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

Ladies and gentlemen, good day, and welcome to the Q3 FY '22 Earnings Conference Call of Genus Power Infrastructures Limited. 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 the 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, Mr. Agarwal.

Thank you. Good evening, ladies and gentlemen. A very warm welcome to Q3 FY '22 earning call of Genus Power. Along with me on this call is Mr. Jitendra Agarwal, who is the Managing Director of the company; and SGA, our Investor Relations adviser. The results and investor presentation are uploaded on the stock exchange and company website, and I hope that you all must have got a chance to see it. Our top line growth in Q3 FY '22 was impacted due to reduced capacity utilization on account of shortage of semiconductors and key electronic components. However, we have secured our supply requirements of semiconductors for next fiscal year very well, and we are very hopeful and expect that a robust amount of revenue will happen in FY '23. We have recorded a sales of INR 196 crores for Q3 FY '22 as compared to INR 178 crores Q2 FY '22, a jump of almost 10%. Q3 FY '22 EBITDA stood at INR 21 crores, up by 44% on a quarter-on-quarter basis as compared to INR 15 crores Q2 FY '22. Higher raw material prices and lack of operating leverage due to lower capacity utilization resulted in lower operating margins of 10.7%. Profit after tax stood at INR 8 crores against INR 7 crores in Q3 FY '22. In December 2021, we received orders worth about INR 325 crores across exports geographies and domestic geography Domestic geography orders have been received for Smart Meters across multiple state electricity boards. These orders will be executed in the next 1 year. The impact of reform-based, result-linked power distribution sector scheme can be felt on ground as almost every state electricity board has come out with inquiries and suited tenders for installation of Smart Meters. A few of the above tenders have been decided, wherein orders are being received by us for Smart Meters across multiple state electricity boards. A record number of Detailed Project Reports, DPRs, have been filed by many SEBs in the last 3 months, and we are very hopeful on the basis of that a lot of Smart Meter tenders will be floated and already have been floated. We anticipate a robust order inflow starting from mid of February '22 onwards. As on 31st December 2021, our order book stood at INR 1,163 crores net of taxes, which gives us a healthy visibility for growth over the next 3 to 4 years -- 3 to 4 quarters. I now open the line for question and answers. Please, we are ready to take the questions.

[Operator Instructions] The first question is from the line of Anshuman Ashit from ICICI Securities.

Sir, my first question is on our capacity utilization. So you had mentioned in your initial remarks that the semiconductor and electronic supply issue continues to hamper our capacity utilizations and in fact, has hurt our margins as well during this quarter due to low operating leverage. So what is the current level? And by when do we expect the capacity utilization to reach normalized level as well as the margins to reach the normalized levels?

Well, I will say this, capacity utilization is around 40% to 50% in the current time due to the shortage of raw materials. What we feel the way we have done the planning in the last 2 quarters and the way that things are getting normal every day. By the end of June, I would say, second quarter of next financial year, capacity utilization will start getting better. Genus will start making the normalized sales from July on.

And sorry, on the margins?

And once the capacity utilization gets normalized, the margins will also get, better but previous levels or even the better level, the margins will be [indiscernible].

Sir, how has been our execution in the month of January? And how do you look at the execution for Q4?

So this quarter also very -- again because of the shortage of semiconductor, it has been below par. It is definitely not to the levels where we used to be earlier. We even said that it's going to be challenging. We expect it to be better than the last quarter, but not to the normalized levels. So as I said, normal levels will take at least 6 months into the normal levels.

Here, we have to understand that if you see last quarter, we have done better in this quarter than last quarter. The current going quarter, we will be certainly doing better than quarter 3. In first quarter of next financial year, we will be doing better than the fourth quarter of financial year '22. Every quarter, you will see an improvement in margins and the capacity utilization. From third quarter of next financial year, we will be at a better level. Then normal level, we will reach by second quarter of next financial year in margins also and revenue also. And from third quarter, you will see growth from the normal levels, before COVID levels from the normal levels, you will see the growth in margins and revenue both.

