GE Vernova T&D India Limited ($522275)

Ladies and gentlemen, good day, and welcome to conference call hosted by GE Vernova, T&D India Limited for quarter 4 of financial year 2025-'26. [Operator Instructions] Please note that this call 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.

Good evening, everyone. Welcome to the GE Vernova T&D India Limited Earnings Call for Quarter 4 Financial Year '25-'26. I'm Megha Gupta from Investor Relations team. During the call, I'm 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; Ms. Kanika Arora, Communications Leader; and Ms. Shweta Mehta, Company Secretary of the company. 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 a comprehensive understanding of the factors that could impact our future performance. Now I'll hand over the call to Mr. Sandeep Zanzaria to initiate the discussion. Thank you, and over to you, sir.

Thank you, Megha. Good afternoon, everyone, and welcome to our fourth quarter and full year earnings call. As we referred on the year gone by, one thing is evidently clear India's posers in the midst of historic transformation. The country continues to add renewable capacity at a rapid pace. Electrification is deeping across industries and household and the demand for a stronger, smarter and a more resilient transmission and distribution network has never been greater. The government of India now articulated an even more ambitious long-term energy vision, targeting around 800 gigawatts of renewable energy capacity, which would take the installed base for the nonfossil power generation to over 70%. This is far more than the capacity addition milestone. It is a clear signal of the CLS infrastructure build-out required. In parallel, the country's transmission network is being planned to support over 900 gigawatts of nonprofile capacity, underscoring the central role of grid infrastructure in enabling India's energy transition while sustaining long-term economic growth. At the same time, the broader policy and demand outlook remains highly supportive, India's energy consumption continues to rise driven by industrialization, urbanization, rapid data center growth, manufacturing expansion and the increasing need for reliable power across all geographies. This demand is on a strong upward trajectory and is projected to nearly double by 2035. As a result, the grid will need to evolve rapidly to manage intermittent renewable generation, enable long-distance power is acquisition and handle significantly greater complexity in system operations. What does this mean for transmission and distribution infrastructure it means that every megawatt of renewable capacity added every new industrial corridor developed and every step towards nationwide electrification requires a modern, efficient and reliable network to carry where it is needed most. This is where exactly do [indiscernible] plays a critical role. Our portfolio is well aligned to these structural opportunities from high-voltage transmission equipment to grid solutions to digital capabilities and HVDC technologies, we remain focused on enabling India's energy transition and supporting the country's long-term power infrastructure need. [indiscernible] in particular, will continue to be strategically important as renewable energy is increasingly generated and resource risks, but remote locations, while demand remains concentrated in urban industrial and commercial rentals. We also see a strong and growing export opportunity as the global market for transmission and grid equipment is expected to expand significantly. This growth is being driven by large-scale utility and data center investments in the United States, industrial and renewable energy expansion projects across the Middle East and rising demand and energy transition in other parts of the world, led by renewable grid integration and replacement of aging substation infrastructure. Our products already reached more than 60 countries across the world, reflecting the strength of our technology, quality and execution capabilities. Under our India for the world strategy, we are focused on deepening localization, enhancing competitiveness and increasing the share of high value export orders manufactured from India, while continuing to expand into new markets and regions. Now turning to our financial performance. I'm pleased to report that a function '25-'26 was a strong year for GE Vernova T&D marked by healthy demand, disciplined execution and improved profitability. During the fourth quarter, our order intake remained robust, reflecting the strength of market demand and continued trust of our customers. For the full year, we delivered a solid performance across key financial and operational metrics, supported by strong project execution and favorable market environment. Our order book remains strong in Q4 and we saw booking of INR 86.1 billion, up by 188% year-on-year compared to INR 29.9 billion in quarter ended March '25. Our Q4 revenue stood at INR 16.4 billion versus INR 11.4 billion, up by 42% year-on-year. On a full year basis, our revenue stood at INR 62.1 billion versus INR 42.9 billion, up by 45% year-on-year. New orders outpaced revenue, further expanding the order backlog to INR 214.6 billion as of March '26 versus INR 14.3 billion, up by 49%. Our profit before tax and exceptional items for the quarter ended December was INR 4.6 billion quarter ended March was INR 4.6 billion as compared to INR 2.6 billion in the corresponding quarter of the previous financial year, growing by more than [indiscernible]. Full year perspective, profit before tax and exceptional items stood at INR 17.1 billion versus INR 8.2 billion, which is 2.1x increase. The cash and cash equivalent balance was at INR 35 billion as on March 31 versus INR 10.5 billion as on March 31, '25. The cash generated in Q4 was INR 9 billion and on a cumulative basis, INR 15.8 billion during the financial year, '25-'26. Beyond the financial performance, I would also like to highlight the meaningful progress our team has leased in strengthening execution capabilities, enhancing customer responsiveness and building a more agile and resilient organization. During the year, we initiated significant capital investment of more than INR 10 billion across multiple product lines and facilities. These investments are represent critical foundations as we prepare for the next phase of growth. Yesterday, the Board of Directors have approved an investment of INR 5 billion towards creating new capacities for disconnector and drive. The capacity will be established at a new facility located at Vallam Tamil Nadu. The Board of Directors also recommended a dividend of INR 10 per equity share for financial year '25-'26, subject to shareholders' approval. In conclusion, this year has reinforced our confidence in the long-term opportunity ahead. India's energy transition is accelerating. And the need for robust transmission and distribution infrastructure will only grow stronger in the years to come. Our strategy remains clear, execute with excellence, deepen our customer relationship drive profitable growth and continue to be trusted partners in building India and global energy transition. On behalf of the leadership team of GE Vernova T&D, I would like to thank our valued customers Board investors, partners and above all, our dedicated employees for their unwavering support and commitment throughout the year. I would now like to invite Abhishek to present operational highlights.

