Ladies and gentlemen, good day, and welcome to the Schneider Electric Infrastructure Ltd Q2 FY 2024 earnings conference call, hosted by Elara Securities Private Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Ltd. Thank you, and over to you, sir.
Thank you, Seema. Good afternoon, everyone. On behalf of Elara Securities, we welcome you all to the Q2 FY 2024 and H1 FY 2024 conference call of Schneider Electric Infrastructure Ltd. I take this opportunity to welcome the management of Schneider Electric Infrastructure, represented by Mr. Udai Singh, Managing Director and CEO, Ms. Suparna Bhattacharyya, Chief Financial Officer, and Mr. Mohit Aggarwal, Head of Investor Relations. We will begin the call with a brief overview by management, followed by Q&A session. I'll now handle the call to Mr. Udai Singh for his opening remarks. Over to you, sir.
Thank you, Harshit, and, very good afternoon to all ladies and gentlemen who are on the call, and thank you for joining the call. Apologies for starting it a bit late, 2 minutes late. I'm joined... My name is Udai. I've just taken over as your MD and CEO of Schneider Electric Infrastructure Ltd, and as Harshit said, I'm joined by, my able colleagues, Suparna, who's, leading the, finance. She's a CFO and supported by Vineet. We all are here.
And I would also, without wasting much of the time, I would like. I'm sure you must have gone through the deck which we had shared last day, and I would, right now, would like to start from asking you and requesting you to move over to page two, which actually gives you, you know, despite the fact that we are not seeing each other, but at least we can see the picture of at least the new people who have come on the board, myself and Suparna. And we also are trying to put some statements which we feel, which are aligned to our mission, what we want the company to be driven at, which are essentially, if you read out, is driving profitable growth with digital and sustainable products and services of consistent quality and keeping customers at core.
This is what I feel, strongly feel for the company. And also Suparna, who strongly believes in supporting a profitable business growth with the right balance of risk management, compliance and good governance. So this is, I would, you know, this being first for both of us, we wanted to just tell you as to what we are trying to do with your company, and this is what we're trying to move on with these statements in mind and these actions in mind.
Now I request you to go to page number four, which actually is talking about how do we see the market and what is the outlook for us, and which is, if you read that, because we are sort of, bullish, I would say, with the Make in India initiative of government, which is trying to infuse about INR 3 lakh crore in next five years. If you read out, there are certain, columns which we have tried to make, which are the major contributors or levers on which we will run your business. If you read out, what I just said, the first one, which is the RDSS, I think you may be aware, this is the government scheme for strengthening the existing, distribution infrastructure.
We see about INR 2.5 lakh or plus that value to be getting spent in next four years' time, which is actually focusing on how do we reduce the losses, how do we make the grid more efficient, how to reduce the smart metering, how to strengthen the existing infrastructure, take it to the last mile. Happy news is that we have all the solutions which are actually can be proposed, offered, sold in these areas. If I smart-talk about the basic equipment, the SCADA, the Advanced Distribution Management Systems, which are ADMS, and other advanced metering infrastructure, is all we have in our portfolio, which can be handled, and we have been working right to actually make, you know, to leverage these investments which are being planned in government.
The other sector is, I think you must be reading out, and this is something which again is being talked about, is the semiconductor business, which is actually now in flourishing because we are trying to see as to how to make China Plus One strategy that everyone has in mind. And MNCs actually have thought of investing about close to INR 60,000 in next four years in this, which actually involve in, you know, investment around battery plants, whether they are the lithium-ion or whether they are the new technology, emerging technology of lithium iron phosphate or the manufacturing of the same. And we see huge potential even coming from here. You know, there are a lot of people who actually have been investing in this, big names, which we are actually rightfully connected with them as well.
You know, for example, talking, you know about Foxconn, they declared investment pattern of about $8 billion being spent. You know, we have people like Micron, we have people like other, who actually have involved investment here, and, you know, we, we see this as something which is, which is going to help us in trying to see and drive whatever we thought, which I mentioned in the beginning, which is a profitable growth. Now, if I speak about the green growth, if you see there's something what happened at COP, and what our honorable PM has also mentioned, there's a lot of, I would say, focus and drive which actually is happening on the ground on this. Government is trying to spend about INR 7,000 crore on green hydrogen mission.
