I'm happy to say that we have a very good resilience on the growth of the base orders. These orders came from renewables, Railways, Data Center in Domestic and Export Markets. And as you can see, The revenues also came close to the pre pandemic level. While I'm talking about, as you know, For current quarter, we see the disruptions across the value chain and that remain a risk for the coming quarters. Moving to the next slide, on the Slide number 11.
Services and exports, as you know, are the key cornerstone of our strategy. And in the Q1, services export orders continue to be in the range bound of 15% to 20% each to our total orders, while expos are in the higher band of 15% to 20% and the services are in the lower band of the 15% to 20%. We were chosen for automation solutions for solar integration by stability in Western India for enabling business continuity through GIS Substation Services, for leading industry players, for transformer repair and for cybersecurity audit by large city distribution company in 1 of the metros. Services for cybersecurity is a key element of our future growth strategy. By March, we had achieved the IEC 6,243 certification, We are finding our commitment to deliver products and systems that meet the highest cybersecurity standards.
In continued efforts to provide cutting edge technologies, we also conducted power system studies and virtual instructor led training for top power generation and transmission companies. Export demand for our products, systems, services came from Africa, South and Southeast Asia, Latin America, the United Kingdom and many other regions. Moving to the next slide. As of 31st March, our order backlog was INR INR 4,777 crores indicating future revenue stream and profit before tax, as mentioned earlier, is INR53.7 crores while profit after tax is INR 39.4 crores. Operation EBITDA, which is another Our key parameters for all of us in the quarter January to March quarter was INR 75.9 crores, up 34.1 percent, improving the EBITDA margin.
Solid gas collections and other measures ensured we are debt free. We also maintained our AAA stable rating from the rating agency, CRISIL. Moving to the next slide, This is also another important slide. We are investing in India for the long term. While we aim to introduce more products To capture a bigger share of the market, our aim is to localize our portfolio to build indigenous capabilities.
We will continue to make in India, for India and the rest of the world. We made investments In portfolio expansion, in our factory in Solvay, in the GIS space, in spindle factory module assembly and the traction transformer line expansion among other things. We also have been expanding our factory for quality products Ohitachi products integrate all presently fragmented operations under one group to serve an ever growing power quality market, both domestically and overseas. In addition to this, as I've already mentioned to you, the launch of our remote Monitoring and Maintenance Center in Bangalore, Powerik. For us, these investments will bring Operational efficiency, improve our market competitiveness.
They will also generate additional value and margins for Hitachi Power Gains Moving to the next slide, I mean, Slide number 14. In the near term, we do anticipate disruptions across the supply chain emanating from the 2nd wave, but our primary focus at this point is protecting our people, our employees, our partners, our communities to together navigate this milestone of the COVID-nineteen pandemic. Factors such as transmission, rail, metro and renewable are expected to contribute to bring us new opportunities, enabling us to further strengthen our leading market position. We will focus on we will continue to focus on high growth segments and Agilovic Group, Crexervices and Digital Solutions and Xpose. We have a comprehensive portfolio of future revenue and state of the art products, software and services to cater to them Continuous quality improvement, commitment to lowering the carbon footprint of our operations, product localization, Digital innovation of the grid will be part of our yardsticks to measure our success.
Nothing is complete without people. Hence, we relentlessly work towards their safety, through testing and vaccination, upon addressing Their growth and their upskilling, as we are in the transformation of energy revolution, it's extremely important of upskilling of a talent and that's where you see we are taking a lot of actions in the direction. We will also strive for building diversity in our various function and balance the mix of competencies across the businesses for the future. So ladies and gentlemen, moving on to my last slide. You would have probably now heard We're saying that the carbon neutral future is electric.
We believe that our future world must be more sustainable world. There should be an accelerated shift from fossil based power production towards the new Power Generation, you already seen the target set by the government of India that 460 gigawatt of renewable Renewable by 2,030. In addition to that, growing the expectation of transportation, industry and building and lost a rise in personal energy carrier, for example, green hydrogen. We see that electricity will soon form the backbone of the entire energy system. Route to decarbonization everywhere is based on much more electrification.
