GE Vernova T&D India Limited (522275) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GE T&D India Limited Fourth Quarter Ended 31st March 2022 for the Financial Year 2021/'22 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Suneel Mishra, Head of Investor Relations, GE T&D India Limited. Thank you, and over to you, sir.

Thank you, Mike. Good day to all of you. Welcome to today's conference call with the GE T&D India Limited management team. This conference call has been organized to present and discuss audited financial results for the fourth quarter and the financial year ended on 31st March 2022. Now let me first introduce my management team available on this call. We have with us, Mr. Pitamber Shivnani, Managing Director and Chief Executive Officer. We have with us Mr. Sushil Kumar, CFO, Whole-Time Director. We have with us Mr. Sandeep Zanzaria, who is our Commercial Leader. We have with us Mr. Mariasundaram Antony who is the Projects Business Leader. We have Mr. Manoj Prasad Singh who is the Company Secretary. And we have with us Mr. Anshul Madaan, who is our Communications Leader. Please note that this conference call is scheduled up to 5:30 p.m. I hope you would have received the analyst presentation and the same has been uploaded on our website. I hope you have also read the disclaimer as per Slide #2. I would now request Mr. Pitamber Shivnani to begin this conference call, highlighting key events of the quarter and the year. Thereafter, Mr. Maria updating us on operations. Then Mr. Sandeep Zanzaria will take us through the order book and the T&D grid market. Lastly, Mr. Sushil Kumar will present the financials. I now invite Mr. Shivnani to begin the conference with his opening words. So over to Mr. Shivnani.

Thank you, Suneel. Ladies and gentlemen, good afternoon. Thanks to everyone for joining us today. We hope you and your families are healthy and safe. 2021 wasn't an easy year for us, majorly because of 2 reasons: first, the continued impact of COVID; and second, its contribution to supply chain disruption and commodity inflation. Just when we thought the pandemic was behind us, the second wave of COVID hit us hard in 2021. However, even during these turbulent times, our teams kept on delivering. And for that, I would like to thank our employees who have been tirelessly delivering for our customers and have been supporting them through their greatest challenges. I continue to be grateful to their extraordinary commitments. Before we share the company's update with you, I would like to take this opportunity to welcome Johan Bindele, who has been appointed as a Director to the Board of GE T&D Limited with effect from 1st of June 2022. He has fill in the casual vacancy post due to resignation of Rajendra Iyer. Johan has more than 25 years of experience in energy industry, which includes leading large projects in India, Nepal, Sudan, Switzerland and the U.S. In his current role GE, at Johan is grid integration and AC system teams at GE's grid solution and manages a global team of 2,000 employees, spread across over 50 countries. Coming back to the company's update. During the year, we contributed to demonstrate our operational excellence by commissioning 21 AIS and GIS substation, strengthening the nation's transmission network and adding new capacity into the grid. This includes commissioning of 765 kV gas-insulated substation for [ Bhuj ] Phagi in Rajasthan. This project is a major milestone for the company given the complexity related to current and weather involved. We have Maria, our ACS leader, with us today. He will share further project updates with you. After the slow start to the financial year '21/'22, when the opportunities started to uphold in the market, our competition were brutally intensified, pushing many companies to pick orders on a low margin. However, we continue to stay selective in order booking and kept our focus on long-term profitability. On financial front, our overall performance was primarily impacted due to a steep increase in commodity prices. But we stayed focused on cash and reduced borrowings. Sandeep and Sushil will cover the orders and financials in detail shortly. Lean continues to drive culture change in the company. We are continuously working to reduce our cost wherever possible. Our teams are acting with humility and leading with transparency and delivering with focus at every turn and are doing their best to deliver favorable results. GE T&D continues to play a critical role in solving for the challenges related to affordable, reliable and sustainable energy to meet India's energy increasing demand, which is expected to double over the next 20 years and support customers in achieving their net zero emission. This includes breakthrough automation technologies as well as equipment and software that builds a more efficient and resilient grid. As a leader in innovation of modern grid solutions, we will continue to work closely with the government and our customers to implement solutions that will help India accelerate in its energy transition journey. This week, we are participating in Distributech 2022 organized by IEEMA in Bangalore from 25 to 27 May. You can follow the updates on the companies as well as IEEMA social media handles. As of March 2022, and we have an order backlog of over INR 27.2 billion. With that, I will request Maria to provide further insight on the operations during the quarter. Over to you, Maria.

