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. At that time, you may click on the Q&A tab available on the media player to ask an interactive question. Please note that this conference is being recorded. I now hand the conference over to Mr. Venu Nuguri, Managing Director and CEO, ABB Power Products and Systems India Limited. Thank you, and over to you, sir.
Thank you, Steven. 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. India has suffered, as you all know, severe healthcare crisis during this COVID-19 wave two, especially in this particular quarter. The country is still reporting quite a number of cases as per the World Health Organization, which has also put a bind on our business growth. It brings some solace that over the past weeks and past months, we have seen a decrease in overall cases. In what is the world's largest vaccination program, we also see a very good progress. More than 400 million 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 Power Grids, the health and safety of people has remained at the center stage. We believe that this is the bedrock of our long-term growth vision. We have already uploaded the presentation in the BSE website. I would be referring the things. Some of you are seeing this. We are also sharing the presentation. Please, those who are not seeing my PPT, please refer the PPT which just now uploaded in the BSE web portal. Moving to the slide number three. Safety is our license to operate, which is a non-negotiable virtue in our organization. Offering support to essential services, we could not switch 100% to remote work. We ensured COVID-19 appropriate behavior across sites possible to limit the spread of infections.
Inculcating safety values being fundamental to self-reliance, we continued the trend of safety operating tools and refreshers to ensure a safe working environment within our premises and reported no serious injuries. Safety is also inbuilt 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 too in this quarter. We kept on nurturing our environmentally responsible values, 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 our role as a company, as well as individuals in curbing it, be it through trainings on ecosystem restoration or personal carbon footprint assessment and measures to reduce it. I'll be now moving to the next slide number four. Our focus was steady on managing the COVID-19 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, continuing to provide PPEs and making provisions for medical assistance and equipment, such as oxygen 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 continued 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 for higher patient intake. 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 enabled 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 and enable vaccine delivery to remote healthcare centers. For the of COVID-19 vaccines in South India, we have partnered with a not-for-profit organization called C-Camp for funding research, development, and deployment of portable refrigerated containers. Moving to the next slide five. 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 reduced 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 second 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 slide 6. We continue to deliver credible performance year-over-year. Orders were up more than three percent year-over-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. In this quarter, close to INR 100 crore worth of orders, the L1s 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 to the extent of INR 200 crores and earnings out of that. We were able to double our net profits in the same year. You can also see, this is also off yearly results. 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 seven. We booked 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 GW of renewable penetration by 2030. Our portfolio of O&Rs continued to reach offshores, and we booked our first 400 kV GIS order in South America this quarter. Moving to the slide eight. 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 Rihand-Dadri HVDC transmission link, or by making our operations more sustainable through smaller environmental footprint and an inclusive and talented workforce. Under our diversity focused hiring, as you know, we have launched a Diversity 360 strategy, and we strive to hire aspiring and exceptional women and develop our culture of diversity and inclusion.
Our quest to tackle the underrepresentation 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 2030 sustainable development agenda in the power industry and of our vision and ideas. Moving to the slide nine. You may be remembering, we announced our carbon neutral targets for 2030 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 seven 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, decrease waste generation by half 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 walk the talk on the climate action market development. Our plan is to be carbon neutral in our own operations in this country by 2030. Moving to the next slide 11. I think you all know better than me, just give you perspective from our side.
The second wave of COVID-19 caused a significant setback, delaying economy recovery a fair bit. The manic spread of the virus and the healthcare crisis affected our supply chains 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 curbs and disruptions triggered by the pandemic. There was hardly any respite in inflation, and we saw price of oil and other commodities soaring. Yet 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 first week of July to over 30 billion units compared to a year ago. It returned to a pre-pandemic level, mainly 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. COVID-19 headwinds notwithstanding, we remain the partner of choice for our products, services, and softwares. We saw 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, et cetera, where the growth is trending in the right directions. We enabled renewable power utilization for key industry players, increased electrification 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. We all know that despite difficult market conditions, we continue to make in India, not only for India, but also for the world, leveraging our wide install base and expertise.
