Ladies and gentlemen, good day, and welcome to Sterling and Wilson Renewable Energy Limited Q2 FY24 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be, 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. Sandeep Thomas Mathew, Head, Investor Relations, for his opening remarks.
Thank you, and over to you, sir.
Yeah, good morning, everyone, and welcome to our Q2 FY 2024 earnings call. Along with me, I have Mr. Amit Jain, our Global CEO, Mr. Bahadur Dastoor, our CFO, and SGA, our Investor Relations Advisor. We will start the call with the key operational highlights for the quarter and outlook by Mr. Amit, and then followed by the financial highlights by Mr. Bahadur, post which we will open up for Q&A. Thank you, and over to you, Amit.
Thanks, Sandeep, and a warm welcome to all the participants on this call. I would like to give a quick update on our business operations and outlook on the solar industry. Beginning with our order book, the company announced new orders totaling approximately INR 2,640 crores in Q2 FY 2024, aided by strong ordering momentum in India. Coupled with our order inflow of INR 466 crores announced in Q1, our total order inflow in H1 FY 2024 is INR 3,106 crores. All the orders announced in the first half are from domestic market. We received an order for an approximately 375 megawatts project in Khavda, Gujarat from NTPC in Q2 FY 2024.
This is the third order from NTPC and is strategically located between the first two projects we had earlier announced in FY 2023. This project is on turnkey EPC basis, including supply of the modules. The total contract price, including operation and maintenance for three years, is INR 1,535 crore and this amount is inclusive of taxes. We also won our first order from Gujarat Industries Power Company Limited, GIPCL, in Q2 FY 2024 for a 750-megawatt DC project, again, located in Khavda region of Gujarat. Scope of work in this project is BOOT. Total book value, including operation and maintenance for three years, is INR 1,130 crore.
Coupled with NTPC projects, today, SW RE has won and will be executing nearly 4.6 gigawatt of projects in Khavda region of Gujarat, including NTPC and GIPCL. We are targeting to maintain our historical domestic margins in these projects as well. In addition to Khavda project, the company has also received a new order of approximately 490 megawatt DC for another BOOT project from Indian subsidiary of French power major, ENGIE. As stated earlier, total EPC contract value of the project won in Q2 FY 2024 is approximately INR 2,640 crores.
With these new orders, our unexecuted order book as on September 13, 2023, has increased to approximately INR 6,835 crores, with nearly 90% of the order book comprising of domestic EPC projects, which are executable over the next 12-18 months. With the inclusion of Nigeria MOU that was announced in September 2022, our order pipeline is anticipated to enhance significantly. We are working with various stakeholders to finalize the DAs and EPC agreements for the project. In terms of outlook, our domestic order pipeline has grown very strongly and is alone approximately 16 gigawatts, with PSU contributing more than 55% and private sector IPP, 45%. Our business development teams are working very hard and remain focused to deliver the strong growth trajectory we are targeting this year.
In the international market, while we have been adopting a more cautious approach with new orders, we are beginning to make progress with our clients on projects in line with our risk metrics. As stated in earlier calls, we reiterate that lumpiness in order flow is to be expected with EPC companies like ours, and timeline for achieving project closures could vary, depending on a host of factors, including finalization of contractual terms, financial closure, et cetera. Now, moving to industry outlook. We continue to witness an unprecedented decline in price of silicon, wafer, cells, and modules in the last 12 months approximately, and as per industry reports, with module price now falling to nearly $0.50 per watt, and is even below the historic lows we have seen during the pre-pandemic times.
With significant support, supply pressures due to the emergence of new production capacities in China, industry analysts continue to anticipate module prices to remain depressed for some time. The time being ripe for some projects to come on stream, aided by lower LCOE, which should translate into more work for EPC players like us. The Indian solar EPC market continue to remain in a very attractive position, and we are hopeful of capitalizing on the strong order pipeline. Solar operation and maintenance sector has emerged as a distinct and highly profitable market, both in its own unique landscape and dynamics. With the steady rise of operational solar plants, the re-entry of O&M contracts is becoming a burgeoning aspect for providers such as ourselves.
We remain focused on expanding our O&M portfolio, making an enhanced emphasis on third-party O&M within global markets, utilizing both organic and inorganic strategies. With this, I will ask Bahadur to take you through the consolidated financial highlights. Thank you very much.
