Ladies and gentlemen, good day and welcome to the Techno Electric & Engineering Company Limited Q4 FY 2025 Earnings Conference Call, hosted by Asian Markets Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj Sonulkar from Asian Markets Securities Private Limited. Thank you, and over to you, sir.
Thanks, Navya. Good afternoon, everyone. On behalf of Asian Markets Securities, we welcome you all to the Q4 FY 2025 earnings conference call of Techno Electric & Engineering Company Limited. We have with us today Mr. P. P. Gupta, Chairman and Managing Director, and Mr. Ankit Saraiya, Director representing the company. I request Gupta ji to take us through overview of the company quarterly result, and then we shall begin with the Q&A session. Over to you, Gupta ji.
Thank you, Suraj. Very good afternoon to all of you, and welcome everyone to discuss Techno Electric financial results for Q4 and year-ending 31st March 2025. Anything said on this call which reflects our outlook for the future, or that could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the industry and, in turn, our company faces. Let me highlight our performance. When we look on the Q4 2025, the total revenue of the company stands at INR 812 crores, up by 68% year-on-year, probably better than any of the previous quarters. EBITDA for the company stands at INR 102 crore, up by 74% year-on-year. The EBITDA margin is at 12.64%. The other income is INR 69.75 crore compared to INR 30.86 crore last year, up by 126%. The profit before tax is INR 167.18 crore compared to INR 83 crore last year.
The PAT is at INR 132 crore, up by 91% year-on-year, and EPS is at 11.42 per share. If we look on the whole year as the close of the year, the revenue stands above 2,400 crore, that is 2,402, up by 43% year-on-year, which is so far all-time high for the company. The EBITDA for the company is at INR 328 crore, up by 45% year-on-year. The EBITDA margin is at 13.66%. The other income is at INR 175 crore, up by 34% year-on-year. The profit before tax is at INR 485 crore, up by 45% year-on-year. The profit after tax for the company stands at INR 428 crore compared to INR 269 crore, up by 59%. The EPS is at 37.65 compared to 25 last year.
We have been getting compressed schedule due to delay in acquiring land parcels by our customers for setting up of the facilities, and they want their projects to be operational as per COD dates forming part of their concession agreements. They are ready to even incentivize us to achieve these compressed schedules. We are pleased to share with you that we have commissioned a 20-way 765/400 kV prestigious Sikar substation for Power Grid comprising 19 elements of transformers / reactors. That is equivalent to 3 GW of transforming capacity and 1.2 GW reactive of reactive capacity. A project of the Power Grid in a record time of nine months, first time in the country, which otherwise would have taken in the past normally two years or more.
Similarly, now we are bettering the timeline on the behest of Power Grid in setting up of a prestigious 33-way substation of 765/400 kV at Dausa, comprising of 28 elements of transformer and reactors, which are equivalent to three gigawatts of transforming capacity and another 2 GW of reactive capacity. This is a wonderful journey for the company, I'll say. A compressed schedule increases the productivity of the resources deployed, which includes mechanized construction equipment, skilled labor forces, and the cost of bulk procurement of local inputs, materials. The compressed schedule further helps in optimizing the establishment costs and thereby increasing working capital efficiency. This is now being practiced in other ongoing projects at Bidar, Halvad, Lakadia, Anantapur, and many more. During the year, we have successfully commissioned projects at 17 locations all over the country.
Apart from this, in spite of increasing the revenue, we did not let our balance sheet stretch in terms of the working capital requirement due to better capital management, focus on cash flows, and efficient utilization of resources. Additionally, we have been able to convert our efficiencies into cash. This is evident from the numbers that our cash flow from the operational results, which you may have observed, that the company is cash positive by INR 837 crore compared to a negative of INR 337 crore in the previous year. This was possible as we have been able to convert trade receivables into cash. There was hardly any increase of debtors compared to previous year, despite increase in revenue by almost 50%. The customers often spoke the performance, and this has gone a long way.
I'm further pleased to share with you that the current investment value, which is cash and cash equivalent, as of the year-end stands at around more than INR 2,500 crore.
That is about INR 220 or INR 225 per share. Techno has been able to garner the better operating margins consistently over the years in this space compared to peers. We have been able to convert the profits into cash on our balance sheet and have one of the efficient working capital management processes in practice. The reasons are simple but need to be practiced meticulously, like speed of execution, thereby ensuring timely completion of project, the timely production of receivables, including closing of the projects and realization of retention money, avoiding interest-bearing advance from the clients, better credit terms from the vendors backed by commitment to pay in time so that the cost of procurement is within acceptable limits.
Due to better working capital efficiency, we have been able to be a debt-free company since beginning.