Okay. Sir, do we maintain our revenue and EBITDA guidance for FY '23? So you had mentioned in the last call that revenue guidance is of INR 1,200 crores for FY '23. And EBITDA, I believe, should be in the mid-teens. So do we maintain that?

Yes, definitely. Absolutely, no question about it.

Okay. Sir, how has been the tender pipeline? And how do you expect the pipeline to be in the next 2, 3 quarters?

Well, the tenders are highest level historically in the current fiscal year. So as on date, we have almost INR 13,000 crores tender is there in the pipeline, out of which almost INR [indiscernible] crores has been quoted. The remaining INR 7,000 crores will be quoted in the next 2 to 3 months. Even the order pipeline, if you see the industry landscape, we've got some orders from Jharkhand [indiscernible] these are some good order booking in the last quarter. And this quarter also, order bookings will have some good numbers. From the industry wide also we will see very good order bookings. And then also like EESL, in terms of [ Smart ] they got order of INR 600 crores from Assam. So now they have come out with a tender in the market where they will buy meters from [indiscernible]. So order bookings have also started from state electricity boards to system integrators like IntelliSmart [indiscernible] system integrator in Andhra Pradesh has got a good order from AP Board. So again, the tenders, they are floated in the market to buy meters from [indiscernible] even the order bookings on the SEB side has also started and system integrators to people like [indiscernible] has also started. Genus plays both the roles of system integrator also and another meter supplier also. So we are getting orders with them.

Sir, could you please put a number on what has been the order -- the total amount of orders till January? And how much have we participated in? And how much have we won for FY '22 till date?

Right now we don't -- I don't think that we have the right number.

There is other bidders.

Here, you will see that opening of 1st October, our order book was around INR 900 crores. Now the opening for 1st January is around INR 1,161 crores. So every quarter, you will see that order book is building up. So just this year, it is higher -- last time, it's almost INR 300 crores higher than last opening. And next quarter, you will see that it is far better than this. And order has started coming in the market. Basically, Genus has not got order, but the orders have come in the market, like EESL has got an order from a Assam. Like one system integrator has got order from AP. Now they will buy from the market. So the flow of orders has started coming. So Genus will also be winning very soon any big order or like that.

Okay. And sir, on a recent win of INR 325 crores. So has the increase in the commodity prices being incorporated in those? And among our order book, which we currently have of INR 1,100 crores, what is the composition of the legacy orders in which the price increase hasn't been incorporated?

So almost 75% is the legacy orders. The new orders which are coming up definitely, we have taken care of this, [indiscernible].

Okay. And this 75% will be executed over the next 2, 3...

Over the next 8 to 12 months, so these orders will be executed.

75% is not the legacy order, 25% is the legacy orders. And 75% is the new orders. I think you have got confused to the question.

What I understood from the question is that they want to ask how many orders have been quoted, the increase of the raw material.

No, no. Yes. So basically, 25% is the legacy order -- not even 25%, 40% hardly will be the old orders. Now these all are the new orders out of INR 1,162 crores. And the price increase has already been taken care in this. It is what -- hardly 15%, 20% legacy is there.

Okay. Okay. Okay. Understood, sir.

[indiscernible].

Shall I reclarify this?

Okay. Okay. Okay. Sir, how much has been our exports in FY '22?

FY '22 exports will be not very much. It will be around INR 30 crores, 35 crores. Now we have an order book, good order book of export supply. Out of this INR 1,162 crores, around INR 156 crores is from exports.

INR 156 crores is exports. And sir, could you give the breakup of the order book in terms of how much is Smart Meters, conventional FMS, if it's possible?

Currently, the order book is, 90% is Smart Meters remaining 10% is conventional and even the whatever the new orders we are booking, mostly it's Smart Meters.

Okay. Sir, next question is on the production ramp-up. So recently in our interaction with the ministry as well, they have said that while the implementation of the new revamped scheme is under process, it will start from April, but there may be a case that the supply of meters may be lower than what the demand is. So are we looking at enhancing our production capacity anytime soon?

