Hitachi Energy India Limited (POWERINDIA) Earnings Call Transcript & Summary

Very good afternoon, ladies and gentlemen. Thank you very much for joining us today on this call for investors and analyst community, following the announcement of second quarter results of ABB Power Products and Systems India Limited. I hope you and your families are staying safe and keeping well. Our Q2 slide deck has been uploaded on stock exchange. And some of you are joining through phone lines, I request you to please download it and then you can refer. For your easy reference, I will take the reference of the slide name so that you are able to follow through easily. But some of you are joining through your computers, I'm also sharing the slides, and you can follow those things. We all know the second quarter, that is April to June, had been a very challenging quarter for businesses across the board. The pandemic escalated and lockdowns extended. There has been quarantines, and there has been a travel restrictions and a lot of challenges in terms of running our operations, delaying our project execution took the toll on orders as well as in the revenue. At this time of crisis and keeping our employees and customers safe has been our top priority just as much as maintaining business continuity. Along the way, we also scored some of order wins, which I will detail during my presentation. So you can refer to Slide #2. Sorry, the slides are not moving. Yes. Slide #2, building resilience despite headwinds, and I'm in the Slide #2. In this difficult time, our mantra has been to stay resilient in the face of adversity. The number of COVID positive cases rising until date. As you know, as of April, there were about 30-plus thousand cases in India, and you know what's the count. And our prime focus was to collaborate and manage the crisis for our employees, customers, partners and the community as a whole and build our spirit and strength. Further, we adopted a 3-pronged strategy. The first one is protect our people. When we're talking about our people, we're talking about entire employees, our customers, and so on and so forth. Preserve business continuity and prepare for this new norm. This approach aided us in staying buoyant in such an environment. And here are the highlights I will walk you through the detail in the next slide. We're talking about the Slide 3, protecting our people. As I mentioned earlier, in this difficult time, the health and safety of our employees, customers and partners has been our most important consideration. We adhered to the requirements of central, state and local authorities with all earnest. In accordance with the emergency national lockdown requirement from March 25, operations across our plants, project sites and offices were closed. This included our manufacturing locations in Maneja, Savli, Halol, in Vadodara and Mysore and Bangalore in Karnataka. And our over 30 project sites, not only in India, but also neighboring countries such as Nepal, Bangladesh and Sri Lanka, were also shut. We resumed operations as permitted by various government authorities in a staggered manner across our various factories, the transformer high voltage and the grid automation. And we reopened manufacturing facilities and offices at 30% to 50% capacity initially and slowly, we ramped up observing all national and local prescribed standard operating procedures. In addition to the network of our location-specific crisis teams, an exclusive health line for our employees was started to discuss and support them and their families' emotional welfare. At project site, processes were put in place to ensure secure and safe lodging facilities for migrant workforce. Medical reviews and checks were organized for the workforce in large project site, such as Raigarh and Pugalur. We kept the number of employees working at a particular time at all plants and offices, made arrangements for sanitized transportation to factories and demarcated work and common areas to ensure strict adherence to social distancing or physical distancing. Employees were provided protective gears like masks, face shield, gloves, sanitizers. Mandated to take all safety precautions and maintained absolute transparency in health declarations. All employees were encouraged to download the Aarogya Setu app launched by the Government of India. We follow this even as on date. In addition to all this, most employees voluntarily donated 1-day salary to PM CARES Fund and the donation was matched by the company to mark our solidarity in this case. I'm now moving to the Slide 4, preserving business continuity, continued customer service. We amplified customer engagement through technology, leverage digital solutions for derisking factory acceptance test, product service and training and even commissioning of certain projects to maintain business continuing. We not only commissioned remotely the projects within our country, but also outside of the country. Due to the pandemic and lockdowns, many of our customers were concerned about how they would test our equipment before delivery and meet project lines. Traditionally, they would visit our factories and oversee the product testing at our facilities before accepting it for delivery. And that's what we call as a factory acceptance test. With travel restricted and many safety concerns, this was challenging to do. Our net physical proximity became deliberating barriers. We offered customers the option of conducting this just remotely, so remote factory acceptance test. And we have done close to more than a dozen of these things cutting across customers, whether they are from utilities and industries. We made investments towards this technology to ensure business continuity, leveraging the power of digitalization. Even in times of crisis, our customers were assured of on-time