Ladies and gentlemen, good day and welcome to the Suzlon Energy Limited Q2 FY 2027 earnings conference call. During this call, the company management may make certain statements that reflect their outlook for the future, which could be construed as forward-looking statements. These statements are based on management's current expectations and are associated with uncertainties and risk as detailed in the annual report. Actual results may differ, so these statements should be reviewed in conjunction with the risk the company faces. 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. We will begin with the opening remarks followed by a Q&A session.
To be fair to others, we kindly request each participant to ask no more than two or three questions. From the management we have with us Mr. Ajay Kapur, Group CEO, and Mr. Rahul Jain, Group CFO, and senior members of the finance team. I now hand the conference over to Mr. Ajay Kapur. Thank you, and over to you, sir.
Thank you. Good evening, everyone, and thank you for joining Suzlon's Q2 FY 2027 earnings call. Let me start by talking about the industry. This year marks a significant inflection point for India's wind energy sector. The industry has moved beyond proving its relevance and is now increasingly being recognized as a strategic pillar of India's energy security, manufacturing growth, and decarbonization agenda. During the quarter, India crossed 59 GW of installed wind capacity while maintaining one of the world's largest and most indigenized wind manufacturing ecosystems. The focus is on building a resilient domestic industry capable of supporting India's long-term energy ambitions and emerging as a global export hub. Green Energy Corridor Phase-III, approved by the Cabinet recently, is a significant step towards strengthening intrastate transmission infrastructure, enabling evacuation of up to 135 GW of RE capacity.
This long-awaited industry demand enhances transmission readiness, reduces evacuation risks, and provides greater certainty for project execution, supporting India's target of 100 GW wind and 300 GW solar capacity by FY 2030. Equally encouraging is the strength of the industry's execution pipeline. With over 40 GW of projects under various stages of implementation, annual manufacturing capacity exceeding 20 GW, wind equipment exports have emerged as a major growth opportunity, with exports exceeding INR 12,000 crores in FY 2026, demonstrating India's growing global competitiveness. Bid momentum is also gaining traction, with almost 8 GW-9 GW of wind RTC, FDRE, wind-dominated tenders being awarded in H1 FY 2027. C&I pipeline also stands robust. This sets the stage for a multi-year growth cycle, with annual installations expected to cross 10 GW in the near term and reach 15 GW by FY 2031.
Overall, the convergence of energy security prioritizes manufacturing strength, repowering opportunities, offshore wind development, transmission expansion, and rising power demand provide strong visibility for a sustained multi-year growth cycle for the Indian wind sector. Now taking you through the Q2 FY 2027 business highlights. Suzlon delivered 710 MW in quarter two with 40% jump quarter-on-quarter, making our ever highest second quarter India deliveries. This performance was achieved despite quarter two seasonally being a lean quarter on account of monsoon. The most salient achievement for the quarter was in terms of commissioning, wherein Suzlon installations grew more than 69% from 269 MW to 454 MW in quarter two FY 2027. Talking about half year H1, the installations reached 723 MW. Further, 1.25 GW of erected turbines in pipeline for future commissioning will pave the way for uptick in the commissioning going forward.
Our order book of 6 GW reaffirms our market leadership. in H1 2027, we have already secured 1.5 GW of orders and continue to have strong pipeline. The current order backlog provides coverage for 18 months, and healthy order pipeline gives strong confidence and comfort for maintaining the growth momentum. Order book is not constrained with strong demand in industry and DevCo model offering in place to help keep momentum growing. Our focus remains on closing quality orders at regular intervals rather than achieving quarterly run rate. With the S175-5.X and S163-6.X, Suzlon is expanding its technology portfolio with high capacity turbines that delivers superior yields, better reliability, the lower LCOE, unlocking opportunities across repowering and new build projects worldwide. 4.5 GW manufacturing capacity, fully operational. Expanding footprint with three AI-enabled smart blade factories to drive efficiency and scale.
Suzlon 2.0 is translating into a tangible growth opportunities across multiple adjacencies. Our RE Tech successfully commissioned the proto of first S175 5 MW turbine and secured the first customer order of 21 turbines of 105 MW. Our DevCo shows a strong market acceptance, reflected in 900 MW of orders already booked in H1 2027. On exports, we are seeing good traction, with customers expected to receive orders in the next few quarters. With respect to integrated offering in terms of FDRE, we are in active discussions and finalizing the terms with prospective partners. Suzlon 2.0 is a five-year journey, and I am personally satisfied with the progress made so far. Our RE AMS India business remains strong with 16.5+ GW of installed base, with EBITDA margins maintained north of 40%.
Our foundry and forging continues to scale strongly, in quarter two delivering revenues of INR 167 crores and EBITDA of INR 50 crores with continued momentum driven by domestic demand and export growth. Now I will invite Rahul Jain, our Group CFO, to take you through our financial performance. Rahul.
