Ladies and gentlemen, good evening and welcome to Hitachi Energy India Limited's Q2 FY 2025 Analyst Conference Call. 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. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. N. Venu, MD and CEO of Hitachi Energy India Limited. Thank you, and over to you, sir.
Thank you very much. Good evening, ladies and gentlemen. Thank you very much for joining us for the analyst conference call. I hope you're all doing well. Today, we announced our results for the second quarter of financial year 2024-2025. Over the next 20, 25 minutes, I will take you through our performance during the period ending September 30th, 2024. For your convenience, I will read out the slide numbers. We have just uploaded the slide deck on the website. I will refer to the slide numbers for ease of reference, those of you who are attending on the phone. Today, with me in the room, I have our CFO, Ajay Singh, and Poovanna Ammatanda, General Counsel and Company Secretary, and Manashwi Banerjee, Head of Communications and Investor Relations.
During the quarter, we have focused on improving our overall operational efficiency, which has helped us in achieving a sustainable flow of order intake, pushing the order backlog to a record high for the second quarter of FY 2024-2025. The growing urgency to accelerate energy transition in India and globally has significantly boosted investments in the energy sector. We expect this momentum to continue in the coming quarters, creating more opportunities in the energy segment, especially in the renewable space, for our portfolio. Moving to slide number three, at Hitachi Energy India Limited, people have been always in the center of our strategy. They have been its core strength, and they've been powering for the last 25 years. We are committed to delivering meaningful employee experiences, and their safety and well-being are paramount to us.
During this quarter, we implemented key initiatives to strengthen safety practices across our offices and factories. It helped us to achieve 100% on-time closure of high-risk hazard situations. There has been continuous effort towards reiterating the importance of reporting safety incidents at working sites. Furthermore, we refreshed our health, safety, and environment policy to ensure positive health, well-being, and safe working conditions. We organized multiple awareness training sessions and health camps across our offices, facilities, and project sites for the well-being of our employees. To mention a few, we had sessions on health situations, precautions during monsoon, lifestyle diseases, mental health, yoga, and manual handling ergonomics. Also, we had multiple health camps for diabetes, pulmonary health, and held a blood donation camp as well. Moving to slide number four, we at Hitachi Energy place sustainability at the heart of the company's purpose of advancing a sustainable energy future for all.
In line with this purpose, Hitachi Energy is committed to drive business in a sustainable way. Our sustainability plan focused on four key areas: planet, people, peace, and partnership, with a specific target for respective heads to be achieved by 2030. As the numbers come in, I'm happy to inform you that we closed FY24 with achieved targets of reducing CO2 emissions and waste by 88% and 97%, respectively. We also reduced fresh water usage by 18%, which is the target of 25%. Diversity is an integral part of our work culture, and we have set our female diversity target of 8%-10% by 2025. It is noteworthy to mention that we are almost touching the 8% mark of our given target. Our constant endeavor towards sustainability has been recognized as we are comforted with the prestigious Businessworld's India's Most Sustainable Companies Award.
Moving to the next slide, slide number five. In keeping with the rapidly evolving environment and technologies, we are globally re-aligning our Sustainability 2030 program to be more measurable and impactful. Changes are aimed to maximize its positive impact across the value chain and through co-creation of environmental, social, and economic value. To maximize the positive outcomes, now the focus on three key strands of planet, people, and principle, which cover all areas for sustainability to life. Under the people strand, we are supporting a safe, inclusive, equitable, and just energy transition by focusing on three areas: health and safety, diversity, equity and inclusion, and human rights and social contributions. Under the planet strand, the focus is to accelerate the clean energy transition with a particular focus on three areas. That is climate, circular economy, and biodiversity ecosystem.
The principal strand emphasizes on taking responsibility for the company's governance and employee behaviors. I'm now focusing on the following areas. That is ethics, integrity, sustainability, supply chain, and behavior and values. The core idea is to move beyond the realm of our products and services offering and deliver for a greater good of the society. Moving from our license to operate what we call, that is safety and sustainability, then we go next slide. That is, slide number six, is our business performance. As you can see here, the quarter ending September 30th orders total around 1,952 crores, up 11.7% year on year, where renewables led the change from steady across utilities, power quality, and substation projects. Expansion, upgrade, and improved efficiency also resulted in orders from existing power plants.
