Ladies and gentlemen, good day and welcome to the Schneider Electric Infrastructure Q4 FY22 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 touchtone 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.
Yeah. Thank you, Ryan. A very good evening to everyone. On behalf of Elara Securities, we welcome you all to the Q4 FY22 and FY22 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 after which the Q&A session will start. I now hand over the call to Mr. Sudhakaran for his opening remarks. Over to you, sir.
Good afternoon, everybody. This is Sanjay Sudhakaran. I'm the managing director of your company, and I welcome you this evening to have a brief overview about our organization, its performance in the Q4 of this year and the year that has gone by and also the full year financials. Let me go directly on to slide number three, which is page three, which is an overview of the economy of the country and its forecast. You would all be reading about it since the previous quarters. I think the economy is poised well in India for a rebound post coming out of a very difficult period because of the COVID lockdowns and things like that. However, we must admit that we live in a very turbulent times.
We have a inflationary economy, which has been a result of solid demand coming back post-COVID, also due to the Ukraine war. Commodities are at all-time high, and there are severe shortages in the market. All this, in context of the fact that governments across the world are trying to rein in inflation. We will probably see a little bit of turbulence as we go ahead. It's very hard for us to predict, do a crystal ball gazing as to what could be in the future, but I think we must be prepared for both some headwinds as well as some tailwinds, without clearly being able to predict where the overall macroeconomic situation is heading. Given all that, I would say that we have a very positive outlook as far as some of the end markets are concerned.
Let me take you all to slide number 4, which is an overview of some of the end markets that we operate in. I think on the power and grid side, we have seen various announcements by the Government of India, on modernizing the grid, improving the digitization in the utilities, reducing losses, and also a thrust onto solar, to try and bridge the energy deficit and also hedge the economy against oil, which is a commodity that is very much under discussion right now in India. I think there is a solid runway for growth as far as both generation as well as distribution of electricity is concerned. The overall Indian market is poised to become more and more electric and more and more digital.
There are no two things about this, and both these provide us with a fantastic opportunity to be able to leverage in the future. There is positive momentum as far as the construction sector goes. We see that housing the trends of housing construction, the bookings, et cetera, are moving in a very positive direction. There is good demand for steel and cement. Also we have seen continued investments by some of the large companies out in building CapEx into minerals, mining, and metals, which is one of our core segments where we operate through it. On the other hand, we see these companies coming back with strong focus around sustainability.
Sustainability means elimination of waste gases, waste gas recovery, digitization around the plants to conserve as well as to reuse energy, which is also a very positive sign as far as our segment and our products go. Transportation, for sure this is not a drainer. India lags in terms of infrastructure on the transportation side. Continued investments in metros and airports are going to be there for the next 3-5 years. The business is a little bit cyclical when it comes to execution because of the fact that there are number of bottlenecks around acquisition of land and things like that, which makes it a little bit difficult for the sector to move in line with announcements. However, we see a strong pipeline 2-3 quarters going forward.
Data centers, again, on this side, I think the country is making tremendous amount of progress. We see a lot of innovation coming out from India in terms of digital payments, like the UPI and the fact that they come into this side of the country, and more and more adoption of digital, whether it's for entertainment or whether it's for payments or education. We see that this is the future of communication and financial instruments. I think this sector is bound to grow as we move forward. I think all the end markets, key end markets are poised very strongly for growth. We see robust investments by our customers, and we are closely engaged with these customers as well.
I think it's a situation where we have headwinds in terms of inflation, in terms of interest rates, et cetera, which we could see in the future, but we have strong tailwinds in terms of demand. Big thing is how do we prioritize and how do we make the best of this situation. Coming to priorities, as I would say, if you go to the next slide, which is page number 5, our priorities have not changed, and we have been consistent through these priorities in the last four to five times that we have spoken about it. The idea is to leverage digital in more and more of what we deploy with our customers, more of lifecycle revenues through services to have a predictable revenue line as far as, and profitability as we are concerned.