delivery, equipment reliability and quality. We carried against, as I said, close to a dozen remote factory acceptance test for leading industry players in diverse sectors. The high-voltage business line provided a major state-owned power transmission company a virtual tour of our high-voltage technologies. Our transformer business line enabled India's largest steel exporter to remotely inspect our 3-phase transformers for an upcoming project. Our grid automation business like conducted remote fabs to speed up equity for leading equity service provider projects in Gujarat and Maharashtra and readied substation automation systems for an upcoming metro line among others, just give you examples of this. Our unflinching dedication won us a big ticket projects that you can see on your screen, almost close to INR 120 crores project of our transformers, contracts for our disconnectors, capacity banks and others. I'm now on to Slide #5, preserving business continuity, operational efficiencies. We continue to strengthen our position to the best of our abilities in the current climate and look for and implement cost control measures to conserve cash, relentlessly make efforts to recover lost production base. To conserve operational efficiency while following due safety guidelines, we planned shifts and rotations to enable maximum capacity utilization of the plants. And we also quickly implemented a 6-day work week across the organization to compensate the loss of productivity -- or loss of the production due to the lockdown and focused on collections and the liquidity. Preserving our cash is the paramount important. We have proactively identified and postponed nonessential spend, ensured sufficient funds for critical operations and optimize our reduced external resources and personnel expenses. Also, our ambition was to prepare for the new norm in the best possible manner and build back better. I'm in to Slide #6, preparing for the new norm, enhancing relationship. Our achievements were backed by our resilience and just for innovation. To adapt to the new norm, we revised how we engage with our customers to help them stay on track with the project time lines and to maintain business continuity. We switch to remote factory acceptance test, as mentioned in the previous slide; conducted numerous virtual technical webinars and touched close to more than 4,000 customers or participants across utilities, industries, transport and infrastructure segments, not only from this country, but also our neighboring countries. And we launched our flagship customer event, Energy and Digital World. We continued engagement with industry leaders, as you can see, some of the pictures. So virtual industry events and specific one-on-one CEO connect that helped us keep our finger on the pulse across verticals. We did our best and more to swiftly adapt to the new norm. Moving on to the business performance and start with the macroeconomic snapshot. You all know this better than me. But anyway, as to the IMF, the Indian economy contract the 4.5% -- are expected to contract 4.5% financial year 2021. As a result of the pandemic, industrial production more than halved in April and India's investment position was downgraded. We all know these things. The number of COVID positive cases in contrast continue to rise until date. To soften the blow of the pandemic on the economy, India's central bank cut interest rates to 4% while the government announced close to INR 20 trillion stimulus package. Yet, the 3 months, April-June was very difficult for the businesses. The closure of factories and project sites of ours and our customers reflected in our Q2 business performance. Our factories in Gujarat and also in Karnataka lost more than a month in working days and -- which has impacted our quarter. In other words, half of the quarter, our factories and project sites have been shut. And even though we have opened gradually, but it's also impacted by the supply chains. So I'm on the Slide 9 and the Q2 order composition. Nonetheless, we had some significant order wins, largest being the transformer orders from CLW of Indian Railways, followed by that MV product of our discoms for our grid automation solutions for Calcutta Metro, and many others across our businesses. Majority of our orders came from the transport and infrastructure sectors, followed by utilities and products accounted for a bulk of these. Just about close to INR 250 crores orders where we were L1 were default by the customers as many of our customers still working on a paper file moments or depend on the physical Purchase Committee Board Meeting as they could not complete and those process could not complete and we could not get those orders of that. So I'm on the Slide #10, Q2 orders, service and export, as we were talking about service and export of levers for the growth of our company. Our service portfolio continued to deliver as we received cybersecurity assessment orders, and we see going forward, these are the critical orders. Lifecycle service orders for grid automation and high-voltage breaker and service several digital upgrade at retrofitting and remote servicing contracts from a traditional and the new customers. Exports continue to fill in our -- fill in even under these tough market conditions and trade uncertainties. We booked orders from our subcontinent, Southeast Asia, Africa, especially for a high-voltage equipment and the transformers. I'm on Slide 11, financial performance. So despite the pandemic and restricted business activity, for the quarter, all of our customers were also shut, but we could secure orders close to 60% of our Q1 which is INR 567 crores. And please note that all these orders without an exception, the order closure happened while meeting our customers virtually with the various tools. Yet many deals, including for