Thank you, Amit. I will start with an update on the key quarterly results. Revenue from operations for the quarter ended September was INR 759 crore. Revenue has improved significantly, both year-over-year and sequential basis, aided by higher contributions from the domestic EPC segment. Revenues were up 88% YOY and 47% quarter-over-quarter. Company has reported a consolidated gross margin of 8.6% in the second quarter FY24, and gross margins in the first half FY24 are approximately 10%. Domestic EPC margins in the second quarter FY24 were also approximately 10%. Our unexecuted order book continues to comprise over 90% of domestic EPC business. International EPC margins were -2% in 2Q FY24.
O&M segment margins rebounded this quarter and touched more than 23%, and are now more in line in what we are hoping to be steady state margins in this segment. Company reported a positive consolidated EBITDA in the second quarter, FY 2024. That loss during the year was INR 54 crore, during the quarter, was INR 54 crore. On a standalone basis, the company achieved EBITDA breakeven and was also tax positive. Now, coming to the balance sheet and our debt situation. As on September 30, 2023, our net debt stood at INR 2,123 crore, and our net worth stood at negative INR 215 crore. The company and its subsidiaries had loan payments of INR 329 crore to various banks in the month of September 2023. Out of the above, the company made payments of INR 194 crore.
Company had availed INR 250 crore short-term loan for working capital for one year, which was due on September 30, 2023. The company was able to repay INR 115 crore from internal accruals, and an amount of INR 135 crore remains overdue as at date. Rating downgrade, four-star BG invocation in July 2023, made sourcing loans more expensive and difficult. With respect to our results, the auditors have made certain observations in the consolidated and standalone financial statements as emphasis of matter. The company incurred losses during the previous year and has continued to incur losses during the six months ended September 30, 2023.
Further, as on thirtieth September, the company has a repayment due of a short-term loan for working capital purposes from a bank amounting to INR 250 crores, of which INR 135 crores is yet to be repaid as at date. The aforesaid events result in cross default in respect of certain other loans bearing a fixed maturity period. Consequently, non-current loans aggregating to INR 516 crores have also been classified as current borrowings in the statement, even though the company has not received notice of recall of loans. The company is working towards a resolution plan with its lenders by way of funds to be raised from equity or debt issue, and amounts recoverable from the promoter selling shareholders in accordance with the indemnity agreement. The management is confident of successfully consummating the above plans.
In the standalone financial statement, the emphasis of matter reads: The company's investment in a subsidiary and loans given with accrued interest thereon, and other receivables aggregate to INR 2,395 crores as at thirtieth of September. We are confident that these amounts are good for recovery based on the projected cash flow expected from revenue contracts, where letters of intent or memorandum of understanding have been signed, refunds of encashed bank guarantees, recovery of remediation costs incurred on projects, and amounts recoverable under the indemnity agreement with the promoter selling shareholders.
The board of directors of the company, at its meeting held on 27th September 2023, considered and approved raising of funds by way of issuance of equity shares, global depository receipts, depository receipts, foreign currency convertible bonds, fully partly convertible debentures, non-convertible debentures, and/or any other financial instruments convertible into equity shares, including warrants or a combination of any of the securities mentioned above in one or more tranches, through one or more public and/or private offerings, including by way of a qualified institutional placement or any combination thereof, or any other method as may be permitted under applicable laws to eligible investors for an aggregate amount not exceeding INR 1,500 crore in one or more tranches, subject to regulatory statutory approvals as may be required, including the approval of the shareholders of the company through a postal ballot, which is presently in process.
With this, we can now open the floor to questions and answers.
...Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions, may press star and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking your questions. Ladies and gentlemen, let's wait for a moment while the question queue assembles. We'll take the first question from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.
Congratulations` for a good set of numbers during the last quarter, and the good guidance in the coming quarters as well. So sir, my first question pertains to you know, the kind of visibility that you are getting you know, from the domestic market. Because to our understanding, the order pipeline for the PSU itself stands closer to 20,000 sort of megawatt on a yearly basis, and we have secured close to INR 3,000 crore of orders in the first half. So sort of pipeline that is visible for the second half, and considering you know, the rating downgrade what implications it would have you know, on the new order intake as far as domestic orders are concerned. And some visibility you know, on the overseas orders would be really appreciated.