Thanks, Sandeep. So I will take you through the key execution highlights from Q4 of FY '25-'26. And again, these execution highlights are reinforcement of our commitment to strengthening of country's transmission network while driving energy transition. Some of the notable successes for us in the last quarter in terms of turnkey solutions, so we commissioned a [indiscernible] for our customer venue with whom we had been partnering very actively, and we commissioned [ 402 kV ] AI project for them at [indiscernible]. Another key mention would be PGCIL Nagaland, which was a tough sublocation where we commissioned 132 kV GIS publication for them. It was done through execution excellence in a very, very tough environment. Another key turnkey project which got commissioned in the last quarter was for our evacuation from NTPC cargo, 400 kV AIS base along with power transformers. And then for our customer HPPTCL at the site location of [ Kanui ] Commission 220 kV, 132 kV, 33 kV AIS base along with the associated power transformer. In addition to that, we have been actively supplying our products to our customers and some notable commissioning in terms of adding further transformation capacity through commissioning of power transformers and reactors that I would like to share with you all. The first one would be PGCIL [indiscernible], were commissioned, along with [ 3500 MB, 765 kV ] interconnecting transformers. Then for a customer is [indiscernible] information. One number [indiscernible] where we had commissioned 500 kV transformers and 765 kV and then PGCIL. In addition to that, we have been actively working in terms of commissioning our switch gears, both air and gas insulated. So we commissioned the 22 numbers, 30 [indiscernible] and 400 kV numbers working with our customers like [indiscernible] and then also at Mumbai, we commissioned the GI capitation. So with this, I think we had been focused in terms of improving our execution performance, completing the projects on time and to our customer satisfaction, which is our continuous endeavor and improving the quality of education and all that we do. So with this, I would like to hand over to Sushil.

Thank you, Abhishek, and good afternoon, everyone. It's a pleasure to review what has been a transformative [indiscernible] for GE Vernova T&D, characterized by record or intakes [indiscernible] margin expansion and a fundamental strengthening of our balance sheet. Starting with our other order performance on Slide 5, we have seen an unprecedented acceleration in demand. In the fourth quarter, loans we secured orders of INR 86 billion, a starting [ 18% ] increase over the last year. This first has presented the total order backlog to record INR 214 billion as of March 31, 2026. To put this in perspective, our backlog has grown by approximately 70% in just [indiscernible]. This provides us with exceptional multiyear visibility, particularly as we begin to layer in long-cycle HVDC projects, alongside our core product and service offering. Turning to Slide 6. This momentum in order is translating directly into strong order top line -- sorry, revenue top line growth. For the full year, revenue stood at INR 62 billion, representing a robust 45% increase over the last year. However, the standout feature in our financial result is a significant operating leases that we have achieved while the revenue grew by 45% on the full year basis. This helped us to achieve an EBITDA of INR 17 billion, more than doubling versus the EBITDA of INR 8 billion in the last -- previous year. During the fourth quarter, we achieved a record EBITDA margin of 27.2%. This margin expansion is a direct result of our disciplined approach to underwriting, a more favorable mix of export and high-value services and the steady runoff of low-priced legacy contract. I would like to provide clarity on exceptional item of INR 690 million recognized in the last quarter and a reversal of INR 57 million in the current quarter. This is onetime and nonoperation chosen related to employee retirement benefit obligation on account of [indiscernible]. Turning to Slide 7, regarding the quality and composition of our backlog. I've already emphasized our successful effort in derisking the business. We have made a significant shift in our customer profile to 90% -- 98% of the backlog is comprised of private customers and utilities [indiscernible]. Our exposure to state utility, historically a point of concern for the investor is now at an all-time low of 12%. By prioritizing the high credit quality counterparties not only protecting our margins, but also ensuring a more predictive and efficient cash conversion cycle. Further, while our new order booking in this year, you are predominantly domestic at around 92%. Finally, looking at the financial position. We concluded the year with 0 debt in the balance sheet and a cash net debt of approximately INR 25 billion. This financial stand it is a clear runway to stealth and our recently announced more than INR 10 billion of CapEx program, which will expand our manufacturing capacity throughout 2028, and we remain committed to a capital allocation strategy that balances the critical growth investment and our long-standing policy of rewarding shareholders through constant dividend. With this, I'll hand the call back to the operator for questions-and-answer.

[Operator Instructions] We'll take a first question from the line of Jason Soans from IDBI Capital.

So my first question just pertains to the revenue growth, be it the domestic growth of the export growth has been very, very strong. So just wanted to know, first, I'll just take the domestic piece. Which segments are basically driving growth here in particular. And I just wanted to know, can you basically -- is it looking sustainable at similar its for the next couple of years at least?

