Good evening, ladies and gentlemen, and thank you for joining us the call for the analyst presentation. I hope you're all doing well. Today, we announced our results for the quarter four and also, which is also basically the full year for the fiscal year, financial year 2023. In the next 20 or 25 minutes, I'll take you through our performance together with our CFO, during the period ending March 31, 2023. I will also take the reference of the slides just for our easy of reference. With me in the room today, I have our CFO, Ajay Singh, and Poovanna Ammatanda, who's our Company Secretary, Head of Legal, and Manashwi Banerjee, who's Head of our Communications.
When we entered the fiscal year in April 2022, we did not have the visibility on the geopolitical tensions in some countries and the impact of COVID, their impact on global economy parameters like energy prices, supply chain constraints, non-availability of, you know, some semiconductor chips, et cetera. However, as Hitachi Energy India, we remained optimistic and focused towards increasing operational efficiencies while expanding our portfolio in high growth markets and expanding our manufacturing footprint. As we navigate through the dynamic headwinds, basically, I wanted to talk about, you know, in Q4 especially, we have not only grown in terms of revenue, but also created value for our customers, stakeholders, and society with the resilience in that. Let me take you to the slide number three.
Sorry, it's not moving. Yeah. Slide number three. As we review the quarter, I want to recognize and express gratitude our most valuable asset, that's our employees. Because employees always the center of our strategy, and our commitment to their safety has been unwavering from offices to factories, to project sites, on-site locations. They return this with their ownership and safety matters. As a first step to commencing a survey and on-site planning, we inaugurated the safety, power, and commitment campaign at our Mumbai HVDC site, reinforcing our dedication to a secure working environment. As you know, Mumbai HVDC kind of projects take quite a long time. Being at the site, it's important that taking care of the people are the most important in that. We also instituted the electrical safety awareness program across locations.
We organized a two-day training session for employees across locations from Kolkata to Faridabad to Manesar. These sessions focus on safe and healthy work environment, which is our basic licenses to operate. Our consistent effort were acknowledged and recognized for excellence in health, safety, and environment practices by customers and stakeholders in the market across verticals, including renewable mining, mines and ports. Moving to the next slide. Sustainability remained another priority for us as we continue to take action in this quarter towards our Sustainability 2030 goals. You recall our portfolio, be it product, system, services, and software enable carbon neutral operations of our customers, so that's the reason we are accelerating our own operations Sustainability 2030 plan. At our largest manufacturing location, Manesar, some of you have visited during our last in-person analyst meeting.
We have initiated a 950 kW, almost close to 1 MW of planned solar power installation, furthering our pledge to adoption 100% fossil-free electricity in our operations. Transitioning from diesel to piped natural gas for heating in our small power transformer section and instrument transformer factories have been another step toward minimizing our environmental impact, with a projected reduction of 33% in CO2 emission in our processes going forward. We have placed sustainability at the heart of our purpose, advancing a sustainable energy future for our partners, customers, and stakeholders, and also our suppliers.
With all these initiatives, since embarking on our journey towards net zero way back in 2021, we have achieved 45% reduction in our carbon footprint to enable a sustainable energy future, but not only for this generation, but those to come in there. 45% is quite substantial across all of our 19 manufacturing factories and several project sites, etc. Moving to the next slide, where we talk about performance. Performance in this quarter has demonstrated our focused strategy to diversify portfolio and relentless pursuit for improving the bottom line. We have seen a consistent order growth and a progressive margin recovery. We remained optimistic and focused towards increasing operational efficiency while expanding our portfolio in the high growth markets.
During the quarter, we received orders worth around INR 1,262 crores, which is, you know, on quarter-on-quarter basis is 3.3% higher and year-on-year basis is 20% to almost 21% higher than that. Mainly driven by utilities, transportation and industries, while re-revenue improved to 28% quarter-on-quarter, reaching INR 1,336 crores for the quarter ended March 31, 2023. As you can see from here, the order backlog stood at INR 7,071 crore, providing a revenue visibility for the coming quarters. During the quarter, we continued to face headwinds due to the global chips and electronic shortage, coupled with increase in commodity prices that posed significant challenges impacting our profit before tax.
