Genus Power Infrastructures Limited (530343) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Genus Power Infrastructures Limited Q2 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kailash Agarwal, Vice Chairman of Genus Power Infrastructures Limited. Thank you, and over to you, sir.

Good evening, ladies and gentlemen. A very warm welcome to Q2 FY '21 earnings call of Genus Power. With me on call is Mr. Jitendra Agarwal, who is the Joint Managing Director of the company; and SGA, our Investor Relation Advisers. The results and investor presentations are uploaded on the stock exchange and company website. I hope everybody has had a chance to look at it. Our business operations have recovered to a great extent vis-à-vis the previous quarter, though it will take some time before we reach pre-COVID capacity utilization levels. Despite challenging environment, we are pleased to have reported significant improvement in financial performance as compared to the last quarter. We have recorded sales of INR 165 crores for Q2 FY '21 as compared to INR 84 crores Q1 FY '21, a jump of almost 97%. The improvement in revenue was on account of improvement in capacity utilization, better price realization, along with improved product mix. For Q2 FY '21, EBITDA profit stood at INR 34 crores as compared to EBITDA loss of INR 2 crores in Q1 FY '21. EBITDA margins stood at healthy 20.8% on account of raw material prices, better product mix and better absorption of fixed costs. Profit before tax stood at INR 30 crores as against loss of INR 5 crores in first quarter. Onetime provision of INR 12.6 crores related towards settlement of past litigation under the Vivad Se Vishwas Scheme 2020 impacted PAT, which stood at INR 6.8 crores for Q2 FY '21 as against net loss of INR 3 crores Q1 FY '21. Excluding the onetime provision, our PAT margins would have stood at a very healthy 11.7% despite suboptimal capacity utilization. Cash PAT stood at INR 25 crores for Q2 FY '21 as compared to INR 2 crores Q1 FY '21. We are confident of significant improvement in our business operations in half-yearly -- second half of FY '21, provided there are no further shocks. Our current order book stood at INR 1,068 crores, which gives a healthy visibility for growth over next 3, 4 quarters. The order inflow has remained sluggish as the tendering process has been slightly delayed and spilled over to the second half of this financial year. We expect robust order inflows to start from the month of November. State Electricity Boards are in transition phase to draw out the detailed rollout process for shifting procurement from conventional meters to smart meters. Also, we will remain very conservative in selecting our clientele with security of payment being a key focal point. The distribution sector is the weakest link in the entire power value chain and greatly affects power generation companies. The issue of under-billing and under-recovery of collection is resulting in more than INR 1 lakh crores of revenue loss and value for DISCOMs. Smart meter metering solutions integrate electronics meters with the billing software of DISCOMs and improve their billing efficiency to almost 100%. Therefore, a lot of thrust is coming from the central government for deployment of smart meters across India in order to lower the AT&C losses, improving billing efficiencies, reduce DISCOMs' financial growth, enhance consumer convenience and rationalize power consumption. Our recent report by Energy Efficiency Service Limited (sic) [ Energy Efficiency Services Limited ], the agency responsible for the implementation of smart meters across the country shows that all states where smart meters are installed had good results with an average increase in billing of nearly 25%. Utility companies are estimated to recover their entire investment in smart meters in just 2 to 3 years by the way of huge savings from decrease in power theft and increase in collections. The government is considering another reform scheme aimed to -- aimed at investing funds in network infrastructure like smart meters. The scheme would parallelly involve the implementation of compulsory prepaid smart meters for 250 million households in the name of lowering AT&C losses of DISCOMs to 12%. The new scheme is likely to have central funding of up to INR 1.1 trillion, USD 16.3 billion, over 3 phases and remaining balance of INR 2.9 trillion, USD 42.5 billion, will be funded by states. Thus, we foresee a lot of traction in our business going forward. The proposed Electricity Bill 2020 may also serve in the major distribution reforms. Government is in process of drafting Standard Bidding Document and outlining the terms and conditions for deployment of smart meters across India. Prequalification criteria is likely to become very stringent to facilitate the entire entry of only quality companies having robust execution track record. EESL, along with the National Investment and Infrastructure Fund, NIIF, has formed a JV, IntelliSmart Infrastructure Private Limited, to implement the smart meter rollout program of power distribution companies. The demand is now likely to increasingly shift from conventional meters to smart meters. We are confident of sustaining our margins going ahead as product mix changes in favor of smart meters. Also, as proportion of smart meters in the overall pie of meters increases, the margin profits of our business will gradually improve. India's energy consumption is set to grow at the rate of 4.2% a year by 2035, fastest among all major economies. More than 28 crores consumers are grid connected, whose conventional meters will need to be replaced by smart meters. Thus, there is a tremendous growth prospect for us in the years ahead, and we are fully geared up to capitalize on this enormous opportunity. We have continued to focus on technology upgradation and operational efficiency to serve our long-lasting relationship with our clients, which has engraved our leadership position. In smart meters, company will also have a lot of opportunity in terms of recurring revenue as facility management, FMS, would also be part of the contract. We, as a company, are specifically targeting recurring revenue as a revenue for sustaining our growth. We also plan to provide our domain-related software to our clients. And we are focusing mainly on the software, and basically, making Genus as a technology company. We can now open the line for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Pankaj Bobade from Axis Securities.