We have never borrowed debt for our EPC business other than for our own asset deployment businesses. Apart from that, over the past years, five years, as you know, we have monetized most of the assets in renewable power, transmission assets, and have collected cash of INR 1,500 crores. But additionally, we also collected INR 1,250 crore out of the QIP, which we want to. We have a program of almost about INR 10,000 CR in hand to be deployed in next three years. Out of this, we have already deployed about INR 1,250 CR in the last two years as CapEx in our SPVs for setting up of data centers, including as data centers, AMI projects, and transmission projects acquired in TBCB mode, and also in execution in partnership with IndiGrid at Dhule, Ishanagar.
The company is pleased to inform that Chennai Data Center Phase One is nearly complete, and Edge Data Center at Gurgaon is ready for operations. We expect during the year to deploy Edge Data Centers at 10 locations and also deploy smart meters of more than a million in number, and we have planned to successfully complete substations of 765 by 400 by 220 kV level at more than 20 locations countrywide in EPC mode and for our own concessions. You will be happy to know that we are deploying 220 kV GIS substation in the highest altitude of the country at Ladakh and Kashmir at four locations, and our labor never vanished even during the Pakistan war. The patriotism was of so high degree seen in our labor force working very close to Pakistan border and China borders.
The order book momentum for bidding and order intake has increased in the second half of the year for the sector and as well as for the Techno. We have robust order book at around INR 11,000 CR as of March 2025, which is highest in the history of the company. We are L1 in orders worth INR 800 CR already. We have received orders worth INR 2,000 crore plus in Q4 itself, which takes the order tally for the year in total to more than INR 4,150 CR, and our guidance for the year was around INR 3,500 CR. We expect the order book momentum to continue, and the order intake in this year is also expected to be around the same level. This simply reflects we will have enough orders in hand to keep on the growth momentum for next two years.
Our board has already announced a dividend of Rs 9 per share, which should be to the delight of all of you. Building on the growth momentum witnessed in last two years, as you all know and as we mentioned in our last Q3 meet, that our monthly revenue of INR 75 crore in financial year 2023 is presently at INR 200 crore now. And this is further planned to be announced to INR 300 crore per month in the current year. That is the target of the company of INR 3,500-INR 3,600 crore this year. This confidence stems from our already achieved performance in last two years successfully. With this, the ratio of order backlog to execution will also come down to 3- 3.5, which is the industry norm.
In the meantime, the company will continue to grow up its strategic presence in data center space, and the total deployed capacity by the end of the year is expected to be around 25 MW and at least 50 MW by 2027. We are pleased to inform that Chennai Data Center has been considered eligible for deployment of AI-based applications, including clouds. India's outlook is very, very promising, continues to be promising. India's energy landscape is undergoing a significant transformation from historical sluggish energy demand growth over the last decade to now registering nearly double-digit growth driven by peak load targets, scaling from 260 gigawatts to an ambitious 400 GW by 2030 or latest by 2032. To bridge this demand supply gap, strategic investments are being channeled into advanced transmission systems, mostly at 765 kV, backed by STATCOMs, VSC, HVDC, where we enjoy a strong market position.
On the distribution front, massive smart metering rollout under RDSS and new reform-linked distribution system strengthening schemes will drive digitization, efficiency, and private sector participation, which may be another area of focus for us. The generation segment is also revived meaningfully with the government deciding to add another 80 GW of thermal capacity, but mostly through supercritical and ultra-supercritical technologies in place to have the emissions in control, opening up sequential opportunities on the balance of plant and power evacuation infrastructure as switchyards or grid connectivity to this generating capacity. Simultaneously, the data center ecosystem is undergoing a paradigm shift driven by AI, cloud, 5G, data localization imperatives. The market is expected to more than double by 2030.
Our investment in hyperscale and edge data centers in Chennai, Kolkata, and across tier two, three cities via RailTel are very timely and strategically positioned to be value-attractive and capitalize on this. We believe this convergence of energy transformation and digital infrastructure, I will again repeat this, we believe this convergence of energy transformation and digital infrastructure offers a multi-year high growth opportunity. Techno Electric is strategically aligned, technically equipped, and financially sound to scale alongside India's ambitious aspirations in both these mission-critical sectors. So Techno is very differently placed than many other companies in transmission line work. Let me give you a brief outlook or an opportunity sector by sector. The key drivers for the transmission sector are integration of 500 GW RE to grid needs almost 50,000 circuit kilometers of transmission lines, but more importantly is 433,000 MVA transformation capacity, all-time high in the country.
The National Electricity Plan envisages INR 9.2 lakh crore CapEx by 2022. The Power Grid has already announced a CapEx of INR 1 lakh crore in next three years, in ongoing three years with INR 1.75 lakh crore by 2030. In the finance budget, the finance minister in budget speech of 2025 said the government will incentivize the electricity distribution companies on augmentation of intrastate transmission capacity and amid efforts to improve financial health and capacity of power farms. Additional borrowing of 0.5% of GSDP will be allowed to states contingent upon these reforms. This would bring an estimated opportunity of another INR 1.5 lakh crore over next two years. The EPC opportunities in this segment. The TBCB model of projects will increase private participation continues.
