Ladies and gentlemen, good day, and welcome to Schneider Electric Infrastructure Limited Q3 FY 2023 earnings conference call hosted by Elara Securities Private Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, sir.
Thank you, Lizanne. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q3 FY 2023 and 9-month FY 2023 conference call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric Infrastructure, represented by Mr. Sanjay Sudhakaran, Managing Director, Mr. Mayank Holani, Chief Financial Officer, and Mr. Vineet Jain, Head Investor Relations. We will begin the call with a brief overview by the management, followed by Q&A session. I'll now hand over the call to Mr. Sudhakar for his opening remarks. Over to you, sir.
Thank you very much. Good evening to all of you, ladies and gentlemen, a warm welcome. I'd like to take you through the affairs of the organization of Schneider Electric Infrastructure Limited. Without wasting any more time, we will go straight to page number 3, which is the economic outlook. Nothing's changed much on the economic outlook, the macroeconomic outlook as we proceed into this quarter. The geopolitical situation across the world remains fluid, though the world has kind of learned to live with it. The sounds of recession are getting louder. The good news is that the Indian economy continues to be resilient, driven by domestic demand, and also rebalancing of supply chains that the world is witnessing. The opportunities for export and industrial production and export out of India look stronger.
All this represents a strong opportunity for India as we enter the financial, the calendar year 2023. We also see that the balance sheet of the banks are much stronger, credit offtake should be better. We also see manufacturing at more or less at capacity and all the industrial houses having a better balance sheet. We should see investments coming in from the private sector as well, in addition to the investments promised by the government. All in all, the situation looks pretty decent for India, and I think that should give us confidence that the quarters coming in the future, we should be able to see it with more predictability. We'll go on to the next slide, which is page number 4.
Here we'll give you an update about our key segments, which is power and grid, mining, minerals and metals, and transportation. We'll also give you how the budget dovetails into these segments and what impetus would be provided by the government in terms of these segments, and what opportunities it presents for us in the future. On the most important segment that we represent, which is power and grid, electricity continues to have a stronger demand driven by manufacturing and also retail consumption. The government is pretty much committed to transformation in this segment, both by digitization and also changing the energy mix more towards renewables and greener sources of energy. The budget allocates more money, almost INR 350 billion, to achieve India's net zero goals.
This should translate into more digitization opportunities and more renewables and changing the energy mix, and thus bringing in more of microgrids, et cetera, into the foray. There is an allocation towards green hydrogen, which we are tracking very closely with corporates to see how we can convert these requirements into real-time business. On minerals, mining, and metals, the key driver seems to be the government infrastructure spend, which will be primarily around metros, around infrastructure projects and steel and airports, et cetera. All these will spur the demand for cement, and we should see more capacity additions happening on the cement side. We also see that the steel capacity additions will also be around 50% by 2031, which should also present some good opportunities for our business.
The transportation segment is a key segment, which is where most of the spend is going to happen in terms of modernization of the railways, the metro networks and airports that are going to be built, and we have a strong position here. All in all, I would say the budget highlights provide a good impetus to growth of our key segments, and we should see positive uptake coming from these segments in 2023. Let's go to the next slide, which is a brief overview on some of the emerging segments. As we know, EV charging and e-mobility presents a strong opportunity for Schneider and its products and services.
The cloud and services provider segment, which is the data center segment, is something that we have been focusing on very strongly, and we've been having a good run here. Also, the renewable segment is something that is very important to us in terms of the changing energy mix of the country. The budget also allocates a good amount of impetus to these segments. The 5G rollout should further strengthen the cloud and services segment. We should have e-mobility also maturing into a strong business proposition as we see the mix change for passenger vehicles, from conventional petrol and diesel to more electric vehicles and the charging facilities that are coming around the country, and the strong focus by the government to ensure that the charging facilities are in place to be able to absorb this growth in EV segments.
Overall, I would say a positive trend in terms of both our traditional segments as well as our emerging segments. We'll go on to the Slide 6, which showcases some of our key wins going forward. I would say that we are helping the country of Nepal build its robust power and distribution system. We recently won a major order from this customer, leveraging our strengths of digital and software, combined with transformers, which will give them predictive analysis. This is the first of its kind of an installation within Nepal, and we are expecting strong repeat business from them as well. We'll go to the next slide, which is a win with a cloud and services provider. This is to provide LV and MV equipment to them.