Am I audible?

Yes, you are.

Sir, you mentioned about Genus being a technology-oriented company or you taking it to a technology-related company. Just wanted to understand how -- what is the road map for that? And how much of your share would be from smart meters? And how much of that would be say, as you mentioned, recurring or ancillary services, services-related services, returns over a period of time, so maybe 2 to 3 years down the line?

I could not get your question very clearly. It was breaking in between. What I understand is [Foreign Language] you want to know out of the current order book, how much is smart meters and how much is conventional meters?

No, no, no. Can you repeat your question, Mr. Pankaj, please?

Sure, sure, sure.

And how much is the recurring revenue FMS?

Sir, that is one part of the -- my question. My question is, you -- as you mentioned that you're going to take your company being a technology-oriented company. So going forward, maybe 3 years down the line, how do you see -- what is the road map for that? How do you see the revenue breakup between the smart meters and the services associated with it, recurring services, as you mentioned?

Got your point. So first of all, Genus is already a technological group. We have Government of India recognized R&D center from the last 20 years. We have NABL approved lab from the last 20 years. So smart meters or electricity meters are being designed, developed, manufactured by a technology company only. So Genus is very much a technology company. And when we said, Government of India recognized R&D center, we have more than 250 engineers in that R&D center. And out of 250, 100 people are with the software. When we relate companies to the software, then it is a program software. We do a lot of embedded software also. So even though this is a technology company, we're going to clarify that very specifically. If you see the current order mix of -- with 3, 4 orders we have, where we have to do FMS. So generally, the FMS is to be done for 5 to 6 years. So it depends on the contract to contract. As on date, our FMS order book is around INR 100 crores. So you can divide this INR 100 crores in the next 5 years. So that would be the recurring revenue. I'm giving you a very large picture about it. I hope I answered your question.

Okay. Sure. Sir, one more, if you allow me, what is the -- how is the industry shaping up? Because as you have very well mentioned that 25 crore meters are to be replaced going forward. And this will help the DISCOMs to save on AT&C losses. I very well take up that point. But I wanted to understand who all are the players? I also understand that Reliance is planning to enter into this field. What are the kartoos? And where do we stand?

First of all, Reliance is a telecom company, and Reliance is not entering this market. If you see the AGM of Reliance, even at that time, this was mentioned, because this is like one more portfolio for any telecom company. And Genus is working with Reliance as a telecom company, not only with Reliance, with Airtel and Vodafone from last 1.5, 2 years. All these smart meters have a 2-way communication, and all this communication is primarily hold by these 3 telecom companies in the country. So Reliance is not doing something -- rather -- we as Genus have already integrated our leaders. We have done some pilot projects with their NB-IoT communication. So Reliance is not entering any new. This news was definitely a big news. Everything that comes from Reliance, people have -- completely take it very greatly. As making company, we are very happy when these large companies like Reliance, Airtel, Vodafone, they will take interest. The biggest challenge what we are -- what these companies -- what the DISCOMs are facing is the financial challenges because such large companies come into the foray, that challenges also getaway to a certain extent. So as of -- as Genus, we are very happy when such large companies are taking so much of interest in the smart meters because unless the telecom companies take fullest interest in the smart meters, the smart making cannot happen in a very large way. At the end of the day, communication is held by them.

And their main interest is their recurring revenues they will get from that.

Even today 2 point -- 20 lakh, 25 lakh smart meters which are running in India, at the end of the day, these all smart meters has to be connected by any telecom company. Finally, the data is transmitted by them only. They have the communication, nobody else does it.