Thank you, Ajay. Good evening, ladies and gentlemen. I would be using slides 18 to 27 of our investor presentation, which has been uploaded on our website as the reference point for my discussion during this presentation. In Q2 FY 2027, revenue grew 27% QoQ to INR 4,869 crore from INR 3,819 crore in Q1 FY 2027. EBITDA improved to INR 720 crore, up 21% from previous quarter. Profit after tax stands at INR 394 crore, up 29% from Q1 FY 2027. The company has delivered strong sequential growth on key financial parameters. When compared on YoY basis, consolidated EBITDA percentage has been impacted on account of below. Declined WTG contribution margins from 26.9% to 21.2%, primarily due to segment customer and scope mix changes, and additionally, FX and commodity volatility, making it a key driver of the EBITDA margin decline.
We are working on several levers to optimize the impact in the near to medium term. Operating expenses increased by about INR 80 crore during Q2 FY 2027 versus Q2 FY 2026, largely led by higher Suzlon 2.0 related branding, travel, SG&A related to associated costs, which are around INR 50 crore. This is expected to be phased down in subsequent quarters. This non-recurring expense had an adverse impact of around 1% on EBITDA margin. In H1 FY 2027, deliveries grew 21% YoY to 1,217 MW from 1,009 MW in H1 FY 2026, with commissioning rising from 723 MW from 217 MW, a significant jump of 168%. Revenue grew 24% YoY to INR 8,688 crore, with EBITDA at INR 1,315 crore. PAT for H1 stands at INR 699 crore. Last year, Q2 and H1 PAT included significant DTA recognition benefits, making the reported numbers not directly comparable.
In contrast, the current year's PAT is largely impacted by DTA reversals, which are non-cash in nature. Hence, for a like-to-like comparison, PBT is a better metric to compare. Coming to the balance sheet, we are pleased to report on our balance sheet as of September 26th, reflects a position of exceptional strength with consolidated net worth crossing INR 10,000 crore mark to INR 10,277 crore. Our net cash position at INR 2,048 crore further enhances our financial flexibility and resilience. Adequate working capital limits tied up for execution of the current order book are also in place. Our net working capital looks higher primarily due to seasonality and us gearing up for higher volumes in H2. You would be pleased to know that CRISIL has elevated our long-term rating to AA- stable and the short-term rating has been upgraded to A1+.
I believe that our integrated business model backed by a robust supply chain, strong execution capabilities, and industry leading service network continues to differentiate Suzlon and create a sustainable competitive advantage. With that, I would now like to hand over the call to the operator and open the floor for questions.
Thank you very much, sir. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good evening. Thanks. Two questions from my side. The first one is if you could elaborate on your comments around the depressed contribution margin of 21.2% in Q2. Also, in what time will the higher fixed expenses in WTG business continue? You mentioned a INR 50 crore number on branding, travel and SG&A this quarter. What kind of a hit should we expect or impact should we expect in coming quarters? When would the operating leverage benefit with growing volume start reflecting in numbers? That's my first question.
Thank you, Sumit. I will take the question. The part of the margin impact is attributable to high volatility in FX and commodity, which is largely, I would say, due to the West Asia crisis. When we think about it, this is a crisis that has been ongoing, and all of us have been hoping that some of this should get sorted out. It is difficult to predict the timing of this resolution, given the nature of the externality. Any such resolution should normalize this impact. Again, like I said in the opening remarks as well, we are working on several initiatives to normalize the impact as well and optimize COGS, which should address part of this issue. WTG contribution margins are expected to remain in that 22%-23% range for FY 2027, is the belief. It should get normalized subject to some of these externalities getting normalized.
I hope that answers it, Sumit.
How much is the FX impact?
See, again, it is difficult to be able to articulate it. I would say, when we think about it, a commodity and FX impact put together has about a 50 basis point impact.
Okay. On the fixed expenses?
Okay. Can I come in, Rahul?
Yeah, please.
So just to add to what Rahul just mentioned. If you look at the key components of the margin decline, one is the customer and scope mix. It is about 150 to 180 basis points. Segment mix, because we have our service business, which generates much higher EBITDA margin. But the share of that changes as the wind turbine revenues go up. So that has an impact of around 50 basis points. Non-recurring OpEx, which you were, I think, asking, has an impact around 1%.
1%.
Between commodity and FX, 50 basis points, and between non-recurring OpEx, 100 basis points. So you could take about 1.5% is something which is. Of course, I cannot comment about commodity and FX. But for sure, the recurring will not be there in future.
100. Okay. Customer and scope mix is basically the EPC shift that you have made.
No, this is also the kind of customers we have. Last year, similar time, we had certain customer orders. So those had a little higher margin. At the same time, they also had an impact on the working capital, which we have spoken in past. So that is something we can say it is about last year same time, our margin was 18.8% EBITDA margin, and now we are at 14.8%. So if I give you all the calculation, this is the basically commentary from 18.6%- 14.8%. Normalized EBITDA margin should be, if I normalize for the non-recurring and also commodity, should be around 16.5%-17%, excluding non-recurring costs pertaining to Suzlon 2.0, FX commodity and impact of West Asia crisis.