This is a repeat customer who has been repeating us for almost 2-3 years now. We see strong traction here in years to come with this customer and more pull-through for our products and services as we go forward. We'll go to slide number eight on minerals, mining and metals. It's one of the world's top glass manufacturers who has repeated us with another order, which is to provide electrification for their new facility. We expect more pull-through and orders from them coming forward as we, as we execute this project as well. The key strength that we displayed in this particular project was, of course, our execution capability, the way we execute our projects with both quality and meeting stringent timelines. We go to slide number nine.
As our diversification continues into segments which have earlier been untapped, one of the top global food and beverage company has contracted with Schneider to provide them with MV and LV panels, along with a sandwich bus duct, with our transformers. This is a complete package, which we will provide to the customer, and this gives us a proposition to also put in some of our digital enablers here and with EcoStruxure, provide them with end-to-end solutions. Going on to the next slide, which is slide number 10.
One of the major cement companies in India who has been regularly buying our products, has also patronized our EcoStruxure service plan, which is an Asset Advisor in combination with intelligent products, which will help them move their maintenance from more of a routine maintenance to more of predictive maintenance, thus improving the uptime of the equipment. This is eventually the journey that we want to move along, and I will also touch upon briefly as to what we are doing next to be able to leverage these solutions with our customers in a more holistic manner. That's where we come in with Active ranges. Active ranges are products which are shipped out of the factory with sensors enabled with cloud connectivity natively, which connect natively to EcoStruxure Asset Advisor, providing predictive maintenance and analytics to customers.
Our endeavor in the future would be that every panel shipped out of the factory would be an active product, and the customer would be able to subscribe to our services in a monthly or in a yearly fashion, by which they would be able to exploit the full value of our analytics and thus improve their uptime and reduce their maintenance costs. This is the eventual model which we move into. Of course, it will be a journey. We will slowly start with certain customers, and we've already had our first win. Going on to the next slide, which is page number 12.
We are working with 30 such customers, we have also upgraded our manufacturing facility with pairing tools which will enable us to quickly configure these equipment to be able to be active very in the field, so that it requires minimum intervention at a field level to be able to connect to the cloud. Going on to slide number 13, a brief update on how we are doing on the transactional piece. As we have mentioned time and again, transactionalization of our business and digitization of our business are two key pillars of our transformation journey. We spoke about digital briefly. Now we'll talk about transactions. Our distributor business has grown 50% in this period, which we are talking about from Q1 to Q3.
Panel builders have grown substantially in terms of our licensing partners and our core component partners with sell-out breakers, which are up, also up 30%. We see good amount of traction in our transactionalization journey, thus increasing the reach of the organization across the country and also providing us with the necessary
Reach to new and new customers. Now I will request Mayank Holani, our CFO, to give you an update on the financials.
Thanks, Sanjay, and good afternoon, ladies and gentlemen. Our OG slide number 15. Our OG order intake for the quarter is higher by about 6.7% versus same quarter last year. While year-to-date 9 months order intake is about 10% higher versus last year. That's a kind of growth. Primarily, the segments which have grown during this period in the quarter are mobility and Diffused segments, while for the 9 months period, the growth has been coming mainly from mining, metals, minerals and Diffused segments. Next slide. On sales, if you see, our sales for the quarter is down by about 4.3% from the same quarter previous year. Here I would just give a background.
Last year was a very high sales in this quarter, coming with a low performance in Q1 and Q2, which were impacted by second wave of COVID. Effectively, we were also carrying a lot of FG where customer projects were delayed. This year, if you see till September in H1, our growth versus last year was more than 34%. Coming from that, you know, this quarter is as such a big growth. In absolute terms it's a big quarter, but yes, in percentage terms, lower than last year. In 9 months period, if you see, the sales growth is about 14.8%, good solid growth.
In terms of segment, if you see, for the quarter, oil and gas, mining, metals, minerals and mobility contributed to the sales mainly, the growth in sales. In 9 months period, if you see, the growth has been coming mainly from mobility and mining, metals, minerals and Diffused segments. Next slide please. Now coming to P&L. If you see our gross margin has improved by 100 basis points, primarily due to the better sales mix. While as we see in the market, the raw material inflation has also moderated a bit from the extreme level or the movements which were seen in the previous year.
