Good day, ladies and gentlemen, and welcome to the analyst call for ABB Power Products and Systems India Limited Q2 Results. At this moment, all participants are in the listen only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. I now hand the conference over to Mr.
Enve Enu, Managing Director and CEO, ABB Power Products and Systems India Limited. Thank you and over to you, sir.
Thank you, Stephen. Good afternoon and good evening, everybody. Thank you for joining us for the call today. I hope all is well at your end and you continue to take all necessary precautions to keep yourself and your families safe. So India has suffered, as you all know, severe healthcare crisis during this COVID wave 2, especially in this particular quarter.
The country is still reporting quite a number of cases I spoke the World Health Organization, which has also put a bind on our business growth. But it brings some solace that over the past weeks and past months. So we have seen decrease in overall cases. In what is the world's largest vaccination program, we also see a very good progress. More than 400,000,000 vaccine doses have been administered already, which brings hope that we are Heading in the right direction towards the recovery.
For us, that is Hitachi ABB Pargains, the health and safety of People has remained at the center stage and we believe that this is the bedrock of our long term growth vision. So we have already uploaded the presentation in the BSE website and I would be referring the things and some of you are seeing this. We are also sharing the So please, those who are not seeing my PPT, please refer the PPT, which just now uploaded in the BSC Web Portal. Moving to the Slide number 3, safety is our license to operate And which is a non negotiable virtue in our organization, offering support to essential services, we could not switch 100% to remote work. So we ensured COVID-nineteen appropriate behavior across sites, possible to limit the spread of infections, Inculcating safety values being fundamental to self reliance, we continue the trend of safety operating tools and refreshes to ensure a safe working environment within our premises and reported no serious injuries.
Safety is also in build in our passion and pursuit of powering good. To that effect, we also continued to receive appreciation for our safety and service standards from leading industry players, customers indicating we have been on the right track. Our efforts to be known as a climate conscious company continued to in this quarter. We kept on nurturing our environmentally responsible The values that percolate down to everyone, every employee in our organization. This World Environment Day, we took yet another opportunity to renew employee awareness on climate change and to renew employee awareness on climate change and our role as a company as well as individuals in curbing it.
Be it through trainings on ecosystem restoration, our personal carbon footprint, assessment and measures to reduce it. I will now move to the next slide, Slide number 4. Further, our focus was steady on managing the COVID-nineteen crisis for employees, Customers, partners and the community as a whole and on lending support to the country's relief measures. We were able to achieve more than 90% vaccination rate at our company level and facilitated more than 6,000 mass testing for our employees and partners in our locations. We are still conducting regular vaccination drives for the remainder of our teams and their families, Continue to provide PPEs and making provisions for medical assistance and equipment Such as OxyContin concentrator to support our workforce across the country, whether it is the factories or the project sites or offices.
In the quarter ending June, we continue to work on war footing, mobilizing our resources, PAN India to help our people whenever they needed us. We also funded hospitals and NGOs to ramp up their medical infrastructure P. Vijay Kumar:] We quickly repurposed and reprioritized our CSR spend here to take on the urgent needed projects. We facilitated makeshift care units through over 100 extra beds, including those for intensive care and enable supply of critical medical equipments in and around our facilities and our communities. We extended support to much needed innovations to relieve the economic burden of wasted vaccines P.
Vijay Kumar:] Enable vaccine delivery to remote healthcare centers. For the last decade of COVID-nineteen vaccines In South India, we have partnered with a not for profit organization called CCAM for funding, research, development and deployment of portable refrigerated containers. Moving to the next slide, Slide 5. Within our premises to ensure healthy and safe work environment, we instituted a team of doctors, Deployed new workflow protocols to ensure social distancing and reduce physical contact, redesigned some of our workspaces And added extra shift to space out the work, we conducted regular sensitization training sessions and workshops to keep an open communication channel for our employees and their families. On the delivery side, We strive to handle with resilience the pandemic imposed challenges, lockdowns, supply chain disruptions, mobility restrictions and demonstrated a credible performance.
Some of our factories and project site had to be fully or partially closed during the 2nd wave for weeks in line with the local government guidelines. We also noticed that our customers face similar hurdles, resulting in delayed decisions and slower pickup from our factories. Moving to the slide 6, We continue to deliver credible performance year on year. Orders were up more than 3% year on year and revenues more than a quarter. Demand was driven predominantly by rail, data center, iron utilities, helping us strengthen our position in future high growth segments, which we have been talking about since last few quarters.