The high-end technologies like 765 kV AIS or GIS solutions backed by STATCOM or VSC, HVDC will be the necessity to sustain this energy transformation and injection of renewable power in the grid. Interregional corridor strengthening, green energy corridors for RE evacuations. The market for Techno will comprise a bidding pipeline of INR 40,000 crore currently, out of which Techno's potential will not be less than INR 2.5-3,000 crore per year for next four years. We currently have orders worth of INR 7,500 crore in transmission segment, EHV transmission segment, and as you know, we also have two concessions in TBCB in Gurgaon and Gurkhagan, with a total revenue of INR 2,800 crore over the concession period, and also are executing two concessions in partnership with IndiGrid at Dhule and Ishanagar.
The various programs in the country on distribution side are RDSS scheme, which is called Revamped Distribution Sector Scheme, is 3 lakh crore plus. Reforms- linked distribution scheme of 16,000 CR, which is largely going to be implemented on PPP of the privatization model. Our focus area will continue to be grid modernizations like GIS, AMI, standards, as we are doing for DVC presently in the DVC command area. The smart grid deployments, loss reduction and power quality improvement solutions, advanced smart metering solutions where we are already executing about 2.5 million meters. There is another about a million, at least about 100 million more to be deployed over next two to three years. We will have a market share of almost around 1%-2% in this.
This offers us a high margin declaring O&M scope under Total Exports because the very concession involves CapEx plus operations that are driven discom transformations to manage their own supply side management, as you already know that we are executing now 2.5 million meters, which concessions we have won. We are expecting further concessions of another 500,000 meters or 1 million, 0.5-1 million meters per year basis. Thermal generation, we have already talked about 80 GW in the pipeline to be completed by 2030, which will facilitate both more of injection of renewable power and also facilitate peak demand of 400 GW. Focus on supercritical and ultra-supercritical plants technologies, EPC scope on balance of plant, air quality control systems like FGD, carbon capturing, as well as ESPs of digitized and modern based on modern technologies to ensure acceptable emission levels globally to 14 mg only.
Similarly, this opportunity is also expected to be no less than almost about a lakh crore over seven years. In the renewable generation side, I will say there will be more opportunities in the solar plus storage, hybrid systems, wind farm EPCs. We are yet to deploy another about 300 GW in the balance six years. Government may plan even RE parks or floating solar parks. The EPC opportunity is 3- 4 lakh crore. The budget for 2026 significantly increased allocation to MNRE by 39% in this segment. On the FGD side, I will say that the NITI Aayog has come back on its earlier report where they have given fresh dates to this sector, commencing completion from 2027 onwards progressively depending on the location of the generating plant.
This industry may eventually see a 5-10 GW per year scope, both from the private and state electricity boards. Our present order of INR 1,450 crore is progressing normally. Coming on data centers, the digitization and cloud services are key reasons for growth of data centers alongside developments like 5G. Major growth drivers for data centers in India are public cloud adoption, data localization policy, incentives, digital transformation, technology developments that is rolled out of 5G, AI, 5G, and VR increased adoption by the enterprise technology markets, IoT, big data, and cloud computing. All these are very progressive and promising. Ankit, would you like to take over now?
Yes, sure. So as everyone is aware, we are in advanced stages of completing our project of 24 MW data center in Chennai. We have incurred an investment of almost INR 450 crore in the project.
While we have faced delays due to regulatory and permitting approvals, also due to supply chain disruptions, but having overcome all of them, we are now very close to commissioning our first phase of Chennai, which is approximately 5.6 MW. We are in the final phase of testing and also onboarding a few customers as we speak. Our pipeline in Chennai data center is growing. We currently have a pipeline of almost INR 80-INR 100 crores. While having additional conversations with other cloud players and potential AI customers, the unique proposition that we provide to our Chennai data center is that it is designed for higher density of racks on average compared to the industry.
Additionally, being a water-cooled data center or the only water-cooled data center in Chennai and that region, we are uniquely placed to provide racks specifically for AI services or AI-related activities, giving us a unique position in the industry. We are currently engaged with multiple banks, content delivery networks, domestic cloud players, and receiving positive feedback from them. We have recently participated in an RFP by a global bank, and we hope that will be concluded in the next three to four months' time. Recent advancements in AI have obviously fueled the demand of data centers, but more precisely, the density of power required per rack. What earlier we used to practice on an average at six kilowatt or eight kilowatt per rack, now people have started talking 25- 40 KW per rack and going higher as we speak.
This requires substantially higher resources per data center, and data centers have to be designed to meet those specific requirements, which we are very well placed to provide. India AI Mission has recently commenced, and the first round of empanelment has been concluded, and we are hopeful that with more empanelment coming through in round two and three, we will have interest from multiple stakeholders to utilize our infrastructure as we call our facility AI ready. We are established and further establishing channel partners, distribution engine for reaching the wider market and as well as reaching global market. Coming to edge data center, we are aware that RailTel has awarded us with a concession to build edge data centers in 102 cities.