It is the most reliable route to achieve carbon neutrality. In this energy transition, We see ourselves that Hitachi ABB Power Grids playing a leading role to our digital and energy platforms. We aim to equip customers and partners with intelligent solutions for a sustainable energy future and contribute to the sustainable development goals. Ladies and gentlemen, thank you very much for listening to me. 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. The The first question is from the line of Sudhir Baira from Rite Time Consultancy. Please go ahead.
Yes. Good afternoon, sir. Good afternoon. Sir, in spite of our focus on the high growth area like renewables, rapid transport, for data center and also we are now leveraging the Hitachi's expertise. Still we are not able to build a significant order book.
Example, our order book on Q1 2017 was 847 crores 847 And Q1 2021, we have order book of INR849 crores. So why are we not able to build this significant Although in spite of our focus on the high growth area. And secondly and also we are leveraging the Hitachi website. And my second question, when we will reach the double digit EBITDA margin? So these are the 2 questions and thanks for the opportunity.
Thank you, Sudhir. I think very interesting questions and thanks for your time. So I fully agree with you while our focus is on hydro segment, but we also need to consider the market situation we are in, right? So we are into the situation on the COVID. As you've seen since last year, it's going up and down in various parts of the country and also various parts of the world.
You'll need to understand that compared to the last sequential quarter, This quarter, we have improved the order book by around 2.8% quarter on quarter in spite of the challenging situation we are in to it. So, nevertheless, we take your point, but you need to understand how the market is moving in. Take for example of renewable. Last year, renewable against target of 14 gigawatt, they did less than 5 gigawatt of that, okay. So it's quite a lot of challenges In terms of execution for everybody, in terms of all these things we need to factor, While the focus remains the same, but the COVID factor is definitely an issue on that.
And the second question is about About your double digit margin in that, as you know, our focus, our strategy 2025 is always we want to be to grow high in the market. If the market is growing next and we want to grow high in the market. And right now on the market standpoint, We are a single digit margin, so our aim is to move towards the double digit market and progressively. Thank you. So, sir, Will that affect the current year's growth projection because of lower orders and COVID situation?
We are in line with our strategy. And I think that we are able to navigate the COVID situation, but come close to our strategy. Thank you, sir.
Thank you. The next question is from the line of Renu Baid from IISL. Please go ahead.
Yes. Hi. Good evening, sir. I have 2 to 3 questions. My first question is a bookkeeping question to understand The reason for sharp jump in the other expenses sequentially, if you look, other expenses are almost at same level.
So last quarter, if you remember, there was INR 70 crores cost overrun, which was provisioned for. So can you help us Tan, the reason for increase in the other expenses, any FX impact or any other takeaways here?
Okay. Thank you, Renu. I think maybe Azai, Our CFO can answer that question. Yes. Thank you.
Thank you, Renu. Thanks for the question. So as we discussed, the other expenses, mainly The increase is coming on the freight and floating expenses that we have incurred in this particular quarter. And also on the IS cost, As you know that we are spending on the IS cost. The IS we are working On the new ERC system that is going to come shortly and this is which we are coming away from the ABB System.
So as of now, our IS infrastructure basically, we are using the ADB's IS infrastructure. So we are running a transactional service agreement on this particular piece. So going forward, we plan within the 3 years will come out of this IS internal charges that will incur from ABB. We are in a transition phase. So in a transition phase, while we build up our own infrastructure IS rated, that is why initially we will be incurring cost, But gradually in the coming periods, we'll be out of that.
So major summarize major is coming from the freight and forwarding And basically on the IS related expenses.
Because these expenses were there in the previous quarter as well. So is there a substantial jump in the infrastructure Building investments that we are incurring, would it be possible to quantify? The reason I'm trying to ask is last quarter we had a Crore cost overrun related provision because of which other expenses were to INR 40 crores. This kind on a similar kind of revenue base, we have a similar expenditure base. So and which is without the cost overrun element.
So I'm just trying to understand that the ERP or the IT expenses, which were there on a sequential basis, Have you seen a 30, 40 crores kind of jump on a quarterly basis for those investments?