You know, there's a green hydrogen mission which has been rolled out, which actually would mean, typically generating about, you know, 15-20 gigas of the capacity addition, because we want to be ready by 2030 to about 125 gigas of our addition of having our ambition of 500 gigas in the country for renewables. We are trying to see as to how the, you know, the landscape is emerging, where we can support with lot of equipment what we make, loaded with lot of digitalization, lot of softwares is something which has been working on this. We have those skills with us, which we are trying to see as to how this, this will roll out in this very capital-intensive infrastructure segment.
Now, the data centers, you know, there's nothing which I'll be adding, but we all know the way these days, you know, the advent of 5G and AI actually has been trying to take the data center requirement up in the country. You know, just to give you a perspective, we had about 138 data centers when we closed 22, you know, which we are drawing up about 640 MW of power. The plan is, you know, to take it to another—add another 45-50 data centers in coming years. And, you know, the total demand should be going 1,000 MW plus. And there are so many of people actually are trying to make investments here. You know, Amazon is the largest one, which is making and declared about close to $12 billion investment coming up.
Then we have SGT, we have NTT, which are planning to invest $1 billion and $2 billion respectively. And they're also trying to, besides data center, they are working on large data centers, they are working on edge data centers in small countries. So, you know, courtesy all, you know, the usage of internet, you know, arrival of 5G, you know, extensive artificial intelligence usage will see this segment grow. We are very rightfully connected, and hopefully, you know, this is something which will aid us in trying to drive business in coming times. The last on the page, if you see, is the mobility.
You know, we have all, we have been seeing, you know, the way, sensitivity amongst all of us is emerging as to how do we move from the fossil to run our, you know, IC engine vehicle to a EV vehicle, which involves a lot of investment in battery plants. You know, we are talking about INR 40,000 crore being invested in the battery plants. You know, there are so many people who have started investing. You know, government is supporting by rolling out the PLI Scheme around this sector. You know, some INR 20,000 crore have been, already been, set, declared.
There are 3 or 4 people who have already been identified who will do this, and we are trying to see as to how do we, with our solutions and the expertise which we have around these solutions, we can make some orders come to us. Also, I would like to mention about one more very specific thing which your company has, which is the solutions which is on the locomotives. And, you know, this is, if you must have heard about the Vande Mataram scheme, that talks about, you know, government is planning to roll out 475 Vande Mataram equivalent trains. Out of which 75 of them are expected to be running, you know, within India, covering a distance of 10-12 lakhs.
It's something which is the plan is very ambitious, and there is a right offer, there is a right solution, there is a right product, which actually we can leverage this bullishness, which is now. Now, at the same time, I would also like to mention, which you can read in the table below, on the other relevant segments, we are also investing where we typically operate, and which also will give us some tailwind in reaching as to where we are trying to do. You know, today, I would like to make about the scale, which is a backbone of you know, steel, which is investing and trying to make up the capacities from 18.5 million tons to about 30 million tons, and investing money, about INR 2,500 crores. Things around happening at food and beverages sector.
You know, this is something which is, you know, by, by nature, this is supposed to be coming up quick because infrastructure is easy to put up. You know, guys like Nestlé, Mars, are all trying to do things here. A lot of things happening on the water side, you know, because we know the situation of water, the population which we have, the type of water which we have in India, something which is large value desalination plants are being planned in, you know, certain parts of the country, which will help us in trying to push our solutions here as well. And metals is not far away, you know, because of the infrastructure push of government, which you, all of you know. You know, the core is, you know, aluminum, copper, for making all infrastructure.
All of the people who are producers are actually having a very ambitious plan. All in all, I would like to put it, the market outlook is positive for us, and we are just counting and also trying to make things work. Now, I will request you to move on to slide number six, which I'm happy to share that, you know, what are the wins which your company has done. And this is, if you see, there are a few slides around this, and this talks about our presence, I would say, in all the sectors, which you can see, picture can give you some out, clue. The first one on slide six, on the left side, is where we have given e-Buildings.
This is a new developed technology where we try to bundle everything, all solutions in a, a metallic, I would say, enclosure, which is a large size to it, and this is being patronized by all distribution companies, private as well as government-held. So this talks about something which we did in, say, with a leading distribution company, where the solution was our primary gas insulated switchgear and PremSet, which you see, which is a design where we are trying to push our SF6 technology, something also which was there. Now, this gives us, this gives us limitation of the uptime, and also we were, you know, single OEM partner for the complete distribution solution.