Jason, thanks for your question. The revenue growth of 45%, as you rightly mentioned, is coming from export as well as domestic side typically do not give it by segment because we manage this as an integrated portfolio. As it is in backlog, it has grown significantly and orders still outpace the revenue, which gives us good visibility that revenue will continue to grow in future as well. The rate may be different depending on each financial year because in our backlog, there are long-cycle HVDC projects typically, which have a longer execution cycle. So those contracts will have a meaningful execution conversion starting from financial year '28-'29 onwards.

Sure. My next question pertains to -- in light of the strong inflation in terms of various geopolitical prices, which is shaping the world right now. Just wanted to understand, in terms of this, how has the raw material pass-through for us work you could speak in terms of both HVDC as well as [indiscernible]?How do you manage our contracts and our services to the raw material past?

Given in our industry, typically, the transformer business has a price escalation clause, the transformers we are supplied directly or as a part of it, they all have the escalation cloud. For the other part of the business, we -- basically our past ongoing trend and the estimated future trends. We include the cost inflation estimate in that, when things change to protect our margins anticipated at the best.

Okay. Okay. And sir, just also wanted to know in terms of localization, in terms of percentage, where are we in [indiscernible], what is the maximum we can go to in both the portfolios?

So Jason, localization part, we are well within the localization, which has been defined by the government of India requirements. And most of the things is now with the new CapEx coming in for [indiscernible] and controls, the end product, which is essentially required for HVDC will all be manufactured in the Indian factories only. However, at component level, there are still imports, which will be required. But then what happens is that, for example, in the example of or any other products. So localization is a much longer journey because you have to first identify the component allies, then develop them, test them. So once the factory comes up and then we start the supplies, then the localization journey for [indiscernible] volume controls will also start at that point of time. But we are compliant with the requirements of the government of India, I should say, for localization.

And just finally, sir, I just wanted to know in terms of when the refurbishments and the ablations are happening for the HVDC. Just a clarification. Does it necessarily become VSC or the LCC or it's not necessarily that the LCC project will be converted to our VSC? I mean I just wanted to clarify that aspect.

So normally, if you have -- so there are -- for example, there's only one VSC project in India. The second one, we will be building. So obviously, refurbishment of VSC is not required as of today. But example, we have won one project in December from power. So for the projects which have been executed like about 20 years back or 25 years back, there is a pipeline of refurbishment of projects for HVDC as well. Formerly, if you go from LCC to VSC, then you can choose the cat to change only the cars in the convert part of it or even if you want to change the transformer, there are more as identical. But if you change the technology, like from LPG to VSC, then it is like changing everything. Because with that, VSC the whole structure, including the filter requirements and those things will change. So it is possible to change from LCC to VSC, but then the scope becomes more wider and -- so the shutdown requirements and the CapEx for the refurbishment will be harder.

Sure. So it will depend on project to project. That's what you're saying, sir?

It depends upon the customer, but what kind of refurbishment they want to do.

Next question is from the line of Amit Anwani from PL Capital.

First question is on the order intake for the quarter, which was roughly about 8,600 considering that it must have included the portion of the VSC orders. So I just wanted to understand how much is the out of this? And if that is the case, the conversion this quarter seems to be on the lower side, even in the domestic market. So some color on the order inflow this quarter would help.

So Amit, yes, you are right that this includes the VSC order which we have done from [indiscernible]. So as a policy, we don't declare the order value because that is also protected by the customer confidentiality requirement. So we'll not be able to share the customer order value. Second, also, but you have to see, Amit, in the sense that whether it is HVAC or water is HVDC. At the end of the day, it is part of the transmission scheme. And it's a technology to evacuate power from a generation source to the more area, which is there. So it doesn't make a difference whether that HVDC should be seen as like one-off or should be excluded and then it should be seen? Because at the end of the day, for example, transformers are also required for HVDC to you use those capacities to take a higher order profile. And if you really look at our full year number, so against a INR 10,700 crores, we have delivered close to what more than INR 10,000 crores for the INR 14,700 crores for the year. Of course, you know that for us also, when we see that order intake for us should be seen more in more in a yearly environment rather than a quarterly environment because quarterly, there are times and decisions get delayed and things like that. So if you look at our perspective, on a high base of INR 10,700 crores. We have been able to grow by another 37% and reach a number of [ INR 14,726 ] crores.

Right. But sir, in terms of pipeline, so are we still thinking that 7,000 to 8,000 base order, which I think earlier we have been discussing that can gradually grow for the next financial year? And also, update on the HBC orders, which others you are building and what is the stage that will help for the domestic ordering pipeline, yes?

So yes, we remain confident on achieving the base order number of INR 7,000 crores or the number which you are talking about, about INR 7,000 crores. If you really look today, for example, we have more than about 33 projects which are under bidding under TBCB. And then we have further patents now coming up in uterine other segment as well. Also, when we look at the HVDC part, of course, I'll not be able to tell us which tenders we are bidding and not -- but for example, there's only one tender which is live today, which is baler. So the tender has been issued, the TBCB developers are working to submit their bid Presently, it is getting extended. So we are not very sure that what will be the time line for the ultimate submission. But once that is done, we expect to be done soon. So once that is done, and obviously, the opportunity will be there to us to secure the center.

All right. Sir, lastly, on the export data center, you mentioned there's a very strong pipeline. Just wanted to understand what is the proportion of data center in terms of order inflow, order book, and that will help. And are we seeing the domestic data center also there is a demand for your products in the domestic data center market? Some color there would help and the proportion in the order book or other inflow from the data center?