Not 30, 40 crores jump because then we have to look into the other elements. So I have given you a broad explanation because there are other elements as well that basically there is an increase in the insurance cost, there is increase in the freight cost And I'll talk about the IS and also since the revenues are on the higher side, this is which we have an increase on the royalties. So these are the major things that has
Basically no one off elements or non recurring items in your V1. This should be the broad run rate at least on this kind of revenue base that you're looking at.
Correct. So that is what this what we are talking about, these are the major 4, 5 heads that we have incurred across.
Sure. My second question is to Venu to understand a bit more in detail, how should we look at the addressable markets For ABB Power Products and Solutions, especially in the industrial automation space, as in last quarter, we discussed as in Movado strengthening the industrial automation footprint. So which type of industries are we focusing on? Are these discrete or process automation side of the business? And how is Hitachi ABB Power Grids placed versus ABB India as well as Ability Solutions or Siemens Myspace Solutions here, Given that those companies have customized process solution offerings as well as products for these core sectors, so how is our Position versus some of the other automation peers in the market.
Yes. As you know, our portfolio is primarily on the energy side. So energy right from the generation, transmission, distribution and the consumption side. So we're basically looking at wherever the energy intense industry, whether it be the cost of industry, steel, aluminum and so on and so and also data centers and that's where we come into picture. So the whole idea is that we will deploy our Technologies with the products, services of the team.
And in addition to that, we will also run on the Lumada IoT platform, which is a new one So Hitachi has been investing on this thing. So all of our software solutions, whether it's your SCADA, whether it's your workforce management and Asset Management. We will be running on that. Just for your information, we have received an order in the last quarter from Bangalore Metro in addition to providing our power technology. So this is the 1st time deploying a workforce management as part of our SCADA solutions there.
So these are the things where we will be relying heavily on going forward In the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the in the industries and infrastructure there including
industries. So specifically from
Ms. Baid, sorry to interrupt, but for any follow-up, maybe request you to rejoin the queue, please. The next question is from the line of Ranjit Sivaram from ICICI Securities. Please go ahead.
Yes. Hi, sir. Congrats on this set of numbers. Yes, as a follow-up After other expense, you said particularly in the IT expenses, like recently there was a deal with sealed by our parent. So will that help us in reducing the overall IT cost Going forward, now that we are gradually coming out of the ABB related ADB.
Yes. So as you probably would have seen the announcement from HCL standpoint, and you know that we are building up the a global leader standalone company. As part of that, we are also creating our own infrastructure so that we can de link From ABB and as of now ABB is providing certain transactional basis on the ERP, IT related thing in that. So the deal what you're talking about is that, but yes, we will be building up our own standalone IT infrastructure I am also on the ERP. So there will be cost in between, but over a period of time, then the cost will come back to the normal where it should be.
Okay. And sir, in the EV charging space, do we have any Any products for these 2 wheelers and 3 wheelers market and what could be the opportunity size here if we had something? Yes. So as you know, EV market is one of our growth segment. And you also know that EV market right now, MDI is at Sounds great.
And we have the product for the 4 wheelers at this point in time for growth in a flash charging technology as well as the feed charging technology. And we also tied up with Hitachi V land and our pilot In couple of months from now, the pilot will be running in IIT campus. While we are having this portfolio, we are also looking at the portfolio of the rest of the 4 wheeler. So please do understand, when we're talking about the charging equipment here, we are talking about the charging not only charging at this. So we are talking about the charging equipment, which includes the grid resilience in that.
What will be the broad opportunity size if you have typical number 2? As I said, the market is in Very nascent stage of the market. Just imagine 2,000,000 buses on the road. How long it will take And how it is converting anybody's guess. As you know, government is having a as part of the same contract.
So there are Number of buses being converted into an electric mode, so that's exactly we are working on that. Thank you.
Before we take the next question, a reminder to the participants, please limit your questions to 2 per participant. Should you have any follow-up, we would request you to rejoin the queue, please. The next question is from the line of Harshad Patel from Equis Securities. Please go ahead.
Hi, sir. Thank you very much for the opportunity. Sir, my first question would be on, If you remember, in July 2020, the government of India had banned the Chinese imports in the high voltage and medium voltage power transmission and distribution equipment. So from all the new tender onwards, these Chinese imports were not allowed. So sir, how this situation is helpful to us?