Last Saturday itself, we powered on our first edge data center in Gurgaon, which is a small capacity of 200 KW, but goes a long way because it's our first data center which has truly got powered on and appreciated by RailTel as well. We are hopeful that the capacity of 200 KW, at least 75% of it, would be utilized by RailTel immediately. We anticipate leasing out the remaining 25%, which is 5 racks, within three months. We have started execution of our second edge data center in Mumbai, which is close to about 50 racks, 450 KW of density. It should be completed hopefully by November 25 or maximum December. We are in discussion with large conglomerates to lease out the capacity immediately on commissioning.
We are also going ahead with discussion with a few hyperscalers for contracting at least four to five edge data centers in multiple locations across India. We have already shown our interest to RailTel to develop edge data centers in the city of Gandhinagar, Indore, and Bhopal, and we are hopeful of getting the possession of the land very soon to begin expanding our facilities in these very cities as well. We target to also start our execution this year in the city of New Delhi and Hyderabad as part of our edge data center concession with RailTel. For edge data centers, we have created an extensive network of channel partners and distribution partners, and we have started receiving active interest through these partners for occupying space within the edge data center ecosystem. We have also started execution of a data center in Kolkata.
We have finalized the master plan, and we have started with pre-construction activities. And very soon, we'll be applying for building plan approvals to begin full-fledged construction. In totality, we have a funnel of more than 100 crores, including Chennai and edge data centers, in discussion with multiple enterprise customers, whether they are cloud, CDN, AI, etc.
Thank you, Ankit. Overall, I would like to say that during the current year, we are targeting a top line of 3,500 CR and an EPS of no less than 50 rupees. In the year 2026, 2027, our target will be around 4,500 CR with an EPS of no less than 75 rupees. With this now, then we can allow the question and answer.
Thank you very much. We will now begin the question and answer session.
Anyone who wishes to ask a question may press star and one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sandeep Agarwal from Naredi Investment. Please go ahead.
Thank you, sir, for the opportunity. So the first question is regarding the period in various segments like a smart meter data center and small edge data center business.
You see, these two are different businesses altogether. Smart meter is a concession-based project where period is prefixed by the government itself. That they pay over 94 months. We call PMPM, per meter per month, post-commissioning.
And immediately on achieving set or go live, what they call, they pay us around 15% depending on the location of the project. That is how the reward is in the concession projects. Coming to data center is totally a market-driven activity, and it goes with the market dynamics. By and large, we anticipate a data center payback should be no more than five years in my view. But because the very challenge of growing and changing technologies, applications, usages, they are all part of it. Ankit, would you like to add something to it?
No, so I think you're on the point. The payback period for data centers is about five years. Yeah.
So follow up there. So per megawatt is a per megawatt revenue per annum is INR 11-12 crore. Is this estimated correct?
No, you can take it at around INR 8-10 crore.
INR 8-10 crore. Okay. So just another question is just bookkeeping. Want to know the detail of the current asset line item, which is INR 814 crore approx. What is the status of current assets?
Just detail of current assets, INR 814 crores. I think when you get the balance sheet, you will find the details in that. They are in the normal course of business. There is no exceptional in it. They keep in rotation with the execution as happens. There's just increase from last year, INR 250 crore approx. to INR 814 crores. So just want to know what is. You are asking on contract assets, basically. Right, not current assets. Contract assets. Contract asset is basically the investment in data centers and AMI or TBCB schemes. They are yet to be built out. That is what we call contract assets.
They are not capitalized in our SBBs. But worked on behalf of SBBs by the holdco in deploying them. So that is a CapEx, you can say, indirectly carried out by the company in setting up these facilities like data center for 500 CR by now, meters, another 400 CR by now. So it is that amount here.
Okay. Okay, sir. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. I repeat, participants are requested to ask two questions at a time. You may rejoin the queue for further follow-up questions. We take the next question from the line of CA Garvit Goyal from Nvest Analytics Advisory. Please go ahead.
Hello. Am I audible?
Yeah, you are audible, sir.
You are well. Good evening.
Good evening, sir, and congrats for the recent execution in Khavda. Sir, earlier you have guided for INR 3,600 crore revenue in FY 2026. I think in opening we asked, now you said INR 3,500 crore. So can you please clarify this?
No, I could not get INR 3,500 crore is INR 3,500 crore. Last phone call, I think you mentioned INR 3,600 crore. INR 3,600 crore is not a big issue between us. You take it 3,600.
I was just getting it right. Okay. So the guidance we have given, given the challenges like land allocation, and we are dealing with very efficiently. So how exactly do you plan to achieve this guidance? Which segment will contribute the most to this growth? And is it entirely from the existing order book standing today, or a portion of it will also be created via the new incremental orders that we expect in FY 2026?
So that's my first question.