We have been mentioning this in the past also that the industry we have enough capacity to take care of the requirement and announcement of capacity for a company like Genus because we are so well vertically integrated. Currently, we have a capacity of 10 million to 12 million meters annually. To reach to the level of 16 million to 20 million annually [indiscernible] of 3 to 6 months for us. So what I believe is from next calendar onwards we should be in a position where we are able to do our -- 100% capacity utilization will be there, and we can add on to our capacities also. So what we have planned internally from May, June onwards. Looking into the way the industry is moving, we'll start working on our capacity expansion if required.

Okay, sir. And sir, 1 last question, before I fall back in the queue. Sir, on the SBD, which has been recently released, so could you just highlight what are the key differences in this SBD compared to the tenders which have been floated earlier? And how has been the response from the states in terms of adoption of this SBD? And has there been any recent tenders which have adopted this SBD -- incorporated this SBD in the tender?

So now mostly the tenders which are coming in the market are according to this [indiscernible] they've given some lever to the state electricity boards, where they can do some modification according to their local requirements. And 1 good thing what they have now proposed in SBD is even the billing -- up to the billing and even from the bill generation can be taken care by the system integrators. So they are -- emphasis is very clear once bill generation and even the [indiscernible] state electricity board they are talking to even the bill collection can be done automatically reading this [indiscernible] meters so that the system integrator money is even more secure to whatever the first price or amounts remains with the system integrator so that they never face any problem of increasing the bill. These are some of the very positive changes, which are brought in the current SBD, latest one And most of the vendors which are coming in the past are currently outgoing [indiscernible] according to the new SBD. Another single tender is there, which is beyond SBD, in our view.

And so this includes the tenders from the SEBs as well?

All the tenders are coming from SEBs only. And it is designed by the regulatory in consultation with the industry and stakeholders from SEB. Tenders are -- using these SBD, tenders are bought by state government.

The next question is from the line of Mohit Kumar from DAM Capital.

Sir, 2 questions. First is, do we have any plans to tie up with a system integrator to bid for all this upcoming bids because this is expected a very large opportunity. Won't it be wise for us to tie up with rails, something like power grid, which is, I believe, is not trying to bid for almost everything now?

Usually, they have still not done a single bid to any of the system integration tender by the Government of India [indiscernible] forward it to get the invoice on nomination by the EESL. They will come out with the bid [indiscernible]

Is there any chance -- is there any strategy to tie up with some of the large system integrators to bid for these bids?

As the meters manufacturers we are [indiscernible] all the system integrators who are working in the country. So I'm unable to understand what exactly you mean by...

My question is whether, let's say, the opportunity of INR 10,000 crores next year, correct, we can do [indiscernible] or balance sheet, right? So part of the -- so where you will -- some we will participate through our own, some will participate through system mitigator. I'm just trying to figure out, is there any way to tie up with system integrator [indiscernible] before the bidding.

Currently, we are doing the same strategy only according to the bid -- according to our news of the bids, we are making the participation like in Andhra, the system integrator -- we are working with the system integrator. We are very clear that we are not getting the application. In the past, we quoted directly also, and EESL also quoted they're using our meters in the bid. So all kind of strategies are being worked out in the market with a very -- Genus has a very flexible approach. We are working with system integrators as their suppliers also, and we are also doing some of the projects directly.

What is your appetite for doing the system integration work in terms of amount which you can do in a year?

Whatever we can do directly [indiscernible] will go for system integrator.

What I'm trying to figure out is [indiscernible] or business strategy for [indiscernible] [indiscernible] the balance sheet. So obviously, we will not be taking too much of leverage on our balance sheet. So remaining will be surely for the system integrators where we will be supplying the meters. Sir, how is the competition in the system? Has it increased? Is it increasing given the expected large opportunity? Of course, it had a number but right as of now. But FY '23 could be a very, very big year for the entire industry.

Competition will always be there, it is there. But the important part is how well you are prepared for the competition. And fortunately, we are sitting on the sweet spot, where they are preparing themselves. They have prepared themselves and they are very well prepared to take on sort of any kind of competition.

Out of INR 5,000, INR 6,000 per meter, what portion of raw material is getting imported for us?

