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

Ladies and gentlemen, good day, and welcome to GE Vernova T&D India Limited Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Megha Gupta from GE Vernova T&D India Limited. Thank you, and over to you, Ms. Gupta.

Good evening, everyone. Welcome to GE Vernova T&D Limited Earnings Call for Second Quarter of Financial Year 2025. I'm Megha Gupta from GE Vernova T&D India Finance and Investor Relationship team. We are delighted to have you all here on the conference call today. Today, we are joined by Mr. Sandeep Zanzaria, CEO and MD of the company; Mr. Sushil Kumar, Whole-Time Director and CFO of the company; Mr. Abhishek Srivastava, Head, Business Operations; Kanika Arora, Communications Leader; Mr. Nimai Verma, Secretary of the Company. During the call, we will discuss company's financial performance, including operational highlights and will share key updates. Towards the end of the presentation, we will have a dedicated question-and-answer session. The presentation we are going to discuss today and financial results for the quarter are already available on our company's website. Before we begin, I would like to highlight that today's discussion may contain a few forward-looking statements, which are subject to risks and uncertainties. These statements are based on our current expectations and actual results may differ materially from those expressed or implied. We encourage you to refer to our public filings and documents for comprehensive understanding of the factors that could impact our future performance. With this, I will hand over to Mr. Sandeep Zanzaria to begin the discussion.

Thanks, Megha, and good evening, everybody. I appreciate you taking time to join us today for your continued interest in GE Vernova T&D India, formerly known as GE T&D India Limited. This name change aligns with GE Vernova's global identity and our continued focus in India's T&D sector. Before we dive into the numbers, I want to highlight the incredible growth potential of India's power sector. India's renewable energy capacity has surged to nearly 210 gigawatts from just 76 gigawatts in 2014, and the country is well on track to achieve its ambitious target of 500 gigawatt by 2030. The power sector in India represents an incredible opportunity and its growth is fundamentally driven by 3 key pillars: energy transition. This transition is creating significant opportunity for T&D company as we work to integrate renewable energy sources into the grid, modernize our infrastructure and deploy advanced technologies like smart grids and energy storage solutions. Per capita energy consumption, India's per capita energy consumption is still significantly lower than the global average. However, we have witnessed a remarkable increase in recent years and we expect this trend to grow as India's economic growth and living standards improve, the demand for electricity is soared, driving substantial growth in the T&D sector. Energy demand drivers, the emergence of electric vehicles, green hydrogen, data centers and other innovative technologies to further accelerating the growth of power sector. These sectors require robust and reliable power infrastructure, creating significant opportunities for our business. Additionally, 3 years actively working to enhance the cybersecurity of India's power grid, our digital and software applications have become more critical to the grid as they help ensure reliable and secure power and they move electricity from variable energy resources often in remote locations to demand center and for grid orchestration to enable utilities to navigate the complexity that comes with the sustainable energy gird. At present, we have multiple HVDC projects under bidding stage finalization under TBCB developers. We are engaged with the developers to target these opportunities. With this background, let me talk about our quarterly performance. Our order book in Q2 saw booking of INR 46.8 billion, up by 333% year-on-year compared to INR 10.8 billion. in the quarter ended September '23. The highlight of this quarter is receipt of orders from our group companies for supply of AIS and GIS products [indiscernible] client GEAT in Algeria. In addition, we received 2 major orders for upgrade of Northern region and Eastern region, low dispatch centers from Power Grid and Grid Controller of India. This reinforces our strong presence of leading digital technology provider in transmission space. Our order backlog stood at INR 98.4 billion as of September '24 versus INR 62.7 billion as of March '24, up by 57%. This is the highest order backlog which the country has achieved and gives a strong visibility of revenue for the next few years. Our Q2 revenue stood at INR 11.1 billion versus INR 7 billion in Q2 FY '23-'24, up by 59% year-on-year, with a notable increase in our profits. Our profit before tax for Q2 was INR 1,938 million compared to INR 503 million in the corresponding quarter of the previous financial year. Cash and cash equivalent balance improved and stood at INR 6.8 billion as of September 30, 2024, versus INR 2.8 billion as on 31st March '24 and a net debt of INR 0.1 billion as of 30th September 2023. The improvement in balance sheet paves the way for the company to generate cash of INR 2.9 billion during the Q2 FY '24-'25 and INR 4.1 billion during H1 FY '24-'25 before dividend payment. We will continue to execute our strategy with sustainability, innovation and lean at our core. We're very proud to showcase some of our company initiatives in sustainability, employee health and safety across our factories, offices and project sites. These initiatives are covered in our presentation. We request everyone to please go through them. In conclusion, the Indian power sector is not just a national story. It's part of the global trend towards energy transition. The integration of renewable energy framework is a part of rapidly evolving global ecosystem. With our strategy built on operational efficiency and selective market participation, we will continue to chart a course that positions us a key player in the industry and capitalizes on emerging opportunities. We could not be more excited about the path ahead, and we thank you for your continued support and interest in the company. I now invite Abhishek to provide further insights on execution.