The profit before tax quadrupled to INR 65 crores, and profit after tax was up more than ten folds, INR 50.8 crores over the weak previous quarter. For the full year ending March 31st, 2023, orders were at INR 6,817 crores, up 84% from the corresponding last twelve months, while revenue stood at INR 4,483 crores, up 14% during the same period. Despite the short-term challenges, we remain optimistic. The high growth markets remain robust, driven by accelerated energy transition towards renewable and electrification drive. This shift presents a medium to long-term opportunities in the power technologies, particularly in our high growth sectors, including renewable, high voltage DC current, data centers, transportation, industrial application and rail transportation segments, et cetera.
Moving to the next slide. The energy we've been talking also during our in-person analyst meet. The energy transition represents one of the most significant opportunities of our time. We are as a Hitachi Energy, we are championing the urgency and the pace of change needed to reach net zero. With our pioneering technology and solutions, whether it is a product, system, services and software, we are helping to accelerate the carbon neutral future, improving quality of living for today's generation and those that come. By applying the intelligence of digitalizations, we are enabling customers to plan ahead, make better informed decisions, and create more value in a rapidly evolving landscape.
During the quarter, we expanded our installed base of digital solutions in the steel industry, demonstrating our commitment to make energy intensive heavy industries more sustainable and efficient. Our power quality solutions have been successfully commissioned across sectors, right from cement to mines and ports. We are taking lead in advancing a sustainable future for all by shaping strategies for the energy transition in our collaboration with customers, partners and policymakers, and fostering inclusivity in the industries. We are showcasing our technological progress at events, various events, industry leading events such as Elecrama, India Smart Utility Week, earning industry-wide recognition. Our initiatives for promoting participation for women in STEM program kicked off its second chapter with another batch of over 100 students. We are seeking ways to replicate and expand this program to further its reach and inspire more women to join core engineering fields.
Our continued efforts have further cemented our reputation as a reliable partner and helped us earn the recognition of Most Trusted Brands of India by Marksmen group and the Golden Peacock Award for Corporate Governance by Indian Institute of Directors. Moving to the next slide. This quarter marked a major milestone for us with the inauguration of our high voltage direct current and power quality factory in Chennai. This state-of-the-art facility underscores our commitment to manufacturing advanced power electronics, including HVDC Light, HVDC Classic, and STATCOM with our MACH control and protection system. This factory will serve both the fast growing Indian market as well as the large global demand for clean energy solutions, to integrate renewable at a scale, at a speed that is needed.
It is the latest HVDC factory built and the world's second testing lab of power quality control solutions. It will cater to the rising number of high voltage transmission projects in India and export to some support global HVDC installations. These technologies represent the future of energy transmission, playing an instrumental role in the integration of renewable energy sources, the bulk transmission of clean energy over long distances, while also maintaining electrical grid stability. Hitachi Energy India is committed to providing business excellence in the energy and power industry. As pioneers in the industry, the company has established a reputation for delivering high quality products and services that meet the evolving needs of our customers across the segments. Moving to the next slide. I think this slide you all know better than me, in fact.
The Indian economy continues to demonstrate resilience in this fiscal year, despite the challenges posed by the COVID-19 pandemic, with a casual spike in cases in several states for a certain time period. IMF predicts the economy to perform well, with the several economic indicators looking stronger and healthier. The projected GDP growth for FY 2023, 2024 stands at 5.9%, and retail inflation has dropped to a 15-month low of 5.6% in March 2023, which is a good news. RBI India have been maintaining interest rates and working on monetary policy to support the country's growth. Manufacturing services PMI have remained in the expansion phase in February 2023, as you can see from the chart, indicating a favorable business environment. The cement production has improved for the second consecutive month in December 2022.
Remaining study there. Power consumption has been an upward trajectory since November 2022, showcasing an uptick in industrial and residential demand. Several measures with the support of government has seen the power sector recovering with a financial deficit that helped to 8% during FY 2022. The rupee depreciation by nearly 7% against USD in the last twelve months has had an impact on import and export. Major factors remained robust. In the face of these macroeconomic factors, our quarter performance demonstrated adaptability as well as the resilience in that. Moving to the next slide, where other significant macroeconomic factors that have influenced our growth trajectory have been our high growth segments. Firstly, renewable.