Key large orders of transformers and power quality solutions from industry, transportation, utilities, and data centers include 220 kV Central Transmission Utility for a petroleum product company in the UAE and transformer orders for a national transmission utility and EPC solar projects in Fatehgarh and Bhadla, respectively, and traction transformer for our locomotive engine factories, and there are several other data center and software-related things in that. Revenue for the quarter is INR 1,553.8 crores, showcasing a strong revenue growth of 26.5% year on year on the back of favorable mix and good order execution during the quarter. Profit before tax for the quarter was INR 70 crores, up by 118% year on year, and profit after tax INR 52.3 crores, up by 111.4% year on year, whereas quarter-on-quarter growth was up by 369% and 402%, respectively.
Operational EBITDA for the quarter stood at INR 126.3 crores, resulting in a margin of 8.1%, reflecting our continuous efforts toward improving margins and enhancing overall operational efficiency. At the end of the quarter, the order backlog stood at a record high of INR 8,910 crores, providing revenue visibility for the coming several quarters. Our continuous efforts toward enhancing overall operational efficiency have helped us in improving our overall performance, including margins. Moving to the next slide, slide number seven, where you see that as a pioneering technology leader, we are committed to the energy security of the country. So various projects undertaken by us during the quarter, we have commissioned several projects, and here I will highlight a few of them. We commissioned 400 kV 600-MW substation at Jaisalmer, Rajasthan, which includes design, engineering, manufacture, and testing.
We also completed supply installation, testing, and commissioning of 110 kV transformer base for an industrial plant in Trichy, and also commissioned 220 kV, 130 kV, 33 kV substation for intrastate transmission projects in Madhya Pradesh. The scope of work includes design, engineering, supply installation, testing of the substations in that. Moving to the slide number eight, we also continued to invest in our capacities and capabilities. This included starting expansion work of our transformers and interrupter facilities in Maneja to strengthen our operational infrastructure. For our teams, this year also, we have celebrated our 75-year celebrations for both internal stakeholders as well as external stakeholders. For our internal stakeholders, we had our first family fiesta, engaging the families of our employees to visit and celebrate our workplaces, our factories, our project sites.
Also, we organized the Energy Run in Bengaluru for our employees, customers, and partners, which saw a huge participation, almost 2,000 plus running enthusiasts. Both events were part of our efforts to commemorate our 75-year celebration, 75 years of our existence in this country. In parallel, engagements with our customers continued. For example, from organizing an extensive five-day training program for our Mumbai HVDC project customer team, which was attended by 20 participants from the customer side, to hosting a senior delegation from Delhi Metro Rail Corporation, who were providing extensive tours to our factories, showcasing our comprehensive product manufacturing and quality assurance process for dry and traction transformer factory at Savli. These are all just a couple of examples for various capabilities building exercise with our stakeholders, both internal and external stakeholders.
Moving to the slide number nine, the company has adhered to the principle of collaboration and co-creation with those most familiar with the challenges. Hitachi Energy works closely with our customers, partners to foster a sustainable energy future for present and future generations. As part of this ongoing effort, we conducted our multi-city flagship customer event series called Energy and Digital World with the sessions in Jamshedpur and Pune, respectively. On the similar lines, we launched a new initiative called Technology Colloquium Technologies for Energy Transition and Sustainable Grid for engineering students across India, so this new platform, we reached out to engineering students to talk about one of the most important and urgent issues of our time, the energy transition and Net Zero targets. The platform facilitates meaningful conversation and exchanges of ideas on energy transition among young minds, subject matter experts, and Hitachi Energy leaders.
The first segment of the tech colloquium was kicked off from BVM College in Gujarat, then moved to IIT Delhi and culminated in NIT Warangal. Engagement with key industry bodies and platforms were also leveraged for sharing leadership views and opinions on topics like innovation to net zero to making India a global manufacturing hub. At CII India Innovation Summit, Innoverge Annual Karnataka Energy Transition Conference, or Economic Times Energy Leadership Summit, just to give examples of that. Moving to slide number next, slide number 10, Energy and Digital World 75. And I thank you for some of you attending to this event on the second day of Energy and Digital World. We at Hitachi Energy are proud to be part of various nation-building projects over the last 75 years. In culmination of this milestone, the company organized a two-day experiential technology symposium called Energy and Digital World 75.