Customers' trust remained rock solid as we saw service and export order exceeding our corridor of 15%-20% range in the order mix, wherein service orders rose by 50% year-on-year and exports added in more than 30% to the order book in this quarter. 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 maker, and 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 at the start of 2021 that ordeal brought upon by the pandemic could be getting over.
The second wave hit us, and hit us so rapidly and so intensely. With a surge in infections in April, business confidence deteriorated, with weak demand conditions and the reintroduction of lockdowns, priority of all the organizations across the country remained to taking care of the people. However, our three-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 board, we covered a good distance over the last one year with a credible and sustainable performance. As of June 30th 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 Q2 with EBITDA margin of 5.8%, and half-year basis, the EBIT margin of 6.7% versus last six 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 often say we invest in India for the long term, and we have been manufacturing here in more than six 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. 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 through services, digital solutions, and exports, leveraging our strong local footprint. We have a comprehensive portfolio of future-ready and state-of-the-art 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 upskilling.
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 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 for our customers, for the industry, to advance a sustainable energy future. With that, thank you once again for taking your busy time, and also attending this. I'll now request the operator to open for Q&A. Thank you.
Thank you very much. We will now begin the question and answer session. To ask an interactive question, please click on the Q&A tab on the left side of the panel and click on Raise Hand button. The operator will announce your name when it's your turn to ask a question. Please accept the prompt on your screen and unmute your microphone while proceeding with your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to the participants, to ask an interactive question, please click on the Q&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. Please accept the prompt on your screen and unmute your microphone while proceeding with your question.
The first question is from the line of Renu Baid from IIFL Securities. Please go ahead.
Hello?
Hi. Hello. Hi, Renu.
Hi, good evening, sir. I hope I'm audible and clear.
Yes.
Sir, I have three questions. My first question is to understand that post the second wave, 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. Why don't you go ahead with all the three questions?
Sure. The first question is related to the execution momentum on the backlog and any project delays that you're witnessing.
Sure.
The second question is, while 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 these segments from a revenue business perspective? 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? Probably from a three to four year perspective, in your view, how large can these business segments be, given that data centers are expecting almost INR 8 billion-INR 10 billion of CapEx. Rail, metro, we would be favorably placed with a lot of funded projects, JICA funded projects, and like. These would be the three questions. Thank you.
Okay. Thank you, Renu. Let me just start answering from your first question. On the post second wave, we have not seen any major delays. The delay was only during the wave two period, that is the last quarter. Now I see more and more customers are trying to catch up. In fact, we are even seeing some of the customers accelerating the execution on that. By and large, we have not seen any major delays due to the post second wave across the thing in that. That's one. The second question is on the service and revenue. I think, if you recall, we have been also telling you that in our exports right now is in the range of 15%-20%, which is a higher bound of 20% range.
Our plan is to take from 15%-20% - 20%-25% over a period of time. Our revenues are also trending in the same band right now. Same is the case, the service is at 10%-12%, our plan is to take to 10%-15%, and we're also seeing the same direction on the revenues part on that. 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, they're going 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 be going to be a major contributor for our orders in the two-three years or three-four years period what you're talking about it.
Can it be more than a third, broadly, in terms of mix, as in 30%-40%, given the size and scale of these segments?
Yeah. 30% is definitely a minimum. We are looking at in excess of 30%.
Sure. If I can add one more question.
Yeah.
Would it be possible for you to share the outlook on the HVDC orders in pipeline? How are they placed and the broad timelines in terms of the likely award that we see?
Yeah. Basically, we are seeing three or four HVDC projects as we speak. One of them we are hoping that it will get finalized by end of this financial year. There are two more large HVDC projects where our PGCIL and customers are looking at it. Given long-term view, we see at least one major project per year, because we see quite a lot of pipeline. Our view is that one major project per year is what we can factor in award basis.
Thank you so much and all the best, sir. I'll get back with more questions.
Yeah.
Thank you. The next question is from the line of Yogesh Singhvi from SKA Investment. Please go ahead. Mr. Yogesh Singhvi, please go ahead with your question. Mr. Singhwi, 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 Sumit Jain from ASK. Please go ahead.
I 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 PowerCell, 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 set. What is the scope of that tie-up and how we can leverage on that in India?