However, in this quarter, more than close to INR 100 crores worth of orders where we are L1 were deferred by customers due to the pandemic. Closure of shop floors, project sites and disruption of logistics affected production, project execution as well as service equity resulted in the revenue loss of to the extent of INR 200 crores and earnings out of that. Yes, we were able to double our net profits in same year. As you can also see, this is also off yearly results. So, as you can see, comparison between off yearly to off yearly as we have almost all KPIs improved compared to the last year.
Moving to the next Slide number 7, we booked a multiple transformer orders from power transmission, rail and infrastructure companies and delivered our power quality digital solutions and service to utilities and data center customers. Our portfolio will facilitate power system stability, protection efficiency. Our focus on The digital solutions remained very strong. Through power system studies, we consulted customers on deploying clean energy in line with the grid code, While advancing India's mission to achieve 450 gigawatt of renewable penetration by 2,030, Our portfolio of OS continued to reach offshores and we booked our first 400 kilobytes GIS order in South America this quarter. Moving to the Slide 8, we steadily solidified our efforts To build back better, be it through demonstrating efficient remote commissioning and upgrade of mission critical power assets such as We did in Bhutan and also our Vihan Dhatri HVTC transmission link are by making our operations Under our diversity focused hiring, as you know, we have launched a diversity 360 strategy.
We strive to hire aspiring and exceptional women and develop our culture of diversity and inclusion. Our quest to tackle the under Representation of women in engineering across industry and build future talent today was strong and clear as ever. Besides, we engaged the key industry discussions including in the ministerial thematic forums of the UN high level dialogue on Energy 2021. We spoke on accelerating citizen centric energy transition to achieve the 2,030 such a number of development agenda in the power industry and of our vision and ideas. Moving to the slide 9, you may be remembering, we announced our carbon neutral targets for 2,030 in this quarter, and these targets are based on a three-dimensional approach to decarbonization encompassing our operations, our products and our contribution to society and environment.
Central to this mission is our UN Sustainable Development Goal, Goal 7 of providing clean and affordable energy to all. We aim to transition to fossil free electricity By March 2022, in our own operations across the country, reducing our emissions and over the course of decade decreased waste generation by off and freshwater use by quarter. We also target a 50% reduction in CO2 emissions along the value chain. We will electrify our operations, our transport fleet and implement energy management standards to ensure we work the talk on the climate action and global market development. Our plan is to be carbon neutral in our own operations in this country by 2,030.
Moving to the next slide, slide 11. I think you all know better than me, but just give you perspective from our side. The second wave of COVID-nineteen caused a significant Setback delaying economy recovery a fair bit. The manic spread of the virus and the healthcare crisis affected our supply Change as well as our expectation we had at the start of the year of achieving normalcy in the immediate future. We saw business activity slipping month on month and industrial production remaining muted due to the curves and disruptions triggered by the pandemic.
There was hardly any respite in inflation and we saw price of oil and other commodities soaring. Yes, we remain cautiously optimistic of opportunities ahead in sectors. We track that renewable transmission, rail and data centers. The government, The Reserve Bank of India and even the IMF are optimistic about India reaching double digit growth in the financial year 2022. Even though there is a downward revision in that, in the sectors where we operate, we had India's power consumption growing nearly 18% In the 1st week of July to over 30,000,000,000 units compared to a year ago.
It returned to a pre pandemic level, mainly P. Vijay Kumar:] Due to easing of lockdown curves and delayed monsoon, which partly means we have opportunities in the pipeline And partly that we have our work cut out. Moving to the Slide 12, I think you have been seeing this slide for the Last couple of quarters. So COVID-nineteen not with COVID-nineteen headwinds notwithstanding, We remain the partner of choice for our products, services and softwares. We saw high intense high interest from utilities, Transport and Infrastructure segment, which was secured through direct sales as well as through our EPC channels.