Mr. Amitabh Kant, G20 Sherpa joined us as a chief guest for EGW 75. During the inauguration of the mega event, we emphasized on the need for collective action towards the bigger energy goal and spoke about how India is an exemplar with its stride in the road to net zero. We also lauded Hitachi Energy's contribution towards achieving the goal. The event encapsulates technologies and discussions towards advancing energy transition for India's net zero journey, which was attended by over 2,000 customers, policymakers, academia, think tank, regulators, supply chain professionals, etc. Over 30 nationalities were also present and over 35 technology sessions by global industry experts, product launches, and many more.
The experiential exhibition was the main attraction of the event, spread over 1,000 sq m, showcasing our state-of-the-art technologies and products and giving a chance to our customers and partners to have a feel and look at our product portfolio, which are crucial for solving customer challenges. During the two-day event, we also had a closed-door meeting with several CXOs of various companies, and many of you also joined us and were provided a deep dive into technologies enabling the future energy systems. Moving to slide 11, I think this slide you know better than me. The Indian growth saga continues as the country is on the right track for a $5 trillion economy in the coming years. According to government reports, India's GDP is growing. Growth was 8.2% for FY 2024, which is 10% for FY 2023.
India's IIP growth for July-August was 5% year-on-year basis, and IIP index for the industry stood at 149.6 during August 2024. The ongoing efforts from the government to boost the renewable sector have had a good result. IIP recognized a 50% year-on-year growth in FDI for FY 2024 with INR 31,600 crores, which is INR 20,700 crores in FY 2023. Furthermore, the green hydrogen market is expected to attract investments of INR 10.6 lakh crores as the country aims to produce 5 million tons of hydrogen by 2030. Also, the Indian data center market is estimated to reach INR 85,000 crores by 2027. With India's ambitious plan to increase power transmission capacity by 35% by 2032, it expects an investment of INR 9.15 lakh crores in state and central networks. Indian Railways, as part of its CapEx plan, has allocated a INR 2.62 lakh crores budget for expansion of rail networks.
Also, concerted efforts were made to reduce distribution losses through upgradation and modernization of substations. Moving to slide number 2, as you can see here, the strong growth in the transmission industry, data centers, and renewables. To provide more color, this quarter data center segment emerged as a high-growth segment with year-on-year growth of 346%, followed by renewables, which is up by 135% year-on-year. And industries and transmission segments saw a year-on-year growth of 78% and 34%, respectively. Whereas railways and metro, due to which we saw a year-on-year decline of 11% in rail and metro segments, but the electrification of railways and growing metro networks across the country will push these segments in the near future. On the right-hand side of the slide, you see that the order mix products took the lead in the segment, whereas utilities and direct end users are clear winners, projects, and channels, respectively.
Moving to slide 13, which are our growth levers, service and exports. The growing urgency to accelerate energy transition across the globe. There has been a constant endeavor at Hitachi Energy to enable many pathways to energy transition across geographies and segments. For quarter two, the service portfolio witnessed a substantial growth with contribution of 12% to the total order received, stemming primarily from industry, renewable, and transportation, including restoration and service of service-level agreements. To mention a few key orders, we received the transformer service coastal order from the steel major, GCB and GIS Unique Spare Requirement and Transformer Repair in renewable and railway sectors. Service and commissioning of various systems in Rajasthan, solar, and the restoration of 220 kV GIS at Gorai substation of a private T&D company.
On the right-hand side of the slide, you see the exports accounted for 22% of total orders booked in Q2 FY 2025, a significant share from a high-voltage product and grid integration orders from European and African markets. Some of the key orders include the C&P system in Yanbu, 145 kV GIS for Red Eléctrica, 230 kV AIS packages for Azerbaijan, and 145 kV GIS for Echelon Data Center. So just to name a few in that. I'll now hand over to our CFO, Ajay Singh, to take you through our financial performance in the next two slides. I'm moving to slide number four, slide number 14. Thank you, Venu. Good evening, everyone. Hope you are all doing well at your end. Our focused and proactive approach has helped us to maintain the order growth momentum carried from the last quarter.