So that's the first question. And my second question purely pertains to, you know, sort of, margins, you know, that is visualized. Because I believe that the Khavda you have got a lot of capabilities now, you know, in terms of, resource mobilization, because, the Reliance orders are also anticipated to come, you know, maybe in the near to medium term. So, so in terms of margin trajectory, how are you seeing, you know, the margin trajectory for these domestic orders, would be equally, interesting. And my third question pertains to, purely on the, on the buildup of, your O&M, revenues, because, you know, I think the progression of orders is going very robust, you know, in the near to medium term.
So what sort of trajectory that you are seeing for the buildup of this annuity O&M revenue? And what sort of margins are predictable, you know, on the O&M side, maybe from next two to three years perspective? That will be really appreciated. Thank you, sir.
Yeah, good morning. So to start with the order for pipeline in India, I would say the pipeline is very robust, and at this point of time, the pipeline is 16 gigawatts. And as you rightly said, the major portion of the pipeline is coming out of PSU. So as you would have seen from our performance in last three quarters, that we have been consistently performing well and very competitive in PSU bids. So looking at past performance, we are hopeful that we'll be able to maintain our competitive approach in the biddings, and we will be successful as we have been in the past. So we are very, very hopeful and expect that our performance is going to be as robust as it has been with respect to public sector and IPP bids.
So order pipeline is going to remain very, very robust. Now coming back to international pipeline, so we are working in multiple geographies with various clients, including Australia, Africa, and Middle East. So we are working on those projects, and South Africa and Africa is also emerging as a very, very strong market. So we are favorably placed in some of the projects, and we have received LNTP. That is called Limited Notice to Proceed for our work on some of the projects. So we are progressing well on international markets as well. Now, coming to your question on the profitability and concentration in Khavda, so you are absolutely right.
So we have achieved a significant scale in Khavda, and the like, concentration of the projects in one location, there will be optimization of overhead, and we expect to increase our margins on the projects which we get in Khavda. It is in public domain that RIL has, Reliance Industries, are also going to have the allocated land in Khavda. So whenever the projects are announced and whenever we get the orders, so we hope if we work on those projects, of course, we'll be taking the... Using the economies of scale, we'll be improving our margins on those projects as well.
Now, coming to O&M, with a significant EPC portfolio and re-tendering of the projects which are completed earlier and some of the projects in the portfolio being implemented by IPP, we expect a strong, robust growth in our O&M business portfolio. So I think it would be growing at a much faster rate than it has grown in the past. So that's what we would like to... So all the business trajectories, both EPC as well as O&M, are for a very, very strong and robust growth. And we'll be able to maintain our, you know, historical margins, which we have maintained in the markets.
Just to add to what Mr. Amit has said, in terms of O&M, we expect the portfolio to actually give us revenue, which will be about 2.5-3 times in about two years.
Thank you, sir.
Thank you. We'll take the next question from the line of Sumit from HSBC. Please go ahead.
... Yeah, thank you so much for the opportunity. My first question is with respect to the debt shortfall that you are experiencing. Is there any thought from the promoter's perspective to infuse funds? And secondly, related to that is, since there has been a default, do the other debt covenants also come into force, which might drive other defaults?
So Sumit, I already mentioned that because of the covenants, the lenders do have a right to recall the loans. However, none of the lenders have recalled the loans. So to meet the requirements of the accounting standard, these loans have been classified as current. As far as the promoter inflows are concerned, the company has raised a claim on the promoter under the indemnity agreement for INR 418 crore. But the correct due date for receipt of this is November 30, 2023. We are, of course, in discussions with them, requesting an early repayment.
And any flows from the 40% Reliance promoter, are they infusing anything to support the company?
The company is anyway looking at a long-term solution, which is what we mentioned. The board has approved, and right now is with the shareholders under a postal ballot. So we're looking at more long-term solution rather than something which is just short term.
Understood. My second question is with respect to the business. In your new contracts, you, you've once again taken projects which have, you know, module price risk. What is the thought process behind it? And if you can also talk about what is the, you know, price of module that you talked about $0.15, and for what delivery period does it pertain?