Various projects that are installing solar power plants under the 500 GW renewable generation capacity by 2030 are generating demand for grid integration technologies. This is complemented by a comprehensive plan to strengthen the nation's transmission system with a Green Energy Corridor to bring clean energy to households and industries, have been driving robust growth opportunities for the company during the quarter. We are already contributing to various projects and have made significant strides in this direction, securing cumulative orders for the integration of over 1 GW of solar power during this quarter. You have seen that we are almost in the same range every quarter we are contributing over several years.
While data center remains a high growth segment in our strategy, year-on-year decline in this quarter with the sheer potential of the market, we do not view this as a persistent trend, and there has been some decision delays, and we expect data center market to pick up in the coming quarters. Moving to rail and metro, Indian Railways commitment to achieve net zero by 2030, along with the electrification of high density corridors, have been another significant area of growth for us during the year. Automation and product orders for enhancing metro rail systems performance too have helped strengthen order book considerably in that. Similarly, our segment focus and products, project services mix is going in line with our plan, and same is the case with serving the various sectors in that.
Moving to the next slide. Our order mix reflects our diversified portfolio across our install base and our focus on leveraging our key growth markets and capitalizing on market opportunity. We successfully secured key market wins, providing us with a solid and steady momentum, especially in services and export. You recall our export strategy as well as the service strategy. We are consistently performing in line with that strategy. Service orders have continued to hold a positive trajectory with a certain key wins from a national utility for life cycle service support and remote operations for HVDC stations. We have also won bushing orders for both national and private utilities, demonstrating our strong position in these sectors.
Notably, our digital offerings, Rail Care orders from a data center customer and transformer digitalization adds a digital key wins. Overcoming logistical and other challenges, we successfully commissioned remote operations and implemented projects, such as the commissioning of 130 kV transformer at Jaipur Cement Works and successful in replacement of 24 members of disconnector at Chanan Power Site. These projects helped continue with the growth momentum. We also achieved our highest ever export orders, a milestone and a testimony of our investments in augmenting our manufacturing footprint in the country. During the quarter, exports contributed 19% of our orders were basically from the Middle East, Africa and Japan.
Some of the key wins during the quarter was, you know, 72.5 kV with circuit breaker from Sweden, and for Saudi Arabia, an order from 420 kV instrument transformer for Ministry of Energy for Iraq, and 72.5 kV, this circuit breaker for multiple projects in Switzerland and Sweden, et cetera. We have been boosting our manufacturing capacity, understanding the evolving market dynamics, and proactively identifying the emerging demand. Today, 80% of Hitachi Energy's portfolio is locally manufactured in India. To better serve our customers across locations and broaden our market reach, both the domestic and global markets, we have been enhancing our production capacity with our global feeder factories in that.
With this, now, let me hand over to our CFO, Ajay Singh, to walk us through the, you know, financial slides starting from the next slide. Over to you, Ajay.
Thank you, Venu. Good evening all, and hope you all are doing well at your end. Well, we have been navigating the unstable market conditions using our long-term plan, which was set in place to counteract the global macroeconomic challenges. What we see during the quarter, the company booked orders worth INR 1,260 crore, a modest increase of 3% in comparison with the same quarter last year. Revenues specifically grew by 28% to INR 1,336 crores. The profit before tax, however, saw a positive impact at INR 65.1 crore. Profit before tax, INR 65.1 crore, and profit after tax was INR 50.8 crore over the previous quarter.
Operational EBITDA stood at INR 76.5 crore in the quarter, mainly because of some of the pressures that impacted last quarter got a bit loosened up. Even in the face of persistent difficulties, we have performed well, and we are optimistic of stronger growth in the long term. With the consistent order growth, the order backlog of Hitachi Energy India stood at INR 7,070.9 crore to be precise, providing us a visibility of 20 months of revenue. Moving to the next slide 12. If you see here, we have been discussing the ongoing macroeconomic issues over the past, you know, several quarters. As highlighted in the previous quarter, I would like to share an update on how the numbers fared during the last three months.
Let me take a moment to walk you through the specific slide in further detail. The table gives you a clear picture of our relentless pursuit of improving the bottom line and a pro-progressive margin recovery. If you see the overall, you know, structure, if you see it, compared to the last quarter, our structure is the material cost, you know, based on the product mix that we delivered in this particular quarter was 65%, slightly higher compared to the previous quarter. But if you see the expenses, we are, you know, quite there where you see, there is a decline in the personal expenses. The overall expenses, on a percentage terms, it has come down from the last quarter.