Increasing our coverage because we cannot do it alone. We are building a network of strong partners, and a little bit I'll speak about this as we go forward and the traction we are building here. Also key segments which I already spoke about, and also keeping an eye on shaping the future, that is working with the governments, et cetera, to see how we can build a future greener product, which is SF6-free, which could help India achieve their objectives as well as we go forward. I'll go to the next slide, which is page number six, talking a little bit about our wins and how they tie up with our strategic priorities. Here is a win in a cement firm, which is a pretty large cement firm.
Here we were able to leverage our traditional products, which is our medium voltage switchgears and transformers, along with the ETAP SCADA. ETAP is now a Schneider company which belongs in the Schneider portfolio, and we were able to kind of leverage both these competencies to be able to serve this customer in a very positive way. This should also be potential enough to bring lifecycle revenues as we go forward. If we go to the next slide, page number seven, this is how we are leveraging our installed base, which is one of a prestigious project which was deployed with Schneider voltage products supplied from our France facility. The customer came back to us for retrofitting these electrical equipment as they have aged.
We won a pretty large order of large magnitude with this customer, and this helps us kind of tie in with our strategy to leverage an installed base for a lifecycle of revenues. Going on to the next slide, which is page number 8, we are also increasing coverage with our customers along with partners. One of the key distribution entities in south of India has placed a very large order with Schneider and one of its partners to supply connected products and to digitize its entire network. 80% of its installed base is connected with SCADA and digitally enabled products. This should also be hopefully a win which will take us towards our goal of digitalization and engaging with the customer for a very long period of time through uninterrupted power supply and leveraging the installed base.
Let me go on to slide number 9 and give you a little flavor about how we are doing with our partner network. If you see across the board how we are doing business with our partners, it's continuously growing. It's growing at a pace faster than the organization. Some are doing a little bit. There's a little bit of lag, but we are doing our efforts to catch up, and this is a very strong initiative. You can see that the breaker business through panel builders, that's growing around 30%. The circuit breaker through licensed partners, that's also growing very well.
The tank which we are trying to sell through our licensing partners for the secondary GIS, that has also shown a very good offtake as we are continuously working on various approvals with the government agencies to make sure that our partners are able to participate at a level playing field in all that are opening up for secondary distribution as well. I think this is how we are executing on our priorities. I'll take you to the next slide, which is slide, page number 10. We have spoken about in the past, we have a set of strategic priorities and we have certain financial priorities. The key thing that I'd like to give a message to all of you is that we are working in a very disciplined manner.
Disciplined execution of the entire cycle from order to cash is what we are focusing on. We see good traction from the top line. As you can see, the lead indicators of orders, which is up 44%, sales are up 18%, profitability is up, and also we have improved significantly on cash, which I think Mayank Holani will take you through more as we go through the slides on the financials. The average receivables in the market that we have with customers that have gone down by 16 days. Reduction overall on inventory as well, and all this with good customer satisfaction. Customer satisfaction is the cornerstone of our strategy. We must remember that we live in very turbulent times where we have shortages. Despite all these issues, we have stayed very close to customers, finding them alternate makes, alternate approvals to be able to service them better.
We have sacrificed at times on profitability to ensure that customer commitments are maintained, and we are able to supply them even if we need to air freight certain components, or we have to go for alternate makes that are more expensive. We have continued our focus on customers through these turbulent times. I'm sure this focus will pay us dividends as we go forward and the situation in the market normalizes as well. With this, I hand over to Mayank Holani, who is the CFO of the organization, to talk about the financials in depth. Over to you, Mayank.
Thanks. Thanks, Sanjay, and good afternoon, good ladies and gentlemen. You please refer to slide 12 on orders. The markets are now looking quite strong and recovering, and our OG orders intake for the quarter stood at INR 5,030 million, which is a growth of 46% from last year's same quarter. If you look at the trend from over last financial year, this is the fourth successive quarter where we have strong order growth in the succession. Which shows the good momentum in orders. This has come from almost all the segments, so there is not a single segment where there has been a drop.