Look, this role of land acquisition is often performed by the asset owners. It is not in our scope. Number one. Number two, our job starts once they hand over the land parcel to us. So most of these orders are already around three to six months old. And customers, as per our information, are fairly advanced in acquiring land parcels. And we have taken that into consideration already. But you must take into view that larger execution has happened last year. It will be same in the current year also, like 40, 60. In the H1 of the current year, it will be 40%. And H2 of the current year will be 60%. So it will go in the same manner.
And which segment will contribute to this majorly out of the order book?
So it will all be from transmission, FGD, meter deployment.
All will be element of it. By and large, if you want to take the breakup, you can take transmission will be 2,500 CR, transmission and distribution. FGD 500 CR, meter will be another 500 CR. One million and plus meters will be deploying as anticipated. So total will be 3,600 CR.
Got it. Got it. Secondly, on the data center, like you earlier guided, Chennai data center was expected to be by March 2025. And similarly, Mumbai was to start construction in April and was expected to be commissioned by August 2025. But while you mentioned about Chennai, can you please update on why Mumbai data center is getting delayed now? And further, can you also confirm, like earlier we were speaking about revenue generation from Chennai plant or Chennai data center, particularly from Q2 this year? Now, that timeline is intact or not?
Ankit, would you like to answer?
Yes. Yeah. So firstly, we do expect to start generating revenue in Chennai from Q2 this year. And so that is pretty much expected. But Mumbai never got delayed because Mumbai was never within our plans earlier. We have very recently got the possession of a location in Mumbai through RailTel only about, you can say, three weeks back. And we have almost completed the civil work over there. And we are in line to commission a Mumbai data center by November. But it was something new that came up to us. It was not a planned location.
Okay. Got it. Got it. Thank you very much, Sir Ajay Mekdising. Thank you and all the best for the future.
Thank you. We take the next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello.
Yes, you are welcome, Deepak. Yeah, yeah. Thank you very much for this opportunity. So just I wanted to understand, I mean, in terms of from data center, what sort of revenue we are targeting for this year and next year, FY 2026 and FY27? And what sort of margin we can expect in data center?
You can take conservatively, let me put it. Our this year target will be about 100 CR. And next year target will be at least 300-350 CR. 300-350 CR.
And what sort of margin we can see here?
Generally, EBITDA is very high in these projects. I say you can take around 80%.
80%.
Yeah, yeah.
Okay. And the revenue that you have said in terms of 3,500 and 4,500, this includes the data center or is it over and above this?
You see, this year we have not included.
That is why 35 or 36 debate, rebate. You must have heard of your colleagues.
Yeah, yeah. And next year it includes up to 3,500 CR.
Okay. And so for next year, your FY27, your margins will be. You'll see a big jump in your margin, right, because of this data center? Absolutely. It should be. That is why I said which differentiates us from the other T&D players. Correct. And what is the general EPC margin range you look at? I mean, for this 14%-15%, is what general EPC margin?
Yeah, 14, 15. 14%-15% is assured. It should be at least better by 100 basis points over last year. And commodities have for the time being cooled down. But it depends on Trump and tariffs. We have to keep.
You're talking about margin in EPC, right? 15%-16%.
Yeah, yeah, yeah. It's all commodity pricing.
Supply chain is under pressure. A lot of exports are happening on the supply equipment now. And export prices are better to the manufacturers than domestic market prices. So all type of challenges are there. But nevertheless, our efficient and productivity will stand us out.
Fair enough. I got it. That's very clear, sir. I mean, that's very helpful also. All the very best to you. Thank you, sir.
Thank you. We take the next question from the line of Vikram Datwani from Nuvama Institutional Equities. Please go ahead.
Thank you for the opportunity and congratulations on a good set of numbers. Two questions from my side. Sir, could you please give us your expectation of consolidated EBITDA margin for the next two years, considering data centers will be revenue-accretive? So how much would that impact your margins positively? That is my first question.
My second question is on the FI27 EPS guidance. Just wanted to reconcile that INR 75 figure. Would that also include any monetization of assets or any arbitration awards that you're expecting, or would that be only from business and monetization will be over and above this figure?
Firstly, you see, data center is a new subject to us. Ability to set up, we have enjoyed. We have a great marketing team now. The numbers, we will be yet to be experienced, to be honest. We cannot say the EBITDA as a console. Overall, you can say as EBITDA is experienced at 20%, should continue on an overall basis at the company level. Whether it comes out of treasury will come down, and data center may add more to it. Definitely, we have not considered any monetization.
That will be over and above this in any case. But there are not great disputes we are carrying in our company with the clients. But something is often a way of life, I will say. That does not impact much financially. But there may be a significant collection out of the discontinued business. So that will be over and above this. Like it has happened in last year also. The EPS of INR 4 is happening out of the discontinued business. So we are yet to get some more money from Chennai than JETCO.
Got it, sir. Thank you.
Thank you. We take the next question from the line of Samarth Khandelwal from ICICI Securities. Please go ahead.