We continue to make headway in our key focus area as part of our Vision 2025 in the renewable integration, power quality, data centers, etcetera. The growth is trending in the right directions. We enabled renewable power Utilization for key industry players, increased verification of industries and transport, Quality power for data centers and played a part in bringing Indian railways closer to its carbon neutral ambition. Slide 13, which is also a very important slide, we have been also talking about our strategic imperatives, both service and export over Several quarters and we all know that despite difficult market condition, we continue to make in India Not only for India, but also for the world leveraging our wide installed base and expertise. Customers' trust remained rock solid as we saw service and export order exceeding the exceeding our corridor of 50% to 20% range in the order mix, wherein service orders rose by 50% year on year And exports added more than 30% to the order book in this quarter.
So we were chosen for cybersecurity, which is also very Critical growth driver in the days to come of critical power infrastructure by a leading utility for power asset automation solution by a major steel I am for substation charging for a hydro project. Export demand for our products, systems and services came in from Africa, Latin America, South America, South Asia, Europe and many other regions. Moving to the slide 14, it seemed that the start of 2021 that All deals brought upon by the pandemic could be getting over. Then the second wave hit us and hit us so Rapidly and so intensely, with a surge in infections in April, business confidence deteriorated With the big demand conditions and the reintroduction of lockdowns and priority of all the organizations across the country remain to taking care of the people. However, our 3 pronged strategy put in place at the peak of the pandemic, which is protecting our people, preserving business continuity and preparing for the new norm continue to support us in walking the tightrope during these challenging times.
Even though Manufacturing activity posed a challenge across the brand. Across the board, we covered a good distance over the last 1 year with a credible and sustainable performance. As of 30th June 2021, our order backlog stood at INR 4,770 crores, which will unlock revenue streams in the coming months. Our operational EBITDA stood at INR 46 crores in the 2nd quarter with EBITDA margin of 5.8 percent and Off year basis, the EBIT margin of 6.7% versus last 6 months 4.2%. We continue to remain debt free And we also maintained AAA stable rating from the rating agency in that.
Moving to my last slide, I say often We invest in India for the long term and we have been manufacturing here in more than 6 decades. While we aim to introduce new products to capture a bigger share of the market, our goal is to localize our portfolio to build indigenous capabilities. We will continue to make in India for India and for the rest of the world. Our key focus will be protecting our people and along with them build our capabilities in high growth segments such as rail, data center, transmission, renewable, HVDC. We will focus on these segments and accelerate growth So services, digital solutions and exports, leveraging our strong local footprint.
We have comprehensive portfolio of future ready and state of the products, software, services and systems to cater to not only our traditional segments, but also many of the emerging segments. Commitment to lowering the carbon footprint of our operations, product localization, digitalization of the grid will be part of our yardsticks to measure our success going forward. Nothing is complete without our people. Hence, we will relentlessly work toward their safety, their growth and their upscaling. We will also strive for building diversity as part of our strategy Diversity 360 in our various functions, businesses and balance the mix of competencies across the businesses, not only to take care of the ongoing segments, but also on the evolving new segments as we are entering into the a big way into energy transition.
In this energy transition, we see ourselves playing a leading role through our digital and energy platforms. We aim to be the partner of choice P. Vijay Kumar:] For our customers, for the industry to advance a sustainable energy future. With that, [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Thank you once again for taking your busy time and also attending to this. I'll now request the operator to open for Q and A.
Thank you very much. We will now begin the question and answer session. The operator will announce your name when it's your turn to ask a question. To ask an interactive question, please click on
the Q and A tab on the left side
of the panel and click on raise button. The operator will announce your name when it's your turn to ask a question. The first question is from the line of Renu Bate from IIFL Securities. Please go ahead.
Hello.
Hi, hello. Hi, Renu.
Yes. Hi. Good evening, sir. I hope I'm audible and clear.
Yes.
So I have three questions. My first question is to understand that post The second wave, have you seen a have you seen some signs of delay in execution from key customers and projects? And will that Impact the execution momentum on the order backlog that we have today currently, any thoughts on this side?
Okay. So why don't you go ahead with all the 3 questions?
Sure. So the first question is related to the execution momentum on the backlog and any project delays that you are witnessing. The second question is why you mentioned and commented about strong growth in services and exports on order inflows. Can you also share how was the performance in terms of revenues for the first half? And broadly, how are we placed in terms of ramping Exposure in this segment from a revenue business perspective.
And the last question is, the key focus markets that you've highlighted, Data Centers, Rail and Metro. How should one look in terms of the likely growth of these segments In your business portfolio, so probably from a 3 to 4 year perspective, in your view, how large can these business segments be, Given that data centers are expecting almost $8,000,000 $10,000,000,000 of CapEx really metro, we would be favorably placed with a lot of funded projects, Jika funded projects and like. So these would be the 2 questions.