Okay. There is no pass-through provision in contracts for commodity FX. These you have to bear.
See, steel is a pass-through by and large. But rest, I think there are many commodities like copper, aluminum, carbon. These you need to absorb.
Yeah.
At the same time, having said that, we have always programs running to improve our COGS. What Rahul mentioned just now, those programs are being further expedited. So I am sure part of this we will be able to negate it. In time to come with the higher volumes which happen in H2.
Operating.
Normally, we will get operating leverage effect. Generally, H2 is about 1.5x- 1.65x of H1. We believe the same will pan out this year as well. That will give us a leverage effect of close to 100 basis points.
That is my second question. How much net capital have you committed to your DevCo business so far? The Suzlon 2.0 plan included winning FDRE EPC projects in solar and BESS and exports. What is the progress on those accounts? Thank you so much.
From a capital allocation perspective, we had said this earlier as well, Sumit, that we are looking at about INR 500 crore total allocation. As of date, the net number is in the INR 125 crore, INR 130 crore range, because some of these assets that we have developed through DevCo also has been sold off again. We have also got, when we look at our order book, almost 900 MW of the orders have been through the DevCo model only. With respect to the overall position, I think the number remains at 500 is what I would say. Ajay, you would like to take the next one?
Yes. Your question on solar and BESS, as of now, no CapEx has been made. We are going for asset-light model. Currently, we are on track to build our teams to start negotiations, which are already progressing well, which I also mentioned, and I think Rahul also mentioned in the opening. I think this will take next couple of quarters. Post that, we will start our journey of CapEx. I hope I have answered your question.
Yes. Thank you so much.
Thank you. Next question is from the line of Shakuntala Agarwal, an individual investor. Please go ahead.
Hi. I would like to ask basically three basic questions. One is, Adani and JSW have also entered into JSW wind energy. So how competitively we are getting impacted? Second is, the cash conversion cycle, I want to know about that. As on date, we have been informed that INR 2,100 is the net cash position. Out of which, how much is encumbered and how much is non-encumbered? Third, the Renom acquisition which we did. So, we have the FY 2026 profitability, while the top line has increased only by 5%, the profits have halved. So we have paid around INR 700 crores, approximately, on the acquisition cost. The profitability is around INR 3 crores- INR 4 crores. That is
Okay. Shakuntala, thanks for your questions. Let me address the question around the competition. You are right, we have Adani, JSW and many other competitors in the Indian wind sector. The good news is the sector is expanding. We are looking at close to 8 GW January to September kind of demand already. Suzlon continues to win orders. Our market share in the H1 is still near 28%, 29%. On deliveries, we are at about 23% in this first half. If I compare that with the previous year, it is a substantial jump. So there is competition. At the same time, Suzlon continues to win its own customers. These two companies are, also if you see, they have a large platform of their own. So large part of their production also gets used in their own captive platforms. Your second question was on cash conversion. I will
Let me just take that.
Ask Rahul to
Thank you, Ajay. See, again, I think there is an element of seasonality in our business, and we must build inventory for our H2 deliveries. It is actually therefore unfair to measure us on a percentage of the trailing 12-month revenue. This is also related to commissioning and RR gap, which results in a hold of partial small receivables with respect to deliveries that have happened. Again, you must also appreciate that we are funding our entire CapEx and volume growth, at the same time have been able to maintain a healthy cash position as well. So the net cash position is about INR 2,300 crores that remain. Largely, some of this we also use for our working capital, but I think the number on the encumbered piece is something that I will have to dig more detail into and then come back to you.
The balance sheet position is about INR 2,300 on cash is what I want to talk about. On the third question on Renom, we are doing various things on Renom. I think the way we look at it is the fact that there have been new additions that have happened in Renom. Business is starting to grow as well. Overall, when we think about it going forward, we believe there is a large opportunity that Renom can take up, given where market sizing is. In H1, I think we added about 178 MW in Renom. What the market is seeing is large capacities being added, where EPC is not there and serviceability is not there. We believe it's a great large opportunity for Renom for the future. That's how we would really look at it.
Yeah. I'll just add on to Thank you, Rahul. Renom has a great opportunity. It's a blue-chip company in the O&M space. You see, every year, we are looking at 8 GW-10 GW of installations in the next three to four years. A large part of these will come into. There's a process by which it flows into the market. Renom is rightly placed to serve these customers. We already won close to 200 MW in the last quarter. As I speak, there are again discussions going on for further customers, marquee customers. I think it's a great opportunity for Renom to build a scaled business, which I think Suzlon as a backbone can offer Renom to scale up fast.
Okay. Actually, my question was, we have paid around INR 700 crore- INR 800 crore, out of which annual profitability is around only INR 4 crore a year. As per the CRISIL report which I was seeing, INR 2,600 crore was the net cash position as of June 30, out of which 50% was encumbered. That is the follow-up question that I was trying to make.