Then on the right, you see this. I'm again happy that we are there, where we have tried to see and put up the installed base, which has been inserted with some intelligence, which works on AI, and which is actually used for monitoring of these 27 transformers, which are spread at 8 locations pan-India. Now, just to tell you as to what is this? This is something where transformer, if you can perhaps relate to, is something which is the heart of the entire power ecosystem. And it is extremely important and relevant for the user to have some prediction about the health of this transformer. And this solution, which we have actually made, which we call as EcoStruxure Transformer Expert, which is acronymed as ETE, helps the consumer to do this.
This is something which we see the future is perhaps this, where people will try to get this offer and try to say, so that they can ascertain the continuity of power in their setups. This is something which we are counting as some offer which has been brought, which will do wonders in coming time. I would request you now to move on to the next page, slide number seven, where the left side is talking about, again, in one of the aluminium sector, the guy who actually are making, you know, these, the blue, the white metal. And there we have actually been in a position to supply. The company has been able to supply very highly digitalized panels, which actually is very sustainable, extremely safe, energy efficient, and it has got full scale, scalability.
Now, what we are additionally been possible to do by the digitalization which has been done, is we are able to do the asset monitoring, which is essentially what we supply. We can monitor how has that been working, and also a real-time indicator of what has been happening in the equipment which has been supplied. Now, if you talk about the right, I am so happy that your company was the first one where we had given in the world which, which hosted the full solution, end-to-end automation, at one of the airports in India, which will set as a reference to wherever in all the airports which are going to come in future for serving the growing population. I would say not growing, only growing and getting richer population of the country in times to come.
Here, the solution has been, you know, all across the layers, which are hardware, the digital hardware, the software which sits on this, the analytics which sits on top of the software, where you can bring out a meaningful, you know, meaningful data out of it. Now, I would like to go to slide number eight, which again, is just in continuation of what your company has won. It's the second continuous order which we have got from this client within one year. Again, in steel manufacturing, where we have actually supplied our equipment, again, digitalized, so that they can help them to drive scalable and get connected and derive some meaningful results. The picture on the right is the sixth win that the company has taken from one particular state utility board, which has come in just one year.
So that's something which we have done where, you know, solutions are being proposed, and the utility has been happy with the, with the experience which they saw with us, so that there is a sixth repeat order which came within a year. Now, I will move on to slide number nine, which is the service. There's one important element which we are trying to see and serve our customer, because finally, customer is looking up to us as to how good service we do with the assets which they already contain. So I'm happy to announce that we have grown year-over-year about 50% more in orders, and 70% more is what we have sold.
Now, this has come through because we are trying to drive this through renovation, modernization, you know, investment, pattern, which we are trying to drive and make people realize about the recurring services. We are trying to see we make the products which are non-digital, I would say, to digital, by putting sensors, by connecting it, you know, by telling the beauty of the software, you know, what type of savings will that customer will accrue. And with all that, we are seeing this acceleration, which I just mentioned, about 50% growth in orders. Now, we have done big wins. The company has done big wins. We have revamped the existing installed base of a leading power company. We have actually taken up the reliability of the existing system in a major Mumbai discom.
We are trying to see as to how do we help and align in Make in India initiative of different public sector companies. We have tried to see as to the reference which you saw, the transformer, which I gave you of the one of the company, is how do you digitalize the existing transformer so that, you know, the reliability and the outages are ensured and the outages are minimized. And going forward also, we are working on this, and we will see as to how do we reach out to more and more clients, try to prove them as to what we can do for them, you know, derive some value in their mindset, and try to work together so that we can drive business.
With this, I'll pause here, and I'll give, you know, the mic to, Suparna, who will actually tell you more about the numbers. Over to you, Suparna.
Thank you, Udai. That was a great perspective that you gave about the business. Good afternoon, everyone. I'm happy to share the key indicators of your company and the performance in the last quarter and the last six months for this financial year. Going to slide number 11, which is the orders for the year, for the quarter. We are at 64.7% higher above the orders of the similar period of last year, at INR 492 crores. For H1, we are at INR 938.77 crores, which is 40% above the similar period of last year. We see very good momentum in orders driven by the PNG, the power and grid, mobility, and other electro-sensitive segments. Going on to the next slide.
The sales indicators for the quarter and the first half of the year. We closed sales at INR 495.81 crores, which is 17.8% higher than Q2 of last year, and similarly, a good traction in the H1 orders. We are at INR 991.06 crores over last year, which we closed at INR 792.3 crores. Again, this is coming from the good momentum in sales driven by power and grid, the M&M sector, mobility, and other electro-sensitive segments. You can see that we are quite aggressive in the orders, and this is basically to fill our factories in the coming quarters so that we are able to give good results to you and ensure good performance overall. Now, coming to the P&L statement.