Thank you. Okay. Thank you. Thank you, Renu. Let me just start from your answering from your first question.
So on the post second wave, we have not seen any major delays. The delay was only during The wave 2 period, that is the last quarter. But now I see more and more customers are trying to catch up. And in fact, we are even seeing some of the So by and large, we have not seen any major delays due to the post 2nd wave across the thing in that. So that's the one.
And the second question is on the service and I think while we have been if you recall, we have been also telling you that our exports right now is in the range of 15% to 20%, which is The higher band of 20% range. And our plan is to take from 15% to 20% to 20% to 25% over a period of time. And then our revenues are also trending in Same brand right now. Same is the case, the service is at 10% to 12%, but our plan is to take to 10% to 15%, And we're also seeing the same direction on the revenues part on that. And to answer your third question, I think likely growth of our high growth segments, especially on rail, data center and renewable and Also, HVDC, I think we do see that these are quite a big growth elements in the New Energy Transition, and they want to take up a very bigger pie of our future order backlog.
We're not in a position to Comment exactly the thing, but it will definitely it's going to be major, major contributor for our orders In that 2 to 3 or 3 to 4 years period, what you're talking about?
So can it be more than a third broadly in terms of mix, 30% to 40% given the size and scale of these segments?
Yes. 30% Definitely at minimum. We are looking at in excess of 30%.
Sure. And if I can add one more question. Would it be possible for you to share the outlook on the HVDC orders and pipeline? How are they placed And the broad timelines in terms of the likely award that we see?
Yes. So we basically we are seeing 3 or 4 HVDC projects as we speak. And one of them, we are Hoping that it will get finalized by end of this financial year. And there are 2 more large PTC Projects where our PGCIL and customers are looking at it. And definitely given long term view, we see at least a one major project per year Because we see quite a lot of pipeline, and our view is that one major project for you is what we can factor In an award basis.
Thank you so much and all the best, sir. I'll get back to your questions.
Thank you. The next question is from the line of Yogesh Singhvi from Sky Investment. Please go ahead. Mr. Yogesh Singhvi, please go ahead with your question.
Mr. Singh Lee, request you to unmute your microphone and proceed with your question, please. As there is no reply from the current participant, we move to the next question from the line of Sujit Jain from ASK. Please go ahead.
Hi, hope I'm audible.
Yes, sir. You are.
Yes. Thank you. Sir, a quick question on the, if you can, The global tie up that we've done in Sweden with Power Cell, that is for fuel based stationary power solutions. And I'm sure that has potential of even disrupting the standby backup power, which is provided by DG Z. It will be too early.
But what is the scope of that tie up and how we can leverage on that in India?
Yes. I think, Sujeet, I think that's very specific limited information and We have not been opposed to share anything. So this is basically like a kind of a pilot basis we are doing it. And we have not reached a stage where we would like to commercialization of that particular thing in that.
Sure. And you spoke about digitalization and in the presentation cybersecurity solutions as well. So and looking at the capabilities that Hitachi brings to the table through industrial IoT platform, what is The percentage of revenue that you've already started booking in terms of industrial IoT solutions in your key segment?
I think when talking about the cybersecurity, right now, our focus is so this is In the very nascent stage, right, the cybersecurity as a revenue stream. Working with the customers and educating and I think with them, it's together we got to learn both our customers as well as ourselves in the long run-in that. So Right now, our focus is on doing the system studies of that, where are the loopholes, where are the plugs. And then we will Giving a more of a consultancy standpoint and then we start deploying the solutions of that. So what you're talking about IoT, IoT is not only for the cybersecurity, but we have now partnered with our Parent organization, Hitachi, where Hitachi has very strong Lumada IoT platforms.
So together with Lumada, we are offering Our asset performance, APMs and enterprise software solutions to our customers on IoT platform of Lumada, FITAJI. And we see that quite a big interest from many of the customers, started from industrial customers and also quite a lot of renewable customers. So we can start taking lot of things on a remote monitoring, remote measurements, etcetera, of many of these assets.
Any number that you can give what it has reached as a percentage of sales to begin with?