The chart below, if you see the table that gives us a glitch, breaking down the change in the PBT over Y- on-Y , you know, over the year. The main element that is affecting right now profitability are the chips and electronics shortage, and which is followed by some additional commodity prices and other expenses, if I compare Y- on- Y. With this, I hand back to Venu for the closing slide.
Thank you, Ajay. Appreciate very much, taking through the financials. We talk more during question and answers. Let me also talk the last slide before, you know, we open the line for the Q&A. As we look ahead, for new financial year 2023/2024, our growth levers remain consistent. We will continue to focus on our high-growth segment strategy that align with our core competencies and evolving needs of the sector. We are developing and deploying technologies that are needed to help make the world's energy system more sustainable, flexible, and secure by building capabilities upskilling our people and investing in capacity building to support our growth trajectory. We are well-positioned to capitalize with bringing operational agility and productivity by continuously optimizing our operations. We deliver significant customer outcomes of value creation and real impact while as a strong organization.
We will continue to drive cash over revenue, ensuring stability and resilience in our business. With the eventual easing semiconductor crunch, as the supply of these critical component normalizes, we expect to see a positive impact on our productivity and bottom line. Above all, as a partner of choice and together with our customers and partners, we collaborate to deliver innovative solutions combining world-class digital and energy platforms. Our purpose is driven by advancing a sustainable energy future for all, and we look forward to productive and successful financial year 2023/2024. Reflecting on our performance this quarter, I would like to repeat the words of Peter Drucker, "The best way to predict the future is to create it." That's precisely what we are doing here, shaping a sustainable energy future, not only for today's generations, but those to come.
As I conclude my presentation, I have an announcement to make. Nishi Vasudeva has resigned as a non-executive independent director with effect from May 24, 2023. Meena Ganesh was appointed as an additional director in the capacity as a non-executive independent direct.
Ladies and gentlemen, the line for the management has got disconnected. Request you all to please stay online while we reconnect them. Thank you.
Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Thank you, and over to you, sir. Please go ahead. Ladies and gentlemen, request you all to please stay online while we check the line for the management. Thank you. Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Thank you, and over to you, sir.
Yeah. Sorry for the disconnection of the line. I was just talking when the line was getting disconnected. I conclude my presentation. I wanted to make an announcement that Nishi Vasudeva has resigned as a non-executive independent director with effect from today, 2023. Meena Ganesh was appointed as an additional director in the capacity of non-executive director for a term of five years with effect from today. She is a chairperson and co-founder at Portea Medical and Services, serves on the board of Pfizer, P&G Health, Axis Bank, and many other boards. The appointment is subject to approval of shareholders of the company.
With her wide experience from education, retail, and also as an entrepreneur, advisor and investor to several recognized startups, we are confident that Meena Ganesh will bring invaluable insights to the board and guide us on our journey towards a sustainable energy future while creating value for our stakeholders. With this, I would like to close my presentation. Now open the channel for the questions. Operator, please.
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 the touchtone telephone. If you wish to remove yourselves from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question. The first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah. Hi, Venu. Congratulations on a decent quarter, sir.
Thank you, Parikshit.
My first question is on the services segment. We had a plan of increasing it to INR 2,000 crore, and we are still somewhere around like at 6% mark. This quarter is about INR 78 crore or INR 80 crore. How has been the journey progressing on this front?
Yeah. As what we have told you that there was, you know, a plan where we have the installed, you know, our installed base. Since we are present here for more than six decades, we have been present here and creating a lot of install base, and we have that potential of INR 2,000 crores, what we said. That won't happen. We also said that it has got a longer horizon. Whereas while the plan to create that, eventually that is getting there. You know, you don't see the traction now and also next year, but we're creating a lot of, you know, productization of our service offerings, digitalizing of our service install base. A couple of examples which I talked about is exactly in the direction in that.
More and more the service offering we are productizing, we are digitalizing so that, you know, customers are able to quickly, you know, get into those kind of things in that. If you ask me, the plan is a work in progress. It's going in the right direction and we see a lot of traction. Even though at the low level, we see a lot of traction with the various industries across wherever we have install base. Thank you, Parikshit.