Again, you were talking about June, I was talking about September number when I was talking about 2,300. That's the position. It's available in our results release as well. I think the number of encumbrance remains at about 40%-50% only, but we'll have to drill into it to understand the exact number. Again, that's not a separate number that we disclose.
Okay.
Your question for Renom, as I rightly mentioned, Renom is a long-term business. We acquired it and, as I mentioned, I'm looking at this business to be scaled up to multi-gigawatt in time to come, and I think that's when this whole leverage effect will play out. Okay. Thank you.
Okay, thank you so much.
Thank you. Next question is from the line of Raj Shah from Enam AMC. Please go ahead.
Yes, sir. Good evening, sir. My question was again on margins front. During the Q1 con call, you had mentioned that though we had done 18% EBITDA margin in FY 2026, but this year should be around 17%, few basis points here and there. However, as you mentioned in the initial part of the call about various reasons for margin decline, 50 basis points relating to FX and commodity is understandable, but the customer and scope changes as well as the non-recurring nature of expense for Suzlon 2.0 is something that you would have planned for. You have that kind of visibility in terms of deliveries as well as the orders that you have under execution. But despite that, we have only reported 14.8% margins, which is much below than what we would have anticipated. If you can elaborate, why did this happen?
Secondly, for the remaining part of the year, what kind of margins do you see, as well as for the full year?
Okay. Let me give you more clarity on the margin, as I mentioned earlier. We have multiple businesses, the leading one being our wind turbine business. Our deliveries have been a very good number at 26%, 27%, both on sales as well as on ground execution. Both have shown substantial progress. The share of our wind turbine business has exceeded the share of the ratio inter se. Last year same time versus this time, by almost couple of percentage points. That itself has an impact of about 50 basis points. I mentioned non-recurring OpEx around 100 and commodity. This itself is two percentage points. The customer mix changes also depending on the site availability. While in the full year, we plan X, but in a quarter, sometimes certain sites go faster than the other sites, depending on the execution of those sites.
That's why you see this little bit of a mismatch between what you are asking. For the full year, I would say we have done 15.1% margin in the H1. With the leverage effect, with H2 being 1.5x- 1.65x of H1. More or less, I expect the same to pan out this year as well. You can say 15% plus upside of 1%.
Okay. From the erstwhile 17% plus or minus, now we are saying 15% plus or minus. Is that correct?
Exactly. Yeah. Because some of the commodity is playing out as of now, and we don't know if it comes back, this can further go up to 17%.
See, again, even at that point in time, we had said that there could be a variation. We were aware of the impact of some of these West Asia crisis and commodity impacts. We had given that positioning, assuming that there will be a positive change, which has not happened.
Yeah. Also, just to clarify, my guidance was 15.1% plus 1%, not minus. This is basically the leverage panning out.
Understood. Secondly, on the debt side, I mean, the finance cost side, I think what we were guiding for or estimating around INR 300 crore finance cost. However, in H1 itself, we have crossed INR 250 crore. You did mention about the strained working capital position because of higher inventory, but when you see the full-year picture, where this number should go? Similarly, what will be the sustainable net working capital, sir?
Okay. I don't think multiplying H1 FY 2026 gives you a position to say that it will be INR 300 next year. You have also to look at the deliveries. H1 FY 2026, we did almost 1,000 MW of deliveries. This year, we are higher by 21%. We have already done 1,217. Overall revenue also is higher by about 24%. So there will be an effect of this that will come into the working capital. What I can tell you is our overall interest costs are coming down from a percentage like-to-like basis. Also, I think when we look at a sustainable working capital, the question that you asked, what we are currently focusing is on growth. Effectively, we are deploying slightly higher working capital for being able to manage growth as well.
No single number, but yes, we are working on various levers to manage our working capital better as well. I would like to say that.
Okay. Last piece, sir. You mentioned about an export opportunity for repowering some order related to smaller turbines. If you can elaborate where we are in terms of any export opportunity in repowering or any other opportunity on the export front.
Yeah. So export, as I mentioned, one on our Blue Sky platform, which has 5 MW and 6.3 MW, which I already mentioned in the opening. We are currently in certification. Likewise, there is a good interest shown in small turbines of 2.1 MW, as I had mentioned in my last call also. So these are customer engagements very much in place. For each of these geographies, teams are now actively working alongside our technical center based out of Germany, and also repowering opportunities internationally. I think all these orders should start showing first somewhere around, I would say next year. We should be able to be in a better position to give you a firm position. But currently, the pipeline is getting stronger. Customer engagement is there. All the work which is needed to seed the market is currently on, including technical specs, certification.
In India, we have already got first repowering order, as I mentioned, with Tatas, which we are working at a project site. It is a small order, but we are working on that. And I think, I believe there is a great opportunity for us. In India itself, there is a 25 GW opportunity. Internationally also, there is a huge opportunity for this in time to come.
Okay. Thank you, sir. All the best.
Thank you.