During the quarter, the company booked orders worth INR 1,952 crores, which is 11.7% growth year-on-year. Revenue, we see INR 1,553 crores, which is up by 26.5% year-on-year and 17.1% quarter-on-quarter, which is on the back of the favorable mix and the good order execution during the quarter. Profit before tax for the quarter was INR 70.6 crores, and profit after tax was INR 52.3 crores, both up by 118% and 111% year-on-year, respectively. Whereas both EBITDA and PAT quarter-on-quarter grew by three and four times, respectively. If you see the operational EBITDA for the second quarter, it is INR 126.2 crores, resulting in an operational EBITDA margin of 8.1%, which is reflecting our continuous efforts towards improving margins and enhancing the overall operational efficiency. Even if you see the H1, the six-month columns also clearly demonstrate the growth trend across parameters from orders to the operational EBITDA.
We closed this particular quarter with, I'd say, one of the highest ever order backlogs, INR 8,009.10 crores, which is providing a visibility of approximately 26 months for the execution. If I move to the next slide, where I'd like to share and update on how the numbers were during the last few months. So let me take a moment and walk through a little bit specific detail in this particular slide. If you see the table, it gives a clear picture of how the value engineering pursued for improving the bottom line and the progressive margin-specific recovery that we are able to see. You can see year-on-year revenue improvement of 26.5%, that is INR 1,553 crores in this quarter, as we discussed because of the value engineering efforts. The material cost, if you see, is 61.7% compared to the last quarter, 62.8%.
Customer expenses from the percentage term, if you see, it is lower than the last quarter, 8.8%. Operational expenses are also in line 20.9% compared to the previous quarter, 23.6%. And then there is exchange rate variance, that is 1.5%. Depreciation is consistent. Interest cost is slightly higher in this particular quarter compared to the previous quarter. So overall, you see, we are well progressing in the direction, and our effort is to ensure that going forward in the coming quarter, we continue this particular trend. With this, I hand over to Venu. Thank you, Ajay. Let us go to the last slide before we open up for Q&A. Our priorities for the remaining fiscal year: we remain steadfast to our bigger goal of 2030 strategy. Our singular focus of cementing our leadership in core segments continues.
Our core segments are our renewable, our transmission, our utilities, our industry, our data center, our rail, etc. This continues with the strengthening of our capabilities for growth. Not only is it called Trinity of Service, Export, and Digital, along with harnessing maximum potential from the high-growth segment, as I've described those things. We keep continuing our focused approach towards improving the overall operational efficiency to further boost productivity and keep rising quality level. On the business front, consolidated efforts will be made to leverage the large order backlog for revenue accretion and also margin improvements.
To capture the maximum business potential arising out of the energy transition, we will continue to invest towards increasing our existing capabilities through upskilling of our existing human resources to address energy needs of today and upcoming time. Safety will always be paramount for us, as it being entrenched in our DNA of our organization.
We will continue to upgrade every day as a day one in terms of implementing safety work culture across our functions, and last but not the least, we invest in capacities for future growth, capacities of our manufacturing, capacities for our workforce as well. With that, I close my presentation and open the channel for questions.
Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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. In order to ensure that the management is able to answer queries from all participants, please restrict your questions to two at a time. You may join back the queue for follow-up questions.
We'll take a first question from the line of Subhadip Mitra from Nuvama. Please go ahead.
Good evening, sir, and thank you for the opportunity. Firstly, congratulations on a good set of operational numbers. Thank you. Thank you. So given that we are seeing good operational performance both in terms of top line and margin recovery, and you have maintained that you would be looking at double-digit margins by end of the year, would you have any change to that guidance or any further clarity in terms of range of margins that we can look at, let's say, over the next one year or so?
Thank you very much for your question. No, at this point in time, no change in our thinking or what we said previously stated.
Understood.
Secondly, in terms of the large HVDC order potential, and we have, I think, one which is the L1 has already been announced and probably two more which are coming up. Are you already part of some of these orders? Would you already be L1 in some of these bids?
No, I think as you know, there are three HVDC tenders which have come for bidding, and as you rightly said, one of the HVDC tenders has been L1 received by a customer PGCIL. That's what we have also read from the public information, and we are bidding as we speak. So we are bidding to our customers. So the equipment-related tendering is currently on, that's what you said? No, the HVDC is a related thing. The PGCIL has won the entire transmission system, right?
The transmission system which includes HVDC terminals, that's our scope, and the transmission lines, etc., including land and development. Although in the whole transmission system, what I understand is that one they received L1 or something like that. So our portion, we are bidding it to our customers, which includes PGCIL. Right. So just trying to understand that for this particular Khavda transmission line which PGCIL has won, would you be supplying the equipment for this piece, or is that something that's yet undecided? No, it is still that's what I'm saying. We are still, that is, under bidding. We are bidding it to our customers, that's what I said.