Okay. With the deep pockets, is there any possibility/probability that they dislodge any player and take his place? Just a thought.

Yes, your thought is wrong, but why a company like Reliance would like to get into any kind of manufacturing business. And even if they want to, Reliance or Airtel, today, we are also into the same game, the same spirit. So we will compete. And I'm sure we'll do better than these large conglomerates because for them this is too small. And for us, this is bread and butter.

What are our moats -- I mean, the strength of our business?

We're into making business almost 20 years and we are into -- deep-rooted into this technological moat. And we hold almost 30% market share in the country. What else is the strength, I don't know. We are back -- completely backward and forward integrated and fully involved lately. And we are not only -- we are not a black box manufacturer. We are a solution provider. So that is where Genus stands very strongly in the markets. So from conceptualization to the final product, everything we are doing is in-house. So that is what the strength is.

Okay. So as you mentioned, we are...

Sir, sorry to interrupt, but for any follow-up, I request you to rejoin the queue, please. The next question is from the line of Ashwani Sharma from Anand Rathi.

Sir, my first question is like, what led to the significant jump in the gross margin during the quarter? Is it product mix or lower raw material cost? And what would be the sustainable margins going ahead? That's my first question.

See, it is primarily the product mix. In fact, most of the orders, what we have in our hand are smart meters. It definitely improves the margin. With reference to previous quarter to this quarter, the improvement is, of course, in capacity utilization. The business has started rolling in the right direction. As we all know, first 3 months were absolutely almost gone because there was no much work happening in the field. Even though the customer is able to work in the field, even the offtake became very slow. Something that happened in the second quarter also is not up to the level where it should be, but things are getting better. So good margins are because of the product mix, of course.

Yes, sir. What's the guidance on margins going ahead, if you would like to give?

It is going to be in that right direction only, sustainable and...

[Technical Difficulty] we have always said that our margins would be around 16%, 17%, and it will be in that direction only. It will be in an improvement direction. We can't -- I won't say that it will be sustainable at 21%, which -- that has come in per quarter. There is a lot of product mix things and all. But 17%, 16% is the sustainable margin. We can give a guidance on that.

Sir, in our order book of INR 1,000 crore, what is the contribution of smart meters?

Around 70%.

70%, 7-0.

7-0, yes.

And sir, my final question is, what was our FY '20 full year utilization level? And where are we vis-à-vis last year currently?

FY '20, can you repeat? [Foreign Language] capacity utilization?

Yes, sir.

So last year, we did around 7 million meters of different product mix. And we can comfortably do 10 million to 11 million meters. So we can say 65% capacity utilization in terms of manufacturing.

The next question is from the line of Vijay Bharani (sic) [ Vijay Bhayani ] from Samyak Financial Solutions.

Sir, I'd like to understand a bit more about the facilities management as well as the domain software that you have been -- you're talking. The facilities management, is it a part of the tender? Or is it separately negotiated with the companies? And is it -- how is it -- is it just a kind of administrative work you will be doing in terms of facilities management? Or will it be linked to the amount of savings that we generate for the client by -- in terms of T&D losses and all that? How is your revenue linked with your services?

So this has nothing to do with the T&D losses. This depends on the contract to contract. In some contracts, this is part of the tender. In some contracts, this is not part of the tender. So just to give you example, the smart meter is not only a product, it's a complete solution. When we do smart meters, we are also providing head-end software along with it. We are also providing a lot of billing solutions along with it. So what the customer is looking from us is [Foreign Language], okay, practically moving towards software-as-a-service. So what customer wants from us [Foreign Language], you completely manage this whole gamut for the next 5 years, 6 years -- you handhold the whole work with us for the next 5 to 7 years. Generally, all these smart meter contracts, whether we have -- what we have taken in Rajasthan or Tamil Nadu and what we are doing in Indore, all these are like this, where meter is supplied, solution is supplied, installation is done, and then it is completed by the next -- for the next 5 to 7 years. So 5 to 7 years you are not doing only administrative role, you are maintaining the SLA, service level agreement. So you have to ensure that, that SLA has been met. So accordingly, because the software belongs to you, so it is -- to a certain extent, you are moving towards software-as-a-service, where you are getting the recurring revenue of the product we have sold to them over the period of time.

Okay. Got it. And...