Yeah, Sumit, I think, that's a very specific, limited information, and we'll not be in a position to share anything. This is basically like a kind of pilot basis we are doing it. We have not reached a stage where we would like to commercialization of that particular thing in that.
Sure. You spoke about digitalization and in the presentation, cybersecurity solutions as well.
Yeah
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?
No, I think when talking about the cybersecurity, right now our focus is this is in the very nascent stage, the cybersecurity as a revenue stream. We're working with the customers in educating, in partnering with them. Together we got to learn, both our customers as well as ourselves in the long run in that. Right now our focus is on doing the system studies of that. Where are the loopholes, where are the plugs? We will giving a more of a consultancy standpoint, and then we start deploying the solutions of that. What you're talking about 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.
Together with Lumada, we are offering our asset performance, APMs, and enterprise software solutions to our customers on IoT platform of Lumada of Hitachi. We see that quite a big interest from many of the customers, started from industrial customers and also quite a lot of renewable customers. We can start taking a lot of things on a remote monitoring, remote measurements, et cetera, of many of these assets.
Any number that you can give what it has reached as a percentage of sales to begin with?
No. Right now it is too low. We are not in a position to give any percentage. We are making the pilots and we are doing some customers at various segment levels. We see that, in the near future, it's a quite a big pickup of this particular complete digitalization, including IoTs of the whole energy networks.
Sure. One last question in exports, can you practically offer your solutions across geographies and markets, or there are some restrictions in terms of which global entities? In terms of, for example, this entity in India, which markets it can service and which markets it cannot service, et cetera?
Sure. We have a dual strategy. One thing is what you said, right? In some of the product lines, we have a strategy that particular markets are being allocated, and then we will be developing the markets together with the local sales organization of that particular countries. That's the one strategy. We also have other strategy where in some of our product lines are at global field factories. That means we will be selling throughout the things, either through directly to our customers in South America and other things, but also through our Hitachi ABB Power Grids sales organizations of those things. It is a combination of both, Sujit.
Thank you. Before we take the next question, a reminder to the participants to ask an interactive question. Please click on the Q&A tab on the left side of the panel and click on Raise Hand button. The next question is from the lineup, Yogesh Singhvi from SKA Investment. Please go ahead.
Yeah. Hello. Am I audible, sir?
Yes.
Thank you, sir. Sir, I just have two, three small questions. First is, what is the private and government order split in your order book? I understand you are primarily, majority of order book is from the government side, like from PGCIL and others. I just want to have a quick idea, what is the split between private and government orders, including export also. Private means from private players, like private industries, like from data centers.
Yeah. Thank you
private entities.
Thank you, Yogesh. Actually, if you really look at, as you rightly said, the government and private, if you really take the split, we have a bulk of our order backlog falls under private. Around 60% is private and rest of the things is part of the government in that. Most of the things like a data center, like industries, which we have been announcing major wins of the last quarters. That's where our private means industries and private we call it the one, and the government is pure government like PGCIL, like state utilities and the railways, that forms part of the government.
Okay.
Even though Rail is a public sector, but we call as a not part of the government bucket.
Okay
Call as a private.
Okay. That's helpful, sir. The second question will be, sir, due to this pandemic situation, there might be some delay in exhibition and delivery of the products. Have there been any instances where customers have been levied with us with liquidated damages? I hope in government contractors it is there, LD damages. In private, I am not so sure. How that situation is emerging?
No. I actually answered, in fact, we had a major delay last year and as huge disruptions, and due to that some of the projects got delayed, but then there the government and also many utilities have extended suitably for whatever the delay, and we did not face any major delay liquidated damages on those contracts. I was just answering to your colleague just now that we don't foresee any major disruptions due to this wave two. There'll be some disruptions, but there are good catch-up plans until and unless we hope there is not going to be any major potential wave three. If that is not there, we hope that it'll stabilize and then we come back to the normal, if not in the next quarter, but next couple of quarters.
Okay. If you permit, can I squeeze in another question, sir?
Sure, go ahead.
Yeah. It is about, sir, our overlap with the ABB India. I see in their presentation also, they talk about data centers, railway electrification, and metros as growth areas in future.
Yeah.
Is there any overlap between their product and our products, or they play in some like LV or we are in MV or higher voltage segment, or both go as a go-to-market strategy we adopt in the marketplace?