Thank you for this opportunity. Sir, congratulations on a strong quarter.
Sir, I just wanted to understand when we say one megawatt of a data center, so one megawatt on a 100% capacity generation, we say 8.7 million units of kilowatt-hours of electricity would be generated. So in how much time does a one megawatt, what would be the energy cost for a one megawatt data center?
Firstly, you see, these are energy conjunctive solutions, not generative. So please correct it. And when we talk of the revenue, generally power cost is a pass-through cost here. What we talk is only a lease rental of the facility provided to the user. Could you get me, Mr. Khandelwal?
Yes, yes, sir. I understood.
That is why eight crore per annum was seeming quite low. I just wanted to understand the energy cost. Energy is a pass-through. We may make some money, but we don't take it as a part of eight crore.
That is over and above this. Ankit, can you elaborate more to it?
Yeah, sure. So in terms of top line or expense, we do not consider energy as a revenue or an expense because it's largely a pass-through to the customer at the cost. So when we talk about a top line of INR 8-10 crore per megawatt, it is largely out of lease rental. It doesn't include energy. And neither would be expenses would include energy.
Thank you. Thank you, sir.
Thank you. We take the next question from the line of Prathamesh Sawant from Mirae Asset Capital Markets. Please go ahead.
Thank you for the opportunity. Sir, just wanted to understand if you can throw more light on the smart meter business. So what kind of CapEx outlay are we seeing over here?
How has our execution been so far and the outlook for the current year?
No, it is I will say that we are conservative and our engagement is very nominal. As I told you earlier, we are having presence of no more than 5% in this segment. To date, we have commissioned 700 meters out of a concession received for 2.5 million meters by us. And the deadline of the schedule is to complete by September 2026. In 2025, 2026, we are targeting to do a million meters more. So we are on track. On an average, we do about 400 meters in different pockets. And they are fairly in cost control.
Okay, okay. And sir, how are we funding this project? Anything of because it is CapEx intensive. So how do we plan to fund it?
You see, we are funding internally, number one, from our own resources. As I told you, we have already invested about 400 CR in this. And another outgo this year will be about 500 CR on this activity. So we have sufficient accruals. It is out of internal accruals, you can say, we'll be able to take care of for the time being. And once these schemes are complete and going, we may like to see the exit at that time.
Okay, okay. So we won't be raising any debt for this, sir?
Because we won't raise any debt. We'll be monetizing straightway.
Okay, okay. And we are expecting 15% IRR on this project, as you mentioned earlier.
Minimum. Maybe more.
Okay. And sir, a few calls back, you had mentioned about the Mumbai data center, which was somewhere near St. Regis. So just any update on that?
Ankit, can you?
Yeah.
As I mentioned, we've been handed over that location only about three weeks back. And we started the construction activities over there. The civil work is almost coming to conclusion. And we'll hopefully commission at least 400 kilowatt of capacity over there by November 25.
Okay, okay. And sir, just one last question to you. So if we look at data center per se as a separate entity, so what will be the line item below the EBITDA? How do we see the depreciation and the interest cost to that?
They are all internally funded as of now. So there is no interest cost per se. But definitely, there will be depreciation as per the norms.
Okay, okay, sir. Thank you.
Thank you.
We ask, ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. We take the next question from the line of Ravi Naredi from Naredi Investment. Please go ahead.
Thank you, Guptaji, to give me opportunity. Sir, we are awaiting investor presentation as you are a nice promoter. So we thought you'd give maximum disclosure, but we disappoint on this part. First of all, congratulations for ever highest top line and bottom line in history of company. Sir, CapEx plus investment plan in next two to three years in smart meter data center or small edge data center, what will be our CapEx?
As far as the current year, we have already given in my presentation that this year we plan to invest about INR 1,250 crore, which will comprise of INR 500 crore of meters and INR 500 crore in data centers and another INR 250 crore in our TBCB projects. Similarly, going forward over the five years, we have already said we'll be investing about INR 10,000 crore with a larger 80% belonging to data centers.
Okay. Thank you.
And this will be achieved by 2030. Maybe you did not hear me in my presentation. We said by 2030, we'll be doing INR 10,000 crore of CapEx, and 80% will be on data centers by and large, and we intend completing about 250 megawatt by then, including edge and hyperscale. And another, you can say, 1,000 in meters and 1,000 in TBCB assets, but depending on opportunities, it may change here and there.
But as of now, this is the program with the company.
Right. Sir, the company is now so big, we want to meet personally to you. So is it available? Are you in Kolkata or Gurgaon?
Sir, we are in both the places. For data center and smart meter, you are welcome in Gurgaon office. Ankit, it's there. And I'm in Kolkata. You are welcome in both the places.
Thank you very much. Thank you very much.
Thank you. We take the next question from the line of Shreyas Gathani from SG Securities. Please go ahead.