Yeah. So as far as the domestic market is concerned, so we have the complete backup of pricing for these projects, which we have taken with modules. So there is no, absolutely no risk at all. The modules are being sourced from Indian suppliers, and we have backup for supply from Chinese suppliers as well. So as far as this particular project is concerned, we are fully protected. And as far as the downtrend is concerned, we are seeing the continuous correction because there is a glut in the market and significant additional capacity addition in the Chinese market, and they have weak profile of modules in European market. So that's why module prices are coming down, and we expect, at least in the short term, this trend to continue.
For the NTPC project, would you have to take Indian modules, or do you have the option to take Chinese modules as well?
No, for the project to be completed till March, we have an option of taking Chinese modules wherever it's there. But after that, if there is no change in the policy, we have to go with Indian suppliers. And India also now we have significant capacities, and for this project, we are backed up by Indian suppliers also.
Just a bit on the technical side, if you do import modules before thirty-first March, but the COD gets delayed beyond March, who bears the project risk? Because the government will not, in that case, allow the COD, right? I mean, we see-
If the scheduled completion is before March, then we are allowed to import. But in this particular case, as per the policy guidelines, we have to source modules from India. If there is no further extension or waiver of amendment by the Government of India.
Just—sorry. Just lastly, and what is the price of Indian module manufacturers?
Indian module manufacturer pricing are varying from $0.21-$0.23 per watt.
Understood. That's what it is. Thank you so much.
Thank you. A reminder to all the participants, anyone who wishes to ask questions, may please press star and one. We'll take the next question from the line of Rabindranath Nayak from Sunidhi Securities. Please go ahead.
Thank you, and, and congratulations for the actually better number as compared to the first quarter. So, my question regarding this gross margin, there is a contraction in the gross margin from 11.4% Q1 to 8.7% in this second quarter. So, how you see the gross margin going ahead in the coming quarters? That is the first question. And, if there is a positive EBITDA margin in this quarter, so the other expenditure has come down substantially. So whether this is related to some provision write back or foreign exchange gain, which is reflected in the cash flow statement, is it correct to view the things in that way? So that is my second question.
The third question, say, about the, what is the indemnity? The indemnity we see other financial assets, had gone up from INR 1,260 crore in the year 2022, around INR 1,718 crore. So what is the indemnity proceeds in this, you know, item? So we can clarify, can you please clarify the balance sheet line item for the indemnity proceeds? And thirdly, fourthly, about the rise of unbilled available revenue. So you have actually this, other current assets, there is a unbilled revenue, you know, which is, this item was actually INR 818 crore in the end of 2023. It has gone up to INR 1,303 crore. So what is the unbilled revenue in this, item?
If you can clarify, that would be helpful. And, about the NTPC projects that you have now completed, whether the projects are, the receivables are back ended or it is, you know, you know, after the completion of the entire project, will the majority of the projects will be given, or it is, you know, based upon the project completion, you will get the orders, receipts particularly. So can you please clarify all these things? Thank you very much.
... I mean, you'll have to repeat because there were far too many questions, and I, I would need you to just repeat them one by one.
Yeah, I am.
Regarding the gross margins, why the gross margins are around 8%? If you see our investor presentation, which was uploaded yesterday, in the domestic segment, we have got INR 567 crore of revenue with INR 57 crore of gross margin, which means the domestic gross margins are maintaining the 10% trajectory which we have been talking about. There is, however, INR 141 crore of international EPC revenue, for which there is no gross margin except for a small loss of INR 3 crore, and that is what is suppressing, on a mathematical basis, your overall gross margin. So that is, that is the answer to your first question. If you don't mind, if you could quickly repeat your second, and so I'll answer each question as and how it comes.
For positive EBITDA, whether there is some write back or foreign exchange gain that is booked in this quarter?
So foreign exchange gain is booked quarter on quarter as and how it arises. Again, if you look at our financials, our operational EBITDA, on a consolidated basis, is shown before the Forex gain. There was a Forex gain of INR 22 crore in this quarter, for quarter, September 2023, 2024, 2023, yeah.
Your next question, is there any write back in provisions or there is no write back in provisions? Because it is reflecting in your cash flow statement that you are asking.