The profit before exceptional items and even profit, net profit after tax is about INR 435 million versus INR 524 million in previous year, going to, you see some increase in employee cost, slightly above, because the production in the quarter has been higher while the, you know, last year was impacted by the old inventory which we have been carrying. That way it's not a bad, it's a reasonably good performance. Nine months period, if you see, our gross margin is again higher by about 100 basis points, primarily due to the better sales mix and raw material inflation moderation. Profit before exceptional items is about 4.6% at INR 629 million, versus INR 276 million in previous year, and almost double in terms of, you know, percentage.
After exceptional items, the profit is net profit is INR 788 million versus INR 276 million. One point I would like to highlight here is this is again the successively fifth quarter where we have been in profit. As we have, you know. We are now in terms of, you know, momentum and quarter-on-quarter performance, we have been able to deliver profitable performance quarter after quarter in line with our strategy and continued focus on cash and margins. We'll continue this journey. I'll close here and leave the floor open for Q&A. Thank you.
Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question, may please press star and one on your touchtone telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Thank you for the opportunity. My first question is regarding our margins. The margins have improved by almost 2 percentage points over the 9 months. Is this trend sustainable or where do you see the margins say next year?
For Nikhil, in terms of, you know, the overall margin, we hope to see continue the same momentum and, you know, obviously would like to improve from this. While we don't give any, you know, indicative number or forecast for the subsequent periods as such. Yes, we intend to, you know, continue and improve this momentum. Obviously the margin improvements had to come because last year, the few quarters have been turbulent with the raw material inflation and COVID, all these impacts and which impacted the volume as well as the profitability.
That's clear. I've got a very basic question. How does a product suit, is different than the unlisted Indian entity?
We in this entity, we are into, you know, medium voltage product.
While those products are mostly not there in the other entities except for few overlaps in terms of... There is no nothing. We are into medium voltage products which are into the ETO products or engineer to order, while in the unlisted entity you have more than one entity. You have UPS, low voltage product and industrial automation product.
Okay. Which are not basically catered to medium voltage and the others, the other entities catered to the high voltage and low voltage.
Yeah.
Okay. Sir, there has been a scheme. The RDSS scheme has been launched and has been given a substantial capital expenditure plan regarding it. Do you see the private CapEx and the distribution CapEx impacting our order inflows, and how are we targeting it?
If you really see, Nikhil, there is an intent by the government to spend through the RDSS scheme. If you really see how much money is flowing into the DISCOMs right now, I think that will take some time.
Okay. You're saying, a few quarters or you're...
Yeah, maybe a few quarters. That's what we are expecting. Yeah.
Understood. That's all from my side. Thanks a lot.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Raj from Arca Partners. Please go ahead.
Okay. wanted to know how do you think FY 2024 year bills to pan out?
Sorry, can you repeat your question?
Yes. How do you think FY 2024 is going to look like looking for from the business perspective?
You're asking about the financial year 2023, 2024?
Yes, yes.
Like Mayank mentioned before, we do not want to give a forward-looking guidance on the business as of now. We refrain from doing that. If you look at all the parameters from our key, which I spoke about in my opening address as well, if you look at the economic outlook of India, we could expect India to be more resilient, given the factors that I mentioned already. The macroeconomic outlook seems to be good. Though unpredictable, it looks to be good. From the key segments that impact our business also, we touched upon the six segments that could be important to us, and we see that these segments seem to be resilient. Infrastructure investments in India would not abate either through government spending or through the private spending. We could feel positive about that.
If you triangulate all these, external factors, you could probably feel confident that we should be able to have a good 2023, 2024 as well, in line with these parameters.
All right. Yeah. Thank you. Have a good day. Bye. Yeah.
Thank you. The next question is from the line of Apoorva Bahadur from Goldman Sachs. Please go ahead.
Hey. Hi, sir. Thank you for the opportunity. sir, I think you in one of the slides you had mentioned that there's a large opportunity coming from renewables and basically the entire clean tech sort of an ecosystem. Can you please share your thoughts, like what's the size of opportunity that you see over there, which are our products which specifically cater to this? That will be very helpful.