If you look at the full year numbers, our orders for the year stood at INR 13,938 million, and again, these are all outside group orders. Close to INR 1,400 crores with a growth of about 44% versus previous year. In the last quarter, if you look, the major customers from where we had orders were, like GE T&D, Bhutan Engineering, Mazagon Dock, Minsun, Tata Projects, etc., in this last year. As a result of this good order growth, our backlog at the end of March 2022 or at the end of financial year has increased by about 24% versus same period last year. Which shows a good pipeline for the sales in the next year. Next slide please.
On sales, our sales for the quarter is INR 3,400 million, which is about 37.6% higher than same quarter in previous year. Sales for full year stood at INR 15,303 million, which is a growth of about 18% versus previous financial year. This is the first time in a way it's a kind of record sales for the entity. This is the first time we have crossed 1,500 crores landmark for this entity. Sales have been helped by liquidation of finished goods, where there were some issues with customers due to site readiness or, you know, the liquidity issues. We have been able to solve it, and that has helped us in maximizing the revenue.
The major customers have been Bhutan Engineering, BFIF, GE T&D, Torrent Power, Humboldt, et cetera. In the late stage we have got some. In terms of order inflows, sales is another factor which I would like to re-emphasize, and we have been stating in every quarterly call, that we continue to be cautious on order booking or even on sales in terms of cash security and margins. For first and foremost priority is to ensure that we don't lose on the recovering the sales in terms of cash. That remains the priority. Now, moving on to next slide. Slide fourteen, please. Our overall P&L, if you see, it is aligned with our strategy. We are focused on cash and margins and we'll continue this journey.
Now, gross margin for the quarter is about 29.2%, which is -6.4 points versus last year. Last year, as you can see, there was a big value in other income, which was coming due to some recoveries from the old present debt. Which is not the same. There was some insurance claim also for previous period. Without that also there is an impact on margin, which has been due to the raw material inflation, which partly we have been able to pass on to customers, but since this is a long cycle business, the impact remains. Employee costs and other expenses are in line with the numbers. You will see that at EBITDA level, we have a growth of about 3.4 points versus previous year.
EBIT is about 4.3 points higher than previous year. Now, all this has resulted in a profit, net profit of about INR 1 million versus loss of INR 113 million in previous year. Which is a delta of 4.6 points. This, the raw material inflation impact, whatever has been coming, we have been able to or partly we have passed on to customers. Then due to the other actions on, our overall structural costs and all, we have been able to mitigate that and improve profitability, whereas, hedging has helped, also helped a bit. Next slide please. Now moving on to the full year P&L, you will see the group sales growth is about 18%. That is, the gross margin is again 2.3 points lower than this.
The material cost impact has been about 1.6 points, which is the material cost as a percentage of sales and remaining is the other income similar to what you saw in the last quarter, this quarter's explanations. EBIT level, we are at almost same level as previous year for full year. At EBIT, it's an improvement of 0.5 points, which is the depreciation has reduced. On profit after tax, we are at INR 276 million for the year against INR 10 million loss in previous year. You will see that this is the first year after a gap of 10 years. In 2011-12, we had profit, and since then we have been, you know, last year we were at a marginal just INR 10 million loss.
After 10 years, we have a profitable handle, and that's a very good thing to have. We'll continue this journey. Okay. I will leave it there and open the floor for Q&A. Thank you.
Thank you. We will now begin 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 only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Viraj Mithani from Jupiter Financial. Please go ahead.
Hello?
Yeah. Hello.
Hello.
Mr. Mithani, you can ask your question.
Hello? Hello?
We can hear you. We can hear you.
Yeah, you can hear me? My question is related to this, transformer segment. Are we doing good in transformer segment also? I hear the industry is reviving. That is question number 1. Question number 2 is, every year we have some, exceptional item of restructuring. You know, that is happening since last 5 years. How many years of restructuring, sir? You know, that's the second question. That's it.
I would say that the transformer segment is doing pretty well. You are right. The order growth in transformer segment is slightly above the overall order growth that we have seen, the numbers which Mayank shared on the set of orders.
In terms of restructuring, I would say that restructuring is an investment for the future. In line with the transforming market and the transforming skill sets that are required in the organization, we do invest in restructuring to make sure that we build a stronger company, going forward.