No, there is a write back of excess provisions in projects to the extent they are not required. So that has been done in case of our Australia and U.S. projects. Similarly, there are always some small additional provisions which are made, for example, in our... These are things which go on happening, and they sort of balance themselves out. There is a provision write back, but that is in the project and in the gross margin. So as you can see, the gross margins in the domestic business, as I mentioned, are maintaining themselves, and there is just a -INR 3 crore margin in, in terms of the international. There is no write back of provisions in case of overheads as such.
Okay. And about the indemnity dues, so because the line item, line item has gone up from INR 1,260 crores to INR 718 crores. So what is the line item for the indemnity procedure for the end of this third quarter?
Indemnity items are put out at various line items, and there is no single line item as such, because there's no heading called indemnity items as per the Schedule 3 to financial statements. They are there in receivables, they are there in taxes, direct and indirect. They are there in other financials and other current assets as well. The total indemnity receivables, which are lying as assets as on 30th of September, are roughly INR 1,400 crore, out of which 400 crore has what has been claimed from the promoters post 30th of September. So after that, in terms of what is lying in the balance sheet, would be a number of about INR 1,000-INR 1,050 crore.
Okay. So that means this INR 1,718 crore, INR 1,400 crore potential indemnity proceeds, right?
No, I said it is there in various places, and it is not in a single place. Other current and financial assets also include unbilled receivables, which are put over there.
Okay. And this line item, unbilled revenue, particularly the current assets carrying unbilled revenues, that has gone up from INR 880 crore to INR 1,303 crore. So, how should we see this thing panning out in the coming quarters and the year ahead?
Unbilled revenue gets converted almost on a monthly basis from unbilled to billed. So these items will keep panning out. You are looking at it as an absolute number, but month-on-month, it gets put in unbilled, and the next month, generally it moves to billing and therefore receivables.
Whether it will be linked to the sales or it is, it is not, it will not change. There is some linkage in the sales, from of this item.
Unbilled revenue is worked out on the basis of percentage of completion. What moves to sales is on the basis of agreed milestones with customers.
Okay. Okay. So that means the INR 1,303 crore is going to decline in the coming quarters, or it is going to remain higher because you are going to increase the sales. So whether it will increase or it will remain controlled within the sales?
It will depend on the milestone which is achieved on every quarter end. There could be a decline if the milestones are significantly reached, or in case there is material supply which has been sent out, for which the billing happens in the next month, then there could be an unbilled revenue also which comes. So there is no positive or negative trend that can be attributed. It all depends on the circumstances.
Okay. What's your NTPC projects, whether it is the project receivables are there, or it is in a milestone basis, it is paid?
It will always be milestone basis.
Okay. Okay.
All projects, the receivables are always milestone based, which is agreed with the customer at the time of signing the contract.
Okay. Thank you. Thank you very much.
Thank you.
Thank you. Thank you. The next question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead.
Hi, sir. Thank you. Thank you so much for the opportunity. So you just mentioned about the O&M business. So what is the current contribution to our sales? And if you could elaborate, how much this opportunity can become, maybe three or five years down the line, and what will be our role in that?
... So O&M is made out of two major parts. One is where we do the O&M during the defect liability period and is a part of our contract. And the third, and the second is what we call, what we call it as third party O&M, where we actually go and bid for EPC plants, which have been built by someone else, or when our DLP is over and it is out for an open update. So as of right now, the O&M trajectory is expected to be in the range of about INR 200-250 crore in the current financial year.
With the new inflows that we have got, both which are part of our contracts and which are projects which are expected to be completed, we expect that, that number to go to about 2.5 times in a couple of years.
Okay. Sir, the margin in this case will be high, right?
So it's an average 25%-30% gross margin business. There is a slightly higher margin in the international side as compared to the domestic side. So it all depends on the mix, but that is the range that we are in. This is a gross margin. There is very little overheads in terms of the O&M business.
So EBITDA margins will be like 20%?
Yes, approximately.
Okay. And sir, I'm just, I mean, if I look in three or maybe five down the line, so many solar plants are coming up, all over India. So the installed base is going to go up significantly from here on. So maybe, five down the line, how much this business can become for us? I mean, just—I, I'm not looking for a number as such, purely from, directional purpose, how things will pan out maybe five down the line.