Then my second question is on orders. We have been averaging, you know, base orders at about INR 1,000-1,200 crore per quarter. We have been highlighting various drivers, decarbonization, sustainability, renewables. When do you think all these three segments, like utilities, industries and transport, infra, getting ready where we'll see a mark shift or reset in this inflows? How far are we in the future, given the outlook we have been talking about in terms of demand drivers?
Yeah. You will have seen my slid e where we start last year, you know, we have grown the overall order at 84%, right? You know that the market is not growing at that level. If you really look at our strategy, since we have been focusing on these high growth segments, the demand drivers, and we're taking a lot of, you know, upfront actions. We are also investing upfront. That's the reason we said, you know, our aim is to grow ahead in the market, and that's exactly what we have been growing it, you know, much ahead in the market. If you really look at our quarter-on-quarter, while we will be focusing on the base orders, the large orders has a timing issue.
Large orders also has, you know, various other elements to come in that, right. We are, in my view, I think, we are trending as per our strategic direction that, you know, grow ahead in the market. We continue to leverage all those things and grow that. You will see, like last time what you have seen, you will also see the growth coming in exactly how it came in the last year, right. We drive on a monthly basis, weekly basis, quarterly basis on the, on the base orders. We drive that, and that's extremely important for us to bring a stability in our revenue growth.
At the same time, the large orders or mega orders, where we are focusing on that, which will come as per the timing of it.
Okay. This is the last question, sir, on this Vande Bharat opportunity, which you highlighted last time, about INR 5,000 crore. We just wanted to understand, has there any progress there, and whether this will be totally a new opportunity in terms of electrification? Will the lines be totally separate? How will this opportunity arise for us?
Yeah. Last time, again, Parikshit, thank you for that question. As I told you last time, we have a five large railway tenders. One is a 9,000 horsepower, another, 12,000 horsepower, and then, you know, train sets. All those things are, you know, some of them have already finalized to some OEMs. We are in discussion with them, to supply our technology, our traction transformers with them. Those discussions are going on at that. We believe that, you know, those things are intact. Those opportunities are intact for us, so we are deeply engaged with the various stakeholders in that particular space.
In next year in FY 2024, something will materialize, or it's more like FY 2025?
Some I think might materialize, in the last part of this financial year.
Okay. Thank you, sir.
Yeah. Thank you, Parikshit.
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Good evening, sir, and thanks for the opportunity. My question is, sir, of course, we had a very good year of the order inflow, but margins have been subdued for last four quarters. Of course, in Q4 we have done better. What is your aspiration of EBITDA margin, and are you more confident of achieving that EBITDA margin based on the current order book?
No, sorry, Mohit, again, your line is.
Sir, my question, FY 2023 was a good year for the order inflow, but margins have been subdued. Of course, Q4 we have done better. What is our aspiration of EBITDA margin going forward, and are we more confident of achieving that EBITDA margin based on the current order book?
Again, thank you, Mohit, for your question. We have been very consistent, saying, you know, the last whole of last year, the main challenges we faced is, you know, huge challenge in the supply chain constraint, especially in the non-availability of chips and electronics, which is required for our grid automation products. We have been also, you know, very vocal in telling you that, you know, this problem is not going to go away shortly. It has a long-term effect, and that's what we have seen in the whole of this quarter. In addition to the supply chain constraint, last year also was one of the most challenging in the commodity super cycle as we call. That effect also has kicked in back.
Having said that, our the challenge of the semi and the chips and electronics we are not overcome. We are seeing some visibility, but still not overcome yet, okay? In our estimate, it may take another quarter or two quarters in that range before it become normalized. There's a huge backlog, that's what is the thing in there. Barring that, I think we are very confident of our strategy, you know, margin accretion progressively going forward.
Understood, sir. Second question is on the high-speed rail ordering. Now that EPC is largely over, are you expecting the high-speed rail equipment ordering to happen over next couple of quarters? I think last year you guided that it should happen in next 12 to 14 months.
Yeah. High-speed rail, as you know, the electrical part of the high-speed rail, I think the tender is now likely to come at any given point of time. We are working with the, you know, UPC and OEMs. In my view, I think the tender should at least come in the next two quarters or so. It's a quite a large tender, so they should come at least in the next two quarters.
What could be our opportunity size? Any rough ballpark, IT ballpark, you know, if you can just lay out the details.