Thanks, Sandeep. Good evening all. So I will take you through the key operational highlights, the key commissioning and infrastructure strengthening, works that we completed in the past quarter. So we have been actively working on strengthening of the transmission network for private and government utility customers. And in addition to that, we have been actively working on supporting our industrial customers to meet their power needs. So as a part of that, we successfully commissioned 220 kV gas station for Hindalco in Jharsuguda, which was completed within 12 months of award. Then another key achievement was the commissioning of Gagad substation for our customers ReNew, which was their second TBCB and a scheme which is very vital for strengthening of the southern grid of India. In addition to these 2 substation commissioning, we also commissioned 220 kV GIS Bays for our customers GETCO, WBSETCL, DVC and 132 kV GIS Bays for BSES. We have been installing and commissioning circuit-breakers for various voltage ranges from 145 kV to 765 kV, all across India and Bangladesh. And then in same [indiscernible], we also commissioned 12 number single-phase transformers and 1 shunt reactor for our customers Power Grid and Doosan. So these are some of the initiatives which got commissioned in the past quarter, strengthening the overall power network for the country. With these highlights, I hand over to Sushil for taking us forward.

Thanks, Abhishek. Good evening, everyone. I will talk about orders and the rest of the financials. First talking about orders on the Page 7 of the presentation. This quarter was a very robust quarter for us in terms of order booking. We booked about INR 46.8 billion of orders compared to INR 10.8 billion in the last financial year, similar quarter. which represents around 4.3x of order booking that we had compared to the last year. Similarly, on an H1 basis, we booked about INR 57 billion of order compared to INR 21.8 billion in the last year. Some of the key orders that we booked during the quarter 2 includes supply and supervision of high-voltage products from Grid Solutions SAS plant and Grid Solutions Middle East FZE, Dubai, both of these are related parties. And this order was material in nature, and this was already disclosed to the stock exchange during the orders quarter. Similarly, we had another significant material order which was related to the establishment of Regional Load Dispatch center for Eastern region and Northern region. Those orders we receive from Power Grid Corporation of India, and this is also disclosed to the stock exchange during the quarter. Besides these 2 material orders, we received several orders across the industry and transmission utilities. These include basically 765 kV power transformer and shunt reactor order Power Grid Corporation of India for various transmission projects and power -- 765 kV power transformer for an EPC player for a substation in Madhya Pradesh, supply of 420/245 kV GIS from an EPC in West Bengal. And supply and construction of 300-megawatt 400 kV captive switchyard from Tata Power Renewable Energy in Maharashtra. And 765 kV/400 kV CRP SAS for various TBCB projects from multiple EPC players. So very robust order performance coming from different players across the market. Moving to the next page, Page 8, in terms of financial performance. Again, the financial performance was very robust. I just talk about the quarter 2 performance. Starting with revenue, we had a revenue of about INR 11 billion, which was 59% increase on a year-on-year basis versus the corresponding quarter in the last year. We generated a significant 41% gross margin in the quarter. And as a result, overall EBITDA of INR 2.1 billion approximately at a rate of 18.8%. This is a significant increase in EBITDA in percentage terms as well as value terms if we compare with the corresponding quarter in the last year, where we had about INR 700 million of EBITDA. So this quarter, EBITDA is about 3x of what we had in the last year. And in terms of percentage point, there is