No, it is right now, it is too low. We Sir, not in a position to give any percentage. It's we are making pilots and we are doing some customers at So, but we see that in the near future, it's quite a big pickup of this particular Complete digitalization, including IoT's of the whole energy networks. Sure.
And one last question in exports. Can you practically For your solutions, across geographies and markets, or there are some restrictions in terms of Which global entities so in terms of, for example, this entity in India, which markets it can service And which markets it cannot service, etcetera?
So we have a dual strategy. One thing is what you said, right, in some of the product lines. So we have a strategy that So we have a strategy that particular markets are being allocated and then we will be developing the markets because of it the local sales Organization of that particular country. So that's one strategy. And then we also have a strategy where some of our product lines are at global food factories.
So that means we will be selling throughout the things either through directly to our customers in like South America and other things, but also through Our Hitachi ABB Power Grid sales organizations of those things. So it is a combination of both, Sujit.
Thank you. Please click on the Q and A tab on the left side of the panel and click on raise hand button. Please go ahead.
Yes. Hello. Am I audible, sir?
Yes, yes.
Thank you, sir. Sir, I just had 2, 3 small questions. First is from what is the private and government order split in your order book? I understand you are primarily on majority of order book is from the government side, like from PG sale and others. But I just want to have a Quick idea, what is the split between private and government orders, including export also?
Private means I mean, from private ways, like private industries, like from data centers or from
Yes. Thank you. I think Thank you, Yogesh. Actually, if you really look at as I rightly said, the government and Private, if you really take the split. We have a bulk of our order backlog falls under private.
So around 60% It's private and rest of the things is part of the government. So most of the things like Data center like industries, which we have been announcing major wins of the last quarters. So that's where our Private means industries and private, we call it the 1. And the government is pure government like PGCIL, like state utilities And the Rail based platform part of the government. Okay.
Even though OCR is a public sector, but we call as a part of Not part of the government bucket, but call as a private.
Okay, okay. That's helpful, sir. And the second question will be, sir, like, due to this pandemic situation, There might be some delay in execution and delivery of the products. So have there been any instances where customers have been levied With us with liquidated damages, I hope in government contractors it is there, LG damages. In private, I'm not so sure.
So how that situation is
No, I actually answered it. In fact, we had a major delay last year and as huge disruptions and due to that, The projects some of the projects got delayed, but then there the government and also in the many utilities have extended suitably for whatever the delay and we did not face Any major delay, liquidated damages on those contracts. And I was just answering to your colleague just now that we don't Foresee any major disruptions due to this wave 2. There are some disruptions, but there are good catch up plans until and unless We hope there is not going to be any major potential wave 3. And if that is not there, we hope that it will stabilize and then we We come back to the normal in the if not in the next quarter, but next couple of quarters.
Okay. And if you permit, I can I speak to another question, sir?
Sure. Go ahead. Yes.
It is about, sir, our Overlap with the ABB India, because I see in their presentation also they talk about data centers, railway electrification and metros as a growth areas over in future. So is there any overlap between DL product and our products? Or they play in some like LV or VRN, MV or higher voltage segment? Or we both go as a go to market strategy we adopt in the marketplace.
Yes. Thank you. I think very good question. I think First of all, there is absolutely no overlap between Hitachi ABB Power Grids and ABB, okay? So there is no overlap at all.
And when it comes to data centers, as you know, we have the competency to build the data centers Right from the grid integration and then also the studies And also the automation, etcetera. So that's where we will be focusing. And in some cases, we will also go together With ABB, wherever it is required, but we are very clearly saying that our competency on the data center is a high voltage stations whether it's air, gas insulated substation, engineering package, grid connections and studies, Digital substation, drydtech transformer, under the electrification is that at the power distribution, backup power, data center automation, battery storage, Power quality and consulting, cybersecurity, these are all part of our portfolio and we have a fully There is no overlap
there.
Thank you. The next question is from the line of Hitesh Kumar from AXA Capital Advisors. Please go ahead.
Yes. Thanks for the opportunity. Am I audible?
Yes, Sitesh.
I just wanted to understand what is the addressable market For the data center for the products that we have, in the sense for 1 MBA of investment, how much
Give me a minute, Hitesh. Sure. We have We will not be able to quantify exactly, but we'll tell you for hyperscale data center, 4 megawatt hour Okay, Sasan. What's the value we were tracking? That is a very indicative thing we will give you that.