Thank you. Thank you, Pitamber. Good evening, ladies and gentlemen. It is my pleasure to really walk you through the operations in terms of the commissioning, which we did during the quarter. And we continue to make strides in terms of our delivering on the evacuation infrastructure, which is critical for our customers. And I would like to walk you through some of the major critical commissioning, which we did during the quarter. And I will kind of walk you through the different -- across the different regions within the country as well as within the South Asia region. So talking about North, North region, I think we commissioned HPPTCL, Himachal Pradesh, Hatkoti I think, which was commissioning of our 220 kV GIS base in Hatkoti. We have had significant engagement with HPPTCL, and this is definitely one of the continued progress in that area. Second, I would say on the North, Andhra region, which was HMEL, Bathinda. I think HMEL, Bathinda, we commissioned 400 kV 12 GIS base along with the transformers. This is also another important, I think, reference milestone for us in terms of delivering for our oil and gas customers in the region. And then we also, on the north, additionally, we also commissioned Adani, Mohindergarh substation in Haryana where we actually did the commissioning of the Damodar Line 1 GIS Bay and Line 2 AIS Bay for 400 kV series reactor business. This is an important technology. And definitely, we're very proud to be playing an important role in this technology for our substations in the country. With respect to the recent East, at the East region, we commissioned 3 substations in the East, WBSETCL West Bengal, Manbazar, where we did the full commissioning of the 132 kV, 6 GIS bays and 33 kV 15 GIS bays along with transformers. We also commissioned in Odisha, Hirakud substation commissioning where we commissioned 132 kV GIS bays and 33 kV GIS bays, along with transformers. And then definitely, our continued progress in Bhutan continues to be there. We actually commissioned the BPC Samcholing Phase 1, charging of our transformers along with the distribution panel. So definitely, we continue to make progress in Bhutan with respect to our execution there. Specifically on West region, we had one major substation GETCO for our customers in Gujarat, GETCO Shapar, very big substation where we commissioned our 400 kV 12 bays of GIS and 220 kV 15 GIS bays. And then on the South, we had done the Tuticorin, Power Grid Corporation Limited Tuticorin substation commissioning of the Tuticorin substation where we had 400 kV 2 bays as well as 220 kV 2 GIS bays extension. So we continue to make progress, I think, in terms of delivering on the energy transition for the region by setting up the critical evacuation infrastructure for our customers, and it was definitely a busy quarter for us in that respect. With that, I hand it over to Sandeep to walk through the order journey for GE T&D India Limited. Over to you, Sandeep.

Thanks, Maria. And if you look at the order book side, it was compelled to be a muted quarter and the overall year was down by about 5% as compared to 2021. The TBCB opportunities, which were there as kind of very few got materialized during the quarter, and we have been able to take some of them. Otherwise, the pipeline has primarily getting shifted, and we expect now the next year to be a very heavy TBCB year. So the market looks to be much better. But if you really look at last year, the lower market comparatively and the price pressures and cost challenges. As Pitamber stated, we decided to go for selective orders only. So the quarter, we were down by about 10% quarter-to-quarter. And for the year, we were down by about 5%. The major achievements were from the new, this is just -- they have done 2 TBCB projects. So this is the second project, which we have taken from them for constructing the Gadag Substation. And of course, on GIS side, strengthening our position in Gujarat, we have taken the 400 kV and 3 substations of 245 kV from [ HMS ]. So that's strengthening our position in terms of installed base in Gujarat. And from KPTCL, we took the automation package of LD. We even made across the various substations to supply [ interpreting ] long-term mission into working substations. Maybe let's conclude in terms of Tata, who have been -- that have acquired the DISCOM and now they're going for modernization. So the ADMS control center for the DISCOM has been done by GE T&D India and the [ Bharti ] Telecom equipment packages for Nampur has also been won by us. And apart from that, we have won multiple export orders to the tune of INR 125 crores or [ 1,241 MILR ]. So I now hand over to Sushil for the financial updates.