about 8.8 percentage or 88 bps increase in the EBITDA compared to the corresponding quarter. Similar performance and profit before tax, where we improved from 7.2% of profit before tax to down at around 17.5% profit before that. Again, a solid performance on a first half basis as well. We did a revenue of about INR 20.6 billion. This is a 46% increase compared to the corresponding first half in the last financial year. Gross margin performance improved from 34% to 40.8%. And EBITDA improved from 9.4% in the last financial year first half to now 19.5% from the current financial year first half. Similar performance, improved performance on the profit before tax. We've also shared the details of the order and revenue in terms of export and domestic market on the next slide, which is Slide 9. So out of the INR 46 billion orders that we booked in the quarter, about 53% of the orders were from export and 47% from the domestic market. And in terms of revenue, about 29% of the revenue was from export market, whereas 71% revenue from domestic market. Almost similar performance on the H1 basis, approximately 37% orders from export and 30% revenue from export segment. In terms of breakup of orders in hand of about INR 98 billion, about 62% of the orders in hand we have from the private segment customers, about 32% orders in hand are from the central utilities and PSUs, and about 6% orders in the overall portfolio from the state utilities. Next slide, we have just the financial trend, but since we have already talked about most of the numbers, I'll not read it out again. And we can open up for the questions.

[Operator Instructions]. The first question is from the line of Umesh Raut from Nomura India.

And congratulations for all round performance in Q2 FY '25. Sir, my first question is pertaining to domestic ordering, which was very strong during the quarter, about 165% up year-on-year basis. So how one should look at now going forward? What kind of run rate we can assume on the domestic ordering side in terms of quarterly rate? And which are the areas where you are seeing a major uptick coming in?

So I think, Umesh -- thanks for the question. So this quarter, we had -- on the domestic front as well, we had 2 large orders which came from Power Grid and Grid Controller, which is on the digital side, which we declared, it is close to about INR 900 crores. I think apart from that, is the market, if you look at it, it is pretty strong, and we are looking at a sustainable number. But this also depends upon a lot of other factors like the delivery requirements, et cetera. But I think the run rate will remain sustainable in terms of order intake, except for the onetime orders of like digital and export of large, which came from group entities. But otherwise, the number should be sustainable.

Got it. So is it fair to assume that including both domestic and exports, our base orders run rate would be closer to about INR 15 billion per quarter going forward?

So with that, we would not like to put a number now because the division time lines and things like things change. But we would talk more about on a yearly basis. So I think probably we should look at the run rate at a yearly basis because in our sector, the division of exports from one quarter to the other quarter for many of the utilities, they keep on changing. Probably let's look at a sustainable number [indiscernible].

Got it, sir. Sir, my next question is pertaining to HVDC projects. So when exactly we can expect first 2 packages, especially for [indiscernible] and Khavda-Nagpur getting finalized? Any tentative time line here?

I think it should happen within the next 3 months.

Okay. Okay. Got it, sir. Sir, my question -- next question is pertaining to bookkeeping. I think if I look at our related party transaction or intercorporate deposit side, it was closer to about INR 450 crores for the quarter. So what's the reason behind this? And can you please specify or give some insight about this, where exactly we are extending this corporate deposits to related party?