No, I understand that, but we have been doing it since last 5-6 years. Like, can you just guide through that what has changed now? Because every year there is one of the exceptional items. Sometimes don't understand what are we doing with it. Like, are we going have some predefined path for it, or how does it work, you know? Hello?
I think what happens in an organization is that you have a certain skill set which you need to invest in, and you have a certain skill set or certain areas that have become redundant as a period of time. The idea is to be able to restructure the ones that do not make sense for the future and to invest in areas which are making sense for the future. We're doing both at the same time to build a more sustainable organization.
Sir, our employee cost, despite doing so much restructuring, has been constantly going up. Is it that because the business is growing, we are adding more and it's, there is some, balancing happening there?
Viraj, the reason for employee cost going up in this financial year, if you look, is due to the, you know, practical actions taken in previous year when the COVID came in, right? There was a salary cut and some of the benefits were cut down for employees. Which have come back. That's why you see a more than normal employee cost increase.
Okay, sir. I shall join you for follow-ups. Thank you. Thanks.
Sure. Thank you.
Thank you. Our next question comes from the line of Nikhil Jain with Galaxy International. Please go ahead.
Thank you for giving the opportunity. Just two questions. One, I just wanted to understand, let's say Schneider has had many entities. Hello?
Voice is not clear. Sorry. We can't hear you. There is a lot of disturbance, and your voice is not clear.
Okay. Are you able to hear me now?
Not really. Maybe, I don't know if you are outside or somewhere. There is a lot of background noise coming.
Okay. Hello? Is it better?
Yeah, please go ahead and ask your question. We'll try our level best to.
Okay. No, what I actually wanted to understand was that Schneider has so many entities in India, and some of them are probably subsidiaries, and while this is, I would say, the only listed entity in India. I just wanted to understand what's the kind of breakdown that we have between the work that we do and what they do, and is there, let's say, some kind of clarity that is there for everybody that this is the path that we will be taking, and is that path good enough or big enough for us to actually grow and continue to actually do well?
I think, to answer your question, I would say that, Schneider has many entities in India primarily because Schneider is, has different product lines in India. If we look at this particular business which we are into, we are primarily the flagbearers for the medium voltage technology in India. I would say that as far as medium voltage technology and its products and its revenue is concerned, I wouldn't say that there is a significant overlap, with other entities. It was actually zero. There might be some things which have been created through, recent acquisitions, and the company is working on a strategy to address that as well.
Would we be the only company who is actually handling this medium voltage business, or do you anticipate that there is still, let's say, possibilities of other entities also handling?
I would say that these matters are under discussion right now. To rest assured, we are very clear that we do not want to create competing entities within the Schneider group. That does not work well for any one of us, right? That is not the purpose we have created.
All right. Great. Okay. Thank you for that. My second question is with respect to the smart meter. I understand that you are the entity who is actually working on the smart meters and supporting the industry for smart meter. Can you give some lowdown or some views on how the industry is doing and what is our strategy for smart meter implementation, given it's a big opportunity?
If you see the manufacturing and marketing of smart meters does not reside within this entity.
Okay.
This entity is not responsible to make those meters or to market those meters. What it represents as an opportunity is for us to digitize the network, right? Because smart meters is an end result of you digitizing the entire network. This entity has the capability to do projects which can digitize the network. That is what represents an opportunity for this particular entity. Also we need to be very selective about it, because this is an activity that could burn a lot of cash if not managed very clearly, because these projects tend to run over 5-6 years of time.
Selectivity in projects, being able to supply digitally enabled products on the medium voltage side, and to be able to integrate them to SCADA, and be able to leverage multi-year of services revenue, that's the focus that we will be having with this particular entity. The manufacturing of meters and its sales is not the primary objective of this entity.
Okay. In your order book, current order book, is there any business that you have from the smart meter or, let's say, digitization of the smart meter and the entire grid network kind of a thing?
Yes, there are. There is a mix, but there are no meters in this particular thing right now.
That resides with another Schneider entity, right?
Yeah. Because the decision-making, if you see in the market, is agnostic. People buy meters separately, and people buy the integration separately.