Thanks, I'm Sushil. Moving to financials on Page 6 of the presentation. Our results for the quarter are quite subdued. So the year and the quarter was quite challenging. In terms of revenue, we did about INR 662 crores of revenue, compared to INR 904 crores in the last year same quarter. This was mainly due to the phasing of the project and lower backlog we had. Similarly, on a 12-month basis, we did a revenue of INR 3,066 crores, which was 11% lower than INR 3,452 crores that we had in the last year. In terms of profit before tax and exceptional items, the quarter number was a loss of INR 145 crores compared to a profit of INR 45 crore -- INR 49 crores in the last year. And on an annual basis, we had INR 180 crores of loss before exceptional items compared to INR 85 crores of gain in the corresponding last year. Including the exceptional item, we had a loss of INR 35 crores compared to a profit of INR 27 crores in the quarter 4, whereas for the full year basis, we had a loss of about INR 70 crores compared to INR 89 crores of profit in the last year. During the year, we have further consolidated and improved our financial liquidity. We debated about INR 80 crores of net cash, which helped us in the reduction of net debt by INR 80 crores. So end of the year 2022, we had a net debt of about INR 81 crores. Moving to Page 7 of the presentation. This is a detail about the split of orders and revenue and backlog as now we have started presenting every quarterly update. So during the quarter, we booked about INR 550 crores of orders, of which INR 124 crores of orders from export market. And about INR 425 crores of orders from the domestic markets. Whereas on a financial year basis, we booked about INR 2,166 crores of orders, of which INR 700 crore were export orders, representing 32% and the balance, 68% of orders were from domestic markets. On the revenue front, on the quarter, we had INR 663 crores of revenue, of which 32% was from export and 68% of the revenue from the domestic market. In revenue, our net full year financial basis -- financial year basis, the export revenue came at around 27% at 518 -- INR 519 crore, and the 7 -- 15% of the INR 366 crores of revenue was from the domestic market. End of the financial year, we have a backlog of INR 37 billion, of which 61% is from the private segment customers, about 18% of the backlog represents INR 661 crores is from the [ sentry ], utilities and public sector undertaking. On the balance, about 21% is from the [ studio ] operating. So with these financial updates, we will now open up for the questions.

[Operator Instructions] We have the first question from the line of Bhavin Vithlani from SBI Mutual Fund.

So my first question is on the gross margins, wherein we saw an all-time low of about 14% raw material to sales increase to 86%. Like we highlighted in the third quarter, there were some one-off provisions, which we took in terms of loss orders of 7% of revenues. Was there something of similar sort in this quarter because of the increase in the commodity prices?

Yes, Bhavin. Unfortunately, the commodity prices moved further up during the quarter. And this quarter also, we have 2 significant items in the gross margin, which basically brought the gross margin to a lower level of 48%. The first one being the commodity price increase. Overall, we had about INR 34 crores, INR 35 crores of further commodity price impact. And the second being, during the quarter for one of the contracts, we had to reascertain the cost to complete due to the change in the technical and other requirements of the project. And that had about INR 55 crores of impact in the P&L for the quarter. So these are the 2 major exceptional or maybe we can say significant charge for the quarter that we had. On the commodity prices, last couple of days, there have been announcements by the government, the one being on the GST; the second being the export of the commodities. So we hope that with these, the commodity prices will either stabilize or be softer up in the subsequent quarter.

Sure. So had this impact not been there, what would have been our gross margins in the quarter?

So these 2 items that I mentioned are about INR 90 crores, roughly INR 90 crores. And there may be another, let's say, INR 15 crores, INR 20 crores of other impacts on various businesses. So we had about more than INR 100 crores of impact during the quarter on various projects, mainly these 2 and few other reasons. If the INR 100 crores, let's say, broadly a date on a revenue of INR 662 crores, which what, 15% of the hit on the gross margin. Excluding these items and the charging during the quarter, our gross profit would have been in the range of 29% to 30%.