Your question was not very clear. I'll just try to answer. And if there is anything left out, you can please ask again. We have taken approval from the shareholders to lend up to INR 700 crores were related parties in the cash deal arrangement. Similarly, we have about INR 300 crores of borrowing limit. So we use the funds [indiscernible] we can borrow from the [indiscernible]. And we have, I think about a little less than INR 600 crores invested in the cash deal at the end of the first half -- as of the end of the September. And that's all within the approval limit of the shareholder.

Okay. Got it, sir. And similarly, sir, if I look at your related party transactions approvals, which were taken at the start of the year, especially for orders, that is, again, I think, totally consumed now, considering that we have received close to INR 2,200 crores of orders from parent entities. Is there any another proposal or any prospect pipeline that you are seeing from especially parent side at a global level in terms of newer orders?

So Umesh, the approval from the shareholders are required when the orders exceed the materiality limit, it is 10% of the turnover of entity in the last financial year. So in specific cases where we anticipated order from the related party in excess of INR 300 crores, which was 10% of last financial year. The approvals were taken. And fortunately, good thing for us, those orders materialize and we have booked the orders. Having said that, in many orders on a regular basis that we get from various related parties but they are less than materiality limit and Audit Committee approval is taken and we regularly get those orders. So as of now, we are getting every quarter [indiscernible] orders or regular orders from may related parties. So if anything comes up in future in terms of any significant we can materialize, that would require shareholder approval, we'll notify to the stock exchange and [indiscernible].

Got it, sir. Sir, my last question is on the gross margin. We have now made closer to 41% kind of a level at a gross level. And in the past calls, we have mentioned that sustainable level is closer to about 35% to 40%. So now we have crossed that upper threshold of gross margin as well. Any color over here? Is this export orders are kind of giving you better margins, and that is what's contributing to the surprise on the gross level side?

So I still mean that range of 35% to 40% as range on a quarter-to-quarter basis. But on the full year basis, we always said that we want to do better than what we did in the last year. Last year, I think we did about 35.6% if I'm not mistaken. And our endeavor is to do better than that. However, I would just like to clarify to the community on the overall profit number for the quarter. This quarter, we have all the, let's say, operational items, there is no nonoperational item in the financials. However, we executed some of the large contracts, a specific part of the contract, which is highly profitable. And at the same time, we have certain one-off operational items in the P&L and expense side. All together -- we see overall gain of about INR 400 million approximately, which is kind of non-repeat in nature. And that's a good positive contribution, but may not be repetitive in every quarter.

The next question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on a very great quarter. My question is on the other expenses. The other expenses in this quarter has seen an uptick. Would you like to call out something? Or this is linked to the revenues in general?

So I answered -- thanks Mohit, for your question. And I answered the overall impact of non-repeat items in the quarter. On an overall basis, some of the non-repeat items are a part of the gross margin, the cost of goods sold. Some of these are part of the other expenses. But instead of giving -- talking about the gross margin -- sorry, the other expenses on an absolute number, I would like to draw your attention to the other expenses as a percentage of revenue. See, our revenue has increased significantly. This quarter, revenue was 60% higher than what we did in the corresponding quarter of the last financial year. And with that 60% increase in the revenue, our increase in other expenses is still lesser than that rate. And as a percentage of revenue, it has come down rather from 13.7% to 11.9%. And this approximately 2% reduction in the other expense, this was an operating leverage and a better, let's say, improvement in the overall profit before tax. So let's look at our expenses as a percentage of revenue rather than increase in the absolute number because -- most of the increase is related to absolute increase in revenue also.

Understood, sir. My second question is given the fact that a large part of transmission projects have been awarded to the players in this country. Last year was INR 500 billion of ordering. And this year till date, we have seen INR 700 billion of ordering in the sales pie awarded to most of the power grid and a few private players. Are you seeing that inquiry pipeline is inching up and is becoming -- can you give us some color?