Fair enough. Thank you. That's all from my side.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one. Our next question comes from the line of Aditya Soni, an investor. Please go ahead.
Yeah. Hi. Good afternoon. My question is the growth which we have seen over the last year, right? That is because of the increase in the price or increase in the volume?
It's a combination of both. If you see, the lead indicators, which is the order booking, you would see, a fairly equal distribution between pricing and volume growth.
Okay.
As far as sales is concerned, I think sales does have a lag impact. You would say that the composition would again be slightly tilted more towards pricing than towards volume.
The delta fee which we have seen, like, you know, because of the cost, the margins of, you know, the last quarter has been impacted, so that we are not able to recover. Are we planning to have a further price increase also?
You see, we are increasing price as far as possible in line with the commodity increases. The fact of the matter is that we have a certain duration of the contract validity. In that period, there is not much possibility to take up pricing further up. The market has been very volatile. For example,
There could be a situation where we take an order today and we execute it, say, next month, and you could still have inflationary pressures happening because of the unnatural circumstances around the globe. It's a catch-up which has become very, very steep, even in very short periods. You can imagine the complexity of managing projects in such an environment.
I totally understand. Since due to the supply chain issues, the lead time of the products have been increased, right? Due to this volatility, probably you may book the order in this month and you may be able to deliver after six months. The in between if the prices increase, then your margins may drop, right? How do you, like, address this?
Correct. We try to build safeguards, we try to build contingencies, but unfortunately we are also in a competitive environment. The fact of the matter is that the situation is not completely predictable. We thought that we understood the impact of COVID on supply chains and then the war happened. There are certain things that fell off the cliff post the war situation actually. It's been a kind of a challenging times, if you look at it from that perspective, to exactly predict how commodities would behave.
Understood.
Okay. Thank you.
Yeah. Thank you.
Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Anurag Patil with Roha Asset Managers. Please go ahead.
Thank you for the opportunity. Sir, for FY 2023 and next couple of years, how do you see the revenue growth and order booking momentum going ahead?
See, we normally don't provide any guidance for subsequent periods as such. You can, I mean, you see the backlog which we have and the order book, the way it's trending. We don't provide any guidance.
Okay. Okay, sir. Directionally you see the positive momentum in revenue and order booking. That can we assume?
I mean, that's the backlog that's available on record.
Sir, one accounting question. Out of INR 152 crore other expenses for FY 2022, how much would be the fixed cost as a percentage? Just approx number will be fine.
Sorry.
Sir, in FY 2022, our other expenses stood around INR 152 crore. Out of that INR 152 crore, how much would be variable cost and how much would be fixed? Very approx number is fine.
Approximately 50% is fixed and 50% is variable.
Okay, sir. Okay, sir. Thank you very much. That's it from me, sir.
Thank you. Our next question comes from the line of Nisarg Parekh with Natus Capital. Please go ahead.
Hi. Thank you for the opportunity. My question is, can you give some broad split for the top products which contribute to the maximum revenue?
Are you talking about product or the business mix that we usually disclose?
Business mix also works, but within that if you can talk a bit about each segment, the top product that you guys have. No, I'm saying, if you can give the business mix, but also along with that, just talk a bit about the top product with each business segment that would help.
Okay.
We are not reporting on the product segment, so the business mix that we are disclosing.
Yeah.
You may want full figure, right?
Yes. Yeah.
Systems is about 72%, transactions 17%, services 11%.
When you say systems, can you just talk like which are the top,
yeah, what products or projects kind of contribute the maximum to this? That we just get a sense of. The definition of these three is available on the website and our presentations. Business area capture all the details about the, which are the products are available under each of these category. As you can see, the mix is also large. I mean, major part of our business falls under systems because we are into a largely B2B business. Sure. Sure. Separately, you know, in India, how much business does Schneider do, you know, outside of this entity as well?
We're just trying to understand, you know, from Schneider perspective, how critical is this entity? See, we can't comment about the other entities. All right. Yeah. Okay. Okay. Sure. Thank you. Thank you.