And nothing to do with the savings or anything.

Right, sir. And separately you said that you'll be...

Not related to savings, but it has a SLA.

Yes. Yes. Got it. I got the point. And separately, you said that you'll be providing the domain software, et cetera. So is it separately build item? Or is it a part of the meters and the facilities management that we will be providing to the client?

See, we are building the complete solution. In BO2, it is a separate item.

Right. Right. Okay. Okay. Got it. Okay. My last question is on the tenders, sir. How much -- in the last AGM, you had said that on that date of the AGM, there were some tenders which had opened and we had bid for the tender. So if you can give us a status of that? And how much tenders are you expecting over the next couple of months, sir? And once the tendering is floated, then how much time does it take to get the actual order?

See, generally when the tender comes, it minimum takes 3 years, and it can take up to 6 -- 3 months to 6 months. So because a lot of pilot testing and everything happens, so minimum 3 months is required for any tender to come and get finalized. So if I talk of the current situation, I'll explain the number. During that AGM day, we were -- we quoted a tender, EESL. So that is still not decided. It will take time. As I told you, it takes 3 months minimum for any tender to get materialized. So currently, if I see, only for the conventional meters, almost INR 800 crores tenders are already participated. And a lot of these testing are over now. So I'm expecting out of this INR 800 crores, a lot of decisions will happen in November, December or by January. Same way, when I talk about smart meters, almost INR 1,300 crores tenders have been participated. So these INR 1,300 crores...

Already, these tenders you have bid, are you waiting for finalization?

I can't hear you. Hello?

Sir, you are saying the smart meters of INR 1,300 crores, the tenders are already where you have bid already, and it is in the process of finalization.

We have already participated.

Right, right. So would you be able to tell us, sir, how much you are L1, sir?

See, the price bids are not open yet.

Okay. Not open. Right. Got it.

So there are around INR 2,000 crores worth tenders have participated and to be participated is almost INR 1,500 crores. So INR 3,500 crores of tenders either are...

INR 1,500 crores tenders is lined, it is not participated. That is already the amount more than supplemented [Technical Difficulty]

Mr. Agarwal, sorry to interrupt, but your voice is not clear.

Your voice is cracking, Kailash. We can't hear you voice.

[Technical Difficulty]

There is a lot of disturbance. Kailash, your voice is not clear. It is cracking.

There might be some network issues, let me see here.

The next question is from the line of Manish Goyal from Enam Holdings.

Just to clarify, the last statement was not cleared from Kailashji. These INR 1,500 crores worth of tenders which were floated, was it that we mentioned that we have not participated in that?

Yes.

We [Technical Difficulty]

Kailash bhaiyya, let me clarify.

You clear, yes.

Yes. INR 2,000 crores tenders are already participated. INR 1,500 crores worth of tenders will be participated in next 2 to 3 months. We're already floated.

Okay. Okay. So we'll -- okay. And out of this INR 1,500 crores, how much are smart meters and conventional meters?

Out of this INR 1,500 crores, INR 750 crores is the smart meters and around INR 600 crores is conventional meters.

Okay. Okay. And sir, just on the facility management side, like -- just want to get a sense on the infrastructure what is required, like say, head-end and other software requirement and the infrastructure. So is it that we have already invested into building that infrastructure and now, basically, we are providing service through that infrastructure?

Yes, absolutely. So as I told in the beginning also that Genus always being a technology company. So generally, what -- we have been into software, but primarily into embedded software because smart meter is coming into the delta since we have to provide the complete solution. All this management of head-end system software, billing software, we have our own team. [Foreign Language] We have very senior people in our software division now. So we have already built a very strong, a good software team. And of course, we need a complete infrastructure to manage this software.

So ideally is it like a common service kind of a model where infrastructure is already set up and you can probably help other SEBs to kind of avail these services?

No, no, no. Every Electricity Board has its own billing app. Every Electricity Board has its own billing software. And we have to integrate our products with them. So it is very customized. Even I was talking -- if you're talking about Rajasthan, there are 3 different utilities, there are 3 different systems working.

No. So Mr. Jitendra, I was just trying to clarify, whenever any contract or a tender where FMS is required, in that situation, the investment in the head-end and other software-related items would be done by you or by the -- it is the scope within the tender?