Thank you. Next question is from the line of Sweta Jain, from Anand Rathi Share and Stock Brokers Limited. Please go ahead.
Good evening. Most of the questions on margins are answered. Wanted to ask you if you could elaborate why there is a realization dip on a QoQ basis.
On a quarter-to-quarter basis?
Yes. I think we were maintaining a run rate of INR 6 crore per megawatt kind of a number, but that has slipped below INR 6 crore this quarter. Despite, I am assuming, EPC mix as a scope of business improving.
Thanks, Sweta, for your question. When you look at our Q2 FY 2027 ASP, we are roughly at about INR 5.9 crore.
Correct.
While when you look at it from a Q2 FY 2026 perspective, this was at INR 5.7 crore.
Overall position, I would say, is that this has remained in a good range. There is no price reduction. This is as per contracted positions that we have created. It is a function of the business mix, what customer you are supplying at what time, what type of order. Is it an EPC order? Whether the full supply has been completed or not. There are spares supplies and other supplies also. I do not think there is a negative in that sense.
Do we maintain a INR 6 crore kind of a run rate going forward? Or do you see some pressure?
No, it is not a question of pressure. We have not reduced any prices here.
Okay.
It is a position that is played out. Obviously, there is a higher project activity that has come in, which creates this position for the price. In the last quarter, it was higher. Project activity creates the price advantage in the last quarter.
Sir, what do you mean by project activity?
There are various activities within the. There is a turbine supply, there is BOP, there is other activities that go on. Equipment plus spares, stubs and others as well. Right? When you look at it from an averaging perspective, each has a different element to it.
Understood. Second, sorry?
Yeah, that is fine. Thank you. Go ahead.
Okay. The second question is on the working capital requirement. Sir, is it linked to the DevCo model being developed?
Not really. I do not think there is any linkage between the DevCo model and the working capital. I think in a previous answer, I had said that there is what amount of capital that we are committing to the DevCo side. It does come in the working capital, but the intensity of working capital here is not because of DevCo, that I can assure you.
Could you elaborate the reason, like why we are seeing this stretched working capital impacting the numbers?
Again, I think when you look at last year, there is a seasonality element that plays out here, Sweta. Right? If you look at it last year, the numbers were similar ranged. Right? Again, I answered this question probably earlier as well. We are building for our H2 position. Ajay also answered saying that it is 1.5x, 1.65x in terms of the overall positioning.
Correct.
I think we have also said that if you look at it historically also, 40%-60% or 35%-65% has been the range that this H1 and H2 have panned out. We are building for our future sales as well.
Okay, got it. Rahul, thank you so much for those answers.
Thank you.
Thank you. Next question is from the line of Abhishek from Motilal Oswal. Please go ahead. Abhishek, your line is unmuted. Please go ahead with your question. Abhishek from Motilal Oswal, please go ahead with your question.
Hi. Sorry. Yes.
Yes, please.
My question is actually on localization. Last year there was a lot of hope that localization will come in and there will be subsequent rounds and overall, for the domestic guys, it will be a big positive. Just wanted to check if there are any updates over there and how is that playing out so far?
Yes. Good question, Abhishek. As you know, the notification came on July 31st, 2025, with grandfathering provision provided for 18 months for C&I and 36 months for IPP. Already bid projects, and currently limited to six components and subcomponents, which is nacelle, blade, tower, generator, gearbox, and special bearings. The grandfathering has been extended for certain components in case of lack of availability or constrained supply chain. One year for yaw and pitch bearing, that is up to January 31st, 2028, and two years for main bearing, that is January 31st, 2029. ALMM, as you know, provides a level playing field for the Indian OEMs, especially Suzlon, reducing the price gap and ensuring quality of wind turbine gets added to the grid. Suzlon, I believe, is very well-placed, since we already have 80%+ local content.
Okay. Basically, you are saying maybe in about two years' time, the advantage will become more--
Yeah, it's already becoming. Because most companies have set up their local manufacturing here, and the ones who haven't, they have to. India, as I mentioned earlier, almost INR 12,000 crores of export of turbines are happening from India, and components also. India has a very good ecosystem.
Okay. This INR 12,000 crores, directly does it coordinate with what you are exporting? Or are there other elements in this INR 12,000 crores which you will not qualify for at this point in time?
No, this is all put together. These are not our numbers. These are the industry numbers I'm telling you. What the whole wind industry—
I understand, but is it something like some—
One of our companies, our forging and foundry company, which also does backward integration for us, they are exporting, for example, to many geographies. Albeit not in a very big manner. It's a small company, but has a big ambition in time to come to grow. As it grows, the leverage effect makes the cost better even for Suzlon when it buys from it. I think what is happening is nacelles are going by the European OEMs, are exporting nacelle gearboxes and components.
Okay. This is basically nacelle, gearbox, and various components. All of those.
Yes.