So as you have the numbers with you beforehand, you can surely see a very significant improvement over the results of Q2 of last year. If we go line by line, our total sales is at INR 497.53 crores, and out of this, the pure sales, if you see, it is at 17.8% higher than similar period of the last year. We have good gross margins as well. You can see an upside in that. And this has basically comes from the growth in sales, the change in the sales mix, and some stability in the material costs over the last periods. Then we can see that there is a small marginal increase in the employee costs. This is quite marginal, so nothing significant to explain.
However, the other expenses have risen by 18%, and this is basically, you know, they comprise more of the sales-driven expenses. Apart from that, the depreciation increase, you can see that has come as a result of the increase in the asset base into organization. The interest expenses have reduced because we have optimized the loan and reduced a bit of it, by generating good cash into organization. And ultimately, you can see that the profit after tax is at 8.6%, which was last year's similar period, which was at 2.1%, which is up by 6.5 points. Going to the next slide, which is the H1 performance versus the similar period of last year.
Our total sales were at INR 995.1 crores, and the pure sales increased by 25.1%. Our gross margins again increased by 4.2 points. Reasons are quite similar, as shared in the Q2 results. We had some similar efficiencies in Q1 to Q1 as well. Employee costs, it is a timing difference, basically in the employee costs, as we see mostly. Other expenses, again, sales driven, as I mentioned, and they have risen. Depreciation, again, mainly an impact of the higher asset base. And interest, almost similar. And at the profit after tax level, we are at 7.8% for six months of this financial year, which is up by 3.3 points of the last year. So thank you all for your support.
Now I'll pass on the call to the operator, and she can please put the call open for questions.
Thank you very much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles... We take the first question from the line of Suraj Malu from Catamaran . Please go ahead, sir.
Thank you for giving me this chance. Sir, I had one question referring to the page number four of the investor presentation. So on the power and grid segment, it's mentioned that the implication for the listed entity is smart meters as well. So just wanted to understand if smart meters is a part of the listed entity or not?
It is actually a solution which is given, it can encompass the smart metering as well. So, you know, it's the entire end-to-end solution, where smart metering can be part of the scope of the contract with the buyer may decide. And smart metering, when the solution is done from us, it is part of us.
It's a software solution and not the physical product of smart metering?
No, it's a smart meter as well. So you have a smart meter, then you have the connectivity, then you have the software, as you are saying, you are right. So when it is done like that, it is actually taken as a project job many a times, in times to come, it may happen, then it will be under, under us.
Got it. Okay. Thank you, sir.
Thank you. We take the next question from t`he line of Manish Goyal from Thinqw ise Wealth Managers. Please go ahead, sir.
Yes, thank you so much. I have a couple of questions. Sir, first on the gross margin side, like for the third quarter in row, we are seeing gross margin at 36%, and congratulations for that. Would like to know, how do we see going forward? Do we see it maintaining this levels in future?
Thank you for your question. Gross margins, it should be of similar nature, unless and until there is a significant change in the raw material costs, which is practically not in our control. So we will try to definitely maintain such kind of gross margins, and hope to see that we do not deviate much on what we are already anticipating.
Okay. So, so basically, like the order book, what we have, we have a fair degree of visibility on maintaining the margin?
Yes. As of now, because we've most gathered a significant amount of orders to be executed during the remaining part of the year, we are in control of the margins.
Great, ma'am. And historically, in Q2, we always used to see within employee expense a certain element of ESOP costs involved. So is there any element in this quarter as well or in first half?
Yeah, it has been there in this first half. And, between the quarters between last year and this year, it's a timing difference, but it's been factored in, H1.
Okay. So, because what I see is that, so is it in Q1 or Q2, ma'am, and what is the num- how much is the number?
It was in Q1.
What was the amount, ma'am?
We cannot give that exact number-
Okay.
because it's related to the compensation of people.
Sure. And, ma'am, would it be possible to share the breakup in terms of like the revenue, in terms of projects, in services and other transitional products? If you can please share the numbers on revenue side, order inflow side, and order book side, and maybe if you can give us the order book number as well, outstanding order book.
So we do have an outstanding order of close to INR 1,200 crore. I'm giving you a round round figure or maybe precisely it is INR 1,100-INR 1,150 crore, if I have to say. So we are quite loaded in terms of the order executions that have to happen during the remaining part of the year.
And, uh-
We also wanted the breakup between the different kinds of
Yes. Yes.
For quarter two of this year, our system-
Yeah.