See, it is the scope within the tender. The investment is done by the Electricity Board. But to maintain those softwares and to manage those softwares, they generally give us a long-term contract. This is what we call it facility management system where the whole solution is being managed by us for 5 to 6 years before it is completely handed over to the utility. So most of the smart meter tenders are coming like this.

Right. And these are ideally from the EESL?

No, no, it is not a single from EESL.

Okay. Okay. And recently, EESL had mentioned somewhere that they have already given orders for -- new orders for some 2 big tenders, one is 5 million smart meters and another 3 million, apart from 2 million, which they have already sourced, which was largely sourced from you. So there are incremental 8 million smart meter orders being given. So just want to clarify from you, like, what is the status of that thing?

There is some confusion in that. Their first 5 million smart meter order, in which primarily they sourced from us, that has been scrapped. And second and third is already scrapped. Only the onetime tender of 5 million meters, that is the ADB funded one, that is the only one where there are 9 lots, and that PO has been given. Out of those 9 lots, 4 were with the Chinese. So that has also been canceled. So only 5 lots are finalized, in which 1 lot is with Genus.

So what about the 4 which are being canceled, which were won by the Chinese?

So now they are coming with -- now they will be coming with more tenders for that.

Okay. Okay. Okay. So this is exactly the situation in terms of what EESL has floated for smart meters?

Yes. As of now, EESL, current confirmed orders will be 2.5 million to 3 million. So a lot of their tenders have got canceled, and now they are coming with new tenders.

So in the first lot, out of 5 million, 2 million were the -- basically, which they sourced. And now this is the live tender of 5 million, out of which 1 lot -- so how many number of smart meters we won in this lot, sir?

5.5 lakhs. We got the -- 1 lot. Out of 9, we got 1 lot and 4 have been canceled.

Okay. And sir, there was one more technological aspect in terms of the communication system, which has been adopted by SEBs. So you did mention that the current smart meter installed base are largely using the GSM technology or that there are certain states which are inclined towards RF technology. So are you seeing certain challenges related to that? What is your perspective that, will most of the tenders come on -- under GSM? Or...

As a country, both will work, except EESL. No Electricity Board till now has got to -- gone for the GSM technology. Electricity Boards still feel RF is better. So all the tenders is -- 8 Electricity Boards are coming up with RF technology only, whether it is Assam or Rajasthan or any state, any state you talk about. EESL is still working on the GPRS-based technology. So both will work in India. India is a country where both technologies will work.

And we are able to provide services for both, even the RF-based technology?

As on date, total 18 lakh meters are installed in India for GPRS and RF both put together and 16 lakh are in use. So we are comfortable with every kind of technology when it comes to communication.

[Operator Instructions] The next question is from the line of Mayank Bhandari from B&K Securities.

Sir, I just wanted to understand in terms of current government policy of AatmaNirbhar [Technical Difficulty].

Mr. Bhandari, can you take the phone off speaker, please?

We can't hear you.

Your voice is not clear, yes.

Yes. Can you hear me now?

Yes, sir.

Better now.

Yes. So I just wanted to understand in terms of current government policy of AatmaNirbhar and Make in India, like how much smart meter percentage would be imported? And which are like if there is -- a policy comes on domestic manufacturing or there is import duty on imports [Technical Difficulty]

Your voice is not clear, Mr. Bhandari. We could not understand what you are asking.

Mr. Bhandari, let me answer. [Foreign Language] Though his voice is not clear, but I'd like to answer. See, import is 0 right now for smart meter because all the tenders, which were given to the Chinese companies have been canceled by the government. And almost every tender, in a lot of tenders nowadays, government have started implementing that more than 50% value addition has to happen in India. So more or less, that chapter of import looks to be closed with that kind of condition in all the tenders. So I don't see any threat immediately or in the times to come for the import of the complete smart meters. Government is very clear, the complete product just cannot be imported. And nowadays -- in the last 3 months, I must have been invited to 4, 5 very senior-level meetings by the MoP and by Ministry of Electronics and Communications, like how we can have a manufacturing base in India so that imports can be lowered down as much as possible. The government is very serious about it. So I don't see any threat for the imports in the times to come.

Okay. Okay. And sir, in the new Samarth scheme highlighted in the presentation, how is it going to be different from the earlier UDAY scheme? Like, how much worth of smart metering was achieved in UDAY scheme, has both -- for targeted? Any data points you can provide, mainly, how it works?