If you look at the energy mix, you have seen that the Government of India wants to clearly move its energy mix from traditionally, non-green sources of energy such as coal and oil to more of greener energy sources like wind, like solar, et cetera. You will see new capacity additions happening in these particular segments. Anywhere where you have investments happening in terms of energy production, you would need to evacuate the energy, and that represents a good opportunity for us to supply our products. We want to fully tap into these segments because we see that all future investments, most of the future investments in terms of generation would be directed towards these segments. We'll be developing and investing in products, et cetera, and software and expertise around management of these assets digitally.
We will be investing in those areas, which should help us take a decent market share in these particular areas. That's the strategy.
Sorry. This will be more on the grid, digitization and management side of things.
Yes. Also on the evacuation side you would have the medium voltage equipment which are required, right?
Fair enough. Fair enough. Sir, I believe the CEA had come out with, I believe, a INR 2.3 trillion-INR 2.4 trillion plan for the 500 GW power evacuation transmission infrastructure requirement. Could you share what would be the size of TAM for Schneider wire of this INR 2.4 trillion?
I wouldn't be able to, you know, put a number to it because every project is quite unique, and it's sometimes very difficult to put a TAM depending upon. It's not a, it's not a straight line. It would be difficult to put a TAM number onto an investment of that particular size. We can definitely see that there is an opportunity for growth.
Understood, sir. Of all the projects that have been developed so far, can you share some of the major ones or what sort of contribution have we made in terms of the equipment that was supplied or something of that sort?
We have been supplying power transformers to these facilities. We have been supplying medium voltage equipment like AIS, switchgear, et cetera, to these facilities. We have certain product gaps and technology gaps as far as this is concerned in India, but we do have it in our global stable. We will be kind of transferring those technologies, et cetera, to develop more and more products which can cater to this segment.
Okay. The parent is okay with this transfer of technology and it won't happen with the unlisted entity, right?
No, no. We are very clear on the strategy. All developments as far as medium voltage and investments are concerned will happen through this entity only.
Fair enough. Fair enough. sir, also, I believe you had mentioned something on the green hydrogen front. Over there as well, is the opportunity linked to the renewable energy which is required or is it anything specific to electrolyzer or the hydrogen ecosystem as well?
Yeah. It's related to the latter which you mentioned.
Okay. With the electrolyzer as well.
Yeah.
What, what sort of equipment will be supplied over there, sir?
We won't be supplying the electrolyzer. We will be supplying the power equipment which is required to manage the energy.
Okay. Your transformers, rectifiers, et cetera.
Yes.
Have you done any agreements for that, sir, or any plan of action over there?
We have had a couple of wins. Unfortunately, we cannot disclose the name of the customer, in the public domain without their due permission.
Understood, sir. Sir, lastly, I think, also on the e-mobility side, what will be at play over here, in EV charging infrastructure?
On the EV charging, our main play would be the package substations, the medium voltage and the low voltage equipment, and the grid management software which will be required for this.
This, sir, this will be sold to the DISCOMs or.
Not necessarily. This need not be. It can be sold to, say for example, vehicle manufacturers like truck manufacturers or bus manufacturers. Someone could get into a turnkey contract to operate a network of buses for a state government that would require electrification of their charging stations, right? That represents the opportunity.
Right, sir. very useful. Thank you so much. All the best.
Thank you. The next question is on the line of Sanjaya Satapathy from Ampersand. Please go ahead.
Thanks a lot for the opportunity. My question is that in this quarter, on a year-on-year basis, your revenue declined somewhat, and you have given the reason that it is because of base effect. Can you just explain that? Is it just base effect because if you cannot grow on this base, then what could you say about the future? The second thing is that you have this massive seasonality from quarter to quarter, and the March quarter last year was pretty much lower compared to December quarter. Can you just give us some sense of this seasonality?
On the first question, see, last year if you see, June quarter was badly impacted by May two of and then even the effect continued in the September quarter. If you go back and see the numbers for June and September quarter, the sales was very low, whether even negative in from the previous year. September 2021 quarter sales was lower than even the 2020 quarter when the first year effect was there. What happened is due to the project delays and all, we were carrying lot of inventory of fixed finished goods at the end of September twenty. That's our published balance sheet.