Good afternoon, sir. I had a couple of questions. So one was on the EPC. You mentioned in your opening remarks that to execute in the compressed timelines, you're getting additional incentives from customers. So what exactly are we seeing?
Is that in terms of better working capital, better payable receivables, or is it additional margin that we are getting? If you could just give some color on that.
You see, apart from all these benefits out of productivity or efficiency.
Hello?
Plea se stay connected while we rejoin the management. Hello everyone. Thank you for waiting. We have the management line connected with us.
Yeah, sorry, dear. There was a disruption.
No problem, sir.
Yeah, yeah. Can you repeat your question, sir?
Yeah. So my question was, you mentioned in your opening remarks that you're getting some additional incentives for executing in the compressed timeline. So I just wanted to get some color on that, whether it's better payable receivables that you'll be getting, or is it going to be in terms of higher margins as such?
No, it's an incentive with the additional payout over and above the contracted price, which is 5% of the contract value. But we account it in our books only as an annual receivable.
Got it. Got it. So would that mean we would see higher margins for this financial year because of this incentive?
Yeah, obviously. If it happens, yes, for that portion of the top line.
Got it. Got it. So second question is on the data center side. So just wanted to understand the customer onboarding and customer acquisition cycle. So how long does it take once our data center is ready, if we have a customer agreement signed for them to get onboarded and for us to start generating revenues? So just wanted to understand the whole process.
So basically, once we've onboarded a customer, it can take anywhere between two to three months for them to move into the data center and for us to start generating revenue against that contract.
Okay. So is there any hardware changes that need to be done or?
No, it is just their own timeline for migrating the equipment to our data center and stabilizing them, and also to provision power for their requirement.
Got it. Got it. So for the Kolkata data center, for Chennai, we had to, I remember, last year also we mentioned that we were trying to get customers, but eventually we ended up waiting until the end of the completion. And now, even after we commission, it'll take two months. So is that something that we are looking to change, or is that how the industry is operating?
We wait until the whole data center is ready for us to start gathering customers? So you see, in this industry, it's difficult to onboard customers unless you are reaching completion of a data center. Because with the given options, a customer is always more comfortable moving into a commissioned data center, which is readily available. And most of the customers come out with their requirements only about three-to-four months in advance of their actual need. So for that very reason, most of the time, these activities start towards completion of the project and go on for at least six months before the capacity is truly leased out.
Understood. So just last question.
I am so sorry to interrupt, but may we request that you rejoin the queue for a follow-up question? Yeah, of course.
Thank you.
Thank you. Next question is from the line of Shrey Gandhi from CR Kothari Stock Broking. Please go ahead.
Thank you for the opportunity and congratulations on the great set of numbers. My question is regarding the CapEx outlay which you mentioned, INR 10,000 crore in the next five years. So how do you plan to fund that CapEx, and how much time frame are we going to looking at the fundraising part?
So presently, we are planning to do it all out of internal accruals and cash available with us by and large. And also, it will be supplemented by monetization of the completed assets to begin with the TBCB, followed with the smart meters. But data center, we'd like to hold on for a while. And maybe a bit of a debt in data center if ultimately called for at the SPV level.
Okay. My another question is on the FGD and smart meter side. Are we facing any slowdown in order intake for FGD, and what is the competitive landscape looking like in smart meters? Because it is a clustered segment, I think. So what is your take on it?
As I told you, probably we are one of the smallest players in this segment with the exposure of only 2.5 million meters among, you can say, about 12, 13 million meters in execution in the market. Maybe not 10, 100 million meters to my mind in execution by now. And we'll continue to focus only in the pockets where we are good to deliver on time and also able to deal with the utility properly.
We are not looking for a business ultimately more than another 2.5 million spread over the next four to five years. Overall, book size may be about 5 million meters by 2030 or 2028 or completion of the scheme.
Okay. On the FGD side, is there any slowdown in the order intake because of regulatory?
Regulatory was there. Government was a bit confused because the CapEx involved in setting up these solutions is very high. It's almost INR 1 crore per megawatt. That was a huge detriment to the government. Probably now government has waived it, and on a selective basis, they want to revise these, comply with these requirements on emissions on SO2 or NO2. The revised target starts from 2027 onwards. As we all know, the majority generating capacity is in private hands.
So obviously, the call has to be taken by SEBs and private because a lot of capacity has happened already in the central sector. Additionally, I will say that whatever new generation capacity is coming in market, 70-80 MW, it is all with FGD only. It is not without FGD at the greenfield level itself. So we are hopeful of this market to continue at least for the next 10 years, but in its own proportion.
Okay. Okay. Got it. And another question is regarding the depreciation for data center. You said it will be based on industry norms. So what will be the percentage if you can share the terms of gross block or maybe per megawatt kind of thing?
I think we are yet to discover that number. We will deep dive and find out.
Yet we are not ready with this number to speak because it will depend on the age of technology more than that, how you value it.
Okay. Got it. Got it. Thank you so much.