So today, data center market is not that big in India. So it's like close to about 1.5, 1.4 gigawatts that type of size of data center market, which is already installed. But we expect this market to grow to a medical number in the next 4, 5 years. Today, that's not because it's not a significant number and most of the data centers, which have been installed are at [ 220 ]. So if you look at the proportion of the order backlog, it's very insignificant. We expect when the data center sizes will grow and will be 400 kV and 765 kV. At that point of time, we expect that to make a meaningful contribution in our overall backlog.

Right. But do we think that the export could be much larger port because we have seen in the U.S. and the global commentary also from your parent and others, that data center still much growing piece. So are we expecting exports can ramp up even faster from this level because of the data center orders you might be anticipating over the next 24 months?

So of course, the next 12, 24 months, we'll not be able to give a speculation on that at what we are expecting. But yes, the data center story, when you look at the U.S. and all, it looks to be very strong, so not strong, but it looks to be very strong. But mostly, for example, our scope with the products only there because we don't do projects or total turnkey scope in markets like U.S., et cetera, because we have other entities doing there. But definitely, whenever there is a requirement and they reach out to us for the support in terms of product supplies.

Right, sir. Sir, what was the promotion for this full year product process project for us? That's my last question.

So I mean, we don't typically disclose the project versus product. As I mentioned earlier, it's like one [indiscernible] portfolio that you mentioned. But definitely, the project has increased because we put a large HVDC turnkey order in this quarter. However, I will highlight your attention to an important element that projects were challenged when we were largely a state related. And as I mentioned in the earlier part of the call that the proportion of our exposure or the backlog to the state utility state sector has actually reduced to less than 2%.

We take our next question from the line of Parikshit Kandpal from HDFC Securities.

Congrats on a great quarter of great financial year and phenomenal performance and margin. First question is, earlier in the call, you highlighted about the export market, but I think this that sports has been very muted, and we've only recorded INR 1,200 crores of order. So INR 3,200 crores in FY '25. So what has changed? And I know you can relate it also to the RPT approval. So if you can help us understand how the RPT approvals, which you have taken converting into order because I see the mix happen there? So that can be INR 900 crores, which we took in June and then now this local grid, if you can understand the [ INR 3,000 ] crore is forward and this U.S. RPT of 1,300. So you can help us understand how it will translate into orders in the FY '27.

Thanks, Parikshit, for your question. So in terms of your first question on the export orders actually booked in the current financial year, which is about [ INR 12 billion ]. So last year, number had large export orders that we highlighted. Excluding the large order, our base orders have actually gone 15% to 20%. So we see a healthy underlying trend in terms of the growth trajectory, excluding the [indiscernible]. Now coming to the large orders for which we have taken the RPT approval, the RPT approval that we took in the last year, that project is still active. There is a delay in the decision from the customer, and we are in constant discussion. And as I mentioned in the last call, we expect the year to be in the second half of the current financial year on the [indiscernible] '27. The second RPT prevent that we have taken is for a U.S. entity. That order is again, active and moving part. We have concluded the shareholder approval. I think it was yesterday that the vote is improved. We'll be filing a stock exchange communication today. And we expect that opportunity to be decided in the current quarter. The third approval that we had taken was for you to this solution that was largely -- on the buy side, where we need to secure the product's key components on the HVDC test. And that order also is expected to place in the current quarter.

That is the purchase. So that will not reflect in the order book. So that is going to the [indiscernible]?

Yes, absolutely. So this is an order that we placed to the U.K. entity, but it is to feed the large [indiscernible].

But whatever is the value we have not disclosed on the [Technical Difficulty].

I'm sorry, Parikshit, you're sounding muffled. Can you use your handset more, please?

So this -- so whatever is the realization in our books on revenue. So it is a respective of whatever we give it to the U.K. and being close to us in the revenues for this order, the [indiscernible] order.

Absolutely.

Okay. So now this -- what is the U.S. order patents it like on any particular product? And particular segment. So if you can give some granularity on that. And whether now I think this is the first order from U.S. in our history. So how do we see this U.S. market evolving? Because in the past, I think [indiscernible] had spoken about once the tariff issue is utter then you start that market open us for us. And now we have another entity project there. So how do we fit in, in the scheme of things for the U.S. market?

So correction is for high-voltage products for the data center market. this order is there. And so this is being negotiated and discussed at the U.S. See, of course, chronic is there, but also depending upon the requirements, delivery schedules, et cetera, and the requirements, whenever it is required, the U.S. entities will reach out to us and we will support them in terms of supplying and help them in pose a larger order [indiscernible] project oriented.

Okay. And I think our parent had highlighted that [indiscernible] will have a low voltage distribution strategy going forward. So for the listed entity in India, how does impact [indiscernible] a product? So will we have any space to play there or need old to play there for if this at all happens? So how do we look at that opportunity in the distribution market?