So the imported raw material is -- what do you mean by -- I'm not...

Let's say out of INR 5,000 per Smart Meter, which is the price -- cost of the Smart Meter, what portion is this will be imported from China or any other geography for building Smart Meters?

So in terms of the meter 60%, 65% of the -- it's a domestic content. So we are a premium made in India product. We have a very large domestic content company. International content to the tune of 25% to 30%, sometimes it goes up to 35%, not more than that.

60% is the raw material cost -- you can take it like this, the 60% is the raw material cost. And of that 60%, 30%, 35% is the imported cost.

And is [indiscernible] offering for a [indiscernible], sir? Is there any talk of...

No, there is no talk.

[Operator Instructions] The next question is from the line of Shantanu Chatterjee [indiscernible] Finance.

My first question is what are the steps we are taking to mitigate the effect of raw material price rise if it is carries on like this. If there is any kind of possibilities to introduce price escalation clause in the new contracts?

No, there is absolutely no possibility. There is no price escalation clause in the bidding, and I don't see that happening also.

And what are the strategies we are taking to mitigate this price rise?

So the strategy we are taking is very clear. We have understood -- we have been seeing this market from last few decades and it's not that for the first time this kind of uncertainty has come in so that -- so it happens. So it is 2 way also sometimes we get benefited, sometimes we lose because of this because all the contracts in the metering industry are always related to a price rise. So we have been benefited. We have been in the loss sometimes, sometimes [indiscernible] and whenever we are quoting a tender, we see 12- to 18- months as a picture before we make a quote to the tender not only for us, it for the whole industry. So that is how it is going to happen.

Okay, okay. And my second question is, sir in your current presentation, in the Page number 29, you have mentioned that India can save up to INR 9.5 lakh crore by investing INR 1.35 lakh crores by replacing 25 crores conventional meters with smart meters. What is the calculation behind this, sir?

The calculation is pretty simple that INR 1 lakh crore are lost every year. This is the data -- and these numbers were taken from the data of EESL because they have done the whole study and along with them as industrial, we have also done that study. Every year, we are losing INR 1 lakh crores in [indiscernible] in the countries, which will be significantly lower once use of smart meters is introduced. So the life of all these products are minimum 10 to 11 years. The life of a smart meter is minimum 10 to 11 years. This is how we have calculated and -- plus the consumption of energy is increasing every year by 8% to 12%. These are the 3 broad numbers, which I have taken into consideration by making this calculation of numbers.

The next question is from the line of [indiscernible] from Sampada Investments.

So my question was on our order book. Out of the total order book right now at 1,100 crores around, how much of it is on the OpEx model and how much of it is on the CapEx model?

So currently, our order book is all CapEx -- primarily CapEx not in OpEx.

Okay. So we are just supplying...

Until now, we have not taken any OpEx orders. Some of the orders has FMS build into them. But mostly, they are all CapEx orders.

Okay. And second question is on the raw material prices. Let's say tomorrow, if raw material prices go down, we will get the extra benefit of it right? Because right now, we have bid on the higher raw material prices. And if tomorrow prices go down, then we'll get the extra benefit, right, on it.

Yes. Because these are fixed term contracts, we lose, we gain.

The next question is from the line of Rajiv Rupani, an Individual Investor.

I had a question. So in the month of May, you had told that the order book is 931 crores. And now our order book is INR 1,163 crores. So basically, it has increased only by 230 crores. And that time, you had informed us, say, INR 7,000 crores tenders will be decided in the next 35, 40 days and tenders were INR 10,000 crores [indiscernible] So I mean, are those tenders not decided yet or what?