You can yourself understand that only 15 lakh meters have been installed, but nothing aggressive was achieved. In terms of the smart metering, when it comes to, that -- I mean it was not primarily for Samarth. Samarth is not primarily for this only. But this is also a very major part of it. So right now, there are so many schemes going on. But in all the schemes, message is very loud and clear to all the [indiscernible] that you will have to reduce your T&D loss. And for doing that, these are the ways we have to go about it. And a smart meter has to play a very, very important role in that. So recently, a lot of this funding, whether PFC, REC, they are also very clear to the DISCOMs that it's [indiscernible] smart meter has to play a very, very important role in that. That is the reason, visibly, we can see a lot of tenders nowadays coming to us.

The next question is from the line of [ Ashok Bachchan Jain from Aayush Capital ].

Sir, we are reducing debt. We are reducing corporate guarantees. And now we have solved pending taxes. Going forward, sir, what more is left on this list?

So basically, there is nothing left on the list. This taxes also we have -- we won -- even from the high court, we were the winner. But didn't want to take any risk of Supreme Court. 99% we were sure that we will win. But government has given the opportunity because in any case, if you had lost from Supreme Court, it could have jumped up to INR 100 crores or INR 90 crores. So getting out of all these things with an amount of INR 12 crore was looking very attractive to the company. So company has taken a decision. And corporate guarantee also has been -- there is nothing left in the balance sheet for us.

Great, sir. And sir, my second question and final question is regarding the capacity utilization. You have mentioned that we had a low capacity utilization because of COVID. But most of the Indian companies, we did not have demand problems, reported a good capacity utilization in Q2. In our group company, Genus Paper reported near-normal working. Then what is the real reason for this low capacity utilization by Genus Power? And when we will report pre-COVID numbers, sir?

You have to understand one thing [Foreign Language] electricity meters are directly related to the consumers. So because of the COVID, most of the Electricity Boards are working in a very low efficiency and their prime focus is to ensure that electricity is reached to the consumer. Their focus is not metering because meters has to be installed by going to the main field. So the offtake of meter installation has slowed down significantly. So first 3 months were practically 0. Next 3 months, a lot of these have started. Just to give you an example, I'm sure you must be based out of Bombay, so Bombay MSEDCL has started working only last 1 month. That, too, on 40%, 50% capacity only. So just to give you an example, because in the State Electricity Board, people were not coming in the head offices, but installations were not happening in the field. So -- and their focus was very clear, right now, our focus is not installation of meters or any other, but our focus is to ensure electricity is provided in the country and maintenance work is done because the whole summer went into -- generally, all the repair, maintenance work starts in the month of March, which went into COVID completely. All the Electricity Boards are more currently focusing on maintenance of their systems so that breakdowns doesn't happen.

And secondly, you have to understand that installation happens going by home to home.

And this is going to happen for the next 3 to 4 months. The next 3 to 4 months, the Electricity Boards will take time to come into the 100% pre-COVID levels.

Okay. So we hope to return to 100% capacity only by Jan next year?

Hopefully.

The next question is from the line of [ Shivam Goyal from Goyal Investments ].

Just wanted to understand that there was some issue regarding installations during Janmashtami in UP and many names had come up that whose fault is this regarding the Electricity Board or the smart meter companies. And there has been a news that it has been stopped, the smart meter installation program, in Uttar Pradesh. So can you maybe give light on that? Is that matter resolved? And whose actual fault was that?

Yes. I'll give you that. So on Janmashtami, there was a software glitch that was primarily from the head-end system, which has nothing to do with Genus meter, but being part of the whole system. So of course, we were also supporting the Electricity Board and the communication company. The good part is within 3 hours, the whole electricity was restored. What came in the media is definitely a big [indiscernible] portion. And later on, all that -- good part is that software glitch could be controlled within 3 to 4 hours, which is a very good thing. Secondly, when there was so much of [indiscernible] started happening in UP, the State Electricity Board themselves gave a press release that only 0.03% meters has problem. So please don't believe in all this news, which is coming in the newspaper. At the end of the day, for Genus or for EESL, UPPCL is the customer. And whenever, you will have any such kind of a change from conventional meters or smart meters and when the people are not used to paying bills on time, when people are not used to paying bills itself because recently a news came by the Chairman of UPPCL that 80 lakh consumers in UP had never paid their electricity bills. Out of the 14 lakh smart meters installed, at least 6 lakh meters have been installed to the people who have never had metering at their home. They were only using the katiya to have electricity at their houses. So these kind of little bit of things will happen. But good part is the solution, the system, the product, everything has proven itself that it is robust, it will work. It is working. And even this month, in the month of October, almost 97% -- 95% -- 96% billing has been done. So UPPCL is also very happy and very clear that it has to work. For the time being, because of the political pressure, they had to stop this whole program. But very soon, they -- with full swing, they'll start this one. And UPPCL is very, very positive about it.