I mean, how it has benefited us? Have we gained any market share in some of the new tenders? If you could give some outlook on it, it will be very helpful.
Yes. I think So thank you for that. As you know, the government has Come out with that particular on the border countries, especially on the border countries in that. So you know that when it comes to Hitachi ABB Power Grids, so we have been manufacturing here for the last 6 decades. And most of our equipment is meeting the requirements of the local content.
And so we are actually with the government's renewed push for making India and self reliant India, The clause given preference to supplier to the meeting of local content requirement, about 50% is now applicable in all the government contracts. We also seen some limited advantage of this for sure. And what we also noticed is that the private industry players In our view, we may also give preference to Indian supplier. We have seen the private players also now ask for the local content. With the above, in our view, we may start to gain in certain parts of our portfolio, while in we are Still in the process of indigenizing some other product ranges, but can you select these only forward our long term view of building India is a manufacturing and export hub.
Sure, sir. My Follow-up question on that would be, sir, you have previously mentioned that we have more than 80% localization as far as finished products are concerned. So, sir, what would be our blended localization, even including the component? So I believe there would be some components that we would be importing as of now. So including everything, what would be our blended localization level as of now?
And when can you expect we could reach 90%, 95% kind of a number? How many years I quoted?
I think if you look at our whole Hitachi ABB Power Grids, so we are in excess of 80% is completely localized. If you take So 80% is completely localized. If you take the whole mix of 80%. We do couple of components, we import it And we do have as part of our supply chain process, we do also have a multiple country sourcing that. Wherever we need that any particular power of countries is not applicable, then we are always engaged about supply chain Processed to get the equipment imported from the country of accessibility.
Thank you. The next question is from the line of Jonas Butta from Philip Capital. Please go ahead. Good evening, sir, and congrats on receiving a decent set of numbers. Two quick questions.
1, From the recent annual report we just gathered that ABPSIL derived almost INR 11.50 crores that is about 35% of sales from ABB India in CY20 against INR 450 crores in CY 2019. So that's a massive jump, about 35% of your sales came from ABB India. So was that for a particular project? And do you Expect this level of dependency on ABB India going forward. This is about almost 35, 1 third of your sales.
In addition to the same question, our IT and management fees in the related party is almost INR 220 crores, which has almost doubled YOY in CY 2020 over CY 2019. While you did Mentioned that this is you are in a transition period where you are moving from the first trial ABB ERP to your own. Can you at least give us a glide path as to how long will this INR 220 crores or equivalent amount be charged Over the next 2 to 3 years, do you expect this number to sort of sustain here or increase? And my second question is on export Maybe I'll come back to that once you answer this question.
Yes. Thank you. Maybe I think let me answer your first question and Ajay will come in there. So I hope you would have seen from our annual report on from the related party transactions, right?
Yes, sir.
So, yes, so as you know, when we have done the I thought of the demerger and CLP, So when we done the demerger, many of our existing contracts were not motivated, right. Many of our contracts will continue to be in the name of ABB. However, by order of the NCLB, then we have become standalone company in that. So the arrangement in us and ABB is that all the Novakit contracts, So we will continue to run through the WVU under ABB's name, it has a related proxy, but there is not Any margin on everything which goes to ABB. So that's the reason you are seeing a huge thing, which is 11.35 crores is basically with all the Hitachi ABB Power Grids.
The name of that contract was not navigated still to our APT ASL, but still remain under ABB. So that's the reason you are seeing that. It is not there is any dependency Rajiv, maybe you can comment on that. Yes. Prabhu, I think you have spelled out.
So basically, we are doing a later party transactions with ABB India. And the only thing that we are using ABB is that for the past 2 transactions. And probably if you are referring to the annual report, then If you compare from the prior period, that number will be for 9 months because our if you see that the numbers for 9 months, whereas in this sum, the numbers will be for 12 months. So that could be one delta you are seeing. But otherwise, we are using ABB only for taking the pass through transactions All the customer orders which are yet to be innovated.
And as we speak, we are already quite ahead on the innovation piece. And coming to the IT part, the second question. Yes. Probably we can add that we are right now in more than 90% of our contracts got innovated in our now. Correct.