Sure. So could we expect that this trend of 29% to 30% would then commence from the next quarter onwards, assuming commodity prices remain as is, where is today?

Yes. So as we have been communicating in all the previous calls and today also, generally, when we take in an order based off their selectivity, we are not very aggressive in taking orders at any type of division. Because over the last couple of years, we have in the -- this pumping the mission, not being favorable to the supplier to our company, impacting the profitability significantly. So we have been selective. And while remaining selective, we target about 29%, 30% asset gross margin, maybe I'll take a higher range of 27% to 30% as a gross margin at the time of booking the order. If the commodity prices remain same and the challenges in a couple of periods that I talked about, that did not happen. Or let's say, broadly, the margin valuations do not happen because of unfortunate circumstances, the orders that we take, we aim at delivering at 27% to 30% margin range.

Okay. The other question is on the outlook for the orders. Now this is the second year in a row where our order flows have actually been lower. And in the opening remarks, Sandeep mentioned about this year could be a better year in terms of bunching up of orders for TBCB. If you could just give us what is it that you see in fiscal year '23 in terms of the total market opportunity? And what was the total market opportunity in fiscal '22? Because previous year, you mentioned it was about INR 16,000 crores. So what was the total market opportunity in '22? And what do you expect it to be in '23? And there were a couple of large HVDC orders also anticipated in our earlier communications. So where are these projects currently?

Bhavin, first of all, as respect to bid market conditions, we expect at least as compared to '22, '23 should be at least -- and maybe about 15%, the market will be more. This is our expectation because of looking into the list of TBCB pipeline. Today, for example, [ Corridor ], which has emerged as one of the hot build of renewable projects. So there in TBCB, we have multiple projects and apart from, not only the transmission side, even the developers were going to put the project there whether the GIPCL (sic) [ PGCIL ] or the GCI core, Adani or NTPC, these customers also would be coming out with the evacuation substation of their renewable plant and been looking into the large capacity of the plants and the acquisition of substations will also require 400 kV there [ for ] cushion. And we -- if you really look at the conditions, environmental conditions, everything is going to come in the form of GIS. There will be no AIS. And this year, we would also -- we are also expecting shortly the resolution of the [ GIB ] issues also. So the TBCB pipeline, which is already in place for Rajasthan projects would also start undergoing through the reconstruction and then will also be available for the development accordingly, the EPC players and the manufacturers as well. Also for the HVDC project, the final bidding for the Mumbai project has happened. The final bids have been submitted. The results have not yet been declared because it is still under final evaluation. And the government, as you know, is already -- government engagement that powered from the Leh-Ladakh project with the various bidders of HVDC. But Leh-Ladakh is not going to be like '22/'23, but it would be more like '23/'24 project. Because normally, a project of that size would take after the tender will come -- will take minimum 8 to 9 months for it to get decided. So I think from this year, and I'm -- don't assume this is going to be a project. And for the next year, we expect the name of that to be there.

Sure. So and what was the total market ordering pie in fiscal year '22. In '21, you mentioned it was roughly INR 16,000 crores or maybe you can correct the numbers if I'm mistaken.

It was INR 16,000 crores only. And for example, when we really look at '21/'22, we are looking at a pipeline of close to about INR 18,000 crores or similar to that.

We have the next question from the line of Rahul Modi from ICICI Securities.

Sir, just a couple of questions. Just taking cues from the reordering in the Green Energy Corridor. Sir, what is the opportunity like under the RDS scheme? Because recently, we believe around 6 to 7 states have signed up for the scheme. So if you can throw some light on that? And the second question was more on within our order book, sir, how much are the older contracts which need to be realigned in terms of the cost increases? And if most are done already?