Thank you. We take the next question from the line of Sparsh from Indira Securities. Please go ahead.
Hello. Hello. How are you? Yeah. So my question is regarding the data center part. In the last quarter, you said that you are going to use an hello?
Yeah, we are hearing you, sir.
So in the last quarter, you said that you are going to use an OpEx model for the data center part. And the current guidance that you have given about the margin, I'm quite confused. Can you give some light on that? Ankit, have you understood the question?
No, Sparsh, your voice wasn't clear. I couldn't get the question. Okay.
In the last quarter, you said that you are going to use an OpEx model for the data center. And with the current data margins that you have given, it is quite confusing to understand how you will be generating an 80% effective with using an OpEx model.
Can you tell me about it? What do you mean by OpEx model? I'm not clear what was said in the last quarter, but most of the projects are undertaken as a CapEx right now, and it will be capitalized in the books of the respective SPV.
Okay. Is it that in the last quarter, you said that the infrastructure that you're going to use for the data center part, it is going to be in the operating expenditure part?
No, but it will be funded through either project finance or it will be funded through any other medium.
Okay, and the data center infrastructure?
Just the OpEx model systems are all in concession contracts. Somewhere we are confusing. I have always maintained your smart meter and your TBCB projects are OpEx model. They are concession. The government ensures you payment month on month and per meter basis or per month of use basis. But data center is your own asset, and you have multiple users deployed in the data center within the overall capacity. So that is a CapEx model only.
I understood, sir. It's just that the kind of services that you sell in the last quarter, it was quite confusing with how it is going to be for the infrastructure part.
Because right now, as you said, that as a customer, it is going to take two to three months with their requirements about infrastructure and the power details, and we are just ready with the highest density, so it is fine.
You see, there are multiple types of practices in this sector. It is custom to build to custom use, general purpose use, and then made to use of respective occupiers, and depending on the application, the changes have to be incorporated either by the asset owner or by the user. Ankit, can you elaborate more on it?
No, so first, if your question is about why does it take two to three months to onboard a customer, it's generally because you have to provision the power and infrastructure specific to the customer's requirements.
So once a customer contract has been signed, it can generally take the customer to migrate his equipment to your data center about a couple of months and possibly about a month for us to just prepare the data center for his equipment to come and get established. But that doesn't require any additional CapEx. It's part of the operations.
Okay, sir. And can you tell me about the rate scale project?
I'm so sorry to interrupt. May we request that you rejoin the queue? There are several other participants waiting.
Sure, ma'am. Thank you so much for the opportunity.
Thank you. We take the last question from the line of Ashish Soni from The Family Office. Please go ahead.
So this monetization model for RailTel, I'm not clear because you said this Gurgaon edge data center, 75% is used by RailTel, but I think Mumbai you're saying it is other customers. I'm not clear on that. So what's the agreement with RailTel on that piece?
The agreement with RailTel is a revenue share model. With whatever revenue the data center generates, a percentage of that revenue goes to RailTel, and the remaining of it comes to us through an escrow account. So the revenues will largely come out of any customer. It can be a third customer, whether a private company or a public company or RailTel itself. So the data center is open to service all kinds of customers. It is not that RailTel is assuring a revenue or is going to lease the space on a back-to-back basis.
Okay.
And other thing is, based on your learning from Chennai Data Center, what are the learnings you want to apply to Kolkata and the subsequent data center in terms of one is cost? Because I think I heard it was almost INR 450 crores cost. And in terms of technological advancement in this area, if you can give some qualitative aspects, what's the learning you want to apply for Kolkata and subsequent data centers in terms of cost and technical advancement in this field?
If you ask me, I think customers in this industry push you for technical advancement because of the unique use cases that they come up with.
In the last one and a half, two years, we are seeing a lot more demand for AI-related services from customers, which is pushing us to deploy technologies which can accommodate very high-density racks, any racks going above 25 KW, and on average, about 50 KW, which in Chennai we had designed at 10 KW, though it was even at that time, or even today, a 10 KW rack is considered a higher-density rack compared to what it used to get designed. One is that one may have to plan for higher-density racks to get accommodated. I would believe that we should be able to bring down a project cost by five-odd% in comparison to Chennai.
Regarding approvals, I think it got delayed. Anything on that we can improve?
I think that is something which is more like a post-merger overview here.
One cannot do much beyond the particular point. Yeah. So these are largely process-driven, yeah?
Okay. Thanks a lot.
Thank you. Thank you. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to Mr. Guptaji for closing comments.
Yeah. Thank you, ma'am. I thank everyone for joining the conference call. If you have any questions left with you regarding our performance, please send us an email, and we'll be happy to revert. The contact man is Mr. Vishal Jain in our office, whose details are available on our website. And similarly, if you happen to be either on Kolkata or Gurgaon side, you are welcome to drop in our office for a personal interactive. And definitely, we are very, very grateful and appreciate your participation. And thank you very much.
On behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.