Go ahead, sir. Yes. So coming to the IT again that the earlier expenses cannot be compared because those are 9 months expenses. And as we explained that we are developing our own IT infrastructure and presently we are having a transactional So this agreement with ABB and we see that this agreement will continue to have for the next 3 years. So after that, that is the time period that we see at the moment.
And then going forward, we'll see how we are placed.
So the CY 2020 number, sir, can be assumed, right, the 2.20 crores run rate can be assumed going forward?
Yes, 2020, 10 we assume. And as I told you, there could be we are also working on the ERP projects that is going to come Basically to harmonize our system end to end processes. So that also that is what initially we are spending more and The benefits will come maybe after 2, 3 years down the line. So that is what we are indicating.
So my second question was more strategy related because you did highlight that growing export is one of the key growth areas for the company. So just wanted to get your understanding on exports today account for almost 18% of sales. So under the new management of Hitachi ABB, is there a change in mandate where you've come up with a number that you want to take this exports to, So 25%, 30% of sales. Is there a mandate change into how exports were first nominated on to India after ABB and is that changing under Hitachi ABB? Any such things?
So there was also talk about Hitachi ultimately helping us in getting project level finances for our clients and thereby pushing exports. So Any road map if you can share on how you plan to grow exports? That will be great. Sure.
So we have a very clear strategy As we are articulating this and its course right now in the range of 15% to 30%, And we have a plan to take to 30% to 33%. And you will have seen my CapEx slide, which I have put in, I thought of for CapEx. We are also Spending the capacity, for example, which is from almost we are doubling our capacity from the existing world. So basically, all these things focus not only for the domestic market, but the export market in that. So that's where right now, we are in the range of 15% to 30%, But we are starting to move from 15% to 20% to 20% to 25% over the period of time.
Thank you. The next question is from the line of Subhadip Mitram from JM Financial. Please go ahead.
Thank you for the opportunity. So sir, in the beginning of your presentation, you did mention that your key Focus areas in terms of future growth remain, I think, D and D renewables, hydro and
that's all, etcetera. If it was
possible for you paint us
a picture that over the next 2 to 3 years scenario, how do you see the market size of each of these segments spanning up and when do you think the adoption of the returns
Yes. So thank you for your question. I think we don't still not give the market size of the sector wise, but We believe that the rail is going to be at the first let me start with rail, can I come to the transmission? Rail will definitely have a There is amount of opportunity, not only the 100% electrification of the remaining 27,000 subject kilometers by 2,030, that will in any case will have opportunities. In addition to that, what we see is a regional high speed rail.
Regional high speed rail is also Focused area and that's the one thing. And then we also see in the next 2, 3 years the project of the bullet train That is Mumbai, Tom Thabat is taking shape. Probably you would have seen the civil part of that has been already awarded. So that's a quite a big project You see the opportunities. So these are all the way and also the metro projects.
And the next one is on the enable. I think enable, As you know, with the 4 50 gigawatt of targets set by the government, even if it takes the factor of that, there is a huge opportunity. We have been adding in the last quarter, so we have 8 to 9 gigawatts. And if we reach that, we have to do at least even if we take a factor of 2, 2 and a half times we have to do. That's been a big opportunity for us both on the grid side, on the generation standpoint, on the digitalization of that What we also see is next one is on the data center.
Data center is with the now data privacy loss is a very big opportunity in India. As we speak, there's a lot of data centers are setting up. As you know, every megawatt, Anywhere between 30 to 44 of the CapEx of 4 megawatt of the data center in that. High physical data centers need lot of breakthrough connections with And you would have seen our last analyst call where we have the complete portfolio of that particular market in that. So in addition to that, I think we also looked at in a limited way, a very select greenfield investment in the industry, especially on the core industrial segment.
And as and when that happens, so that's also another opportunity because more and more these things We do both on the energy start standpoint and the digital standpoint, both of them had to go 99 where we can bring the opportunities together from energy platform as well as on the digital platform side. Thank you.
Thank you. The next question is from the line of Sujit Jain from ASK Investment Managers. Please go ahead.
Thank you for the opportunity. A few quick questions. What is the size of Hitachi's business, which is unlisted and current areas of operations. As per the contours of the current deal ABB India and Hitachi ABB, after
8 years, can
you then enter into LV, MV products, which you right now cannot? And when you talk about energy storage, which you've spoken about in your previous presentations, what exactly that opportunity is? Thank you.