Okay. Got it. Just last question on the localization thing. What we've seen for solar manufacturing is that there have been subsequent rounds and the government has tried to go back from module to cell to silicon wafer, maybe eventually to polysilicon. Is there a discussion with the government that, okay, after the first round is done, maybe we want to localize further and backward integrate further? Is that on the cards?
I think right now, as I mentioned, the current policy envisages these components I mentioned, nacelle, blade, tower, generator, gearbox, and special bearing. On top of it, pitch bearing and main bearing. I think if you add all this, you're almost maybe hitting 85% of the cost. I believe we can do 100% also in India. I think India has a very good ecosystem, made for India, for the world. We can certainly do it.
Got you.
That, I am sure, should be the roadmap ahead.
Okay. Perfect. That answers my question. Thank you so much.
Thank you.
Thank you. Next question is from the line of Parth Majithia from Ambit Capital. Please go ahead.
Yeah. Am I audible? Thank you for the opportunity.
Could you be a bit louder, please? Thank you.
Yeah. Is this fine?
Yes, much better.
So most of my questions were answered, but one follow-up on one question which was asked earlier on the competition bit. A few names like Adani and JSW were mentioned. Recently, Adani won multiple orders. They have an order book of 1 GW outside their group. Major customers were NTPC, Aditya Birla Renewables, Purvah Green Power. All of these were Suzlon's customer in the past. Considering these orders that they have won and 40% market share target given in Suzlon 2.0, what's your read on that?
No, it's a very good question. All the names you are saying continue to remain our customers. We continue to get repeat orders from them. Aditya Birla Group, we are currently implementing some of the largest projects, which you would have seen in the recent announcements also. I think India market is maturing. I believe what we should be looking at is that Suzlon has three decades of leadership, has seen number of global players, has itself operated in global markets, has a presence across geographies. Our R&D centers are in three parts of Europe. We are preferred partner for customers over the lifetime due to reliability and also the way we manage the O&M. We have today almost reached 22 GW of installed capacity over the years. So I think we are in a unique position.
On top of it, many of these companies are largely meant for their own captive consumption, and of course, they are supplying to outsiders, and it's good for us because end of the day, Indian market is now likely to go to 15 GW by FY 2035. Suzlon, at 40% of that, I'm very confident should be able to reach that number. Also, there is space for everybody. So I think India itself becomes such a big geography. If you see China's demand, what we do in a whole year, they do in a month. I'm not saying we become China tomorrow, but I can see that as we navigate the potential on wind, solar already has a lot of investments already made. Today, we have almost 1,100 GW of potential in India. We only used at 59 GW, about 5%.
Even if you go to 20%, there is enough room for everybody.
Right. Okay. Understood. Another question was on the ALMM bit that was again asked earlier. The costs of competitors, which were basically based in China, will increase. Because of that will give us a level playing field for Suzlon. But right now, there will be a particular date. Some of the parts, the deadlines are extended. But for some of it, the deadline, correct me if I am wrong, was January 2027. After that, you feel that the market share for Suzlon might increase?
I have given my guidance that by FY 2031 I want to hit 40%. I am trading more closer to 30% right now, like 28%, 29%, to be precise. I have an order book of 6+ GW after doing record deliveries of 1,200 in the first half. Also getting 1,500 MW of orders, and all from marquee customers, repeat customers, new customers. I currently again have a very healthy pipeline. With the DevCo, we are in dialogue with the leading C&I and other customers for year three, four, five, which means I am actually talking now FY 2028, 2029, 2030, 2031 kind of a business with them. I think that should give us a lot of confidence going forward. ALMM has impact on building Indian supply chain and not necessarily the margin. I think that both the impacts are there.
Because there is a need for India to become self-sufficient, and with the FX impact, I think once you have all these things made in India, we also have a much stronger, resilient supply chain, and this INR 12,000 crores of exports out of India, I believe, can actually triple in time to come.
Right. Okay. Thank you. Those are my questions.
Thank you. Next question is from the line of Mahesh Patil from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. My first question is on our inflation, commodity inflation, that you are saying, for most of the part is not passed through. One thing here is for the new orders. For the new orders, at least we will be factoring in the higher cost in our prices, right?
Very good question. See, end of the day, you are in the market with the price, and you also have to see what a customer gets the price from other competitors. Pricing is more dynamic. We do try to pass on as much as we can, but end of the day, customer also wants to get his best price for them. What we do is we keep developing alternate supplier basket. Our cost of fresh purchases, cost of manufacturing, we keep running initiatives, which help us improve our COGS, and I am happy to see the projects in Suzlon we are running across our various models. I think that will help us to mitigate, to a large extent, the commodity risk. But in short term, it hits you.
When it becomes little near term, it actually tends. This affects, and commodity impact will hit everybody, especially the ones who are importing more will be hit even more.
Okay, sir. Sir, second question is on the pipeline. How do you see the pipeline of projects, where the projects are awarded, but the orders are yet to be placed? Any number that we have?
Just to clarify, you are talking about the order pipeline?
Correct.
Ajay.