Thank you. Our next question comes from the line of Rupesh Tatiya with Intelsense Capital. Please go ahead.
Hello, sir. Can you hear me? Yes. Okay. Last quarter, I think you had talked about three substantial wins in data centers. If you can, you know, just talk a little bit about that, where are we and any other wins in Q4, and how is this business progressing from, let's say, FY 2023 and FY 2024 point of view?
I would say that the traction in terms of. We spoke about the opportunities, and we spoke about the traction that we are making with customers. I think the traction continues. We are not yet privileged to disclose the names of the customers and the values because of non-disclosures which we have with these customers. But I can, one thing we can say that the mix is steadily improving in terms of the data center mix.
Okay. Sir, I mean, can you give some sense of opportunity size in data center?
I think this is something that is pretty difficult to calculate in terms of what could be the potential in terms of because data centers are an evolving market and evolving business. I would say that it is a little bit too premature to put a number on it as to what could be a steady state business of data centers. Right now it's at a stage where it's just about to grow. It's growing at a very double-digit pace. What could be a steady state business is something that is a little bit difficult to put a number on it. Can we have the next question, please?
Yes, sir. Our next question comes from the line of Dhiraj Sachdev with Roha Asset Management. Please go ahead, sir.
Since you are involved in large projects and part of the projects I guess is tender business. Are you able to or will you be able to pass on the higher, you know, costs, its variable costs, et cetera, to the end client? Sometimes what happens is the project business is fixed costs in nature or fixed pricing in nature, and the contract doesn't cover the price variation clause. Can you give some qualitative color that you'll be able to maintain the margin in this kind of higher raw material cost situation?
You could see from our past track record that we have been able to kind of mitigate the risk from commodities to a very large extent, or else the impact to the gross margin would have been much more significant. There are price variation clauses in some of our contracts. Some of our contracts are fixed period contracts in which we cannot pass on the commodity prices to the end customer. The way we look at it is when we pick up projects, we also look at a kind of duration that we are agreeing to, and there's some contingency onto it in terms of what could be the inflationary trend in the period going forward.
It's not, as we have seen, the circumstances have been a little volatile, and that predictability has not been accurate to kind of hundred percent, but we are pretty close. I think, but what could happen in the future is something that we cannot predict. We try our best to use our judgment in terms of what we need to bake in as far as contingencies are concerned, but it's not something that is entirely predictable.
Yeah. We assume that in the current order book, you must have built sufficient contingent fees to take care of, you know, raw material cost pressures, and you should be able to maintain the margins. Right?
That is the intent, I would say.
Okay. On the other side, I've also looked, you know, we have also looked at your cash flows which have improved materially because of better working capital management. Now, when you execute these incremental order book, will you be able to generate a similar kind of cash flows of over INR 100 crores, you know, with payment terms and inventory, et cetera? Will you be able to manage on a similar basis at higher, at a new level?
Our cash flow is a mix of kind of, you know, there are two factors. One is in previous year, because of the, you know, COVID situation, the payments and liquidity issues were there, so payments were getting delayed. One is that. Second is also the impact of our, you know, focus on cash and securing the payments that we have been continuously focusing on improving the payment terms. Right? Both put together have shown the result, and we continue to make progress in that direction. From my own sentiment that we focused on disciplined execution. We did not change our strategy on that particular front. One of the key parameters is to make sure that we focus on cash.
No, that's very nice to hear. I think, yeah. Incrementally, if you want to grow at, say, 15%-20%, I'm just giving you a hypothetical number, you'll be able to manage with cash flows without resorting to any working capital borrowings or incremental loans per se, right?
We would not like to comment on, you know, any future guidance. Sorry.
No, it's not a future guidance. It's based on the current tightening of working capital that you have resorted to. You should be able to manage comfortably the incremental order book execution cycle through the internal cash flow that you are generating, right?
Yeah. Sorry, can you repeat what you said?
I just said that based on your working capital tightening norms, payment terms, et cetera, going forward with these incremental order book that you have or growth that you will have to incur, you should be able to manage through your internal cash generation without resorting to any incremental working capital borrowings.