Most of the tenders are not decided yet. There have been multiple reasons to this. In the post-COVID, again, [indiscernible] this is very unfortunate. So none of the tenders, too good things for stakeholders. None of the tender have been scrapped. Customer is also very clear that they have to go for these meters. The smart meters decision was started ramping up. So whatever, currently, the order book [indiscernible] order book is [indiscernible] because most of the electricity boards [indiscernible] most of them have stopped or reduced their [indiscernible] on the smart meter phase. We stopped them [indiscernible] or reduce the dial on conventional meters. All the budget they are making are according to smart meters particularly. All the tenders which are coming up, which are being quoted or will be quoted in the next 30 to 60 days and 90 days, they are all mostly smart meters tenders. So good part is none of those tenders are scrapped or anything like that has happened. But yes, things have got slow. Unfortunately because -- initially the DPR date was to be till October government, extended it till December because most of the electricity boards wanted extension. Most of the DPRs has been submitted [indiscernible] from December, January again slowed down things like the [indiscernible] These are all unfortunate for us. But I think things will get normalized within 5 to 6 months. Most of the state electricity boards are fully operational. So we don't see any much problem of COVID also. So 3rd March onwards, a lot of good procedures will start happening.

Okay. And I had a follow-up question. You had informed us in last con call that by 31st October, state governments have to respond to the central government regarding smart meters. So could we have an update on that, please?

So by 31st October, the DPRs were to be completed, which have extended up to 31st December. Almost all the states in India: Maharashtra, Rajasthan, Gujarat, Telangana, almost everybody Tamil Nadu, Kerala. There is not a single state which is not given DPR. They have [indiscernible]. Again, some meetings happened between L&G and state institutions [indiscernible] several meetings are going on decision of the SBD. So things are in the right direction. This is what I can say currently. A lot of tenders are being out in the market.

And my last question is regarding gas meters. In the press release, you were mentioning you have received orders for gas meters. So could we have an update on that?

The gas meters are also taking a very good traction. And I'm very hopeful that gas meter business will also be the significant one and will show some good numbers. Recently, [indiscernible] in 2, 3 different utilities, which is a very good sign. We are the only company in the country which has received BIS match for the gas meters. Though it is not compulsory in the country, we are asking that government and the utilities that why it is not compulsory? Because electricity meters BIS is compulsory, it should be compulsory in gas meter also. It is even more -- even more I would say, is related to safety, it has even more safety in vision. It should be [indiscernible] now. So gas meters also you will see dealers doing this very good job [indiscernible] we have a very strong base in this financial year.

so what is the order book? Could you sell me the order book for that?

Currently, we have orders of around INR 30 crores for gas meters.

[Operator Instructions] The next question is from the line of Vishal Prasad from VP Capital.

So I have a few questions. I understand we haven't won the CapEx plus OpEx model until now. But sir, could you probably spend few -- 2 minutes to explain the modalities of the contract, the CapEx plus OpEx. So how does it work? What -- I mean, how does the payment works? How are these capabilities of different vendors is taken into consideration by giving the contract?

I think what I understood is, you are trying to understand how this SBDs will work? In CapEx model, which has this coming year. Is that what you are saying?

Right. Right.

So the TOTEX model is very simple, like mostly as a system integrator, we have to make a daily SLA per meter per month in which you have to maintain certain 2, 2.5 years are given for the installation. 3.5 to [indiscernible] years are given for maintenance. So total for 10 years, for whole project is under the system integrator. So the system integrator will do the end-to-end job from installation of meters to maintaining that daily SLAs, monthly SLAs and quarterly SLAs. Everything will be done by the system integrator. SLAs, new service level agreements, which will be done between by the electricity board and the system integrator. And mostly the system integrator will be paid per meter per month. Given the whole system will work and from not only the meter, meter reading, billing, and to some -- in some cases they are even talking of connection. Everything online prepaid meters, giving the connection, meter reader everything is maintained by the system integrator. So the end-to-end solution of metering will be taken by system integrator which is what EESL is doing currently in, I would say, UP, Haryana [indiscernible]. So this is how this whole system integrator is.

Okay. So I mean based on the last few calls that we have done so I understand there are 3 parts to the CapEx plus OpEx model. One will be the meter price, second would be the service part and last would be the software. So for a typical contract, where we have 8 years of services. So how would be the pricing divided. And what part will go to the meter cost, what will go to the software and what will go to the services cost -- yearly services cost?