If you see, from September 2022 versus September 2021, our FG at the end of September 2022 was lower by more than INR 50 crores, right? That's what happened is last year we had manufactured, but we were carrying all those FG because there were delays at the customer end or things like that, which we could ship in the last Q3. This year, our sales growth till December because there was a low base effect and the sales growth in first 6 months if you see it was 34%. The sales growth in both the quarters, June quarters and September quarters even individually was more than 30 and average for 6 months was 34%. That has got more normalized. This number, which is about 4.5% low.
It's not a loan sales or decline, it's just a kind of evening out of the balance because last year you had two very low quarters then the number went up in December quarter. I don't see any challenge. If you see the order growth overall, in for 9 months period, because quarter on quarter you may have sometimes you have a higher growth or lower growth. Even our order growth for the 9 months period is double digit. Sales growth also is quite solid. I don't see any challenge or, you know, any concern on that. Coming to the 4th quarter, December quarter has always been higher than compared to the other 3 quarters, like in the past all the years. That's how it has been.
We still hope to have a good quarter in the March also.
Okay. December will still be the biggest quarter, and March quarter will not be as big, right?
Yeah, I think we are because the value chain where we are placed, it's because of that, it doesn't work. Because what we have sell in the December quarter usually take another one or two months to install in the site. You know, every company has a financial year of the March ending, so people want us to supply the December end so that they can install in the same quarter and get the revenue or capitalize the CapEx what they are doing. That's the cycle that we are in, and that's the reason we are having the higher quarter. The same the reason for the March quarter, because we are the last quarter then. People used to fight on the existing equipment what they have to install.
That's the reason, seasonality quarter is comparatively less than the Q3.
Understood. In last question that I just wanted to get a sense from you is that on our last 12 months, this is your EBITDA margin has improved to somewhere around 7%. There has been a remarkable improvement almost every year for the last 3, 4 years now. Going forward, what will we see further upside to this kind of a margin performance? The way the company will target, it will be more of top-line driven growth? It will be something which where you are still not too confident about margin, and so you'll be continuing to remove low-margin business and achieve the bottom-line performance driven by cost reduction?
I think you have mixed a couple of questions. Let me answer you one by one.
Sorry, I couldn't articulate it better.
It's okay. Let me just answer one by one. First, as management communicated many times that we are not giving any forward looking direction, I will not comment on the margin movability, how it will move. You can look at in the past trend. The management will look or focus on the similar journey we are trying to do. If you're coming on the management focus is on the top line as well as the bottom line. Our major focus on the, whatever the business we are doing, we should be coming with a profitable margin. We are not granting any of the contract which is a loss making or where our payments are not secure.
Cash security. Yes. That's what I was about to comment.
That's the focus area is there, and journey will continue. You're talking about that the cost control and all. That part I will say that 90%-95% of the journey is already over. Now we are preparing our organization for the upcoming opportunity. You will not see much of the cost cutting on that side. Almost that cost cutting part is over. Now we are reinvesting the organization around for the future ready perspective.
Understood. Basically your top line driven story is what it will be from here on.
Sorry to interrupt, Mr. Satapathy. May we request that you return to the question queue?
Sure.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star 1. The next question is from the line of Diganth Haria from Green Edge Wealth. Please go ahead.
Hi, sir. My question is slightly more basic, that, you know, we mentioned that we won an order from a cement major. You know, if that order value was, say, INR 100, you know, if you can just break it down as to, you know, what revenue would we get from the component sales, like, you know, a transformer or a switchgear or a panel? What component is the AMC and what component will be the cloud kind of solutions that we use for monitoring and automation?
Roughly the equipment would be around 50%, services would be around 30%. Everything balanced, for example, the AMC and the services and the cloud connectivity et cetera, would be the balance.
30% which you said services, that would be the installation charge or installation or the EPC charges.
Yes. Yes, yes.
Okay. Only the 20% would be recurring, which we will get every year.
Correct, correct.
Okay, okay. Does this, you know, Do we make these transformers, switchgears, all the equipment that we need for these electricity solutions in-house? Or, we are looking to you know, get out of, say, transformer manufacturing or, you know, any of those manufacturing intensive parts?
We make most of it in-house, but the casting and all we do not do it ourselves. The castings and all are through vendors, and we do the core stuff in-house.