Business was 64%, transaction 23%, services 13%.
This is, you're giving me revenue or order flow?
This is the sales breakup.
Oh, okay. Okay, okay. And how much is IG, ma'am, of the total revenues?
IG is close to 19%.
Okay, that is included in the projects?
It's included in the system revenue.
Sure, ma'am. If you can please share the order inflow, if you can give me the order inflow for the IG, as well as the breakup of the external inflows, please.
The order breakup is: equipment is 42%, projects are 17%, transaction is 22%, and services 19%.
The IG number, please, ma'am.
So IG is... IG, I can tell you the value. So this is about INR 100.2 crore.
Sure, ma'am. Last question on the status for our Kolkata plant, how is it progressing? I believe we were expecting it to probably start it by the year-end. What I see from the cash flow statement is that there has been a CapEx of INR 23 crore in the first half. So maybe if you can enlighten us on the CapEx plan and the progress on the new Kolkata project. Thank you.
We are moving on the right track in Kolkata, and, you know, things are moving as per plan, and we expect that this should be happening and going live sometime next year.
Sure. I have a few more questions. I'll come back in the queue. Thank you so much.
Okay. Thank you.
Thank you, sir. The next question is from the line of Apoorva Bahadur from Goldman Sachs. Please go ahead, sir.
Hey. Hi, thank you for the opportunity. Ma'am, you provided the breakup for revenue into systems, transactions, services. Can you also break up the system revenue into equipment and projects?
Equipment is 33% and projects are 12%.
Perfect. Ma'am, the order book breakup, please?
Oh. Order book is equipment is 42%.
Sorry, orders or order book?
Orders.
Order book, okay.
Perfect. So, we have systems at 66%, transactional 17%, and services at 17%.
Perfect. That's very useful. Secondly, I also wanted to know about the RDSS scheme. Firstly, what would be the for, for Schneider in this scheme? And secondly, by when should we expect the materialization of orders here?
See, RDSS scheme involves lot many things which we can do. Now, because RDSS, I am sure you might be aware, that is a investment which is announced by the government, which runs into INR 303,000 crore, supposed to be getting done by FY 2026. Now, you know, there's a dashboard which government runs, which talks about the status of all the disciplines, how much money has been infused, and what is the project status, whether where they are reaching. Can always get to that, which will give you some idea about as to how the project has been moving and how much investment we typically would like to have from the government coming in coming times.
But from our side, we have multiple offers and solutions which can be worked upon, depending on how strategic they are to us, we can do under this scheme and projects. But the status, I think, more than me, the government side itself give you the overall spend and everything in a very elaborate and very illustrative dashboard, which has been made by the government.
Sorry, sir, this dashboard you're talking about, is this smart metering dashboard?
No, I'm talking about the usage and the status of the RDSS scheme by itself.
Okay. Sure, sir. Thank you so much. That's all from me.
Thank you, sir. We take the next question from the line of Raj Rishi from DCPL. Please go ahead, sir.
Yeah, hi. By when can you scale up your software and services related business as a percentage of total revenue significantly?
We are working. This is a continuous effort which has been put, and, we hopefully will try to... You know, this is not; this will happen overnight. It involves a lot of fieldwork, as you may understand. A lot of concept, a lot of you know, on realization and value addition, which needs to be proven. But let me assure you that we have been working on this, and this transformation will happen in times to come.
I believe Schneider globally had taken over a company, and that particular company has a subsidiary in India, which is also into this medium voltage. So I believe in the previous call, there was some talk of merger between, you know, with getting it all in the listed entity. Any comments on that?
We have no visibility around that.
Okay. Okay. Okay, thanks.
Thank you. Before we take the next question, a reminder to all the participants, if you wish to ask a question, you may press star and one on your touch-tone telephone. Participants, if you wish to ask a question, you may press star and one on your touch-tone telephone. We take the next question from the line of Viraj Mithani from Jupiter Financial. Please go ahead, sir.
Yeah, am I audible?
Yeah, Viraj sir, you are loud and clear.
Okay. Good afternoon, and happy congratulations on the good set of numbers. Most of my questions are answered. I just want to know, you talked about all these new segment, this airport, e-mobility. Does it mean we are shifting from more products to solution-based company? That's what is transition happening there. And also, would it mean that our margins in days to come would be much higher?
Can you repeat the last part? Sorry, I missed it. Margins?
Margins in days to come would be much higher because. If you can give some opportunity size on all these segments you talked about, emerging market, green growth, mobility, it will be helpful.