I'll answer the second question first. Then I'll let Sandeep to take on the question on the order bookings. As a part of our accounting policies, all the costs up to the date of close of the quarter are considered as per the accounting guideline. So -- which means that the commodity price increase was any such technical requirement or other cost or paid requirement of any contract as known and being rolled up to the date of 31st of March have been accounted already. What we do not know and can impact in any further, risk and opportunities that come are they which may be dependent on internal and most external factors. However, as I said in the earlier question to Bhavin, given that government is taking various actions to controlling inflation, control the significant impact of the commodity prices on real sectors of the economy, which was represented by the positive move in terms of interest rate, GST and other export-related restrictions. We hope that now the prices should stabilize and hopefully, there should not be such a significant impact in the future quarters. However, that is -- so our expectation and anticipation. But given that there is a lot of geopolitical and other uncertainties in the last couple of years, which are beyond the imagination of any organization. Like any uncertainty, any such incumbent issues that can impact the backlog. But as of now, 31st of March, all the loan charges have been taken as per the accounting guidance. That's second question. On to the next question.

So Rahul, I think you're talking about RDS schemes, yes, we know that 6, 7 states have signed up, but our expectation is that this year, which is '22/'23, probably we expect a decision making by 2 or maximum 3 states because the process of identifying the opportunity w6hen making the DPR, making the specifications, floating and then finalizing. So normally, when you start at -- sorry, normally when you start the process of -- once, for example, 2, 3 orders will get finalized and the process of specification formation, et cetera, will get more streamlined. So the initial pain or initial pain to come out with a tender and assessment and placing the orders is higher. So we expect about 2, 3 orders to be placed under RfS scheme for the year. And that will also be to the later part of the year, where we expect the pipeline from where decision-making pipelines are there between INR 300 crores to INR 500 crores for the RDS installment.

[Operator Instructions] We have the next question from the line of Sumit Jain from ASK Investment Managers.

So you've explained the lower gross margins. But what explains the jump in other expenses from [ INR 107 ] crores in the base quarter, it is Y-o-Y, versus [ INR 161 crores ] in the March '22 quarter?

Yes. So the other expenses also had a few onetime [ throwaway ], a few one-off items. I'll cover them now. So the first big one was about [ $180 million ] of change in the, let's say, increase in the VAT reserves that we created for the old litigations. The second item, which had a charge in this what was -- or in this quarter 1, rather, INR 75 million of free from the said penalty paid to one of our landlords for early termination of fleet. So this is in line with our objective to view the future goal. And we have -- we are trying to reduce the office space. The third big item is the bad debt frozen of about INR 140 million during the quarter, mainly on account of ECL charge, expected clear [ deep ] loss and doing it on a specific process. The fourth item is actually plus meaning, as of the end of the year, about INR 150 million of ForEx gain broadly has been reclassified to the other income. That's why it represented charge in the quarter, but it's not actually a real charge during the quarter. And the last being the reassessment of the warranty cost of about INR 100 million, sorry, INR 10 crores. So if I come up all these 5 items that I explained, that reserve true-up, the termination of what an MD [ term ] lead breakage, bad debt, ForEx and warranty costs, all this from at around INR 650 million of onetime specific charges during the quarter. As we have been communicating in the earlier quarter call, the annual number of INR 390 crores is a more representative number. We have been communicating about INR 100 crores per quarter being the other expense. And that's normal where we see to be the expense per quarter going forward, something around that INR 400 crores annually.

Sorry, I didn't get that number. You're saying INR 40 crores per quarter?

No, INR 400 crores per quarter, INR 400 crores on an annual basis. So if you look at the full financial year, other expenses INR 390 crores. That is a more representative number than just the number of quarter 4, which was impacted by the INR 65 crores of onetime reserve for exceptional value.

Right. But the earlier question, which was asked to you. So I have a similar question. Basically, what you've told us is that up to margin, and you've been telling us every quarter, whatever it is there, according to you, you would have taken it in the P&L. But is the P&L cleanup finally done for GE T&D? Like you've done a good job on balance sheet. Are all the legacy costs where you see there would have been some trouble in terms of bidding higher commodity costs, provisioning, warranty provisioning, all those issues, have they been taken out through P&L?

Sumit, the accounting policies and guidance required to be trued up, this is basis the...