Okay. Does that explain that, you know, our employee costs are, say, 15% of the total revenue? You know, for a similar kind of company, the employee costs can actually be much lower. Just wanted to check that. When you said the cost efficiency part is over.
What kind of industry are you benchmarking with in terms of 15%?
I was just comparing with, say, an ABB or a, you know, or a Siemens, you know, somebody who makes components also and who gives solutions also.
If you have a mix of products which are, as Mayank mentioned, we are an engineer to order company, right? Most of the products in this particular portfolio and this legal entity are engineered to order. You could have, say, the organizations that you compare with could have a mix between engineer to order and highly standard products. If you have a highly standard products which are mass manufactured, you could have a different wage mix. Whereas if you have an organization which is primarily engineered to order, which could be a subset of their business, so it is not exactly comparable.
Exactly. If you see, ABB or Siemens, both fields, it's not comparable. Any company, it's not comparable.
Okay. Okay. Okay, sir, I get it. We are probably at the optimum level where we should be. I get that. Thank you, sir. I have more questions, but I'll come back in the queue.
Thank you. The next question is on the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead.
Hi. Thanks for providing the opportunity. My first question is, you know, if I look at from the order inflow perspective, you know, for the full year basis about, say, 14% kind of a growth. If I look at the many growth drivers like data center and all those new segments, if I look at the industry, the growth has been quite higher than, you know, 14%. I'm looking on 9 months basis because quarter-on-quarter it becomes difficult to compare. You know, why it is like that? Why only 10% growth in order, you know, compared to any other segment? If I look at any large companies or data center, they all are growing at 20%-30%.
You should also look at the fact that we have a certain mix of business, right? There are some traditional segments which have a larger weight, and you have some emerging segments which have a lower weight. The emerging segments, based on your strategy, you could have a higher growth. Say a segment like power and grid, as someone was asking me as to whether the RDSS scheme, the money is actually flowing into it, and are the investments happening in real time. You see that those segments are growing at around 5%-6%, and which have a larger weight on the overall business.
Do you think, you know, the... I think that's true for any engineering company. I mean, I don't think, even the comparable companies, whether you look at ABB, Siemens, so for that matter, any company, I don't think any company is only 100% the new base. Am I right? Legacy is always, you know, that's how the transition moves. Still, if I look at on the totality basis, the order intake growth of most of the other companies have been 18%, 20%, 30% kind of a growth, and that too on a 3-year CAGR basis, not only on 1 year, but on 3-year CAGR basis.
That's what I'm telling you that, you know, you need to look at every organization from the mix perspective also. You will have to detail out the businesses by product segments.
Of course, of course.
You will have to compare it, because if you lump everything put together, which is a high mix of transaction business and infrastructure business, you will not be able to get the right picture.
No, no, I understand. What I meant was that it means that the new segments for them is compensating for the low growth of the traditional segment.
I would urge you to do a product mix allocation also, if you have their financials broken up into that particular categories. Which you will not be able to find as well.
Absolutely. The, I mean, I didn't.
Unless you do that analysis, you cannot ask me this question as well.
We don't have even your product mix, no? Where you will not give us.
That's what I'm saying. I do not have information about somebody else. Similarly, I will not be able to comment on that.
Okay. Okay, let me put it this way. You know, over next two, three years, you know, do you think the new growth drivers, the weightage in your business will basically make it substantial enough to offset for the low growth drivers and make, you know, strong double-digit order intake growth?
Yes. That is the endeavor. That is the reason why you allocate resources and attention to segments that are emerging and high growth.
Okay. When you say that's endeavor, are you seeing the on ground realities, you know, resulting into conversion of those opportunities into, you know, the actual delivery?
Yes.
Okay. Hopefully next year, should we see those fruits?
Hopefully, yes.
Okay, fine. One more question from my side. From the competition intensity perspective, particularly on those new growth segments, how do you see that? How do you see the relative competitive positioning of Schneider in right to win market share?
Competition exists in each and every segment that we operate in. I would say that we are at no disadvantage as far as the market is concerned.
Okay. Okay, fine. Any large orders, basically, which are in pipeline in terms of the, or might be in pipeline even for the last nine months, which might have skewed these numbers, including or excluding-?