See, why we choose to talk about this, there's nothing that we are leaving behind where we traditionally were. We are always there in that... We are trying to give a perspective as to how your company is trying to shape up with the emerging segment. You know, and that was a good idea, which we thought that perhaps we can tell how the company has been shaping up. And we have been—we are—our ambition is to keep on driving profitability, and this is something which we will be between the technology and the selection of projects and things like this, which will happen in the world.
So it's not that we are coming out, and we are only talking about these new emerging sectors, but, you know, as a matter of fact, we thought that it will be relevant for you all to actually understand as to what we are trying to do, the company is trying to do. But these things which we have been talked about and being spoken about every day.
Okay, so we are becoming more solution-based company, towards probably moving towards a higher trajectory margin side. That's what is the attempt. That is the correct to think that way?
With the limited audibility which we have today here, I think your answer to your question is yes.
Okay. And sir, this port project you talked about, what do we do that? Do we offer some medium voltage transformers, ring main unit, or we give some solutions to them? Like, what was the project you were doing before?
So yeah, the basic bricks are these, and then we try to evolve the solution around, depending on the customer needs. You know, somebody is asking something which actually is as the product which you mentioned, something on top of it, we do that as well. So that is what we call as a project.
Okay. And, sir, this, the projects in the government side, the, the money, how are the receivables are okay, right? There's not an issue there, because some lot of problems before had happened in that case.
Hello, Viraj.
Hello, hello, ma'am. How much listen to you, too?
Thank you. So, on the receivables side, we are doing much better, and we can see, I mean, a good cash amount which is being generated in the organization. We are working very closely with business and everybody and also customers to have the old receivables collected. And now it's a much, much smaller amount as of today, with respect to the old one. So, we are seeing good efficiency in the collections as well.
Okay. Okay, that's it from my side, ma'am. I wish the team all the best and very best for the future.
Thank you.
Thank you.
Thank you. We take the next question from the line of Aditya Deorah from Divisha Investments. Please go ahead, sir.
Good afternoon, sir. Sir, in the notes to accounts, we have mentioned about an exceptional item regarding the shift of existing plant located at Salt Lake to a new place in Calcutta. So are we shifting everything to the new factory we are setting up at ProSpace, or are we putting up a new plant in Calcutta?
The new plant will definitely take some of the equipment which are usable and which are shiftable from the existing facility to the new one. In addition to that, whatever is required, we will be making the new structures, et cetera.
Okay. Do we plan to dismantle the unit in Salt Lake?
Yes.
Okay. And, sir, like, ma'am, what is the percentage of our revenues right now is digital revenues? Like, how much percentage of our revenues is digital revenues right now?
So we do not have that kind of a split with respect to digital, because we often give a complete solution to the customers.
Mm-hmm.
That split is not available at the moment.
Ma'am, a few years back, in one of the slides in the presentation, you had mentioned that, our targeted digital revenue percentage would be somewhere around 25 from maybe around 10, 11, something like that. So are we moving in the correct direction or in that particular direction at this point of time? And where have we reached in the journey? This is my basic query.
Yeah, we are moving in that direction itself. We are trying to see, because with more and more disruption happening with the advent of AI, which we are trying to bring in in the system and trying to prove some worth to the customer this evening, so we are moving in that direction.
Okay.
That is what we are trying to do, you know, systematically and strategically as well.
Perfect. Thank you, sir. Your results are very, very pleasant. Thank you.
Thank you.
Thank you. A reminder to all the participants, if you wish to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Mr. Sanjay Kohli from Goldstone Capital. Please go ahead, sir.
Thank you. Good afternoon. Thank you for the opportunity. Just wanted to know the breakup between sales to the public sector versus the private sector?
We do not have that with us, because we do our business mainly through the EPCs and, you know, they further bill it to their end customers. So we are not monitoring that kind of metrics as such at the moment.
So the EPC, the... Oh, so, you're not... At the customer end, you don't, you're not monitoring whether you're selling to, the division between government and...
So let me take this. Now, if you, I think perhaps what you meant was, that how many is being end-used by Government of India?... or whether are you interested in knowing the buyer profile, where, whom we are selling?
Yeah, the buyer profile, not the end user.
So, so-
The buyer profile, that you know your customers, whether it's government or, public sector in the government or companies, you know, to industry and businesses. Basically, your B2G versus B2B kind of breakup.