No, I think it's, you see, it's still a work in progress from the high speed authority standpoint. It's a quite a large tender, you know, quite a large tender comprising of several stations, right? You know, in what form the tender comes, we're not able to quantify at this point in time that.
Understood.
Quite a large.
Thanks, sir. All the best. Thank you.
Thank you.
Thank you. The next question is from the line of Sudeep Mitra from Nuvama. Please go ahead.
Good evening, sir, and thank you for the opportunity. My first question is with regard to the, you know, the larger orders that you were indicating, and clearly, HVDC is one of those. Now, what we understand from, some of our other interactions with Power Grid, et cetera, is probably one of those lines, Khavda, is being rethought and that might fall out of the HVDC bucket. Do you see that in any way impacting the overall TAM for us? Or, you know, even if it falls in the HVDC bucket, it doesn't really move the needle.
Yeah. I think, you know, these kind of discussions keep going up and down in my view. I think, the HVDC bucket at this point in time, I believe, is very, very, very strong. You never seen these kind of opportunities in the last, you know, in India, these kind of opportunities, we never seen that. There will be always, you know, some pulls and pressures to look at, you know, the from the, you know, authority standpoint, whether it is CEA, whether regulators look at all the combinations, what makes most business sense for them. They could be always do that. Our information is that, you know, both, you know, Khavda and other projects are going in the HVDC direction.
Either way, we have opportunities, even if it goes for a 765 kV AC, we also have a huge opportunities over there. That way the opportunity value might come down from HVDC to 760 kV AC transmission. In our view, at least in our assessment that they need a strong HVDC for this Khavda line for strengthening the renewable penetration of that particular line.
Understood. Is it possible for you to hazard a guess in terms of, you know, what would be the addressable TAM for the market size for us in this particular bucket?
No. The HVDC projects are quite large. You know, each project is quite large. You know, it's very large of each of them, at least in the range of anywhere between INR 8,000 crores-INR 10,000 crores of each project size. Depending upon what shape and what size, things like that comes, you know, that's what is the size of the HVDC.
Understood. Typically, can one assume that roughly 50% of this can be the product supply component?
Yeah. It's more than that.
Understood. Understood.
Yeah.
Sir, secondly, in terms of margins, I know you have answered the question on this earlier, but I couldn't hear that properly. Just wanted to understand that, are we looking at the current, let's say, level of gross margins and EBITDA margins for fourth quarter being the sustainable number going ahead? You know, can things get better from here?
No. What we are saying is there is a still uncertainty on the supply chain, especially on the chips and electronics. Okay? The supply chains are not still stabilized. Okay? On a quarter-to-quarter basis, we may have some challenges, but when we are looking at a whole, you know, on a yearly basis, we will definitely have better margins compared to that in the past.
Understood. Understood. Lastly, with regard to.
I also said, whether you have heard or not, I also said that at least it will take minimum one to two quarters before it gets stabilization of these chips and supply chains.
Thank you. Mr. Mitra, may we request that you return to the question queue for follow-up questions. We'll take the next question from the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead.
Good evening, sir. Congratulations for, you know, reasonably good set of numbers, and hope that, you know, FY 2024 will be better. Sir, I have a first question on the, you know, the profitability front. That over next, say, two to three years, assuming that we continue to do well and, you know, the growth kind of, such kind of growth continues in terms of the, you know, revenue, what kind of margins the company is looking at in the longer term at EBITDA?
Yeah. Yeah. We have been. Thank you, Rajesh, for your question. I think we have been consistently saying that. You know, we have, you know, we have a strategies, and strategies basically grow on our base orders and add service and digital offerings, and exports is another area. On top of that, you know, leverage our high growth segment like HVDC, et cetera. All these things will take us in a sustainable manner to a 10% operational EBITDA level PA. By end of 2025. We also said that, but then we had a lot of challenges in between, right? We had the challenges of a geopolitical situation. We have Ukraine war, supply chain constraints. Those are the things are headwinds where we are, you know, beyond our control to do that.
You know, assuming that those things are within control and in a contained manner, then I think this is the direction we would like to go over there on the margin standpoint.
From 10% to, say, 12%-15% margin, because, you know, for example, other multinationals, they are reporting 15%+ margins. Of course, the product profile mix, it might be different from one company to other company.