Unfortunately, I can't share those details, forward-looking details.
Okay. Okay. Okay, perfect. Thank you.
Thank you.
Thank you. The next question is on the line of Shyam Maheshwari from Aditya Birla Mutual Fund. Please go ahead.
Yeah, thank you. I just wanted a breakup of our revenue into different end user industry. For example, for every 100 INR, how much of our dependence is on the different sectors in the old economy as well as the new economy sectors?
We give you a broad breakup between old economy and new economy. It will be somewhere around 80 and 20. We wouldn't be able to give you more granularity on segment-wise performance.
Okay. Is there any particular sector in which we have some sort of higher dependency?
We have already mentioned that, right? With the traditional segments of power and grid and minerals, mining and metals, we have a higher dependency.
Understood. Sir, just one more question from my side. Do we also export, some of our products to the parent entity?
Very little, yes.
Very little, but not substantial.
Not substantial.
wouldn't be meaningful. Okay. All right. That's it from my end. Thank you.
Thank you. The next question is from the line of Viraj from Japetha Finance. Please go ahead.
Yeah. Good evening, sir.
Sir-
Yeah. Can you elaborate on this Active Range subscription you talked about? Does it mean?
Sorry to interrupt. sir, your audio is not clear.
Now it is clear?
No, sir. I'll request you to use the handset mode while speaking and not the speaker phone.
I'm on the handset mode only, ma'am.
Sir, your audio is sounding a little muffled.
Okay. Is it clear now?
A little better. Please proceed.
Yeah. Yeah. My question is, you talked about this Active range subscription. Does it mean that, will it increase our, yeah, subscription revenue going forward? Because you said every product would be probably connected, so.
Sir, I didn't get the last part of your question. Can you repeat?
No, no. Can you give more color on your Active range subscription? Like, would it increase our, some sort of, subscription revenue in days to come?
Yes. Yes. Yes, that's the idea. Yes, you're absolutely bang on. It will increase your subscription revenues and year-on-year recurring revenues.
Does it mean we'll be doing analytical sort of a business for the client, like analyzing certain data, giving them certain feeds and certain outputs?
You're right. You're right. It will have different service plans which the customer can subscribe to. It will have a vanilla plan which will give a certain set of features. If you have a plan which is slightly bigger than that and better than that, you would have to pay more and you would get some more of the services. You will have a top-end plan which will, if you subscribe to, you will get analytics, you will get 1-hour service support. It's like that. It's tailor-made to suit customer requirements.
I understand this will be the high-margin business. Is that correct to think?
It would be higher-margin business. I wouldn't say high-margin business. It would be higher-margin business. The value proposition is not just around the margin. The value proposition is around the customers, adding value to the customer, the stickiness with the organization and the ability for the customer to repeat us.
Okay. Sir, my next question is, there's a report that there's a shortage of transformers in the world. Does it benefiting us by any chance? The suppliers are very few.
The global supply chain continues to throw up new and new surprises every quarter. I think, we're finding a way through that. Every quarter it seems to be a different commodity that seems to be in short supply. Totally unpredictable. What, we Because of our leverage of a global organization and a global supply chain, we are positioned okay, and we will be able to overcome these challenges. As you rightly said, if there is a shortage, there is a shortage, and the shortage is for everybody.
Okay. Sir, any plans for increasing Indianization of our product and any CapEx plans?
Increasing what?
Indianization of our product. We import a lot of things from the from our parent, from other countries. Any plan to improve the Indian content in our products?
Yeah. Depending upon how the volumes pan out and the ability of the suppliers to invest on behalf of us in terms of products, in terms of raw materials and components that meet the quality requirements, we will progressively localize more and more as we go forward. You already heard of the plans on the expansion in Calcutta that we put forward. Similarly, as volumes keep rising and we reach a certain scale, we will localize more and more of those components in India. The idea is to move towards mostly move towards 100% localization for India.
Okay. sir, my last question is.
Sorry to interrupt, Mr. Viraj.
Just one question, ma'am. Just one question more, ma'am.
Sir, there are participants waiting for their turn.
All right. Okay. Okay, ma'am.
Thank you. A reminder to the participants, anyone wishing to ask a question may please press star and 1. The next question is from the line of Aditya Deora from Divisha Investments. Please go ahead.