So we have the 6 GW orders. We expect that with the current run rate that we are seeing, I think next 18 months, we have a very solid visibility. You can see our acquisition rate also is pretty good, which I also mentioned in the first half, we already got 1,500 MW of new orders. You add both these, I think, we are in a very good position. Our order book is not a constraint with strong demand in the industry, and the DevCo modeled offering in place will help us keep the momentum going. Our focus would remain on closing quality orders at regular intervals rather than achieving a rush to do quarterly run rates.
Sir, just to clarify this, sales here what you are mentioning is over and above the order book, right? The pipeline that we have.
Absolutely.
Okay. This is largely FDRE RTC, right?
Wind specifically.
This is largely wind, I am talking. In time to come, as we come and talk to you more about our BESS offerings. As I mentioned, currently, we are in the process of incubating these businesses. The new leadership teams are joining us. I think in time to come, we will start getting into BESS and other FDRE offerings as well.
Okay. And sir, last question. On the C&I side also, we are seeing quite a bit of traction. How do you see that? I mean, utility scale versus C&I, the pipeline forming ahead.
If you look at our overall order book, I think almost 78% is between C&I and PSUs utility scale. All leading C&I, we are very happy that we are repeat suppliers to them. Many of them have engaged us for end-to-end EPC. Many of them we are engaged on DevCo. I think each of them have their own large requirements to do their own decarbonization journey. Because it is not just wind sector standalone for the IPP and utilities, but also corporates who have big steel plants, cement plants, chemical plants, large industries, they all want to decarbonize. I think there is a huge demand. The questions asked to me earlier about other competitors entering the segment, I think we need this kind of a supply chain so that India can meet its wind potential.
Thereby, not only offer a long-term green supply, but also at a reasonable price. I think there is enough room.
Okay, sir. Thank you, and all the best.
Thank you.
Thank you. Next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Thanks. Just one follow-up on the working capital. The question is, on a sequential basis, I see that the working capital deterioration is mainly on a sequential quarter-on-quarter basis, mainly because of increase in receivable days, and not really a buildup in inventory days. On that clarification, just wanted to sort of get an insight from this.
I think, Sumit, we had answered that. We are building certain inventories to be able to meet our requirements for H2 supplies. So our inventories are slightly higher.
Yeah, inventory has not really gone up in terms of days.
Slightly higher is what I said.
Receivable has gone up more, is what I see. Receivable days.
Yeah, you are right. Receivables are up. I think there is also a timing of the supply positioning that gets created here. Some of the receivables are also related to commissioning and other positions that get created. As our commissioning, again, I think when you look at it, our total commissioning this quarter and both half year, has been very robust. As our commissioning levels improve, some of these, let's say, receivables that are effectively not due and are linked to commissioning, should get converted to cash as well.
Okay. One comment made that you are exploring DevCo orders for delivery up to FY 2031. Just want to understand the profile of the projects which have been booked under DevCo so far. I mean, are almost similar in terms of delivery to other normal standalone WTG projects.
There are two kinds of orders. I think the orders we have announced of 900 MW odd, these are COD in the next 18 months. These are like normal ones. Here we already have land available, so these are near term. What I am really saying is, for year three, four, five, those orders we will announce in time to come.
Got it. Thank you.
Thank you. Next question is from the line of Satpal Singh Khanuja from Ishaan Ventures. Please go ahead.
Hi, sir. Good evening. Thank you for the opportunity. Sir, what are the total megawatts which are pending to be installed? How many megawatts are still pending to be installed, which have been delivered and are pending for installation?
So it will be close to 3,900 MW, of which closer to 1,300 MW are already erected, which I think with the current 725 odd already done in H1 give us a very good visibility for the full year. I think, so I am very positive that it should be a very good year for our deliveries.
For the installation, sir?
Yeah.
Okay. Sir, what is the percentage of revenue that gets held up for the installation, and what is the aggregate held up amount currently?
Just to answer that question, it depends on customer to customer. Right? Some customers-
Can you give me a ballpark figure, sir?
I am just completing the answer, sir.
Some customers, it is between 5%-10%. For certain other customers, it could be in the range of about, let's say. Again, I think the range remains between 5%- 7.5%- 10% max. That's the way it works.
Okay. There would be revenue which has been booked for which the installation has not been completed yet.
Yeah.
Am I correct in assuming?
The installation gets completed is when I receive the cash.
The revenue has been booked already.
Yeah. That's how accounting gets done.
Okay. Sir, when do you see an inflection point coming when installations will start exceeding the deliveries?
Very good question. If you've seen first signs of execution on ground uptick from Suzlon last year. In a whole year, we did 750 odd. Year prior to that, we did some 350. In the current year, in the first six months, we have almost delivered what we did in the whole of last year.
Amazing.
I think that's a good sign. We also, on top, have erected stock of 1,300 MW. What we have also done is reorganized the company. Rather than having one chief project officer of the group, we have appointed three regional chief project officers with their own independent team. I can already see, with this management bringing in new leadership in our India business, I'm already seeing tremendous efficiencies happening. I think it will take another 12-18 months, more like 18-month journey, when we will start seeing even sharper commissioning on the ground. I think I'm very confident that over the next year and a half, we'll see this turnaround.