Yes. Thank you. I think obviously as you know, we are a separate independent company, globally run standalone global company continuing to be headquartered in Subjaland and then we have our own listed company in India and we have a separate board. So We cannot comment on the Hitachi because that's a separate legal entity and since it's not a listed, so we're Publicly not available, so we will not be willing to comment on that. That's number 1.
And your can I know your second question, please? Can you please repeat that?
After 8 years of this agreement, which is where there is no compete, can you enter into LV and MV products, which you right now cannot?
Yes. Let me just clarify, I think that's a very good question. These cannot be as you all know, then we always and non compete only from one side, not other side, okay? So otherwise, it will never come under never be approved by the antitrust team, right? At this point in time, we do not have any non compete clause on us.
That means If you want, we can do medium voltage, we can do low voltage. So it is the complex cost is only on ABB, not on the Hitachi ABB Power Grids. Having said that, Our strategy remains on the energy standpoint. Our strategy, as you know, we want to be a partner of choice enabling our customers stronger, smarter And VELGRIDGE standpoint. So that's where we would like to focus on that.
So we remain that focused and that's exactly what we are looking at. It is not about Competing on the low voltage or medium voltage, which was not in any case not part of our strategy.
And energy storage when you mentioned, what Would you like to highlight in terms of the opportunity? Is it related with EV sales, etcetera?
Yes. I think it is related with that. As you know, the more and more renewable energy, especially the solar and with so much of penetration, definitely the grid needs Do more of the storage, right? So inertia of the system standpoint, etcetera, it needs more of a battery energy storage systems or any other part of the storage system in there. So that's where the energy storage comes in.
But we have quite a good offerings on the Microgrids are energy storage on the we have the battery management as part of our portfolio. So we have a good connection for the Grayscale Energy Storage Plants. So this is another big opportunity in India for the energy storage opportunity. Thank you.
Thank you. The next question is from the line of Alok Ranjan from L&T Investment Management. Please go ahead.
Hi. Thank
you, sir, for the opportunity. Sir, you have a highlighted in your presentation that this quarter we have Could you give more sense on the opportunity size that is available, say, for a data center of size of 50 megawatts, what kind of opportunity that comes to our company? And how is the competitive aspect there? 2nd question is on grid automation. Could you give some things on business states are more active on this grid automation?
And how is the intensity of the automation be first between the discounts which is operated by the private player compared to the one which is operated by the state agency? That's all my questions.
Okay. Thank you. I think your first question on the data center, So data center with the data privacy laws kicking in, so there are quite a lot of opportunities on the data centers and data center as a business. So many players have been setting up of the projects here. So we have got one order from 1 of the largest conglomerate in India, who is venturing into the data center opportunities.
So we also see similar to that the big tech companies are also setting up the opportunities. They're all hyperscale data centers, Talking about 50 megawatts to 100 megawatts of data centers, 100 megawatts of the energy consumption of the data centers in that. So from an opportunity standpoint, we have a power delivery connection. That is the one thing, which is basically substation, automation, Grid based compensation and also the reliability maintenance of this thing. Data center is extremely important that the reliability of the power is Extremely essential.
So we bring a lot of automation solution to the data centers in addition to our traditional power technology. So reliability care. And thereafter, we also can talk about using our power system module model, so we can We can also look at energy savings. Energy is one of the biggest cost elements in the data center. So we can also look at the migration of the energy cost.
Those kind of things are opportunities for our company in that. And second question of you asked is especially on the grid Automation Grid Automation Business is basically it starts from the traditional controller panel, Substation Automation and then you're talking about the communication standpoint and then enterprise software And battery energy storage is also part of the automation portfolio. So we see, which is a very robust and we need This kind of automation solutions in almost every part of the value chain after the energy. And In addition to that, we have to scale our networks for the networks. We have to scale our network for the transmission sectors, and we have the distribution automation for the discounts.
So these are the opportunities we'll go into the various things in that. So last question about private versus This is for sure in our private facilities. They are far ahead in terms of the automation, decline the automation. And yes, there are also a couple of government agencies are also touching for now, but I think Private CP so far has been declined by permission.