Thank you. I think very good question. I think first of all, there is absolutely no overlap between Hitachi ABB Power Grids and ABB. There is no overlap at all. When it comes to the 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, et cetera, in that. That's where we will be focusing. In some cases, we will also go together with ABB wherever it is required. We are very clearly saying that our competency on the data center is the high voltage substations, whether it is air, gas-insulated substation, engineering package, grid connection studies, digital substation, dry-type transformer.
Under the electrification is that the power distribution, backup power, data center automation, battery storage, power quality and consulting, cybersecurity, these are all part of our portfolio, and there's no overlap there.
Thank you. The next question is from the line of Hitesh Kumar from Aksa Capital Advisors. Please go ahead.
Yeah. Thanks for the opportunity. Am I audible?
Yes, Hitesh.
Right. Hey, I just wanted to understand, what is the addressable market opportunity for the data center, for the products that we have? In the sense for every one MW of investment, how much is the addressable market for us?
Give me a minute, Hitesh.
Sure.
Exactly because we will not be able to quantify exactly, but we'll tell you for hyperscale data center, per megawatt of a data center, 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. Meanwhile, if you have any questions, please go ahead.
Sure. Just also wanted to understand what's the competitive landscape in this space, in the data centers project that we get to do? Whom would we effectively be competing over here?
Yeah. 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 who will be competing with us. You know them. Depending upon, suppose customer wants only, let's say, a grid connection for the data center, then the set of competitors for that particular thing is different. When it comes to us, as just now I 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 ways.
Suppose some customers buy only the dry-type transformer plus, some customers buy only the grid connection, some customers will buy the entire thing, including the studies, stabilization studies, grid connection, automation, and electrification of those kind of things.
Mm-hmm. Sure.
Yeah.
Sure. Thanks.
I come back to you on that exactly the value on this, okay? Thank you.
Thank you.
Yeah.
Thank you. Next question is from the line of Amit Tawani from Zenith. Please go ahead.
Hi, sir. Thank you for taking my call, sir. Am I audible?
Yes, Mr. Amit.
Yes. Sir, can you please tell me how much is data centers part of this order book right now?
I think we don't quantify the order book by the segments, Amit. We were talking about data center is one of our growth levers. We are tracking the growth of that, but we will not be able to quantify how much of the data center part of our total orders.
Fair enough, sir. How is our order book looking after the June 30th ? What is the order booking like this month?
You mean, in this quarter? 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 some of their targets, they're really accelerating now. We see a quite a robust pipeline in the renewable. We also see quite a robust pipeline in the data centers. We also see quite a pipeline on the TBCB projects. We see a quite robust pipeline in the rail segments in that. Again, coming back, the key fundamental thing is that there could be a potential delay in decisions due to this how the COVID will pan out. That's only the thing. Otherwise, there's quite a robust pipeline at this point in time.
Correct. Basically, if it doesn't come in this quarter, then probably come into the next quarter. Just in case there is any delay in the decision-making.
Absolutely, Amit. Absolutely.
India has a great talent pool as far as software engineers go. You have MNCs like Honeywell and WABCO. They hire talent in India to cater to the software needs of the parent, as well as the local software needs. Are there any plans to tap into the talent pool that we have in India to, on the software side?
Yeah. I think, Amit, that is a very good question. We have not only planned, we already had this implemented plans long back, and that particular thing is a separate entity. It's not part of the listed entity. We have a separate legal entity, which is 100% owned by our parents. That's where we house this thing. We have, at this point in time, more than 2,500 engineers, principal scientists working across for our global companies. We have the center in Chennai and we have the center in Bangalore.
Understood, sir. My final question is on the EV charging infrastructure. Can you tell us if there are any plans, how we intend to participate in the EV charging infrastructure?
EV charging, as you know, EV charging is one of our growth segments. 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 flash 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. Our portfolio is geared towards not only the public and commercial transport, but also a large scale four-wheelers in that. Again, I'm talking about the both front-end and back-end, we will do that. We have the portfolio of what we call as a Grid-eMotion flash charging technology, which is the world's fastest flash charging technology, and where we are now doing this pilot in Chennai together with Ashok Leyland.