Yeah. So as Bahadur alluded to, in the next couple of years, we are expecting this business to be completely on the half time. So even in next two years, based on the orders which we are looking and we are expecting more and more completed plants which had initial O&M contracts will go for re-tendering, we expect this order book to grow significantly. But as you said, over five years or 10 years down the line, more and more contracts which are constructed by other EPC players or which have been in operation by other operators, will come for re-tendering. So with the installed base, this market of O&M, where even if we are not doing EPC, grow significantly, and we expect this number to grow exponentially.
So as you rightly said, we are not putting any numbers, but in this particular segment, we see a very, very strong and robust growth. So 2.5 times, you can imagine yourself what kind of numbers it can be. Our numbers can pretty, pretty good. We can average... We are taking 10%-12% CAGR in other segments, so it can be 20%-25% CAGR in even beyond two years in this particular segment of O&M.
Sir, on O&M side, I mean, I mean, in terms of size, are we the largest in India? And who are the main competitors in this segment?
We are, like other players in organized sector, I would say we are the largest one, and the competition is from the smaller players. And the other, in the degree, I would say the developers who are managing their own portfolio, otherwise from third party and, competitive segments, we are among the largest. Not even in India, globally, we are among the largest players.
So maybe five down the line, our maybe business structure or revenue structure will change in favor of more O&M business that, that is, you know, high margins and without any-
No margin. The O&M business will contribute significantly to the bottom line, but EPC portfolio will also grow significantly in India. So as far as the revenue contribution is there, O&M will rise significantly, but so will EPC. So I, I would say EPC will remain to be a major contributor, but on the bottom line, O&M will, will add significantly to the bottom line, having the high bottom, or like, high top line and, high bottom line.
Because this business will have, you know, predictable cash flows, high margins, and-
Absolutely. Absolutely.
Key numbers, I mean.
Yeah, absolutely right. So that's one thing, this business will grow significantly, so it will have a sizable size. Right now, we are at INR 200-250 crore, so this may grow significantly, but EPC business will also grow significantly. So both, both the business put together, the top line will be great, and but to the bottom line, in proportion to the top line, O&M will be contributing much more to the bottom line.
I see.
As a percentage of revenue, as a percentage of the revenue.
Sure, sure, sir. And sir, last question from my end. This O&M opportunity, we are only looking into India, or is it that globally also we are looking to tap this market?
So we are, like, as we said in our earnings, is that we are looking at both organic and inorganic routes, and we are addressing this internationally. So in the geographies where we are working, when we are doing EPC, we are doing O&M. So those projects, we are doing O&M in South America, we are doing O&M in Africa, we have done O&M in Middle East and Australia. So we are active in all the geographies, and now we are working to get, and that's one of the things which we are working actively, to increase our third party portfolio for O&M in the international market. So we'll be operating globally wherever our footprints are for O&M business as well.
Mahesh, just to give you a further statement, the O&M for both domestic and international is roughly half and half. So it is not that we are not operating, O&M in the international space.
Sure, sir. Thank you so much, sir.
Thank you. The next question is from the line of Harshad Gandhi from Harshad H. Gandhi Securities Private Limited. Please go ahead.
... Hello, am I audible?
Yes, sir, please proceed.
Okay. First, clarification. I mean, does this default of ours hamper our eligibility to participate in future tenders in India or abroad?
Yes, we are engaging with our customers, and I think we are working on the funding options, so we'll be remain eligible to quote for all the domestic and international projects.
Okay. But has this default hampered our eligibility currently?
No, no, no. As of now, nothing has been impacted, and all the bidding process, negotiations with the customer where we were in that process, is continuing as usual. We are engaging with all our customers and keeping them abreast of all the developments and what all the actions we are taking. So customers are in loop, and so far, nothing has been impacted.
Okay. No, I was just asking whether in future, if you want to participate in any tender, we will be able to participate?
Harshad, this is a, a short-term default, which the company is working expeditiously to overcome, along with, as I said, discussions with the promoters s o this is not something that is going to extend for a long period of time. Besides, also, as has been approved by the board, we are looking at a long-term solution for a fund raise of a significant value, not exceeding INR 1,500 crores, to solve all of these problems. The balance sheet will then get fixed. The cash flow issues will no longer exist, impeding our ability to attract more business. So what we have seen right now is a short-term or near-term issue, which we are working to resolve.