How you will have to divide is -- I'll just very quickly. For the meter and the software, we will do that in CapEx cost. And then is it the maintenance for next -- then it will be installation, then it is the maintenance. And this maintenance is going to happen online because these are all online meters where you will have to maintain them. So we will drive them as CapEx to system integrator, 50%, 60% of the revenue will go in the software initially and then remaining 30% will be on the OpEx over the period of 7 to 8 years. Everything else will be direct.

So 60% is still the installation of the meter, you can see like that, and 40% is then the servicing that actually happen for the PTUs.

Okay. Sir, generally, I mean based on our experience, I understand smart meter is not that old. But what would be the expected life of a smart meter?

Minimum 10 years.

Okay. So we should be able to...

All these projects are 10-year projects. So the life has to be 10 years.

Okay. So if anything goes wrong within the 10 years, we have to replace the meters.

Of course. If anything goeas wrong we have to replace the meter.

You talked about our model where we are in some of the contracts, we are trying to become the system integrators. Some of other places, we are trying to partner with some other system integrator and bid for the contract. So I mean internally, we would be having some criteria just based on which we decide okay, these are the contracts where we will become the system integrator. So could you elaborate on those criterias where -- which help us decide as becoming [indiscernible] particular contract?

See, the business criteria what we have implemented is the situation of the electricity board. And since we are deep rooted in the electricity boards [indiscernible]. So that becomes a very important criteria for us to decide. And this we are going as a system integrator because here we will not focus as a system integrator [indiscernible]

Okay. So irrespective of the payment from the electricity boards to be assigned our payments are secured by [indiscernible]? I mean if we are partnering with somebody else?

In the SBD, payment is absolutely secured to the system integrators unless he does -- we would not doing one currently, it is not meeting even the 95% SLA. It's the program of the system integrator and our sub dues fully secured to the system integrators.

So typically, these electricity boards -- I mean I understand there would be multiple SIs who will be bidding for each of the contracts. So what were the criteria that they use to select the SI? And is it totally based on the lowest pricing? Or is there something else?

There's a full technical qualification documented reasoning. Every [indiscernible] technical qualification criteria. And only, once you qualify in the technical qualification criteria and commercially [indiscernible] then only the price bid is opened. [indiscernible] opened.

Yes, sure. So my understanding would be there would be more than 1 SI who will qualify through all the technical requirements. So let's say, there are 3 or 4 who qualify. So the final decision based on lowest cost or is there something else?

Yes, yes final decision is lower cost. Full technical qualification before accepting the lowest cost then also in some of the cases, like just to give you example in the case of Jharkhand where we became [indiscernible] we have got order. It's not only on the lowest price, it is also on the quality cost base system. So a lot of tenders [indiscernible] is also getting look, also come in since the tenders [indiscernible] is very good for the companies.

Okay. Last question, so if we have to compare our retail and our capabilities in software with our competitors, so let's say for example [indiscernible] T sold it to one of the multinationals. So could you elaborate on what are the advantages that we have with respect to our multinational competitors? And what are the areas where we are lacking and we'll still have to catch up?

Currently, Genus is only the company which is only [indiscernible] I don't say that others are not capable of providing that, but there's still a little behind us in providing end-to-end solution in the current state of affairs. since we are roughly the only company which is making all the communication clear. The company and we -- so I think technically, if we want to compare with Schneider, we have much more vertically integrated in comparison to Schneider. I don't say these are not -- these are our very good competition. But currently, when comes to smart meter, we have [indiscernible] over them.

[Operator Instructions] The next question is from the line of [ Nikhil Jain from Galaxy International ].

I just wanted to ask, so the software part of the solution on the OpEx model, you do it in-house? Or will you take it from somebody else and reprepare it?

Currently, we have both the strategies. We are doing [indiscernible] in-house and we are also outsourcing some of the work. So both the strategies are being worked out currently.

Okay. Okay. So which is the 1 that we are preparing? So our software solution is also, let's say, approved and can be used or -- because if ours is approved, then why are we actually taking from outside software solution.