Thank you. The next question is from the line of Manish Goel from Enam Holdings. Please go ahead.
Yes. Thank you so much. I have Two questions. One on the annual report mentions about that for growth of exports, we have identified 5 products for global sourcing. So we'd like to know like what's the potential size and what kind of revenue contribution can be expected?
What are these products, if you can provide some insights? That is number one question. And number 2 question is on verify on what is the Is there any overlap between ABB and Hitachi ABB in the areas of data centers and EV space? Like on EV, like we provide charging solutions, but we don't make chargers. So how would be the go to market strategy?
Like Do we go along with ABB and provide the entire solutions? Or how would it be going forward, number 1, on EV? And number 2, on data centers? Like Even ABB is having a presence and so is it that they would be providing The inside the data center low voltage and medium voltage and we would be focusing more on the outside and How would we approach the market? Thank you.
Yes. So on the the first question was on the Sorry, in the annual report on the exports, right?
Yes, 5 products we have mentioned that have been identified for global sourcing.
Got it. So as you know, I've been also telling you our export strategy is very consistent and we are making the progress in line with our strategy. Our exports are currently in the range of 15% to 30%. And we are making a lot of actions and taking initiatives to move from 15% to 30% to 20% to 30% over a period of time. So that's the reason we are investing it as you can see from our CapEx and also the local footprint.
So that's exactly what we are doing in that. So as part of the export, so we have a strategy. One is that some of the products we manufacture only here and no other plant in our Hitachi ABB power grid. For example, 66 kV 13.3 is a global fuel factory. So we sell That's a big part of the world from here.
So that's the one strategy in that. Then there are also feeder component strategy. And the third one is we also sell the directly to the customer using the existing Hitachi ABB quality sales network. So we are the multi channel approach in that to bring our next course in that. Moving to your second question on the overlap, let me Before that, let me talk about the EV space.
Let me clarify to EV. EV, we do have the charger, But we don't make only chargers. We make chargers and charging systems. And We do file a large scale application. For example, a mass rapid transit system like in buses, where in a bus depots, where those kind of things where you need a resilient charging system and also the charges in that.
So that's where our cross charging technology, for example, which is part of the Hitachi ABB power grid, this technology will enable us to get a boost of charge in less than 20 seconds. So this is a high power. The bus doesn't need wait for hours to get it to get charged. We have the technology, we can get the charge to 30 seconds and keep moving in and thereafter again we do it and when we come back to the depot, You get the full charge kind of thing. Both chargers and charging systems are part of the thing.
Our go to market strategy is very clear. We have been as you know, we have told you also the pilot of the class of Leelan. We are setting up now a pilot and we are going to run this particular bus Using this technology, using our chart we have seen IIT Madras in 2 months from now. So that's very clearly we have it. And last question of our data centers.
See, as I told you, Hitachi ABB Power Grids, data center is one of our biggest Growth segment. We do the complete electrical right from the grid connection to the log stream. We do not have the products like low voltage and medium voltage for developing that is there with ABB. So we do disconnection. We do all the transformers required in the data centers.
We do all The power system models in that and we do the automation that we think. So that is how we are working with the data center. And power quality for the data center is another very important thing. Power quality for the data center is extremely important. So we have the complete offerings for the data centers.
So you mentioned about INR 30 to INR 35 crores per megawatt. So is it your addressable market or minimum investment in a data center?
No, that's a CapEx for the data Not all.
What would be your addressable market, sir, roughly out there 30, 35 crores?
In any place, this kind of thing is Within the 10% to 15% depending on the specification slightly higher, that will be the addressable market.
Thank you.
Okay.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Envino for closing comments. Over to you, sir.
Thank you once again taking your time and listening to all that I really appreciate very much. And I really want to thank you once again and want to wish you a Please take care of yourself, your families, your colleagues. Stay safe. And we all need to collectively navigate this particular day 2, which is right now in the natural course in all parts of the country. Thank you once again.
Thank you. Ladies and gentlemen, on behalf of Hitachi ABB Power Grids, that concludes this conference. We thank you all for joining us and you may now disconnect your lines.