Understood. Understood. And for the rest of the two lines, any timelines in your opinion by when we can see the equipment ordering on the other two HVDC?
I think our view is that at least one or two, at least. If not two, at least one for sure. It will get finalized in this financial year. One or two.
T hat's understood. Perfect. That's it from my side. Thank you.
Thank you.
We'll take a next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi. Good evening. Congratulations on a great set of numbers. Good to see improvement in gross margin and EBITDA margin. So my question is on the HVDC, Leh-Ladakh . What is the status? I think the bids were supposed to be submitted in October. Has there been any update?
Leh-Ladakh , I think the submitted is not submitted yet. So there will be again discussions are going on. What will be suitability, etc., all those things, kind of things. Not submitted until that.
Understood. My second question is other expenses.
I think last quarter it was high. Again, this quarter it persisted, right? I think I mentioned last quarter there are some one-offs. Is it fair to assume that there are some one-offs again in this quarter and which will go away in the next fiscal year?
We are right. Yeah. So if you see in the current quarter, the other expenses, as I told you, from the percentage terms, it has come down, rather. It is 20.9%, right? So I don't see that there is any other one-off in this particular other expenses. So clearly, it will be more or less consistent in this particular range. So these are one-offs which can go away in the next fiscal year. This is the trajectory, right? We should assume. This will hover around this particular range depending upon how we progress.
There are some expenses which are variable in nature that will vary depending upon the growth. Understood. My last question is, are the conversation on orders from high-speed rail still going? Yeah, it is still ongoing. It's not concluded. It's still ongoing.
Understood. Thank you, Venu. Thank you.
Thank you. We'll take a next question from the line of Parikshit Kandpal from HDFC. Please go ahead.
Hi, Venu. Congratulations on a decent quarter, sir. Sorry. Can you use your handset mode, please? Your line is not very clear. Is it better now? Yes. Yeah. Hi, Venu. Congratulations on a decent quarter. So I think initially in the call, you said that you are bidding for the client. So I mean, have you entered exclusivity with the client, or it's again an open bid and where other peers are also giving their bids?
Or is it that you've already been finalized and just some commercial negotiations are going on before the project LOI gets issued?
It is open bidding. It's open bidding. So all the participants are there.
Okay. Second question is on other expenses again. So if I compare with some of your peers, so they report about 11%. So I understand royalty will come on top of it, 5%-6%. But still, if it goes to 16.70%, but still there is almost 400-500 basis point difference. So why is such a big difference? And is it because we are running again the parallel IT costs because we have our own ERP now operational? So last time, I think Ajay said that we're still operating on dual IT systems.
So what would be the contribution of shared IT with ABB, and when do you expect it to go away from our books? And what could be the savings from that?
Okay. Yeah. So thank you for the question. So as I explained earlier also, if you see the other expenses in percentage terms, we are consistent. That is how I'll say. And if you talk specifically about this particular quarter on the value terms, if you talk about the value terms, whatever the major incremental value is there, that is because if you see in this particular quarter, we have increased the revenues. So the production-related expenses increased. But overall, if you see on the percentage terms, we are consistent.
Coming back to the IT cost with ABB, so again, if you see, we have told earlier also that when we embark into new companies, we have taken support in the form of TSA agreement with ABB because at that particular point of time, we did not have our infrastructure, so to say. But as we speak today, we are basically at the end of that transitional service agreement. We have already set up our own infrastructure, and we believe that the IT cost that is factored in this particular, it will be in the same range. So that is the overall setup. So our overall agreement, the TSA agreement, finally, last leg of agreement will be coming out of that either by the end of this particular, let's say, December next quarter.
So how much would be that cost in absolute terms?
I mean, is it significant? So how do you quantify that?
As I discussed, we will be hovering around 3%, 2.7%-3% range overall IT costs that we are also today we are hovering around, and going forward also will be around the same range, so no savings as such from this association after? Because we implemented the new ERP system, right, so we'll also get into a lot of other savings, including the productivity, and those other things also part of that, so I think we have discussed earlier in the last quarter that we have implemented the new ERP system for Hana, and there will be just now we have implemented in the previous quarter, so we expect to have efficiency out of we can leverage efficiency out of that, and that will come with time.
We expect one or two quarters, three quarters to derive efficiency out of those new implementations.