I mean, it's that I'm telling you about the accounting policy. That is understood. I'm saying -- you have a view of your order book. There would be some legacy orders there, which is clearly evident from the regular P&L cost that you are taking. Is everything done in terms of that cleanup?

Yes, I was actually trying to answer the same thing. If you look at the commodity price draft, every quarter, there has been an increase. The commodities have gone up even in the last quarter starting January to March and even up to further up to May. Reason being the Russia-Ukraine war, let's say, a significant increase in some of the processed commodities. So you will not see in some of the commentaries as raised base metal price increase, but when it comes to the processed commodities and the specific commodities being used by the company, there it has been a specific increase. And also, there was a significant increase in the oil prices. Having said that, every business, at any point of time, has risk and opportunity. And given the assessment of the risk, all the loan risk which could impact, as the accounting policy, have been for a date up to the March 31.

Like you see, you take the example of CRGO of -- which is used in [ consumer], the price doesn't come out in the commodity prices like copper and aluminum. But the way the CRGO price has increased last year, and this year, first calendar year, first quarter is abnormally high. So what Sushil is telling, as on 31st March, complete order backlog is corrected.

That will get captured in gross profit margins and the line above that. What happens in other expenses every quarter? I need some explanation in terms of what is happening with your legacy order book.

Sumit, I have tried to explain the charging in the one-off items in the other expense to extent of INR 65 crores. And as I said, that full year number of INR 390 crores is more representative, because every quarter, then the other expense, which has been moving, let's say, positively or negative during the quarter, always communicated that INR 100 crores per quarter or INR 400 crore annually is a more representative number from the -- and in the projection or annual payment point of view. So I'd say that let's, for the time being, not consider this as a run rate, but consider INR 400 crores as a run rate for GE T&D.

Right. And what is the potential size that can come if one were to be successful in the Mumbai HVDC project? And similar is the question even for Leh-Ladakh.

Mumbai HVDC project, it is under evaluation, so we cannot talk about it actually. Because we have bidded, the results are not out yet.

And potential opportunity in Leh-Ladakh?

Leh-Ladakh will be a large bit. It will be basically lines plus HVDC terminal and all. So I think HVDC terminal may be in the range of $ 1 billion to $ 1.3 billion or so complete project actually. So including the part of the line. But basically, HVDC terminal will be in that range actually.

Just a small add-on, as GE T&D, we do not have the entire technology. So generally for these projected partners with our counterparts in U.K. or other entities across the globe. So the 1.3 [ billion ] opportunity that Pitamber talked about will be shared between our entity and the global entity because we'll have to bring [ GIC ].

Got it, and going back to...

That is one thing. And just one thing here, Sumit. Is $ 1.3 billion is dollars actually.

Yes, yes. And going back to our project SL, which was stuck. What is the status on that in terms of receivables and the monies that were stuck in terms of completion and further liability on us?

SL project as we collected the entire outstanding amount in, I think, in the month of June last year, if I'm not mistaken. So the outstanding amounts will be collected. The project was moved to a new owner of promoter, Adani. So far, we -- whatever shipments we have made, we have been collecting in time. So there has been no challenge of collection from the new promoter. Nonetheless, because the contract was on some price, so the commodity price impact we have to take on this project. I don't have the percentage completion of this project as of now.

Right. And the exports where we've done well, 32% of the order inflow, which are these markets? And within the GE construct as a group, which are the markets that we can cater to? So would they be just MENA and Africa, et cetera, and South Asia or you could even target developed nations?

So we actually have a number of markets which are allocated to us. So for example, the material even going to Australia, it is also going to Japan, complete Southeast Asia market. Many of the products, for example, the instrument transformers and circuit breakers, the sole supply chain is from the Indian factories. And then we also have the African market and apart from the African market, we are also supplying to Latin America also. So there are a lot of markets which are allocated to us. In fact, for 1 or 2 products, we are also looking at supplying to Europe because we have got the factories qualified in Europe as well. So this is primarily the markets which are allocated to us. I mean, that as well, is a typical market in Middle East, one, where they prefer the supplies to come from mostly Europe. So MENA, our presence from India is quite limited, but Africa totally supplied from MENA. Southeast Asia, Japan, Australia and Latin America.

