GE Power India Limited (532309) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the investors conference call hosted by GE Power India Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Puneet Bhatla, Managing Director of GE Power India Limited. Thank you, and over to you, sir.

Thank you, Devin. Thank you. Good evening, ladies and gentlemen. Thank you for joining us today, and thank you for your continued trust and support in GE Power India Limited. Joining me on this call is our Chief Financial Officer, Mr. Rahul Rojal. We are here to share our business progress, our turnaround journey and the strategic rationale behind the proposed demerger of the Durgapur business. Our objective is to communicate clearly how the company has evolved over the past 2 years and why we believe this proposed step is in the long-term interest of the shareholders. Can I request to go to the next slide, please? Over the last 2 years, GE Power India has taken a series of deliberate and disciplined actions to strengthen the business. Since 2024, we have focused on high-margin, cash-accretive opportunities with faster cash conversion cycles. We have restructured the business, frozen the commercial strategy around the services, expanded our reach in the third-party fleet or what we call it as other OEM segment and increase our presence across international markets, including Saudi Arabia, Turkey, Australia, UAE, Malaysia, Indonesia and Morocco. In parallel, we have undertaken important portfolio actions such as hydro and gas slump sale, the BHL settlement and now the proposed demerger of Durgapur business. Can I request for the next slide, please? These initiatives have materially improved the company's financial position. Over this period, GEPIL has delivered a significant increase in the network, a substantive improvement in the bank balance and a major reduction in outstanding bond exposure. EBITDA has improved meaningfully from negative levels to positive profitability and the company's market capitalization has strengthened significantly. We have also seen an improvement in our long-term ICRA credit rating to BBB+ with stable outlook as of June '26. The declaration of dividends in 2026 further reflects the progress made in restoring financial strength and stability. While quarterly report captures the progress, demonstration of true transformation is by sustained momentum over multiple years. Since the fiscal year 2024, we initiated a series of hard disciplined prices. We stopped chasing volume for the sake of revenue and began chasing value for the sake of profitability. This discipline has been the bedrock of our recovery. Consider this trajectory of our balance sheet as detailed in our uploaded slides. We have seen our network grow on more than eightfold in just 2 years, climbing from INR 57 crores in March 2024 to INR 483 crores by March 2026. This is not an happenstance. It is a result of a deliberate cash-accretive strategy. Similarly, our liquidity position has shifted from a deficit of INR 66 crores in 2023 to a robust INR 880 crores by March 2026. And 18-fold improvement in our cash position that provides us with the ability to maneuver in an unpredictable global market. Most indicative of our turnaround is our deleveraging story. We have shed INR 1,364 crores in bank guarantees exposure over 2 years and [indiscernible] our capital from historical burden. Our EBITDA, which once reflected a loss of INR 251 crores in financial year 2023 has crossed into positive territory reaching INR 277 crores in FY '26. This is just not a recovery, it is a renewal. Our credit rating elevated to BBB+ stable by ICRA which stands as a testament to this financial stability, culminating in the declaration of our dividend in 2026. Can I request for the next slide, please? Our core services business remains central to our future. The order booking trends clearly reflects this momentum. Order bookings have grown from INR 299 crores in 2021, 2022 to INR 734 crores in 2025, 2026, representing a CAGR of approximately 25%. In FY '25, '26 alone, we delivered around 34% overall order booking growth in core services compared to the previous year. We are also seeing strong progress in other OEM segment, where order growth has increased from around INR 162 crores to around INR 322 crores. This demonstrates the strength of our services-led business model and our ability to unlock sustainable profitability and cash flow. Next slide, please. Let me turn to the Durgapur facility. The Durgapur facility in West Bengal has played an important role in the manufacturing and supply of critical power equipment, including power boiler components, pressure vessels, piping and the coal mill for thermal power plants. It includes both industrial factory units and our residential township spread across approximately 661 acres of leasehold land. However, in recent years, the factory utilization has become limited largely to service work and noncoal activities. During the last 2 years from 2023 to 2025, there has been significant underutilization of its capacity, and this has resulted in an average loss of approximately INR 27 crores per year which has been booked in GEPIL. Given the situation, GE Power India Limited evaluated multiple options, including retention of the factory as well as demerger of Durgapur business. The key objective was to simplify GEPIL's portfolio by exiting an underutilized asset and sharpening focus on business that are better aligned with our growth and profitability. After careful evaluation, we believe the proposed demerger is the right path forward. Next slide, please. Under the proposed scheme of arrangement, GE Power India Limited will demerge the Durgapur Business Unit to JSW Energy Limited. JSW Energy is an established Indian public listed energy company and a well-recognized name in the sector. We believe that the acquisition of the Durgapur facility by JSW Energy will help ensure better utilization of the facility, particularly in the view of broader demand outlook for the Indian power industry. Upon sanction of the scheme by National Company Law Tribunal, the business will transition on a going concern as is where is, retrospectively effective 1st July 2025. This demerger is designed with a strong focus on maximizing shareholders' value. First, shareholders received a clear and direct entitlement. For every 139 fully paid equity shares of GE Power India Limited, shareholders will receive 10 fully paid equity shares of JSW Energy. This entitlement ratio has been rigorously evaluated by third-party independent valuers and has received a formal fairness opinion, ensuring the scheme is equitable for all the shareholders. Second, shareholders' existing number of shares in GEPIL will remain unchanged. In the other words, shareholders preserved their equity ownership in GEPIL while also getting direct equity participation in JSW Energy. This is an important feature of the transaction as it allows shareholders to participate in potential value creation from the Durgapur business under JSW Energy without dilution of their current position in GE Power India Limited. Third, the transaction brings strategic agility to both the businesses. It enables Durgapur undertaking to pursue its own growth trajectory under JSW Energy, while allowing GE Power India Limited to further streamline operations and accelerate its core services strategy. Can you go forward to the next slide, please? We also recognize that investors may have questions regarding continuity of the manufacturing and the fabrication support after the demerger. Let me address this clearly. Management does not expect any disruption to the manufacturing and fabrication support for the core services business. A 5-year manufacturing services agreement with JSW Energy has been put in place to secure [indiscernible] capacity at a pre-agreed schedule and pricing. At the same time, concurrent efforts to establish an independent supply chain are progressing very well, with full supply chain independent targeted to be achieved soon. This phase transition is intended to protect order execution, maintain service delivery commitments and build a resilient top long-term manufacturing ecosystem. To illustrate the shareholders' value proposition more simply, if a shareholder currently owns 139 shares of GE Power India Limited, that shareholders will continue to hold the same 139 shares after the demerger also. In addition, based on the approved share entitlement ratio, the shareholders will receive 10 shares of JSW Energy directly. This means reserved ownership in GEPIL, additional ownership in JSW Energy and no dilution of existing GE Power India Limited stake. In summary, the proposed demerger is a strategic step that supports portfolio simplification, sharper operating focus and enhanced shareholder participation. It addresses the challenge of an underutilized asset, supports long-term operational continuity and create a framework for both GE Power India Limited and Durgapur business to pursue more focused growth in their respective areas. The Board of Directors has unanimously approved this resolution and we invite shareholders to exercise their discretion to vote on the scheme to help enable a smooth and timely transfer process and position both the entities with the focus and agility needed in the evolving energy sector. Thank you once again for your confidence in GE Power India Limited. We remain committed to transparency, execution discipline and long-term value creation for all of our stakeholders. If you have any questions, please write to us at Investor Relations mail ID of the company. Thank you very much.

Thank you, members of the management team. On behalf of GE Power India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.