Good afternoon, sir. Sir, in the presentation slide you had mentioned that there is this in slide number 7, that there is this order that you have won from one of India's top wealth services company, and there would be maybe INR 34 crore kind of a run rate for next quarter and around INR 1,200 crores for next 2-3 years. Can you elaborate a bit more on this order?
This is an order with for electrification with a cloud and services provider, one of the top cloud and service provider in the country.
Like, what will be our margin profile for this order? Like, would it be similar to the company margin or a bit better?
I cannot disclose those details of individual orders.
Fine. Fine. Sir, during this year's AGM in the presentation in one of the slides you had mentioned that you're doing some CapEx to improve the productivity of the employees and the efficiency of plants. Today during the con call, I guess you have mentioned that the productivity of employees part of it has been taken care of. Should we expect some improvement from efficiency of the plants to improve here on?
Well, see, we obviously with the, what, we maintain with the ongoing production and the volume increase, we expect productivity to improve. There is not any, you know, beyond this, any drastic or, you know, drastic change which we expect in immediate future.
Okay. Okay. Sir, any update on the expansion, like how much CapEx we have done for the INR 138 crores expansion?
No, not significant. I mean, as such, effectively nothing. Just in the process of agreement and all for the lease, then it will take go on.
We are still within the timelines, right? That we have mentioned.
Yes, we are within the timelines. Yes.
Perfect. Thank you. Thank you.
Thank you. The next question is from the line of Aditya Sawant from Shreeji Finserv . Please go ahead.
Oh, thank you for the opportunity. My first question is on the debt. The company has around INR 400 crores of long-term borrowings. What are your plans to reduce the debt? What are some opportunities that can help you reduce this even in the long run?
See, long run, I mean, difficult to comment, but yeah, see, the debts are there. As you also know that we have been making losses for many years and then the COVID also impacted the cash flows. We are back on profitability from last year until nine months also you'll see the performance is much better than previous year. Our cash flow has also been good last year and this year you know what we reported in September. Once now we are, since we are on track in terms of profitability and generating cash, obviously we will be looking at, you know, reducing the debt.
Okay. Do you expect the coming quarters to be in profitability?
Pardon? Can you repeat?
Can we expect the coming quarters to be in profit like after a long period of losses?
you are seeing, you know, we have been able to deliver last five quarters consistently, with a profitable P&L. We hope to do continue doing the same.
Okay. All good. Thank you.
That's what I can say, not more than that.
All good. Thank you.
Thank you.
Thank you. The next question is from the line of Rajesh Khatri from AlfAccurate Advisors. Please go ahead.
Thanks for providing the opportunity. Sir, just one small question I had. In slide number, I don't see slide number here. In that order of successful execution of INR 34 crore next quarter and then INR 1,200 crore, you know, over next 2-3 years. What is the meaning of this? Because, your orders slide says INR 978 crores, and this itself is INR 1,200 crores. I'm slightly confused. What is this INR 1,200 crores number is to be executed over 3 years? This is over and above the INR 978 crores?
This is a customer investment actually. This is.
Opportunity, potential opportunity.
This is the investment by the customer. This cannot be read as our numbers.
Okay, this is investment by customer. What can be the opportunity for us in this?
you can say that roughly 10% is the opportunity that exists for us.
Understood. This would be part of the 978?
Sorry, can you repeat?
It's, we are talking about opportunity. How can it be a part of your current order book? It's a opportunity for future.
Okay. Got it. Understood. This orders slide, this is a order intake, am I right?
Yes. On outside group order intakes, yeah.
Group order intake.
Correct.
What is our current order book?
Current order book is. Just a minute. It's about INR 817 crores.
INR 817 crores.
Yeah.
Okay. Okay. Okay. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Harshit Kapadia for his closing comments.
Thank you, Lizan. We would like to thank the management of Schneider Electric Infrastructure for giving us an opportunity to host this call. We would also like to thank all investors and analysts for joining for this call. Any closing remarks, Sanjay sir, you would want to share with investors?
I'd like to thank all of you for taking the time out and talking to us regarding the organization and its future growth prospects. Thank you very much, and look forward to meeting you next time on this call as well.
Thank you. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. We thank you for joining us. You may now disconnect your lines. Thank you.