Right. And one last question. A few calls back, I think we mentioned that we have a product that we market for [ IIoT ] in competition with, let's say, Siemens' MindSphere and ABB Ability. This is not GE product, but some other products. So what is the status there? Can we offer IoT solutions to our clients?

No, sir. Basically, in the digital space, wherever we are present on the transmission side, on the distribution side, we are not offering products, but then we have a different product, which is available with us. So if we are offering that to the clients who are getting the transmission and distribution. Of course, with that product, we are not present in the industry domain and all. For example, if I go to steel industry and all where we are not present, where the product is more aligned towards the transmission and the distribution side. So in the steel industry, if it's, for example, a substation, which is there, then our product is there. But otherwise, it's then otherwise for the industry, et cetera. Then the solution comes as prediction here.

And who is the owner of the IP of this product that we market?

[ Ideally ].

Okay. And what is this product called?

It just streamed out of mind. I'll just indicate it.

We have the next question from the line of Kunal Sheth from B&K Securities.

[indiscernible].

Mr. Kunal, we request you to go off the speaker phone. We can barely hear you on call.

Is it audible now?

Yes, we can hear you now.

Yes. I just wanted to check on this INR 37 billion of order book that we have. What is the execution period for that order book? I mean, how much of that is executable next year?

So this order book is a combination of turnkey project business plus the orders for business, where it is going to be 1 particular time range of this order book. But generally, as a trend, 70% to 75% of the order backlog that's executed in the next year. That has been the historical trend.

Sure. And sir, secondly, we talked about the Green Corridor orders in the domestic market. So, I mean, what is the status of those orders? And I mean, how soon -- do you think they will be postponed to the second half? Or we expect them to start putting in, in the first half itself?

Our assessment is that it is going to go to second half or maybe by the end of first half, like, for example, certain things would start coming in by August, September. But when the developers will win, they also take practically a month, 2 months to decide the order. So for the EPC or for the manufacture of OEMs, the decision-making will go to second half year.

We have the next question from the line of Bhavin Vithlani from SBI Mutual Fund.

The question is again on the exports. So we have seen INR 700-odd crores kind of run rate on orders. Could we see an increase in the run rate on the export because many of the other capital goods peers have been seeing a very strong growth on the exports? And especially a couple of quarters ago, we highlighted about a few projects, a few products are where GE T&D could become a sole source base for the global supplies.

Yes, I'm sure that we are going to increase exports in time to come because for some of the products, our factories are becoming sole suppliers actually. We are exporting a lot of high-voltage products from India in various countries, like Sandeep mentioned, even Australia, Japan, Latin America and South Asian countries. So we are definitely going to increase more and more export.

Why not -- talking about a percentage on the sales or the orders, could we see that the exports could double on a 3-year basis from the current levels of orders that we have seen?

Yes, we can say that within 3-year basis, it can double exports, but it is very difficult to predict as on date exactly how it will move.

Okay. And in general, is the profitability in exports better than what we see in the domestic market?

Yes, yes.

Okay. Great. On the competitive intensity in the domestic market, how are you seeing the competitive intensity in the domestic market? And there was one comment made that incrementally, there is a traction towards the gas insulated substation in the Green Energy Corridor, wherein about 3 or 4 players, inclusive of GE T&D, do have the technology. So if you could just comment on the competitive intensity and the underlying mix change for HVDC projects, GIS project, does it hold GE T&D in good stead and maybe if one looks at a 2 to 3-year perspective?

Yes. I think GE T&D is definitely in a good stand because we have a [ giant ] portfolio in our product range. We have exclusive factory at Chennai, [ Padappai ]. So that way we see in a good shape actually.

Sure. Last part, we have seen some improvement on the working capital side also, and we have seen the release in the cash and while the headline profits were negative, but we saw positive cash flow from operations, could we believe that there is more juice left on the working capital, which is currently around 18%? Or can we expect some increase in the working capital as a percentage of sales as we see going forward?