[Operator Instructions] The next question is from the line of Kartikeya Agarwal from SMS Holdings. Mr. Agarwal, can you speak closer to the handset, please? Your voice is not audible.

Sir, so my question is that our receivable cycles have been spread, and as we all know that it is primarily due to the DISCOMs, that is the weak link in the electricity value chain. Sir, my question is, from a strategic standpoint, like what changes in the industry landscape would have to happen in order for us to grow at a higher rate and utilize more of our capacity as we are more than able -- or we have a lot of capacity, but it is being underutilized. So what would be the triggers in your view?

So it's not basically nothing to do with the DISCOMs payments and all. We are maintaining a 30% market share, and it is the business which has to come. So coming time, seeing the smart meters and all, a lot of business is expected to come and the market size will increase. And once the market size will increase, Genus will certainly utilize 100% capacities or even more than that. So basically, that has nothing to do with the DISCOMs payment cycle. It's a routine thing. It's nothing new happening with the DISCOMs of late payment cycles and all. And it may remain in future also.

See, secondly, everybody has to understand, we are into custom-built product manufacturing. So it is not that [Foreign Language] when we say the plant is running at 65% capacity, it is from 1st of January till 31st December, it is running at 65% capacity. Sometimes, it is at 100%. Sometimes, it is at 95% because there's [indiscernible] also. It needs to be maintained. So not necessarily, it is a process industry where same amount of meters are being produced every month and same type of meters are being produced every month. This is what we will have to understand when we talk about capacity utilization.

The next question is from the line of Keshav Garg from Counter Cyclical Investments.

Sir, recently the Director of CRISIL wrote a article in Financial Express. Sir, I'll forward that article on the e-mail ID of the company, sir, which basically says that currently, the price of a smart meter is INR 6,000 to INR 7,500. But due to bulk procurement, the price is expected to come down to INR 2,000 to INR 4,000. Sir, so what do you have to say about this? And sir, what impact will this have on our operating margins?

One thing we have to understand, when CRISIL is writing a report of INR 6,000 to INR 7,000, it must be meaning the complete per count -- per collection point and that, too, even today is varying anywhere from INR 5,000 to INR 8,000, so basically, it depends. As I told you, it's a custom-built product. It's very, very difficult to say -- can you define the price of a shirt, the shirt is INR 400, INR 500. So even for smart meters of any kind of a custom-built product, the product we are into, a lot depends on the specifications of what customer is asking. A small new smart meter, which is called a smart meter is being sold at INR 2,500 also and same smart meter is being sold at INR 5,000. And one of the customer is -- and both the customers know what they are buying, what is their requirement. So the statement of CRISIL must be on the per point collection, which is -- and it will come down to INR 4,000. I don't know the economies of scale. Very difficult to say as of now. But I personally feel the smart meters have already reached a good competitive level in the country. India is a beautiful country, where things before they become large, they already become competitive. I don't see so much of correction happening now. More important would be for the customer will be true solution being provided. Today, EESL have canceled almost all those orders, which are at the lower price or which are from the vendors who are not able to supply them. They also realized that a smart meter is a solution, which has to run 24/7 without failing at any cost. So the quality is much more important than the price levels.

Sure, sir. And sir, also, recently, there was a news article, which basically said that Reliance Industries plans for into smart electricity meter business. Sir, so have you come across this?

I have already answered that in the beginning. That was the first question that came up.

Okay. Okay, sir. And lastly, sir, since now our balance sheet is net debt-free. Sir, so -- and our share so undervalued considering that whatever future business you are expecting from smart meters, sir, so then why don't you consider a share buyback, which will permanently decrease our number of shares and permanently increase earnings per share?

Well, this is -- these are basically the Board decisions. So we can -- we'll see on that.

The next question is from the line of Manish Goyal from Enam Holdings.