So it's not that the only 1 kind of software or 1 kind of solution is required. So it is the multiple solutions which are required. And in some of the places, we are using our own solution. In some of the places, we are using the solution as is demanded by the customer. So both strategies are being worked out. We have our vendor base also and we use our own product also.

Okay. And second thing is that in 1 of the earlier calls, you suggested that there are something like 90 to 100 people who are working on the R&D side, who are working -- doing the development work for the smart meters. So if you can just give a little more idea about what they actually do and what's the value add that is coming in from there? How is it different from, let's say, commodity kind of a product, right, that's available off-the-shelf so based on the work that the team is doing. So if you can just give some perspective. That would be very helpful.

So meter is a very custom built product -- lot of customization according to the customer requirement. And the way that -- just to give you a simple example, like I'm doing the smart meter project, let's say, in a small city like Jaipur. So it should like that when you're doing the smart meter project the end customer is concerned about the SLA. He is not much concerned in how we are going to get to the data. So for him, the most important is the to meet the service level agreement. When we get into the -- let's say, and we are currently working in Jaipur what we are seeing there [indiscernible] some places in RF [indiscernible] some places we are using GPRS. So Genus has the capability looking to the condition of the geography because we are vertically integrated, we have our own design. We aren't dependent on the design other product. So these R&D engineers, they are primarily -- because we have a very strong R&D and we have almost 300 engineers in the R&D not 90 to 100, just to give you perspective. We are very solid in terms of R&D. It's not only -- when we talk about smart meters, it's not only a hardware, there is a lot of embedded software which goes into this. It is the only electronic product in the world which has the electrical attributions. It is why people have to look in to smart meters are electricity meters could never become commodity and it will never become a commodity and I'm confident about it. It will be -- it's an electronic product, which is a electrical application plus the viability of this product is like there's no electronic product in the world, it has to work 24/7 full time. So a lot of application software has been added because of the smart meters end-to-end solution providers.. So that is where the R&D brings in a lot of customization, a lot of solution that gives the edge to 2 companies. I hope I was able to answer the [indiscernible] .

Yes, that's helpful. So just if I can just squeeze in the last one. So basically, if I just wanted to understand. So when you reach, let's say, a full capacity utilization, let's say, 100% by quarter 3 of the next financial year so -- and given that our now the order book is tilted towards smart meter, 90% is smart meters or 85%. So what could be, let's say, our margins on a TOTEX model on a, let's say, some guidance on the margins when we reach the high capacity in smart meters because I presume that the smart meter would have much better contribution margin as compared to the earlier conventional meters?

First of all, I would like to clear that that's not 100% capacity utilization. Earlier also we are saying that from third, fourth quarter, we will be reaching to a pre-COVID levels that was 55%, 60% utilization. So once we will reach to a 100% utilization, our turnover will be more than INR 2,000 crores. So basically, that you have to understand. Jatin, Now you can continue.

Yes. So by quarter 3 and 4, once we reach the normal level of our capacity pre-COVID level, from quarter 3, quarter 4 we expect our strategy in the range of 16% to 18%. It will be pre -- COVID levels or even better.

So I was just presuming that it should be better than what it was earlier because the component or let's say percentage of smart meters will have gone up in the overall order book. And hopefully, the pricing will -- and the price of the raw materials and all will also come down. So that will not have an impact and can increase that.

I'm very hopeful. It should be better...

The effect of any price down of raw materials. So there will be -- certainly, there will be a price down, we will be getting more better margins.

Advantage of it.

advantage of it.

The next question is from the line of Anshuman Ashit from ICICI securities.

Sir, can you please tell us what is the quantum of FMS in our order book currently?

Friend, I don't have the numbers. I can send it to you [indiscernible]

And sir, we have received the order from NCLT regarding our restructuring process. So could you please give some details on where the process currently stands at? And by when do we expect the whole process should be completed and the other entity to be listed, Genus, the other entity?

The shareholders meeting has been called that is in the end of the February. So once that approval will come then we will file the second mission in the NCLT. And I think after filing the second mission NCLT might take 2 to 3 months. So I'm very hopeful that first quarter of next financial year we will go over the process.