Yes. So Bhavin, I know 2.5 years ago, we talked about becoming that we are moving in that direction. And at that point of time, our debt was more than INR 500 crores, which we have successfully been able to bring to INR 80 crore level end of March, the net debt. As a direction, yes, our intent here is further improve and become debt-free and remain in the positive [ 2 or 3 ]. However, being in the capital business quarter-on-quarter, there may be some change, meaning maybe a couple of quarters, there will be a negative, negative sales or negative cash, but other quarters will have the improvement as a direction on a long-term basis, our endeavor here is to further improve the working capital and become debt free.

Sure. So just last question from my end to Pitamber. So are you feeling more optimistic now versus a year ago now that -- I mean, the cleanup is done and the ship has been steady, and you can actually see GE on a growth path, maybe on the orders and on the revenues in -- with some lag where we can now see the GE T&D actually crossing the level of INR 4,500 crores, INR 5,000 crores top line in 2 to 3 years' time frame? .

Yes, I'm quite optimistic because of the market and future opportunities to fund.

I'll just make an add-on here. I think with the Green Energy Corridor and all, the order bookings, we are hoping to increase and with corresponding impact on the execution. How those levels of INR 4,000 or INR 4,500 crores revenue comes with the HBDC opportunity volume? It will not be from the revenue kind of a business. But as Sandeep talked about few HVDC opportunities in the pipeline. So hopefully, if we get some of them, then definitely, yes, we'll move to a higher revenue level. And just a small correction from my side to the question asked by Mr. Sumit Jain -- sorry, Mr. Kunal earlier question. The backlog in execution in the year is in the range of 60% to 65% versus 70% to 75% that I talked earlier. When I talked 70% to 75%, it was more about 70%, 75%, revenue for the year coming from the backlog. Or if you have to make corresponding number in terms of the backlog, then it is 60% to 65% of the backlog getting eliminated during the year. So that was just a small correction.

[Operator Instructions] We have the next question from the line of Aashna Manaktala from ICICI Securities.

Sir, continuing on the previous participant question on competitive intensity, if you could talk about who are our competitors in the GIS substation, what is the current market size and our market share in that segment?

We replied to this question.

Aashna, it's a direct impact of competition, which is the one on the EPC side and second is on the product side. So on the EPC side, you have multiple competition, like, for example, you have 15, 20 players that may be involved in that. Although we would have some people present on one 32-case segment, some pay income, too, 20 cases. It doesn't sound like it's on this case. But if I really look at GIS as a product, when our main competition actually comes from Siemens, Hisense, Toshiba -- Siemens, Hisense, Toshiba and Hitachi. And for a very small segment from [ Chronicles ].

Okay. So -- and sir, in terms of product, what could be the market size currently? And what is the expected growth rate given the amount of order inflow that we're expecting to come around in a year or so might should come in?

So purely as market for the GIS product, we are looking at a year of close to about $300 million with the market size, what we are looking forward to And of course, market share would be in the range of something like 25-plus. This is something which is our endeavor to target.

Okay. then coming to the EPC proportion of your orders, how much of that would be fixed price contract?

So if you really look today in the market, EPC ordering, which will happen, across the customers, maybe few RTM packages, if we exclude from power grid or maybe a few packages that you exclude, which is coming from state, which would be less than 15% of the total project volume being tendered out. Balance is because first hand dose on fixed price or the TBCB with the private player. So mostly the price duration today which the customers are offering is mostly on the transformers and the reactors.

Okay. And sir, are we able to renegotiate some of these fixed price contracts?

We're trying. We are making the effort, but still, the results are not very encouraging today.

Thank you. That was the last question. I now hand it over to Mr. Suneel Mishra for closing comments.

Thank you, Mike, again, and thank you, everyone, for your participation. With this, we conclude today's conference call. In case if you have any other questions, then please feel free to contact me or Mr. Anshul Madaan on the e-mail ID. Thanks again.

Thank you. On behalf of GE T&D India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.