Mohit, Sandeep here. So yes, we are seeing a sustainable pipeline, I think we had some slowdown during the last quarter when elections were there. But apart from that, I think now we have seen that there is good traction which is happening in terms of pipeline for TBCB project. So not only the Power Grid, definitely Power Grid is winning a large chunk of that business. But apart from Power Grid, we are also seeing that the pipeline is getting generated from the private players also.

Understood. My last question, sir, what was the average life of the current order book?

So some of the orders have a time line of 3 to 5 years. And most of the orders, let's say, more than 60%, 70% of the orders have an execution time line of 18 to 24 months.

The next question comes from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on the cash and cash equivalents, which you highlighted, INR 670 crores. So does it include the deposits given to the -- INR 450 crores.

No, the -- you are talking about presentation or you talking about...

[indiscernible] available in the books, it includes that...

Yes. So -- we have about INR 6.7 billion of cash end of September. And the first 2 parts: one is the cash and bank balances that we have. And the second part is the money that we have lend through the cash pool. The money that we have lend through the cash pool, if you look at the balance sheet, is a part of the loan line item. So we're combining the loan line item and the cash line item to arrive at the total cash and cash equivalent that we have at the end of the half year.

The question is for the cash, the other income during the quarter -- and so what kind of yields you're earning on the other income, which could be generated on this cash pool because INR 4 crores of other income for the quarter looks to a very small number?

So I think you disclosed that yield on -- the return on this cash pool investment in the shareholder notice when we took the approval. It's approximately 7%. I think we are doing a math on the total balance at the end of the quarter, but most of it would have got generated at that last leg of the quarter and may not have been fully eligible for the interest for the entire quarter. But yes, I can confirm that for whatever period we lend to the cash pool, we do get the approximately 7% interest during the tenure of deposit.

Any particular reason why other income is lower in this quarter?

Yes. So other income has many components, including the cash pool income, we also have a ForEx loss of approximately INR 55 million during the quarter, which is netted off against the other income.

Okay. My second question is on the export orders. So you've given the breakup of order inflows. But in the order backlog now, how much is the export component in the total close to INR 10,000 crore order backlog? How much is the export component in there?

We typically don't share that breakup. But on a ballpark basis, it should be about roughly 40-or-so, but that's a very high level.

The question is now what we are seeing as a trend that orders which you're announcing the automation portion is increasing. That should be directionally largely positive. And also the export share and mix in the order backlog is increasing. So directionally, is it right to project that the numbers on the margin side still have a headroom to expand from the current level?

Parikshit, your voice is very unclear. Can you repeat the question?

So I was saying that directionally, the export is now 40% of the backlog. And in the orders which we have announced, the automation component is increasing, the Power Grid and other orders which we have been announcing. So -- which would be, again, margin-accretive. So both the share of automation orders and high-margin export orders. So directionally, is it right to assume that the margins which we are reporting still have more tailwinds that they can improve from here on?

So overall, yes, generally over the last 2-year period, the margin on backlog has improved. Various factors. First, there is also an improvement in the pricing in the domestic market. Export orders are also accretive and some of the business lines have better profitability. And our endeavor is to work more on those business lines to grow orders there. Having said that, we don't give guidance on the future profitability in terms of how much accretive margin it will contribute. But you see the past trend, we have been making improvements, and you can then make your -- you can extrapolate the numbers as per your own estimates.

Okay. And sir, on the HVDC side, so how serious we are about winning these orders because you already have huge volumes of order coming in. And then on the other side, now we have INR 10,000 crores of backlog. So at what point of time do you would see the order backlog balloons up. And if you get some HVDC orders, then we need to expand and announce CapEx. I mean ballpark, how are you linking the 2 things now given there is a strong visibility in domestic ordering, exports as well as large chunky HVDC ordering? So how do you link it with the CapEx? So at what point do you see -- on CapEx?