Yes. Sir, in our opening remarks, we did mention that we are quite confident on performance for the second half of the current year. So is it that we are more referring towards the profitability and the cash flows or even on the revenue front? Because in first half, our revenues are down by almost 54%, revenues of INR 249 crores [indiscernible] by 44 so -- or you are referring to that we should be able to cover up the lost revenue in the first half in the second half, sir?

The complete loss, will we be able to recover, I doubt. But yes, in comparison to current quarter, there will be a significant improvement, which is visible in the work itself. The reason I said [Foreign Language] the Electricity Boards have started rolling. Just as an example, our Rajasthan project, we could not start it from last 4 months. And same way, the Tamil Nadu project, we could not start it from last 4, 5 months. They all will get started by November, December. But things have now eased out. So we were in the complete lockdown situation from the last 4, 5 months when it comes to installation. So complete installation was almost completely hold up by the SEBs [Foreign Language], okay, no installation can happen. So now these things are easing out and installations will start happening. That will clearly reflect in the revenues.

Okay. Okay. But at least from a profit front, like what we probably see in the -- from the second quarter performance, we should be able to cover up on the profit front.

Yes, yes.

It will be good [Foreign Language].,.

Whatever the guidance we are giving on the profits, that will be at that level. There is no challenge on that. And basically -- and utilization will also be improved. It will be better in third quarter, more better in fourth quarter. So things are improving slowly. As we already mentioned that Electricity Boards have their own pace, and we have to work on their pace also.

See, more than the pace, they were not in a position to work. Electricity Boards had a very different challenge to face.

Right, sir. And last question on the order inflow. I would like to give a number as to in current year, what kind of order inflow one can expect for the full year because so much tenders have been floated? So...

Almost INR 3,000 crores, INR 3,500 crores tenders are lined up. I don't want to throw any number, but yes, Genus will have it's own share, for sure.

We will maintain our market share. And if you'll see that even if the last quarter -- second quarter, the company has got almost orders of more than INR 200 crores. In such a slow quarter, the order booking is almost more than INR 200 crores. So basically, we are maintaining our share, and we are maintaining our cycle. So there won't be any challenges worth the orders to receive and get companies facing any challenge on the orders book.

Sure, sir. So this 30% market share is considering both conventional and smart meter? Or I believe smart meter, we should be having a higher market share, right, sir?

See, but that is not a right percentage to be because we were the first ones to be more aggressive in the smart meters market. That will surely help. Maintaining 80% is impossible.

So ideally, on a worst-case basis, we can expect at least 30% market share of the tenders floated going forward?

Yes, yes.

Logically, it should be.

The next question is from the line of Milan Shah from Urmil Research Consultancy.

Sir, congratulation for your approach to Vivad Se Vishwas Scheme because you're great energy for company now. And second, my question was gas meter project. Is it operative and export is starting or not, in the whole India?

So as a company, we are -- we have already done pilot projects of our gas meter. The gas meter is already there in the market where the practical pilots are happening. We have supplied from the [indiscernible]. To multiple gas companies, we have supplied around 2,000 to 3,000 gas meters. Because gas meter is a very, very sensitive product, it takes around 6 to 12 months for all the approvals and for all -- because it is a very, very sensitive product. We have to understand it is put at the gas station, gas station of your house. So it's a very sensitive product. So a lot of testing, a lot of field pilots are required. So Genus is very much following into gas meter market. But yes, you will see some significant numbers happening in -- after 6 to 12 months because it needs a lot of approvals.

Okay. And what is the business process of export in current year, which we are doing business, sir, in smart meters?

[Foreign Language]

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Yes.

Last year, if you see the numbers of the company -- last year, we did almost 7%, 8% more than that of our revenue in the exports. This year, exports have been slow in the first 6 months. Because as you know, not only in India, the whole world has been hit badly. And a lot of our major focused markets are very badly hit, like Malaysia. So exports will be slow this year, but yes, that will also gain the pace from next calendar year.

As there are no further questions, I now hand the conference over to Mr. Kailash Agarwal for closing comments.

Thank you, ladies and gentlemen. And we assure you that the company is doing good, and it will maintain its margin. And going forward, we will reach to our COVID levels very fast in third or fourth quarter. So thank you very much. If you need any more informations, you can contact our relationship advisers, with SGA. Thank you very much. Best of luck.

Thank you, everybody. Thank you.

Ladies and gentlemen, on behalf of Genus Power Infrastructures Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.