The next question is from the line of [indiscernible] Kothari from Kothari Securities.

I had a couple of questions. So the first question is that how much order inflow can we expect in quarter 4 of FY '22 and FY '23?

Quarter 4 of this financial -- the current quarter.

So the quarter 4 of this financial year.

And FY '23, financial year '23, 2023?

So order inflow in this quarter in terms of numbers, maybe it's very difficult for me to comment right now because a lot of tenders are in the pipeline that may take 15 to 30 days, sometimes because of the [indiscernible] they do spillover to April, May. So exact number is very difficult to give but [indiscernible] any numbers which are not [indiscernible].

Okay. Okay. So my next question was on the smart meters. Are smart meters are likely to constitute how much share in our order inflow is going forward?

Going forward the smart meters are going to be 85% to 90% in the order inflow.

Okay, okay. And sir, you have mentioned of much improved performance in FY '23. So how much top line growth and operating margins can we expect in the next financial year?

So next financial year, as we said earlier also, we sure of [indiscernible] within the guidance we gave last time also we maintain the same guidance. [indiscernible] plus we expect to do in next financial year with EBITDA pre-COVID levels.

16% to 17%.

The next question is from the line of [ Isha Chawla from Arya Securities ]

I can take the last question, please.

We'll take 1 last question, which is from the line [ Isha Chawla from Arya Securities. ]

Sir, could you please provide an overview of the current status of Indian metering industry implementation road map of new distribution reform scheme and how you see the industry evolving over the next 1 to 2 years?

So overview [indiscernible] the industry is evolving from conventional meters, electronic digital meters to smart meters. The government mandate is very clear in this. State electricity boards mandate is very clear with this. The smart meters have a good benefit to their revenues and in future, they're going to go about that. Government of India has also giving lot of incentives to the state electricity boards for implementing smart meter. So the future is very clear that most of the metering in the country is going to be smart meters only. The ambitious plan of government -- they are ambitious of changing 250 million meters in the next 4 years, but we're definitely -- it won't happen 4 years. It is not easy. This will take some time but this will certainly happen. This is the clear mandate. [indiscernible] so the industry is geared up, the stakeholders are geared up. So the future looks to be very good.

Okay, Sir. Good to know that, sir. Sir, as you have mentioned that there will be multiple jump in the Indian metering industry. Can you provide a ballpark figure of annual revenue size of the industry?

Currently, our industry hovers around INR 2,000 crores to INR 2,500 crores roughly [indiscernible] if you see that [indiscernible] 5 years. This investment size will definitely and I'm confident that this doesn't go by 2 to 3x at least.

That was helpful. So going forward, can we expect the company to maintain its current 25% market share post the multiple jump in the size of the industry?

To be very frank, we are very confident. This is the way we are working. Internally, we had our targets. But whatever the conventional meters. Genus has the largest [indiscernible] of conventional meters in the country. And internally, we are -- we have our target that rather single should be -- Genus meter should be changed to as Genus smart meter. So I'm pretty confident that we are still be able to maintain our market share in the times to come.

Good to know that. Sir, I have just 1 last question. What impact will the new distribution reform scheme will have on our operating margins and on our working capital cycle? Can we expect much improved performance on both the fronts? Can you share shed light on the change?

So [indiscernible] once [indiscernible] system integrator [indiscernible] increase because most of the system integrators we supply very secured [indiscernible] Genus has been becoming -- we are becoming system integrator also in terms of the projects. The payment terms of the government is pretty secured. So working capital requirement in terms of numbers, which only increase because your business is also increasing. As in terms of number of this, it will surely increase.

Thank you. Ladies and gentlemen, because of time constraint, that was last question for today. I now hand the conference over to Mr. Kailash Agarwal for closing comments.

Thanks. Thanks a lot, ladies and gentlemen, and we surely assure me that the company will be doing very good, and the coming time is very good for the company seeing the market, seeing the condition and the government [indiscernible]. Thanks a lot. Thank you, all.

Thanks, everyone. Be safe. Take care.

On behalf of Genus Power Infrastructures Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.