Okay. That's what we can, we will or we may also expect. You know, sometimes there are short cycle impacts also, right? It's difficult to predict exactly. Yeah, in the normal scenario, we would also like to have that kind of thing.
Okay. Thank you so much. All the best.
Thank you. Our next question comes from the line of Harshal Parekh with AlfAccurate Advisors Private Limited. Please go ahead.
Thanks for the opportunity, sir. My question is on the medium voltage industry side. I would like to know what could be our market share. Are we market leaders into the medium voltage segment? What would be our competitive positioning in the industry in terms of our products?
Normally we do not comment on market share as to whether we are number one or we are number two or number three. What I could tell you is that in the addressable market, we are pretty decently poised. I wouldn't want to put a number to it because the definition of market and market share is different for different people. But as far as the addressable portion of the medium voltage market is concerned, we are pretty decently poised. We have a twin agenda. We are not just chasing market share, we are also chasing the right market share for profitability reasons. One of the reasons that we want to target is partnerization and digitization is to ensure that we have the right market share with the right set of customers.
Understood, sir. In terms of the addressable market which you mentioned, so is there any particular section of the market which we are not specifically catering to in medium voltage?
There is a large amount of market which is best addressed by partners. The pull-through that you get here is for your breaker and not your full equipment. We have been kind of divesting a little bit of top line continuously to make sure that we participate more and more in the right markets on a complete project basis, and address the markets which are at the bottom of the pyramid through our partners.
Okay. Sir, in terms of technology, if we compare with our peers like ABB and Siemens, so are we technologically superior?
Yes, we are. Let me put it this way. In places we are superior, and in most places we are equivalent. I think it's a good position to be in.
Okay, sir. Sir, my other question is on the other expenses side. If we see FY 2021 and FY 2022, the other expenses remained flat in absolute terms, that is INR 152 crore, despite our revenue increasing by 18%. You know, is this because of any cost-saving initiatives, et cetera, and is it sustainable?
See, the impact in other income, other expenses is because, you know, last year we had some major good amount of provisioning also for the old debtors, right? Which has gone out. Then some of the variable costs like repair, maintenance, fuel, et cetera, have gone up. That's kind of balanced. Otherwise obviously if your revenue, you know, your fixed costs remain same and there is no abnormal impact, slightly the other expenses will go up. Last year there was an exception kind of or you can say the one-off that debtors provision. There was a debtors provision. What happens by way of accounting, debtors provision come in other expenses, and if there is a recovery, it goes into other income.
You have a recovery also coming as other income from return of debtors, and you have had provision below. If you net it out, that was the reason.
Understood, sir. Sir, just last question. What would be our closing order book?
You mean the backlog at the end of March, right?
Yes.
Our backlog at the end of March 2022 is INR 933 crore versus INR 750 crore in March 2021.
INR 750 crore in March 2021. Okay, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, due to time constraint, please restrict your question to one question and one follow-up. Our next question comes from the line of Viraj Mithani with Jupiter Financial. Please go ahead.
Hello?
Yes, Mr. Mithani, you could go ahead.
Yes, sir. I was looking at your numbers. What is this benefit of, which is there in the lower lines of remeasurement of defined benefit plan, some INR 2 crore and fair value of cash flow hedges. This is our hedging income, is it?
Yeah. There are two things in that. One is with the this you see gratuity and gratuity benefit reevaluation, which is to be done actuarial basis.
Right? That comes here below the profit there. Because we last year in, I think Q2, we started the hedging process. That hedging benefit also as on date based on whatever hedging we have done. The impact, which is notional impact as on date, has to be provided as per accounting guidance.
Yes. Yeah. Secondly, this cash flow from the operating entities has actually gone up smartly. Is it because we are receiving orders or advance cash for the orders booked?
More because of the last year, one is obviously your profit has gone up, but also last year if you see base is outstanding. Outstanding was much more, right?
Okay.
That, you know, when the market situation was a bit different than this year the sentiment has been good, so that has helped. We were able to collect more than, you know, from the previous year and this year's outstanding which remains at the end of the year was much lower than the last year in terms of, you know, the percentage if you say.