We're going to inaugurate in the next couple of months. Our buses, the Ashok Leyland buses, will be running using our technology in IIT Madras. Same is the case, we have this Grid-eMotion fleet, which is a large-scale EV charging, where the grid integration project is a depot and terminals involving conventional and prefabricated substations, including transformers, switchgear, rectifier, chargers, pantograph, auxiliaries, smart digital and service solutions. This is all part of our whole encompassing the entire portfolio for the electrical vehicle 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. Much of the voltage and currents are required, and you need those kind of things.
We are fully gearing up, and we are working actively with all the stakeholders in many of the states. We are looking for opportunities in these places.
Thank you. The next question is from the line of Amit Mahawar from Edelweiss. Please go ahead. Mr. Mahawar, 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 Bhutta from PhillipCapital. Please go ahead.
Good evening, sir. Just a quick two questions. First, for the past Q3 , we've noticed that the raw materials to sales ratio has hovered around 60% of sales. Do you believe that this now captures the worst impact or the most impact of higher raw material prices? From now on, sequentially, we should actually see the material margins actually go back to the old norms? 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 three or four HVDC projects, just wanted to understand how would this be managed. Given that we've post 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.
How will this be managed by us, in the current form? Erstwhile, while you were part of the ABB group, at that time, it was managed by the group entity itself. In this case, if you can help us with how this will be managed.
Okay. Let me answer your second question, and meanwhile, I'll ask Ajay to look for your first question. Jonas, what I've told you is that when it comes to HVDC, we see one project per year now next to couple of years, three to four. That's what we are seeing the visibility of the projects in the pipeline. That's what I said. Second is, when we are talking about We are not only the product company. Maybe let me clarify that. Our purpose is to serve the sectors with our portfolio right from products, systems, services, software. That's why if you have seen my presentation on the slide, we also have our products, we have also our projects, we also have services in that. We continue to serve across the thing in that.
Previously, even though when we were part of the previous ownership, the HVDC competencies always remained with the Power Grids. Entire execution capabilities, including our turnkey execution. For example, the one which we are just completing, almost in the verge of completing Raigarh, Pugalur HVDC project, entire HVDC EPC done by the team, which is part and parcel of Hitachi ABB Power Grids right now in India. 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. That's where we said we'll do. Suppose a particular substation, which has a 50% of civil, that is where we do not want to do that. We will provide our substation engineering capabilities to them.
That's why, we have treated another company, our group company, which is a Linxon, and they will do that kind of thing. HVDC and STATCOMs, FACTS, SVC, whether they are turnkey, full turnkey, or whatever the model, it will be done by the Hitachi ABB Power Grids in India. Is that clear?
Understood. Even the civil part will be managed in-house?
Absolutely. Right now, Raigarh, Pugalur done by us, and Agra done by us. Same is the case.
Understood.
Okay.
Understood.
So-
Yeah.
Ajay, can you.
Yeah
answer the question?
Yes. Thank you for the question. Coming back to sales to raw material, ratio. Currently it's hovering around, let's say, 60%. Basically, it is a mix of the function that we talked about, our sales mix. It will be roughly hovering around this line, plus, minus two. Definitely, because we cannot compare with the last few quarters, because obviously these quarters we know that it has got impacted because of pandemic. 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 line only.
Yeah. Thank you, Ajay. One question on the data centers, we are looking for a data point. Just wanted to clarify to the person who has asked for it. Generally, our data center CapEx, again, if you take out the civil and those kind of thing, the CapEx, it is in the range of 15%-20% is our scope. Again, it's a full scope or partly scope, that's where comes into picture. Roughly, we have seen, again, hyperscale data centers, the CapEx per MW is in the range of anywhere between INR 35-45 crores, depending upon the specifications, et cetera, and those kind of things in that. Thank you.
Thank you. Ladies and gentlemen, we're time constrained. That was the last question. I would now like to hand the conference back to Mr. N. Venu for his closing comments. Over to you, sir.
Thank you once again, ladies and gentlemen, taking time from your busy schedule and attending to the investors call. Appreciate very much. Please, if you have any more questions, reach out to us. We are happy to provide, and engage for any kind of clarification you may have it. 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.