So I think one of the important things, Parikshit, you need to understand is that HVDC orders what we are talking about, when we look at our factories, one of the most important thing would be the transformer deliveries of case of HVDC orders. So the CapEx for transformers requirement for HVDC orders is already, for example, we have planned that CapEx. I think apart from that, when we look at an HVDC order, it is mostly the technology side, which is going to play. And then we have our global partners as well who will be supporting us in the execution of those HVDC orders. So I don't see that taking 1 HVDC order will require any additional specific large CapEx for delivery of that product.

And the transformer CapEx, you spoke about you have planned. So if you can quantify what is the CapEx and what capacity you're looking to increase?

So that would always be very difficult to quantify because ultimately, today, we're looking into the market. The CapEx that we are doing in the plant will not only help us even suppose if don't win an HVDC, that would help us in the AC market. That is one thing. And second, also, I've always said in the past that MVA is a mix because an MVA of HVDC and a MVA of AC transformer practically same, but the realizable value of HVDC transformer might be 3, 4x of the same MVA of an AC transformer. So MVA is normally for a very high-level benchmarking, but not an accurate methodology to track the capacities.

But in terms of value of CapEx, how are you budgeting the value of the CapEx? I mean, let's forget the MVA part, but how much do you intend to incur in this year or the next 2, 3 years?

So it would be somewhere between -- we are looking into that, but it will be somewhere between -- today, depending upon the need of the plant, it will be somewhere between $5 million to $10 million.

$5 million to $10 million?

Dollars.

Okay. And just the last question, sir, you spoke about the sustainability on the ordering side, order inflow side. So that will sustain. So when we were saying that, so you're benchmarking on H1 numbers of INR 5,700 crores or like -- when you're talking about the annual inflows? So is it the H1 number which is relevant? Or like how do we read into it?

I think the H1 numbers have -- that's what I said the H1 numbers are exception. So one is the export order, which we got, for example, where we have a delivery time line of about 5 years. And also for the Eastern region, Northern region, digital orders, which, of course, the upgrade comes every 7 years. So that is not something like, for example, INR 900 crores of order, this is something which you don't get every year and things like that. But the balance part of the order is a sustainable volume. This is what we will be targeting every quarter. But we would be working more, measuring ourselves in terms of yearly numbers rather than quarterly numbers.

So yearly, it's about INR 7,000 crores, INR 8,000 crores would be what is a sustainable number as of now on the current run rate?

So for the current financial year, Parikshit, if we take out these 2 large orders, those are about INR 30 billion. But Sandeep is trying to say that excluding these 2 large orders on an H1 basis, we have orders of, say, INR 27 billion, INR 28 billion. If we extrapolate, that becomes like INR 55 billion to INR 58 billion on a regular run rate other than the large 2 deals. And if we add another 30 billion of these large orders, we can be in range of INR 78 billion to INR 82 billion. I mean that's the mathematics. It's not a guidance [indiscernible] yearly number.

Got it. And HVDC will be on top of it, if at all something materializes. So HVDC will add on it.

The next question is from the line of Mohit Kumar from ICICI Securities.

Sir, from an stat comp, I just wanted to check whether there is any requirement of indigenous -- either an indigenous clause in that? Is there some kind of other additions required in this country?

For Power Grid tender, yes, there is an indigenous clause.

And do we qualify for that?

So as you know, when you look at, for example, IGBT or the thyristors, it's not a very difficult technology to assemble and test it. So I think it's not something which is very difficult to meet those requirements from India. In fact, if you look at -- sorry, if you look at Champa-Kurukshetra, the Phase 2 which we did, the thyristors were assembled and tested in our plant in India only.

But that will take some time, sir, right, sir? Will that -- so if you want to qualify with the clause, can you bid right now? Or will it take some time?

We can bid right now, but that's a commercial decision which bid to participate or not. But there is no problem in bidding right now.

Understood, sir. Sir, last question on this -- on the HVDC development part. Have you seen any development, sir? I think this is up for tender. Has the tender happened? Or is it still delayed?

No, see the tender has already floated. But it's going to take time for submission.