Okay. What is our outstanding, I mean, order book right now and what is our capacity utilization? Can you give the broker breakup of the order book? Second point, what you said, other than the outstanding order book? Capacity utilization and breakup of order book.
Breakup of order book is about, you know, the INR 933 crores are backlog.
INR 933 crore.
Yes.
That'll be broken into like systems, transactions and IT.
69% is systems.
Okay.
Transaction 18%, services 13%.
Transmission 18 and services 13.
Yeah.
What is the intergroup orders?
Intergroup order is for the year, right?
Yeah, yeah.
Intra-group order for the year is about. Just a minute. It's about INR 319 crores.
INR 319 crore. Out of this INR 933 crore order, is it? This is part of that order book or this is already executed order?
No, that is only the Outside Group. INR 933 crore backlog is the Outside Group. Intergroup is separate.
What is intergroup? That's what I wanted to know.
As we are not reporting on the backlog side because it's a very short-term order. We are taking the order. Intergroup is not a long cycle, so we don't report that side.
No, no. What is the intergroup order in this INR 933 crore order book? That's what my question was.
93 is with the only outside group.
The Outside Group. Okay.
Yes.
Is there an intergroup order book also in this, apart from this?
No, this. Yeah, intergroup is over and above this, but we don't report it, because the cycle is very short.
All right. Okay. Okay. That's it from my side. All the best.
Thank you.
Ladies and gentlemen, a reminder, please restrict your questions to two questions per participant. Our next question comes from the line of Rupesh Tatiya with Intelsense Capital. Please go ahead.
Hello, sir. I, my first question is a clarification. On page 10 of your presentation, there is an order progress. It says INR 1,394 crore, and you are saying order book is INR 933 crore. What is this order progress then?
Hello.
You see INR 1,393 crores is the order booking during the year, right? 933 crore is the backlog, orders in hand which are going to be executed in future period as on March 2022.
I see. Okay. Sir, in last year's revenue, what would be the percentage of business from utilities?
You see, typically our business from utilities is about in the range of 40%-45%.
Would it be fair to assume, sir, it is more margin business than rest of the segments?
Sorry, can you repeat?
Would it be fair to assume that this is lower margin than rest of the business?
No. In that way it's, you can't assume that utilities is more margin.
Okay. Understood, sir. Okay. Those are my questions. Thank you.
Thank you.
Thank you. Our next question comes from the line of Nikhil Jain with Galaxy International. Please go ahead.
Yeah, thank you for the opportunity again. Are you able to hear me, sir?
Yes.
Yeah. I just wanted to know whether you do any exports, and if you do any exports, then what will be the percentage of exports in the current quarter and for the year?
We do exports. The exports is around 28%.
Yes. 28%. Okay.
Like INR 9 million.
For the year, sir, how much was it?
I said exports in the last quarter was INR 328 million.
Right. For the year?
INR 1,459 million. INR 145.9 crore.
This is basically supplied to group companies across the globe or is it to other external parties, sir?
Orders can be to the group companies, but also there are many exports where you have, say, Indian EPCs executing a project in Africa or, you know, Middle East or somewhere. Those are also coming as exports, you know, where you are exporting working out of India.
Uh-huh.
Maybe the customer may have some connection with India, but you are exporting. The business is coming directly from here, not through group companies, but there is an export. Even in like
Yeah.
Also we have a lot of business.
Right. Is there any special focus or clear aspect that you want to grow exports higher than our domestic revenue rate or any, let's say, a mandate from the group company that the parent company that they will be taking some material from us? Is there anything or any movement in that direction, sir? Okay. Very well, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question for the day. I now hand over the conference to Mr. Harshit Kapadia for closing comments.
Yeah. We'd like to thank the management of Schneider Electric Infrastructure for giving us an opportunity to hold this call. We also would like to thank all investors and analysts for joining us for this call. Any closing remarks, Sanjay sir, that you would want to give to investors?
I would like to thank you and all the participants for joining the call today evening and asking questions. I look forward to talking to you next time. Thank you.
Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us. You may now disconnect your lines.