Okay, thank you very much. So one question is, about the outstanding indemnity amount, from Mr. Khurshed's. Since 2021, ever since Reliance became the largest shareholder, have we received any amount? I mean, what is the amount that has actually been billed to him, and what is the amount that we have actually received until today? Hello?
Madhu, we have.
Harshad, are you asking for both sets of promoters? Because you only mentioned-
No, I'm sorry. I'm asking for both sets of promoters, Nifty and Khurshed.
Yeah. In terms of the indemnity agreement, the claim has to be raised on 30th September of each year. The first INR 300 crore, as has also been mentioned in our notes to the financial statements, had to be borne by the company. The company had provided for the total amount into INR 300 crore in the quarter ended December 2021. In September 2022, we raised a claim of INR 90 crore on the promoters, because the total amount claimable at that point of time was INR 390 crore, of which INR 300 crore had to be borne by the company. The company received the INR 90 crore. In this September, the company has raised a claim of INR 418 crore. Out of that, the company has already received about INR 43 crore from the promoters.
The balance is to be received, and as I said, the last date for receipt is thirtieth of November. Have I answered your question, Harshad?
Yeah. Is the company confident to receive the amount?
Yes, the company is confident of receiving the money, because they have paid in the past on time.
Okay. That's all from my end. Thank you very much.
Thank you, Harshad.
Thank you. The next question is from the line of Deepak Fursawani from Swan Investments. Please go ahead.
Yeah. Good morning, sir. J ust wanted to seek the clarity in terms of the funds requirement over the next three-six months, in terms of the debt repayment a nd is this amount of RIL and promoter indemnity clause would be sufficient enough to meet these obligations?
The total amount which will be required from now till, say, end of March, is roughly INR 1,300 crores. The amount receivable from promoters is roughly 400-ish crores, and that is why the company is working on the fundraising plan, which has been mentioned in the financial statements.
Okay. I n that context, downgrade from the debt trading, would have any implications in terms of the fundraising or this thing?
The company is right now in discussions, doing whatever it can to its best abilities, to make sure that the fundraising happens in the manner it is planned.
Okay. Thanks. Thanks a lot. Thank you very much.
Thank you. The next question is from the line of Bala Subramanian from Arihant Capital. Please go ahead.
Good morning, sir. Thank you so much for the opportunity s o I just want to understand about the Nigerian order, like, like, when the order will start for executions and when it will complete, and what kind of potential we have, what are the challenges we have in that order?
So Nigeria order, we are still. As you know, MOU was signed last September, and we are still discussing with the memo from cabinet for the finalization of the EPC agreement, and we expect it to get concluded soon s o we are still working on it to get it signed, and we expect once it is signed, so we expect the revenue either in Q1 FY 2024 or Q2 FY 2024, 2025, the revenue will start coming in from the project.
Okay, thank you.
Thank you. The next question is from the line of Rahul Kothari from Grit Equities. Please go ahead.
Sir, can you give me some guidance on the hybrid opportunities and also pure wind sector? Are we exploring the opportunities in both the domains?
Okay. A s far as the hybrid is concerned, as and when now we have started looking at them, but the hybrid pipeline is not like it's developing at this point of time, projects are getting announced a nd, as you would have known, we already have executed projects for battery energy storage system s o we are working on multiple bids in some of the select geographies, like Australia, on battery energy storage system projects coupled with solar or standalone projects s o as and when these projects will announce or pipeline will develop, so we'll start working on those projects. But at this point of time, I will not be able to give a concrete number for that pipeline. But we expect shortly to finalize one of the projects of that system in one of the international geographies.
Okay. A lso, sir, can you give me any guidance, any further development or guidance with regards to Reliance project or any flow on that front? Thank you.
Reliance project, like, as you know, the land has been allocated. We are in discussion, and we'll announce whenever the orders are received from the land.
Okay, thank you. Thanks for that.
Thank you. The next question is from the line of Namit Arora from Inglobe Capital. Please go ahead.