Okay. Sir, my second question, we have an unutilized capacity. We have a capacity for 4.5 GW. We have cash and working capital. What is stopping us from going faster?
Two things. Number one, we are looking at a plan which we unveiled a couple of months back as part of Suzlon 2.0.
Wherein we have said from our 30%, 33% market share, we wish to increase our India market share to 40%. This we said we will do by FY 2031. We also mentioned we are looking at our order book from current 6 GW- 15 GW as an exit of FY 2031. We also mentioned we are looking at an annual sales of close to 10 GW from last year, 2,500, current 200, you can already calculate. 1,200 in the first half, 1.5x- 1.65x second half. We have also given a trajectory of 25% CAGR. If you take that trajectory, I also mentioned about exports. We are looking at 3 GW order book by FY 2031. We are looking at 1 GW sale by FY 2031. You work backwards. I think capacity will not be a deciding factor. It is basically the pull from the projects.
The current healthy order book, the future DevCo strategy. I think as they play out, I think this 25% CAGR, which I have guided, should more or less pan out, and that will help us not only utilize this. This 4,500 is with 3.3 MW capacity turbine. As we go for higher, of course, we have to do some new blade plants. This capacity can straightaway be increased and enhanced. I think that will not be a constraint for us.
Mm-hmm. Right, sir. Sir, when are we planning to recognize more deferred tax assets for the unabsorbed losses?
Okay. See, again, I think this is an annual exercise that has to be done, right? The deferred tax assets. Again, I think there will be an evaluation that will get done in March 2027 based on discussions, based on future profitability projections. Will there be a recognition that will come through.
Previously, you were doing it half-yearly, sir.
See, again, I think, the scale and size has changed, right? At that point in time, we were doing it half-yearly because there was a very large. We were growing 60%, and therefore confidence building measures were also being taken into account. But we now believe that, like Ajay said, a 25% CAGR is the one that we are looking at. And therefore, we believe, and the auditors also believe, that it is a good time to do this on an annualized exercise basis.
Right. Sir, can I make a small suggestion?
Sure.
In one of the investor presentations, I think it was four or five quarters back, Mr. Himanshu Mody did that. There was a clear presentation of the position of the installations, like how many the foundation work has been completed, how many have been erected, how many are pending for the machine installation and all. I think it was divided into three or four stages. So that thing has been taken out of the presentation. If it can be included again, that will give the investors a lot of clarity.
We will evaluate that. We will think about it. But again, the point is that we can keep drilling into more and more detail, right? I think what Ajay has talked about and what we have been talking about is a thematic and industry positive that we have all kind of created here. The DevCo model, the export positioning, the AMS growth. I think you have to look at it from that perspective rather than drilling down into details.
I understand, sir, but that was a very good information that was shared.
Yeah. What is important is how is the on-ground execution. As I mentioned, we did almost 169% growth in the on-ground in the current period. This is the highest ever done by the company. We have also given a number of close to 1,300 MW erected already, and also guided what does the H2 look like. I think by and large, these numbers are there. We can separately engage as well, and have a discussion if you wish to get a more detailed
Thank you. Thank you for the clarity, sir. Thank you.
Thank you. Ladies and gentlemen, we will take the last question from the line of Nikhil Poptani from Kizuna Wealth. Please go ahead.
Yeah, hi sir. Most of my questions have been answered. I just wanted to ask, what is there
Could you be slightly louder? Your voice is a bit muffled.
Yes, sir. Is it clear now?
Slightly better. Thank you.
Yes, sir. So, sir, most of my questions have been answered. Sir, I just need to ask one question. What is the update on the European export side that we talked about, the 2 MW, which are really going on in the European and Australian markets, Blue Sky platform. Is there any kind of update on that?
Yeah. Good question. Actually, this was asked before, but I will answer it for you. Blue Sky platform is for the larger wind turbines we have launched in Europe, 5 MW and 6.3 MW. These are currently under various stages of certification and the local requirements of grid requirements. So those studies are currently underway at an advanced stage. The 2 MW is not Blue Sky, but it is also having a demand in repowering as well as we have seen some good demand in some of these geographies you mentioned. For this also, we need to get a certification for the local countries. So that is also work is undergoing. I think next year we should be in a better position to start reporting our export orders. But the order book, the detailing from the customers, I think the business development outreach is very encouraging.
It is basically now the technical aspects to be sorted out, and then we start reporting the orders and shipping the turbines.
Okay. Thank you, sir.
Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for the closing comments.
Thank you very much, everyone, for joining Suzlon's H1 FY 2027 call. I hope we've been able to answer some of your questions. Our teams will be happy to engage if there are any additional questions for us to be possible to answer. Thank you.
Thank you so much, sir. On behalf of Suzlon Energy Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.