At the end of the day, you know, for such a business where good part of your business is a high technology driven business, where you enjoy the significant moat within the limited players, the competition is between the restricted players. You know, how to make sure that what is the potential that can we make it, say, 12%-15% longer term margin? I'm not saying 2025, but say over, you know, two, three, four years, you know, what is required to be done to make it a 15%+ EBITDA margins?
Rajesh, I think thank you for your question. I think, you know, I think competition is very intensive here. It's not that competition is very, very restricted. You know, we're having a lot of competition in our portfolio. The whole portfolio, if you look at our transformer, our high voltage, our, you know, substation, for example, as well as, you know, HVDC, maybe you may be right saying that, you know, we have a limited players. The issue is that again, you know, our levers for sustainable growth are well-defined. The levers are to increase more exports, increase more service, and also, you know, our business model is to have a more, you know, projects with, you know, system integration, scope, et cetera.
Those things are well defined, and we have been driving that in a consistently in that. I think that's where I think in a step-by-step manner, you know. I would not like to comment on the 15%. I don't like to comment on other competitors what they've been doing it. What all I can say is that at this point in time, we have a midterm strategy to reach to 10% operational EBITDA, and that's where we are working and focusing on that.
That, you know, royalty what we pay, you know, that basically agreement is for how many years?
Yeah. Again, royalty we continue to pay because we continue to pay because the whole energy transition, Rajesh, to give you a perspective, it requires a huge amount of, you know, changes in our portfolio. Huge amount of, you know, portfolio changes need to be adapted to that. It's not possible to get with a lot of digitalization happening, you know, a lot of, you know, renewables coming into it. It needs the strengthening of the grid resilience of the grid, et cetera, needs. Our portfolio need to be robust. Our technology need to be updated, and that needs a huge amount of, you know, investment, and that's exactly our royalty we are paying there to get our products. The moment any product is released anywhere on the same day, same time we are offering to our customers here.
That is an extra benefit for us.
Last question from my side. It's the current order book what we have. you know, typically what is the, you know, fixed order book versus a, you know, where you have a, you know, the short cycle and various, you know, variable order book where you have to basically pass through the both, you know, lower or higher commodity prices?
Yeah. If you're talking about our how much of our order backlog has, you know, price variation clause, if I understand that's what is your question? I could say that more than 65% of our order backlog does have this price variation clauses. Any price impacts will pass through that.
Thank you. Mr. Kothari, may we request that you return to the question queue for follow-up questions. Thank you. We'll take the next question from the line of Priyank Chheda from Vallum Capital. Please go ahead.
My question is regarding the HVDC order pipeline. You have been guiding that we would be targeting at least one order per year. Where are we on that? There were three projects which were in the active stage last time you did mention about that. If you can help us with the update on that. The second part of the question is, have we started booking revenues from the Palghar Mumbai project? Given the capacity, how many of the HVDC orders can we service at the same time?
Priyank, thank you for your question. What I was telling you previously is that, you know, HVDC is a market which is fast changing, fast maturing. We used to have a one HVDC project for every five years previously in India. Today, the situation is changing. We may be having a requirement of a one HVDC project coming into the market for every year. That's what exactly I told. We are focusing, for example, we came last year, we booked HVDC project for starters, and we are also working towards another project as and when it comes to the market this year. We expect either Bhadla or Khavda, whichever is coming, and we will focusing on that in that.
Again, coming back to how much we will do, so we're not able to tell you because, you know, it's our internal thing in that. We look at our capacities. As you know, we have built our factory last year. We have opened our factory to take care of this kind of demands in that. We are expanding our factories. In the last one year, we have inaugurated three new factories. Those things will help us to do that. We will take our due share of these projects. The second question on the HVDC, whether the revenues have come in. I think we have just started. As you know, when we start the project civil and other things, you have seen the, in the picture that we just inaugurated.
We're working on the, on the site, to do the construction, which will be slow start. It will happen by end of this year onwards, the revenues will kick in.
Okay. sir, I mean, how are we looking at the opportunity of Leh-Ladakh project, which is supposed to be one of the largest project in the HVDC pipeline that we have seen? How are we looking at that project?