Parikshit, 2 thing here. So one is a U.S. distribution market is a different volume and Indian distribution market with a different engine altogether. So -- and role has been present into the distribution range not from now, but since many decades. So they are not entering into a new domain. So they have been into distribution sector, and they will continue to participate in distribution sector. Here today, we don't have an industrial unit today, which is, of course, and we are aside the automation and the software part. But on the product side, which is the transformers, et cetera. Today, we don't have an industrial setup, which applies to the distribution sector. We have to participate in the distribution sector, then it will require either an organic growth or inorganic capacity to be builded. And you know the price levels and quality considerations and even the participation of players like is not going to value add in terms of margins where we have leased. So I don't think that's a strategy which is -- which we can replicate in India from U.S.

Okay. So for us, like -- even like [indiscernible] there is an opportunity in India, so it's not possible. And anyway, we are not interested in doing it because it's not as a big commercial sense is the right thing to understand from this?

You cannot manufacture a transformer in U.S. and supply to our [indiscernible].

Right. And just the last question on the export market again. So what is the exposure to the Middle East and even on orders, spot ones? And this market looking on? Because you said that earlier, the 60 countries we are present. So I just wanted to understand will FY '27 will be a big year for exports because there will be a trickle over from FY '26 of our maybe new RPTs will also come in FY '27? So is it right to understand that FY '27 will be very strong in exports and also to open up new markets because I think Middle East, we don't have any substantial exposure? So how are you reading the Middle East market. In light of the Vietnam, the parent has announced a big CapEx. So how does it also impact us in the RPT side, so if you can cover all these things? That's my last question.

So I think Middle East, we don't have much of an exposure. So we are not impacted directly by the Middle East geopolitical situation. This again -- so on the '27, so if you are able to conclude with this order of what we are. So you said that we did INR 1,200 crores in last year. So this order itself will be close to about INR 1,400 crores, INR 1,500 crores. So in the first quarter itself, we will be able to exceed if we are able to close this order what we did last year. And of course, then we still have 3 quarters look. We remain bullish on export, as I said, but let's see how the overall space evolves.

So on the midterm, the export can be as big as the base of this business, excluding HVDC for India because I think that's about 70 billion, 80 billion but over the next 3 to 4 years, can export match up with the base models in India? And in light of the Vietnam investment, anything -- I mean, will Vietnam impact us at all because I think in Asia, we were the most cost effective noting also expanding. So will it also compete with us?

So Parikshit, so Vietnam transformer factories basically for HVDC CapEx which is coming. And there is a lot of projects expected in the East Asia part of it like it could be Vietnam, Japan, Korea and other geographies, Singapore, et cetera. So that is one thing. Second, I think when we look at, for example, when you said that can the export market be as big as the local market I say that we don't take a decision to take an order, whether it's a domestic market or an export market. We look at the various of things like, for example, terms and conditions, cash flow, margin. And then we take a call. So depending upon -- theoretically, if you ask me, yes, why not it can be. But practically, it looks to be difficult that we will be able to match and export potential as it is equivalent to our base potential of the [indiscernible] number.

Next question is from the line of Umesh Raut from Nomura.

Congrats for a very good set of results and ending FY '26 on a strong note. So my first question is on the margin outlook side. When we started FY '26, you guided for low 20s kind of margins, but ultimately, you revised it twice to mid-20s and then high-20s. So how should we now look at probably FY '27 in terms of margins?

Umesh, we continue to maintain that we endeavor to deliver mid-20s kind of margin going forward. We can enable to improve further, wherever there are areas of improvement, including various productivity and cost control leases that we continue to take in tonnage in our precision.

Understood, sir. Sir, one clarification. In fourth quarter, we saw other expenses going up by about 30% quarter-on-quarter and 41% year-on-year. Was there any one-off during the quarter in other expenses?

In the fourth quarter in other expenses, there were about INR 500 million of mark-to-market on the foreign currency derivatives, which is an accounting notional expenditure.

Okay. So about INR 50 crores, you said?

Yes.

Okay. Okay. Understood. My second question is pertaining to the capacity expansion that we have announced closer to INR 55 crores towards creating capacity for disconnects and drive for [indiscernible].So I just wanted to understand the thought process behind this? Is it towards backward integration so that we can achieve higher margins? Or is it pertaining to the philosophy of becoming Indian operations as a part of, say, global federal factory for a few products to global parent?

So it is both to make that for certain product, it will be a global feed refractory. And for example, disconnected when we talk about basically disconnect is a product which was there in our portfolio, which was manufactured in [indiscernible], then because of very bad pricing environment at that point of time. The disconnect -- we stop the manufacturing of this kind of because if you look at the initial few years, 765-kV [indiscernible] all the subscriptions have been it these are now make connectors and our quality was very good. Now we are seeing demand, which is now coming back. So disconnector is a very important requirement in a transmission network and [indiscernible]. We are now getting this feedback from various customers that they want because of the good quality, they are -- they want our discounters to do that. So that is why we have decided to now we start this disconnector as an additional product for the Indian market.

Understood, sir. On the grid automation side, in last 4, 5 years, we won 2 large orders in the domestic market. So any color over here? Is there any large orders you're anticipating in terms of tender on the lines of probably wide area monitoring system or probably, say, great digitalization in certain corridors. So any kind of color over here? And whether we can also supply or fulfill orders for grid automation in export markets as well?