Yes, thank you for the opportunity. M y question was around internal communication, in terms of your engagement with the senior management team and the middle management team, given the current sort of issues at the company, if you could give us some color of your level of engagement and your efforts to maintain employee morale and momentum in this current difficult circumstance.
We see that all the teams, senior management, middle management, and across all the management levels, teams are fully engaged. The morale is very high, considering the strong order book and kind of success we are seeing in the domestic market. This resurgence in domestic order book is the morale is very, very high, which we see that whatever the current financial position which has happened, it's a short-term phenomenon, and we are working very aggressively to address this. Board has already given its mandate to work on all kinds of options for fundraising. This has been communicated across the organization. All the senior and middle management teams are fully engaged in those discussions, and they are being made addressed of all the developments from time to time.
We see no issues with the morale of the team, and teams are, like, very bullish on the business going forward.
Got it. Thank you very much, sir, for your detailed answer. All the very best to the entire team. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Maulik Shah from Prospero Tree Financial Services. Please go ahead.
I mean, sir, and congrats for a good set of numbers. But I, two questions. Amongst the INR 329 crore of loan repayment, which we had to pay in September, what amount of this was protected under the indemnity clause?
None of the loans are protected under the indemnity clause. Indemnity items are more for receivables, liquidated damages, et cetera. Loans were taken as a bridge to meet the past losses of the company. So loans cannot be indemnified. They are a means to cash flow.
Okay, and this INR 1,300 crore, which we have to pay until March, what about that?
Also, that none of the loans are.
That is loan, right?
Yes, they're all loans. When I said INR 1,300 crore, that is the total loan, including this amount includes the present overdue, sir.
Okay, I got it. Okay, thank you.
Okay.
Thank you. The next question is from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.
S ir, there has been this, you know, drop in solar panel prices and other, you know, key key raw materials also, s o, in the orders that we have already taken from most of these energy PSUs, what is the kind of EBITDA margin improvement that we expect in the next year or so?
So the most of the orders are like domestic, as you must have noted, 90% of the order book is domestic, and we maintain historical 10%-11% margins in those projects. Also, the fact that the domestic orders are all BOS, Faisal, so therefore, there is no module in that. The only one order which we have very recently picked up is this NTPC order. So leaving that aside, module price does not affect the margin improvements on our existing projects, though, of course, the team has worked towards improved efficiency, because in the Khavda region now we have almost 3+ GWp of work happening simultaneously.
I suppose even the Reliance project is in the same neighborhood? Whenever it does come up.
It is expected to be in that neighborhood, of course.
Okay. I s it, is it, you know, would it be a right statement to make that, you know, even the battery opportunity and its EPC opportunity is almost as big as the, the solar opportunity?
A battery opportunity is also, I will not say as if it is going to be significantly high, because as we move into round-the-clock or hybrid, so there we expect that, that market to, you know, will be significant size to the address, both in India and internationally.
But can you give a very frank answer to this? You know, we are almost having, like, three promoters, and, you know, all three promoters are, you know, big industrialists in their own right, s o is there no kind of a, you know, is the professional management not finding it difficult whom to report? Y ou know, this whole turf war of the promoters themselves trying to even pay amounts as indemnities, causing a lot of problem in, you know, operating?
Firstly, I do not believe there is any turf war between any of the promoters. They are all working together. They are all participating in board meetings. I am also a member there, and it is done in a complete professional manner. The management also does not face any challenges in talking to all three sets of promoters judiciously, as and how required, or give them whatever information is sought from them. As far as the indemnities are concerned, there is a very clear agreement. The management works towards crystallizing of those items as expeditiously as possible. Once the claim is raised, it is sent out to all the promoters, including Reliance and SP, and the payments are being made, s o I am not seeing any turf war that we, as management, are finding difficult to handle or anything of that sort, personally.
As we have alluded in our earlier calls also, the management board is providing strategic guidance and then directives to the company, and we seem to welcome that at all.
Mr. Hawa, any further questions?
No further questions. Thank you.
Thank you, sir. Participants who wish to ask questions may please press star and one at this time. Ladies and gentlemen, as there are no further questions, with that, we conclude today's conference call on behalf of Sterling and Wilson Renewable Energy Limited. That concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.
Thank you, sir. There are more than 20 parties in the conference.