The next question is from the line of Sagar Gandhi from Invesco Mutual Fund.

Yes. Sir, my question pertains to order inflow of INR 5,700 crores that we see for H1 FY '25. So sir, how much has the export part grown for us on a Y-o-Y basis? And how much is the domestic part growing on a Y-o-Y basis?

Just give me a minute, Sagar. So in this first half, we had an order book of INR 46 billion, of which approximately INR 24 billion is the export order for this quarter. And if I look at the last financial year -- and what was the number of it. So I think last financial year, we had about 24% of the orders that are coming from the export market. So 24% of roughly INR 10 billion was hardly INR 2.5 billion.

INR 2.8 million goes to INR 24 billion on a quarterly basis, Q2 of this FY '25 over Q2 FY '24?

Yes, you're right because this time, we declared a very large a material order of approximately INR 22 billion from Grid Solutions SAS and Grid Middle East FZE, and those are the orders for which we have taken the related party approval and those orders materialized. In fact, these are declared to the stock exchange in the month of August and September.

Okay. Sir, like you, what you shared for Q2, can you share for half year?

So on a half year basis, I think it's already part of the presentation. If you look at the Page 9 of the presentation, out of INR 58 billion, we have export orders of approximately INR 26 billion. This represents 47%. And in the last financial year, the ratio of order -- export order was approximately 23%, 24%. So we had about INR 5 billion of export orders in the first half of the last financial year, which has now grown up to INR 26 billion in this financial year.

So INR 5 billion going to INR 26 billion, so that is slightly over 5x?

Yes.

The next question comes from the line of Shrinidhi Karlekar from HSBC.

Congratulations on stellar set of results. Sir, may I ask how much of your domestic backlogs actually come from the utility segment and how much is from the industry segment?

So, Mr. Shrinidhi, we don't have that breakup immediately. And in fact, we don't share that much of breakup in the public forum. But we have already disclosed in the Page 9 the breakup of the total orders. So in the total orders that we look at the INR 98 billion breakup, INR 61 billion is from the private segment, INR 31 billion from central utilities and PSUs and about INR 5 billion from the private segment -- sorry state utilities, which represents 6%. So on the overall business, we have already disclosed. Breaking it further into export and domestic is not something that we share.

Private will include the related party order as well as the TBCB from the private sector, right?

Yes. Yes.

Okay. Okay. Sir, and the second question I wanted to understand is the pipeline on transmission side is undoubtedly quite strong. I was wondering, would it be possible to share some light on the -- how the industry segment pipeline looking like?

So industry segment pipeline on the data center side is pretty good. I think there are multiple opportunities which we are discussing with either the EPCs or alternatively with the -- directly with the data center players. And also, there are a few opportunities on the steel side, et cetera. But because we operate mostly into 220, 400 and 765, there are various opportunities which come on medium voltage now, but those we don't participate.

The next question is from the line of [ Indrajit Chakravarti ], an individual investor.

I congratulate you for the excellent set of numbers. I just want some details about this HVDC tender, which has been floated and about -- I think you said about something like 3 months from now. Within 3 months from now, something will come out of it. So can I just know that how much this is tender value, the HVDC scope? What is our total value of HVDC scope that we have?

So this value will be somewhere between $1 billion to $2 billion.

Okay. Okay, sir. That was my only questions. And we have a scope that we might get something of it, okay, within 3 months?

No, what we said, these tenders, the 2 HVDC tenders, which are in the finalization process at the developer level will get decided. We are participating. Whether we win or not is an outcome that we'll have to see.

And the outcome will be within 3 months? Or after 6 months, we will get to know?

At present, we expect this outcome to be in the next 3 months. But as we see these large opportunities -- this has been going on for last more than a year, so we expect now to get decided within 3 months, but if it shifts beyond 3 months, it is beyond our control, actually.

[Operator Instructions]. We have the next question from the line of Parikshit Kandpal from HDFC Securities.