So this was not for grid automation, but this was a software business image because both are part of the sales business line. But then grid automation at the subscription level and software is there then network. It's a large order what we had reported in the previous year was related to the software business. So yes, there is one tender which is going on, on the software side. And, for example, wide area monitoring extra, that's the need of the hour, and we expect in time, a few more tenders to come up on wider monitoring. And yes, that could be a good opportunity for us to again make a meaningful impact in terms of software orders. Regarding globally, on the software side because this is basically a software development part of the [indiscernible] platform is ready where you have a global platform. So mostly from India, we are doing for India, not for the export market.

Okay. And on services side, are we in a position to supply say on-site engineers from India operations to global projects, especially complex projects like HVDC, whether it is in Europe or in North America?

That's part of the engineering CA, but that's not part of [ GTBS], they're a different entity for that.

Next question is from the line of [ Rahul Kacha ] from Macquarie Capital.

Yes, sir. Congratulations on good performance in the year. My first question is on the royalty and the tech sales that you paid to the period for FY '26. Is it possible you can spell out that number? And what was the comparable number in FY '25?

Rahul, royalty and related group charging, they follow a revenue linked formula that has been broadly consistent for the last [ 10 ] years. In FY '26, we see about INR 1.9 billion, approximately 3% of revenue compared to about INR 1.4 billion in the previous year, which was around -- result earlier year, which is around 3.5% of [indiscernible]. The formulas are consistent depending on the mix and related competition. There will be a small change in the percentage of year-over-year. So is this basically means tech license fees, trademark fees, data management charges and corporate headquarters that [indiscernible].

These are the fourth line items, which would be a part of [indiscernible], et cetera. Is that correct? Is that right understanding?

Yes. So this includes technological license fees, trademarks and [indiscernible].

And data management is not a part of royalty?

No, no. Data management is operational expense, which is separate.

Okay. This is very helpful. Second, [Technical Difficulty].

Rahul, I'm sorry to interrupt. Can you just use your headset more, please?

Yes. So with respect to the HVDC of [ Barber ] to the South Kalam project, which is under bidding at this point in time, if the size is expected to be anywhere between INR 25,000 to INR 30,000 crores, typically, the rule of thumb, how much would be the share for companies like GE or some other players, the supply part? Is it 60% is something how one should look at it?

Sir, Rahul, this changes from project to project, for example, if it's a INR 25,000 crores, INR 30,000 crores, import the line is 800 kilometers then the share will be more same project if the line becomes 1,200 or 1,500 kilometers this share will change.

Okay. Fair enough. I think that is fair. And in margin, I think we've already spoken about the margin. And I think somebody had asked this, but I just want to comment. Given that this we have booked by HVDC and I think this is the fourth HVDC that we have booked in India over the years, how have the import cutting changed, say, in the last 3 years or 5 years? And how is it today? I just want the quantification in terms of how much localization has happened.

So the local content has changed drastically because when we booked the earlier projects at that point of time as per the tender requirement only like 1/3 of the transformers could be supplied from India. But now you can supply 100% transformers from India. And now we have open -- we are in the process of opening the balls and the controls and everything from India only. So you would have seen that in one of the CapEx announcements, we have also said that we are putting up an air core reactor facility. So local contains will not be drastically better as compared to what we did in late about 2012 time when we take that order.

Okay. Sir, and my last question is on the CapEx. The INR 1,000 crore CapEx, this will be -- how much will be done in FY '27 and how much will be spent in '28? Is it possible to bring that number out?

So we don't have [indiscernible]. It will be a phased manner from beginning of '27 until the end of '28.

Next question is from the line of Renu Pugalia from IIFL Securities.

Congratulations for a super year went by. Now my first question is on the [indiscernible] project, which we have secured for ever on the technology side. So what would be the localization plan for this new technology platform in the Indian domestic market. Given that if you go back by CK-1, CK-2, we were significantly ahead in terms of localizing it. So when it comes to VSC technology, what are your plans to localize as the first question?

So I think renewed the requirement of localization for the BSI is not there. But then we are examining the possibilities of what can send, for example, controls and all since we are building the platform for you have controls in India. So when everything -- so by localization, it means that the product will be discussed from India a large part of the study is integrated testing will be done. But the hardware for those panels today, there is no supply chain in India. So that we are still dependent on sources, which is outside. Transformers, et cetera, and other things anyhow are going to be supplied from Indian factories only.

Right. So would it be fair enough to assume approximately 50% to 60% share of the total project value would be local value add or assemblies coming in for the Indian listed entity? Or it could be higher?

It will be difficult to give a number.

Sure. Sir, second question is slightly more longer-term perspective, given the demand supply gaps we have seen and the keep margin mix coming through for everybody in the industry, including your nominal. But given your experience and understanding of the cycle, in your view, how long could this pace continue for another 12, 24 months or it could potentially stretch to 6 months also further from your [indiscernible].

So Renu, I think if you talk to anybody in the government, they will say that this is a very long-term story. And if you look at the CapEx, which is now being invested by most of the company, everybody believes that it's a long-term story.

In your view should start commencing well, 18 months down the line or it could get slightly pushed back further?