We are just looking with, you know, equal interest. I think, as you know, we have already committed Leh-Ladakh. PGCIL has come out with a, because it's a very, you know, challenging project, so both the technology standpoint as well as, you know, logistical standpoint. So they came out with a consulting study to do a thing. Then, you know, we have won one of the consulting study orders. So we are looking at in the technical feasibility standpoint. We have received an order from PGCIL on that. So that study will be going on that. Basis of that study, PGCIL will come out with the tender, and this study will take at least nine months, six to nine months to complete.
Okay. Last question, sir. You did mention that semiconductor shortage would ease out in next one or two quarters. We had a shortfall of INR 100 crores revenue, because of the chip shortages last quarter. Did we recover that and any loss of sales that we had in Q4 also?
Sorry, Ajay, can you answer this question?
Yeah. Thank you for the question. Last quarter we did mention that there was an impact of INR 100 crore of revenue account of semiconductor shortage. In this quarter, as you if you see in the slides, in the, you know, particular bridge, we have mentioned that there is a, you know, compared to the last quarter, the impact has come down. Basically in this quarter we see there is roughly around INR 50 crore basically the impact that we see on the revenues.
Thank you. Mr. Chheda, may we request that you return to the question queue for follow-up questions.
Just one comment on that. You know, the semiconductor is very dynamic. The supply chains have not still stabilized, and we are doing everything from our side to do that. You know, last quarter was one example how we came out of that. Our estimate is, a rough estimate is that, you know, it will take at least two quarters, but then, depending upon, again, lot of other headwinds, huh? Thank you.
Thank you. The next question is from the line of [Harshal Sheth from Amfin Advisors ]. Please go ahead.
Going ahead, do you see any slowdown in large orders in the Indian markets?
No. If it is, Harshal, I think, if you really look at our pipeline is very robust. There may be, there could be some, you know, decisions postponing it. Barring that, I think the pipeline is very robust on that.
Okay. Thank you.
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi. Thanks for the opportunity once again, sir. My first question, how much is export order in the current order book?
We are in the range of around 20-22%.
Right. My second question is, sir, on the Scott-T transformer and V-connected transformers.
Sorry. Come again, Mohit.
My question is, sir, I heard that Scott-T and V-connected transformers, which will support Indian Railways' vision to achieve 100%, this is seems to be a large opportunity. Is it correct over next 2-3 years?
It is correct.
Okay, sir. Thank you. Thanks.
Thank you. Next question is from the line of Kunal Sheth from Batlivala & Karani Securities India Pvt. Ltd. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Sir, I just wanted to check on, we did mention about our margin aspiration of 10%, our operational margin.
Okay.
Yes, sir. Any timelines by which we want to do this, do we have in mind?
Yeah. I think, Kunal, we have been talking about, right, you know, we have been developing our strategy, our levers for getting into, you know, very sustainable and profitable growth. That is, you know, focusing on high growth segments and focusing on exports and bringing the exports to, you know, level of 24%. Service potential, improving the service potential. All those things will get us. Also operational excellence initiatives. All those things will get us into a double digit operational EBITDA margin. As you see, last year was one of the challenging year, but year before we reached 8.9% operational EBITDA.
We are looking at FY 2025 is where we think that, you know, hopefully all these commodity challenges, everything will stabilize, and then we have a better position to reach that level. That's our plan.
Okay. Great . Sir, I, sorry if this is a repetition, but, you know, the supply chain challenges that we talk about, what are these behind and what exactly are the supply chain challenges? Are they in very specific parts or across the board?
Yeah. There are some specific to maybe our industry. You know, initially, if you have seen, you have heard about the semiconductor shortage, which was across the industry, right? For us industry as well as auto industry. After that there has been some stabilization of that. The demand and supply gaps have been, you know, building that. There are also like our thing where the chips and electronics are specific to our particular design and those kind of things where we are facing the challenges. But we see the improvement in that, but still not, we're not overcome yet.
Okay, sir. Sure, sir. Thank you so much and best of luck for the future.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. N Venu for closing comments.
Okay.
Thank you, and over to you, sir.
Thank you, Faisal, once again. Thank you everybody for taking time from your busy schedule and attending to our analyst call. As we have hosted, you know, some of you have attended, I know I've seen your names, and we are very transparently, very openly we're communicating our quarterly results and also showcasing of technologies et cetera in that. Thank you once again, please look forward to meet you some of you. Take care and stay safe. Thank you.
Thank you. Ladies and gentlemen, on behalf of Hitachi Energy