We'll just pick up and give you. But meanwhile, if you have any questions, please go ahead.
Yes. I also wanted to understand what's the competitive landscape in this Space, the data centers project that we cater to. Who would we be effectively be committing over here? Yes.
I think this is again, depending on the kind of Buying pattern of our customers, if customers want to buy the whole things, then we have some sort of global Players will be competing with us. We know them. And depending upon, suppose customer wants only, let's say, A great connection for the data center, then the set of competitors for that particular thing is different. But when it comes to us, I just now was telling you that we have a wide portfolio for the data center. And we have the huge capabilities to build the data centers.
And that's how we can offer either Whatever the customers are choosing for only limited base of course, some customers buy only the dry truck from a class. Some customers By only the grid connection, some customers will buy the entire thing, including the study stabilization, studies, the connection, automation And notification of those kind of things.
Sure.
Yes. Sure. Thanks. I'll come back to you on that exactly the value on this, okay? Thank you.
Thank you. Yes.
Thank you. Next question is from the line of Amit Tavani from Zenith. Please go ahead.
So can you please tell me what is how much is data centers part of this order book right now?
I think we don't quantify the order book by the segment, Sameet. So we were talking about data center is one of our growth Leave us, so we are tracking the growth of that, but we will not be able to quantify how much of the data is in that part of our total orders.
Fair enough, sir. Fair enough, sir. So how is our order booking looking after the 30th June? Has there what is the order booking like this month?
You mean in this quarter? So as you know, we don't give an Outlook, Amit, as per our strategy, we don't give an outlook. I can tell you that our pipeline is very robust. Our pipeline across the segments, the segments of the renewable because many of our customers who have actually missed all their targets, they're really accelerating now. We see quite a robust pipeline in the lending pool.
We also see quite a robust pipeline in the data centers. We also see quite a pipeline on the TPCB projects. We see a quite robust pipeline In the rail segments in that. So the key what again, coming back to the key fundamental thing is that There could be a potential delay in decisions due to this how the COVID will pan out. So that's only the thing.
Otherwise, That's quite a robust pipeline at this point in time.
Correct. So even if so basically if
Absolutely, Amit.
Just a couple of one is, we have a lot of MNCs in India who have, who are kind of so India has a great talent pool as far as software engineers go. So you have MNCs like Honeywell and WaBCO. They kind of hire talent in India to cater to the software needs of the parent as well as the software needs of the local software needs. Are there any plans to tap into the talent pool that we have in India to kind of On the software side?
Yes. I think Amit, this is a very good question. But we have not only planned, we already had This implemented plans long back and that will not be that particular thing is a separate entity. It's not Part of the listed entities. So we have a separate legal entity, which is 100% owned by our parents.
So that's where we house this thing. We have, at this point in time, more than 2,000 500 engineers, principal scientists working across for our global companies. And we have the center in Chennai and we have the center in Bangalore.
Understood, understood, sir. So my final question is on the EV charging infrastructure. Can you tell us what if there are any plans to how we intend to participate in the EV charging infrastructure?
Yes. EV charging, as you know, EV charging is one of our growth segment. So here, what we do is We do both front end and back end. When I say front end, back end, we are talking about very High Floss Charging Technology in that, which involves they play a very important role in connecting the generating sources, especially new generating sources and also connecting them to the EV load center. So our portfolio is geared towards not only the public and commercial transport, but also a large scale 4 wheelers in there.
So again, I'm talking about the both Front end and back end, we will do that. So we have the portfolio of what we call as a 3 d motion flash charging technology, which is the world's fastest loss charging technology and where we are now doing this pilot in Chennai Together with Ashok Lee Land, we're going to inaugurate in the next couple of months. And our buses, the Ashok Lee Land buses will be running using Technology in IIT Madras. And same is the case we have this Greedy Motion fleet, which is a large scale EV charging where the grid integration project is 64 and terminals involving conventional and prefabricated substations including Transformer, switchgear, rectifier, chargers, pantograph, axillaries, smart digital and service solutions. So this is All part of our whole encompassing the entire portfolio for the electrical vehicles charging.
It's not only one charger. We'll definitely make the charger, But behind the charger also, there's a lot of other things where we are talking about flash charging technology, So much of impact of the technology too much of the voltage and currents are required and you need those kind of things. So we are fully gearing up and we are Working actively with all the stakeholders in many, many area, many of the states here looking for opportunities in these
places. Thank you. The next question is from the line of Amit Mahwar from Edelweiss. Please go ahead. Mr.