You have to understand one thing is that last time when there was an up cycle in India. It was only in India, okay? This time, it's not only in India, but if you look at the U.S., Europe, Middle East, Australia, there are a lot of geographies where there is an up cycle. This is not an isolated Indian phenomenon. That is the first thing. Second, today, if you would have seen the presentation, close to about 30% of last year's revenue came from export. Today, we are also driving -- or we are also driving a lot of export potential from our Indian factory. So we are not -- I said it, obviously, we are dependent to a large extent on the Indian market, but then export also plays a meaningful role today. And today, if you look at the list of HVDC pipeline, you get 1 HVDC order and then, for example, whatever, more than $1 billion to be executed in 4 years, but looking at the back-end execution, even a 30% execution contributes to maybe INR 3,000, 4,000 crores, INR 5,000 crores in a year. So this time, the cycle is different the market is different and the longest of the cycle looks to be more sustainable.

Absolutely. Fine. And one last small understanding if I can share with you and get your thoughts on, especially for the Indian data center market, as you mentioned, it's not as large enough currently just about 1.5 gigawatts and projections range anywhere between 6, 7 gigawatts to up to 10 gigawatts in the next 5, 7 years. But in relative terms, if we see that India moving from 1.5% to say, 6 or 7 gigawatts in the next 5 years, it would just an incremental 5 gigawatt of data center demand. And if 1 compared with the power generation incremental demand, you have on MDP type of projects with 5 or 6 units of superficial. We're anyway adding 4 gigawatt by single project. So from that technical perspective, from an Indian domestic demand dynamic, data center may not become as large a piece of the demand driver in the domestic market as the way it is there in the U.S. or other markets where other sources of demand for the rate equipment is [indiscernible]. What would be your thoughts there?

So Renu, I think if you would have asked anybody 2 years back in U.S., did they see such a large data center business, anybody would have said no [indiscernible]. Okay? So sitting there, if you take the example of U.S. and if something similar happens when we're looking at a much higher demand of data center. Also we've had that today, for example, it's a cumulative installed capacity of 1.5 gigawatts, but maybe going forward, every year, you might see like 4, 5 gigawatts of data center coming every year. Also, you are right that on MPPs like about 5, 6, 7 gigawatt. But data centric gives you a better realization of better realization of prices for the same products.

Next question is from the line of [ Oman Kuruvilla ], an Individual Investor.

My question is, can you throw some light on your foray into nuclear energy in collaboration with [ Hitachi ]?

So thank you, Mr. Oman. We are actually a transmission company. So GE Vernova has multiple entities in India. So we don't deal with power generation part of the GE Vernova business. So that's a different legal entity. So we are not in a position to answer that.

Next question is from the line of Mahesh Patil from ICICI Securities.

Yes. Sir, my question is on the HVDC India order. What can we expect, although you mentioned that majority of the edition would be FY '29 onwards. What can we expect in the first couple of years? Can we expect around 30% of execution in the past 2 years?

It should be lower than that because first 2 years are largely in dining and in the profile supply chain. Most of the revenue starts, as I mentioned, from the FY '29 onwards, where the supply of metrics [indiscernible].

Okay. But will it be lower than 20%? Can we have some range?

If I give pleasant [indiscernible] execution.

Next question is from the line of [ Sankar Sharma ] from HDFC Life.

I just have one question on the domestic transmission bid pipeline as you look at FY '27, the domestic market that is versus last year. And just to put this in context, we've obviously seen a slowdown on the TBCB bids being placed in '26 also reflected in the order books for Power Grid kind of flattening out. So just trying to understand, I mean, obviously, new PPAs are covering. So obviously, we have a problem on the generation side. So just trying to understand, when you look at your pipeline for the coming year in domestic market, coming off a very high base of last year and not nearly. But for the industry as a whole, how do you see that kind of shaping up? What kind of growth do you see in that pipeline for [indiscernible]?

So I'm not seeing a substantial growth in the pipeline on core. But I think it's going to remain like a consistent pipeline. So normally, if you look at the numbers which are there, so on a high-level number, when you talk about -- when you talk about, for example, the new NEP document, which has been issued. So under implementation is like close to about 500 gigawatts for the transmission schemes up until 2035 to be built is like 400 gigawatt. So, there's a lot of ordering, which is still to be done. But for us, why it's going to make a more meaningful impact there are, like, for example, more than 10 HVDC projects listed. If there is a part of the demand which is shifting from AC to DC that is more mutation for companies like us.

Just for the next 1 year point of view. Any numbers you can share or anything in terms of your bidding opportunity, anything that you internally measure?

If I look at [indiscernible] pipeline, which is there today, we have about 33 packages, which have been build out and the final RA and other things have not happened under decision-making process come that 33 number projects out of that [ 25 to 75]. So today, at least, there is a decent pipeline available on the table.

Next question is from the line of Mohit Kumar from ICIC Securities.

Congratulations on a very, very strong year. My first question, sir, can you please confirm that localization requirement is 0 for HVDC [indiscernible]?

Yes, that is my understanding. Of course, we are not at 0, so it doesn't matter for us, but that is what was decided by the government. For [indiscernible], it was made 0 because that was a VSC technology. So a few of the bidders that requested through that.

Understood. Second, do you see slowness in order finalization in current quarter in the domestic market compared to last year?

In the quarter, which you mean like April to June? Or do you mean...

Yes, it looks like the Q4 was very dull for us. Is it true statement?

Yes, you can say that it was slightly dull for us, but that was a conscious decision, I look to it like that.

Understood, sir. I understand the [indiscernible] HVDC upgradation we're expected to play a major role. Do we expect this to get finalized in this fiscal?

So that will -- that's a project which is being discussed. So we'll not be able to share any details in this call on that product.