Okay. And this is the last question around this battery storage. So now the battery costs have reduced significantly on the storage side. So any plans, do you think, any opportunity for us to play out in the near term? So how do you think the pathway towards introducing the battery storage for the Indian?
Yeah. Thank you. I think absolutely. As I said, you see our 2030 strategies also. This is exactly on the edge of the grid where we have played there. That is energy storage. So we have a complete portfolio, battery energy storage. And we do containerized, modularized, which is scalable battery energy storage supply. In addition to that, that's anywhere we add our things. In addition to that, Hitachi Energy globally, they acquired a company called eks Energy.
So, eks is a company with Hitachi Energy globally they acquired. And that company has specialized in the battery energy storage applications. They've done a grid-scale battery, several countries in there. So we will be also leveraging that, offering that solutions and our products to our customers. So we are discussing with the customers as the market is getting matured.
Okay. Sure. Thank you. I'm sure I'll happily run those other questions. Thank you.
Thank you. Before we take the next question, we'd like to remind participants to press star and one to ask a question. The next question is from the line of Dhavan Shah from AlfAccurate Advisors . Please go ahead.
Yeah. Thanks for the opportunity. So my question is on the renewable side of the portfolio.
If I look at the order inflow growth for the first quarter, that was also more than 100% and around 500% in the first quarter. The same is around 135% in the second quarter. So can you help us to understand what is the scope of work in the renewable side of the portfolio? And out of the current order backlog of roughly INR 9,000 crore, how much of renewable constitutes to the overall backlog side?
So renewable, our scope lies everything from the end terminal of the inverter. We don't do the civil. We don't do the structural. We don't do the panels. Okay? So take a list of the things. All we do that. Whether you're talking about the grid connection of the renewable power, whether you're talking about transformers required, everything, then you're talking about automation and also the system studies. System studies is a big thing.
So all those things, right from the planning stage to the building phase until maintenance phase is what we do that, except the civil, structural, and the modules.
Okay. And how much does it constitute to the overall backlog in the portfolio?
We don't separate the backlog by renewable and non-renewable so that we are not given so far and we're not led to give you also more on that.
Got it. And just last thing is we are hearing some issues in the supply chain for the CRGO sheet for the transformer. So any issues? Which one? Corrugated sheet. Hello?
Yeah.
Corrugated sheet for the transformer. So are you facing any issues in the supply chain for our portfolio?
No. I don't think. Corrugated steel, no. You must be talking about this electrical steel, you mean?
Yeah.
T he CRGO.
Yes. Correct. Correct.
Okay.
Electrical steel, as you know, we are Hitachi Energy globally. Now I'm talking about globally. We are one of the largest consumers of CRGO globally because by far we are the largest capacity thing. We have a definite frame agreement with many global suppliers. And that way, we are able to secure the supply so far. We are not facing any problems so far.
Okay. And we are not expecting any delays in terms of the requirements of those raw materials in the future quarter, right?
Yeah. We can't tell forever, sure. But in the near term, let me explain. We have robust frame agreements globally. We do see that we have a robust supply chain in place. Of course, the prices are fluctuating. Prices are varying. But barring that, we are able to secure the supplies.
Okay.
And pricing-wise, I think, are we protected in terms of the end pricing? Because the pricing has also been moved up. So how are we safe in terms of the overall contract pricing?
Most of our contracts, more than 60% of our contracts, we have price escalation formulas.
Got it. Yeah. That's all for my side. Thank you so much.
Thank you.
T hank you. We'll take the next question from the line of Vinod C, from PhillipCapital. Please go ahead.
Yeah. Hi. Good evening. Am I audible?
Yes. Yes. Yes.
Yeah. So I had a question on your cash flows. So if I look at your operating profit, they have doubled from September last year to this year. But I think the entire cash flow is getting eaten up by working capital. There's a big jump in this organic growth on your side.
That has also resulted in, I think, 120% growth of short-term borrowing. So can you shed more light on what's happening operationally?
Thank you for the question. So you see, you're right. Operational cash flow for this quarter, we are on the negative side. And our borrowing also compared to the previous quarter has increased by roughly INR 35 crores.
So if you see, what I will say, this is a timing issue. In this particular quarter, I would say the collections were good, but the payouts were also very high on the higher side. And why so? Because we are aware that we are running a large HVDC project for which in this particular quarter, the payouts were a little bit on the higher side. So that is just a timing issue between the receipts and payments.