Mahavod, request you to unmute your microphone and proceed with your question. As there is no reply from the current participant, we move to the next question from the line of Jonas Butta from Philip Capital. Please go ahead.
Good evening, sir. Just a quick two questions. First, For the past three quarters, we've noticed that the raw materials to sales ratio has lowered around 60% of sales. Do you believe that this now captures the worst impact or the most impact of higher raw material prices? And from now on sequentially, we should actually see the material margins actually Go back to the old norms.
Or is it a function of the sales mix today given there is Lesser orders which have higher gross margins. That's the first question. The second question is, Now that you mentioned that you're targeting almost 3 or 4 HVDC projects, Just wanted to understand how would this be managed. So given that we've paused the demerger, The current entity is largely a product company and may not be taking EPC projects, While the project may be awarded on EPC, so how will this be managed by us in the current form? Your trial while you were part of the ABB Group at that time, it was managed by the group entity itself.
But in this case, if you can help us with how this to be managed.
Let me answer your second question. And meanwhile, I'll ask Ajay Ajay, to look for your first question. So Jonas, What I have told you is that when it comes to HPTC, we see 1 project per year next couple of years, 3 to 4. That's what we are seeing the visibility of the projects in the pipeline. That's what I said.
And second is, when we are talking about, we are not only the product company. Maybe let me clarify that. So our purpose is to serve the sectors with our portfolio right from products, systems, Systems, okay, systems services software. So that's why if you have seen my presentation in the slide, we also have our products, we have also our projects, we We also have services in that. We continue to serve across the thing in that.
And previously even though when we were part of the previous ownership, The HVDC competency always remained with the power grids, entire execution capabilities, including the execution of turnkey execution. For example, the one which we are just completing, almost in the words of completing the Rygaard Pughlur HVDC project, entire HVDC This is done by the team, which is part and parcel of Hitachi ABB Power Skits right now in India. So What we are saying is that our strategy is to go to the projects where we have A bigger of our products, our competency and leveraging our engineering capabilities in that. So that's where we said we'll do. Suppose if A particular substation, which has a 50% of civil, so that is where we do not want to do that.
We will provide our substation Engineering capabilities to them. So that's why we have treated another company or group company, which is the Links and they will do that kind of thing. But SVDC and .com, fax, SVC, whether they are turnkey, full turnkey or whatever the model, it will be done by The Hitachi ABB Power Fields in India.
Understood. So even the civil part will be managed in house?
Absolutely. Right now, the Rygaard, Kublur done by us. Any other done by us. So same
is the case. Understood. Okay. Understood.
So Ajay, can you answer the question?
Yes, yes. Thank you for the question. So coming back to sales to raw material Ratio, so currently it's hovering around, let's say, 60%. So basically, it is a mix of the function that we talked about or sales mix. So it will be roughly hovering around this line, plus minus 2, but definitely because we cannot Compared with the last few quarters, because obviously these quarters we know that it has got impacted because of pandemic.
So in real sense, It will be a mix of both. Where we'll see the mix of between sales mix, that is one factor. And we intend to see that it will more or less will be hovering around this area Line only.
So, on the one Thank you, Ajay. And one question on the Data centers, we're looking for a data point. Just wanted to clarify to the person who was asked for it. Generally, our data center CapEx, again, if you take out the civil and those kind of things, the CapEx, It is in the range of 15% to 20% is our scope. So again, it's a full scope or quarterly scope, that's where comes into picture.
And then roughly, we have seen again hyperscale data centers, the CapEx per megawatt is in the range of anywhere between 35 crores to INR 45 crores depending upon the specifications, etcetera, and those kind of things in that. Thank
you. Thank you. Ladies and gentlemen, your time constraint, that was the last question. I would now like to hand the conference back to Mr. Envino for his closing comments.
Over to you, sir.
So thank you once again, ladies and gentlemen, taking time from your busy schedule and attending to the investors call. I appreciate very much. Please, If you have any more questions, so reach out to us. We are happy to provide and engage for any kind of clarification you may have it. And with this, I want to really request you please take care of yourself and stay safe and stay strong.
Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of ABB Power Products and Systems India Limited, That concludes today's session. Thank you for your participation. You may now disconnect your lines.