Understood. And do we have the capability to produce the [indiscernible]? And how do you see this opportunity evolving in India? And are you looking to localize it?

[Technical Difficulty].

Sorry, sir, we are unable to hear you. Ladies and gentlemen, we have the management team back online.

So Mohit, it is basically the other businesses of [indiscernible]. So the product is there with Varana but not with the over the end of India.

Understood. My last question, sir, the long-term start costs expected to get awarded in the given a lot of activity -- bidding activity happened. But some of you haven't seen any finalization in the -- and great finalization in the last fiscal year. Do we stick this particular opportunity to improve in FY '27 and a lot of finalization?

Yes. We expect that to improve in '27 versus '26.

The next question from the line of Subhadip Mitra from Nuvama.

I missed the early part of the call, so pardon me if this is a repeat question. Firstly, on the fourth quarter numbers, gross margins have expanded quite a bit. Just wanted to understand that, is this a regular course of business? Or is there a one-off or one particular order which has led to better [ investment ]?

Subhadip, everything is normal as the business because we have executed all the operational projects in the quarter. The gross margin for the quarter was higher because we had a very significant part of revenue coming from the export business. And also, operationally, we have, as I mentioned, over a period of time, made 2 strategic and it shifts from state to the central and private customers, which helps better execution. And at the same time, the productivity and lean-related factors the actions that we have been taking over the year are helping us to deliver and it became better.

Understood. So if I adjust for the INR 50 crores MTM, which is effectively a one-off, you would have had much higher EBITDA margins at least for the quarter?

Sorry, could you please repeat the question?

Yes. So I'm saying that in the other expenses, the mark-to-market INR 8 or INR 50 crores is a one-off. So if I look at it from that perspective, the EBITDA margins would have been much higher and at least for this quarter a quarter, [indiscernible] what been reported?

Yes, you may interpret that way. But if the MTM loss was not there, EBITDA will have further better.

Perfect. Perfect. So on the same line and since exports is such a high value driver, so do we see, let's say, over a 3- or 4-year period, export mix can expand further, maybe to 40% or more. Is that a possibility?

So we typically do not target a particular mix from particular segment as we look at it as one integrated portfolio, and we would appreciate that HVDC is also a very key focus area. So in our backlog, obviously, the and the quarter and the year order booking exposed as a mix have reduced. But on a like-to-like basis, comparable basis growth have grown. So mix will change, but the entire business the effort for the management is to grow and improve in terms of dentition profitability.

Secondly, on the GCC side, while we understand that barges under bidding and there are maybe more than 10 projects as Sandeep highlighted, which are expected to come over the years. Is there any visibility of what is the next 1 or 2 GBC projects expected to get ordered out after [indiscernible], let's say, in FY '28 or '29?

I think one of the projects which has been listed [indiscernible].

I understand this is also an LTT project.

Yes, yes. This is. I think next, all projects that we are looking into, this is all [indiscernible].

I see. I see. I see. So roughly one project per year or thereabout is something that one can anticipate in terms of [indiscernible] side?

If I look at that pipeline, they say that about 10 projects of Rajasthan to be executed by FY '36, which is like 10 years from now. So that way, if you look at that will be like one project, but then we expect other opportunities also to come in, for example, if [indiscernible] comes and then there might be other HVDC projects from private developers also which might come in for city and feed requirements, et cetera. So it can be more than one [indiscernible].

Understood. Understood. Next, if I look at, you are expanding capacity, and that's expected to come up over the next, I believe, 18 to 24 months. So on an expanded capacity base, what kind of keep top line can you target, let's say, over a 2, 3-year period, that will be some ballpark range?

So if you want to lay out a number because as we know that capacity and the venues may not be proportionally linked because of the HVDC where we can contribute more to the reveal depending on how much HVDC we execute because not the entire HPD petition require. If it is [indiscernible], there's a lot of manpower, which can be increased basis the need for the HVDC as well as a lot of out -- but as it cost you to apply some cetane ratios to our [indiscernible].

That's what we typically do, but just sorry if I could get a confirmation from me, but not a worry. Last question from my side is in terms of the overall annual CapEx pipeline, let's say, from an India transition perspective, right, I mean, we talk about [ INR 8 lakh crores, INR 9 lakh crores ] spread over the next 10 years. I assume that also includes the HVDC opportunity. So roughly maybe INR 80,000 crores to INR 1 lakh crores of annual T&D comps is what we are hearing. Would you say that that's essentially where overall PND market in India will later out that?

[indiscernible] Subhadip, because that basically comes from the MEP document. If you look at the NEP document, that doesn't include, for example, you have thermal transmission of a question. So if you have heard that the government about 85 to 90 gigawatt of thermal capacity. So I think that transmission will also be there, then the industrial CapEx, when you have the data center in time, we will have green [indiscernible]. In addition to that, for example, the transmission is also required at the generation end. So that is all not included in that CapEx. So I think if you include that, that number is going to be much higher.

Ladies and gentlemen, we will take that as the last question. I now hand the conference over to Ms. Megha Gupta for the closing comments.

Thank you, [indiscernible]. Thank you all for joining the call today. We hope that the insights provided by our speakers have been informative and valuable to you. If you have any further questions or require additional information, do not hesitate to reach out to me or our communication leader. Thank you.

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