So that is there in the transactional piece, which I think Suparna just mentioned some time ago, which is transactional is sort of channelizing it through partners, which is typically, if you see the sale which we have done in the quarter we just went by was typically about 23% a quarter of what we did. And if you see, we try to reach out to the end user, which is government, by either direct or channelizing it, and typically the one which is coming from utilities or whatever we do, which is the products which are being used up by utilities, most of them is government, it's typically about 40%, if I may say so.
So about 40-60 mix, it'll be 40-60. There's close to INR 500 crores of sales in the quarter would be 40% to government and 60% to the private sector customers.
Sir, was a high level number because it is not same to same that we follow the same number, depending on, you know, this is a project business. So typical, if you take a larger time window, then typically about 40% is coming from utilities and rest are coming from other segments.
Okay, thank you.
Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Sanjaya Satapathy from Ampersand Capital. Please go ahead.
Hi, sir. Sir, thanks a lot for the opportunity. Can you just clarify that how much of your order book and revenue is to the group company and to the outsider?
It's roughly 20%.
Right. And the order book number that you give- gave, that is INR 215 crore, does that include sales to group company or not?
No, it doesn't.
Okay. And last, just can you... You have given the growth in order in flow, but, can you just tell me, how much is this INR 1,215 crore order higher compared to the same period last year?
Can you please repeat your question?
I mean, this order backlog that you have, that is of INR 1,215 crore, what was it at the same period last year? That is, year-on-year growth is how much?
Year-on-year growth, Mr. Sanjaya, is 24%. Last year, in the same quarter ending that is September, we were having INR 978 crore of order backlog, and now what we are having is INR 1,215 crore. It's a 24% increase to this side.
Understood. And sir, last question, if I can just ask that you have mentioned that your gross margin is kind of sustainable, and you are getting good amount of order inflow. So can we look at much better profitability and hence much more aggressive initiative in terms of CapEx to drive your business?
It's little difficult to comment at the moment, but as I mentioned, we will try to maintain similar gross margin and keep a good control on the expenses. So, that's, that's the outlook that we have.
Is there any update on your, the acquisition of your, that Switchgear business of, you know, related business of Schneider?
There's no visibility at the moment on this one.
Thanks a lot.
Okay.
Thank you. The next question is from the line of Suraj Malu from Catamaran. Please go ahead, sir.
Sir, of the government CapEx that they have announced in the RDSS sector, which is roughly INR 2.5 lakh crore, what will be the relevant market for us, like for the products that we offer, the medium voltage products?
It will be for, you know, most of the offers which we have, sir, you know, there are jobs where people are trying to... The distribution companies are trying to revamp their existing structure or augment it or make it more reliable, so, you know, and then make substation for better distributions, you know, involve something which is high-end technology, move away from, you know, the more compact solutions for driving carbon footprint. So we have actually, even the ring main units or the AIS or the GIS; everyone actually can be sold depending on what sort of utility, what the plans are. Because speak about what's happening in AP, what's happening in Goa, they are different. You know, because the charter, what they're working on is different.
But then, the good news is that we have some things to offer at each of these response.
Wait, so like any number, like it will be out of INR 200,000 crore-INR 250,000 crore, like 50% will be relevant addressable market for the products or like a sense of proportion?
Difficult to comment on that on a number perspective, but I think I did mention sometime in the beginning that, you know, it's very good work done by government in terms of, you know, putting up a dashboard which tells you as to what the projects are, what the tenders have been closed, what are they trying to do. So somebody's trying to put up a, you know, transmission line, we have nothing to do there, you know. Things like this. So some state takes up INR 230 crore, for example, and they say INR 130 crore coming up for putting up additional overhead lines. So we have no work there.
Mm-hmm.
But if someone says, "No, I want to go underground, and then I need a distribution which will actually help support the underground from the overhead doesn't set up," we do make. We have an opportunity there for supplying ring fence. So it depends. It is not. It's difficult to quantify as of now, if you ask me.
Got it. Just last thing, what will be the product which is relevant for shifting from overhead to underground lining?
So when you typically do it, you actually do talk about, you know, having a separate network which handles it. And there are a lot of people, as I mentioned, one of the drivers of RDSS is how do you make SCADA adaptability, etc., come up. So we are talking about smarter rings which speak to each other so that the outages can be curtailed and managed better. So those are the areas where we can actually help the utility to do what they want to do.
Okay. Thank you, sir.
Thank you, sir. Participants are requested to limit their question to two per participant. We'll take the next question from the line of Mr. Manish Goyal from Thinkqw ise Wealth Managers. Please go ahead, sir.