Just on the employee cost, this quarter has been a little high. So is it because of the volume growing? Or is it because of hikes getting affected during this quarter?

Both, Parikshit. And again, as I mentioned for the other expenses, I think instead of looking at the absolute number, let's start looking at the percentage. And as you see on Page 8, as a percentage of revenue, both employee expense as well as other expenses have come down compared to the corresponding quarter in the last year as well as in the half year basis.

[Operator Instructions]. The next question comes from the line of Akhilesh Bhandari from Millennium Capital.

So just a small clarification. Out of the total order values in HVDC project, what would be an addressable component in terms of proportion of the overall value of the HVDC order of the project?

So when I said that between INR 1 billion to 2 billion, that is the addressable portion by us. The overall project value will be in few billions of dollars.

Okay. But roughly, it would be 40% to 50% what would be an addressable component?

So that -- see, for example, some HVDC projects which have longer lines, some will have shorter line. There are multiple factors into that. So it's very difficult to put a percentage of component in the total HVDC. It's a very flexible thing. There are a lot of variables in it.

Okay. Okay. And sir, for the Leh-Ladakh project, there has been some discussions that Power Grid might want a more localized supply chain closer to the area of where the project is going to be because of supply chain issues. But all of the major players don't have any capacity in this area. So any sense of the discussions, which you can give me whether some capacities being sort of -- some mix in capacities being thought of the supply chain? Or the supply chain -- or a different solution for supply chain is being considered?

So Akhilesh, these are all commercial matters and -- for example, it cannot be disclosed so openly in a call and things like that. So probably, we'll not be able to answer this.

The next question is from the line of Umesh Raut from Nomura. India.

Sir, my question is pertaining to an addressable opportunity in domestic especially for digital solutions and one which you have also received during the quarter in terms of new orders. And on the similar line, we are also hearing that now there is a next phase for wide-area monitoring system, which can come up. Earlier, I think you have executed certain portion of it. So any color over here? What kind of opportunities do you see maybe in the medium term for all these solutions in the domestic market?

So you are right, Umesh that we have executed the large -- sorry, the [indiscernible], which is the project. I think probably there are a lot of discussions which are going on at Power Grid CEO and at ministry level. So after this scope finalization and what technology will be used, et cetera, et cetera, there will be a color or there will be an expected value to the opportunity. Today, it is too premature to even put a value to it.

Got it, sir. And apart from this WAMS, are there any new technologies where you will not able to participate because of technology? Or you can easily kind of get it from parent in a more of an immediate basis whenever that opportunities kinds of coming up for the tendering?

So I don't think that there is any limitation for us to get any technology from the parent if it is available and the need is there in the country. So if there any technology requirement which is there, we'll definitely be getting the support of the parent and we will be participating.

Okay. And in accessing those newer technologies from parent, what could be the arrangement between GE Vernova T&D India and its parent in terms of royalty or other fees?

We have a royalty technical fees agreement, which is there in place for the last many years. It has a certain percentage of revenue that is paid as a royalty to the parent. The rates and the methodology has been consistent for last many years. Overall last financial year, I think royalty was approximately 1% of the total company's revenue.

The next question comes from the line of Parikshit Kandpal from HDFC Securities.

Sir, this HVDC orders which we are evaluating, so is it in consortium with the parent company?

We will not be able to disclose this thing, Parikshit. I think that's a commercial strategy, we cannot -- its not possible to disclose.

Okay. And sir, just 1 clarification. When you spoke about the CapEx for transformer, it was about $8 million to $10 million you said, right?

It was total.

Total?

Yes, it was approximately $8 million to $10 million, but total, not just for the transformer.

And in this year or next year?

We're talking about the plan for the next 12 months.

[Operator Instructions]. We have no further questions. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Over to you, sir. Sir, you may proceed with closing comments, sir. Ladies and gentlemen, we will end our conference here. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.