Otherwise, I don't see there being any major challenge in this particular aspect.
Okay. Thank you.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have a question from the line of Heet Mehta from ValueQuest. Please go ahead.
Hi, sir. Congratulations on a good second quarter for the quarter. Sir, my question is more on the CRGO prices and its movement side of it and how it is affecting our realizations in terms of who are we supplying to, whether it be industries or the utilities?
Yeah. First of all, I said CRGO has two dimensions. First of all, it has huge demand in the large power or overall power transformer industry worldwide. So naturally, the demand is very high. As I said previously, Hitachi Energy is one of the largest buyers of CRGO globally.
We have a very robust supply chain framework agreements with most of the CRGO mill vendors directly. And we are able to, first of all, we are able to secure the supplies in line with our customer's requirements. That's the big thing. Our teams globally, they're working to ensure that the commitments are met, and we are able to get to date the commitments in line with our commitments. That's number one. Priority for us is ensuring the supply chain, ensuring the supplies in our factories. The number two is, yes, the prices are fluctuating globally, and supply demand is there. So as I said, we have long-term framework agreements, which also allow escalations. And as I said, most of our contracts do have price escalations. So we are able to transparently pass on those price escalations. That way, we are able to mitigate the risks with that.
So my question was more on the side that we are seeing that peers or other transformer manufacturers are actually seeing the realizations go down with consistent margins. So we would assume that it was the commodity input prices that were going down instead of going up. So my question was on how our realizations are moving, on the higher end or on the lower end?
The realization on the products, you mean?
Yes. We will not talk about the realization for each on the product line basis. What I can tell you is that since the demand is high, naturally, there would be tendency for going up on the margins, which is what we are looking at. But costs are also going up, right? We need to also balance those costs versus the unknown costs of impact. So I would say it's stable in other words.
Okay.
You are not seeing any huge fluctuations in the price of CRGO as such, right? Right now, their prices have stabilized more or less?
As I said, there are fluctuations, but those fluctuations are being covered with our price escalation. And as I said, we are giving priority to ensuring the supply over the pricing. That's how we have been working, and that's how our contracts are being structured with the CRGO people.
Understood. Thank you so much, sir. Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We'll take a follow-up from the line of Parikshit Kanpal from HDFC Securities. Please go ahead.
Yes, sir. Thanks for the follow-up. We have taken the related party approvals for order from the parent entities.
Just wanted to understand how much of that has come in already in OneEdge and in this quarter? Are there any returns on that?
Right now, we will not like to quantify at the moment, but we'll get more visibility in the coming quarters how we are carrying on those particular approvals. Last time, when we took the approval, we had anticipated, and we have done a bottom-up exercise where we see that by the year-end, we'll be crossing the threshold. That is for which we have taken the approvals in advance. But maybe we'll get more clarity in the coming quarters.
But as of now, nothing has been materialized from that approval, right? Nothing has come in the first half.
Obviously, it has come. It has come. It has come because it will come in a quarterly. It will come.
So that is what I'm asking for in OneEdge, how much has come in? And in this quarter, if anything has come in this quarter, out of the total order inflow of 1,900 crores, what is the contribution from related parties? So ballpark number, you can say 300 crores. 300?
For we are talking about the Switzerland we talked about. So ballpark number, the approval that we have taken is around 1,200 crores, and the ballpark we see till at least September is around 300 crores roughly. So a lot of ordering is still to happen in the second half. So we'll see some more larger contribution to come in from the related entities in the second half. Yes, sir. Yeah. But at the same time, just to be sure that whatever we take the approval, there is no guarantee that we will get everything.
We take an approval in anticipation of some of the projects. We are bidding together with those companies, and that's how the approval will be taken ahead of the curve in line with the good governance practice. So whatever we take, everything will not come into that.
Okay. Sure, sir. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phones now. Participants who wish to ask a question, please press star and one on their phones now. As there are no further questions, I would now like to hand the conference over to Mr. N. Venu for closing comments. Over to you, sir.
Thank you. Thank you very much. Once again, ladies and gentlemen, I want to take this opportunity to wish you and your family, your loved ones a happy Dhanteras and happy Diwali.
Take care and stay safe, and talk to you soon. Thank you very much.
Thank you, sir. On behalf of Hitachi Energy India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.