Yeah. Thank you so much for providing another opportunity. Sir, so, as far as the old plant is concerned at Kolkata, has it been shut down completely, or it is a phase-wise movement what we are doing here?
So it's working. It's not been shut down, and we have a robust plan of actually moving it at what Suparna was saying some time ago. There'll be all disruptions will be planned disruptions.
Okay. Okay, great. Sure. Sir, any timeline would you like to specify, next year by when the new facility can start, sir?
So it's a complex infrastructure which we are trying to make, which is going to be a state-of-the-art. There are multiple parties who are helping us to do so. We expect that this should happen sometime next year, as I say. As we move on, we'll keep on, you know, highlighting the status as to how we have been doing there.
And sir, how are export revenue shaping up? In Q1, we had INR 28 crore revenues, and ideally, we have seen that export revenue share has been 12%-15% for us. So in this quarter, what is the number and how do we see it going forward? And related also question, sir, is, are we seeing any disruption due to geopolitical situation in Middle East and Europe, both for/against sourcing material from there or even our export sales?
The export sales for this quarter is INR 31 crore. Regarding disruptions, we are not seeing much of disruptions. We have some mitigating actions also lined up, so there will be no, no critical bottleneck as per the current situation as of today.
So, supply chain has been more or less normalized for the components what we have been, semiconductors and components what was there earlier?
Very slight disruption is still there, but it is not really, you know, stopping our sales plan, et cetera.
Okay. And sir, last, last question, ma'am. And sir, on the order pipeline growth, sir, like, how are we seeing. You did elaborate various segments in your opening remarks, but like, if you probably want to get a more handle on the numbers side, like, how do we see the pipeline number growing? And, second related question in terms of, do we see any challenges, in terms of slowdown ahead of general elections next year? Thank you.
Yeah, you see, the pipeline is supportive of what India looks, and that is not only true for us, it is true for everyone. And I think your point is valid. There may be some embargo on certain government decision which will happen as we move on to the general election in these five states. So we... And, it will be. It is difficult to predict. We can anticipate there will be some deferment of closures which might be there. But at the same time, you know, because our business, as I think I answered some time ago, that is not directly from government as well, and there are a lot of EPCs who actually keep on, you know, patronizing us and giving orders, so that will not get impacted by elections any issue.
Right.
But we do see that there may be certain exposure which we directly have with government and something which was related to that order sometime just after Q4 and early Q1, that may get shifted, you know, for a while. So we are not able to quantify. We are actually gearing ourselves so that we can see and we can have a consistent order to feed the pipes.
Great, sir. Thank you so much. Thank you.
Thank you, sir. Ladies and gentlemen, you are requested to limit your question to one per participant. We'll take the next question from the line of Mr. Akash from Dalal & Broacha Stock Broking. Please go ahead, sir.
Yeah, thanks for the opportunity, ma'am. Just one question. If you could elaborate more on the exceptional item, that is reflecting in our results this quarter.
Okay.
What does that contain?
The exceptional item is basically where we have taken some provisions to take care of the shifting of the factory from the current location in Kolkata.
Okay, so have we reversed the provision or have we made additional provisions? We have made additional, right?
It's the first time that we've made this provision.
Okay. Okay, and, how do you expect this item to, I mean, recur in the books in the coming quarter?
We haven't yet made any analysis on that for the coming quarter. So as and when, based on the progress of work, et cetera, we'll take a call, and then we'll look into our books.
Got it. Got it. Okay.
Thank you. We'll take the next question from the line of Mr. Viraj Mithani from Jupiter Financial. Please go ahead, sir.
Just one question. I just want to know what level of capacity utilization we are on right now?
So, we have different factors for different lines which we have, which is, you know, typically we are working at an optimal level, I would say. Few lines plus, few lines minus, but on an average, we are at optimal level or shape more than that.
Okay. Thank you.
Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Harshit for closing comments.
Thank you, Seema. We would like to thank Schneider Electric Infrastructure Management for giving us an opportunity to hold this call. We would also like to thank all investors and analysts for joining for this call. Any closing remarks, Schneider Electric, please, sir? Udai, sir?
I would first like to wish a great and happy Diwali to everyone who is on the call, them, their family, and want to give an assurance that we are working and trying to take your company to the right direction, all put together. So thank you again for joining this, and wishing you great success ahead.
Wishing everyone a very happy Diwali. And again, thanks to everyone for your confidence in the new management and your support, and we will live up to your expectations, and we try our best to achieve. Thank you very much.
Thank you. On behalf of Elara Securities Private Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.