our substation and capacities were impacted from delayed decisions due to the outbreak of the lockdown. And we have estimated our revenue impact due to this lockdown is close to INR 410 crores vis-a-vis the quarter 1. And that reduced our turnover to INR 634.3 crores, which is also hurt of our cash flows. I'm on the Slide 12, financial performance analysis. Due to the nationwide lockdown, as we've sold, I'm just reiterating, our shop loss project size and offices were shut for more than 30 days. And in addition to that, the transport disruption, travel bans, quarantine, social distancing. And also, we also had a very strict guidelines for taking care of our employees also took their toll. The disarray in supply chain worsened while projects were impacted by the mass exodus of migrant workers and collections also dipped and -- while we continue to pay to our suppliers. Alongside all this, short-cycle demand plummeted and system installation and service activity extensive mobility restrictions. We could not travel, we could not mobilize our service engineers due to the travel restrictions, and that has also resulted in the service revenues coming down. Despite all this, our revenue was close to 80% -- or 78% of the previous quarters. And fixed implementation of intensive cost migration effects provided support to the bottom line. So did our operational resilience and effective use of both the digital technologies as well as cyber secure remote technologies have helped us to reach at this level. The reopening of our factories from our -- last week of April in a staggered way minimize the further impact on KPIs. We kept trying to mitigate the impact of the crisis, work towards better liquidity and cash position as well as identify service growth opportunities. Our profit before tax before exceptional item in the second quarter was INR 14.9 crore, and profit after tax was INR 10.9 crores, both hampered by the revenue shortfall. As of June 30, 2020, our order backlog is INR 5,133.9 crores, which will provide a revenue visibility once normalcy returns. I'm on the Slide 13, where COVID-19 challenges and our response and opportunities. The heart of the COVID-19 pandemic is being felt across sectors, as we talked about. It's already -- and we expect this negative impact to cascade even to the current quarter with CapEx and OpEx remaining muted, decisions delayed and power consumption staying weak. But We also see that the long-term growth opportunities are intact. As normalcy returns, we see government push for infrastructure development under Make in India, lending support for industry growth. We see ourselves growing in some strategically selected high-growth segments, namely renewable, green energy corridor transmission, rail and electrification, metro, data centers, grid digitalization and smart sector integration, or e-mobility, just to give some examples of that. I'm on to Slide 14, preparing to build back better. We have already begun making inroads with the 2 of our recent projects in education and e-mobility. In the second quarter, we signed a memorandum of understanding with the National Institute of Technology Warangal for a cooperation to drive smart electric grid technology, education, skill development and research activities as well as made further away into the e-mobility segment. As you know, NIT Warangal is the first institute in the country to start a Master of Technology course in the smart electric grid. And we were picked to get involved, and we are part of this whole designing the curriculum and also setting up the whole worldclass digital laboratory at NIT Warangal, which will make both the upcoming students as well as the faculty to learn the power systems of the future. And we have recently launched the new Grid-eMotion Fleet chargers, e-mobility segment, with the global launch of Grid-eMotion Fleet charging solution. This offering holds a potential to cost track India's mission to decarbonize this transport sector, the public sector seemingly taking the lead. You all know that we have close to 2 million buses in the country. And even if a part of that goes for this mass electrification. And for those kind of electrification, we need both grid to plug kind of charging systems, and that's where we come handy in that. So I'm on to Slide 15, Hitachi and Power Grid, Powering Good for Sustainable Energy. You all know, we commenced operations at Hitachi ABB Power Grid in the second quarter. And the deal got closed on 1st of July this year and a great fit for us, for which all of us work very hard, braving difficulties galore. The joint venture brought together 2 highly respected companies to create a global power leader, leveraging portfolio complementary and front-end synergies in the rail, electrical vehicles, charging, renewables. And we will power secure a sustainable future with our pioneering and digital technologies as a partner of choice for enabling a stronger, smarter and greener grid. Our business serves utility, industry, infrastructure, customers across the value chain. We cover emerging areas like sustainable mobility, smart cities, energy storage, data centers, with an extensive portfolio of smart solutions, ranging from renewables integration and energy storage. So enterprise asset management and e-bus charging, to energy service and finally, IT and OT and the products. This is enabled by our strong footprint, scale largest installed base and local capabilities comprising of a solid pool of engineers, researchers, scientist, field engineers and software developers alongside other functional talents. So now I move to the last slide to Slide #16, our Vision 2025. As we talked in the last 2 quarters, our vision remains the same. We are aligned with the United Nations Sustainable Development Goal as well as Government of India smart cities and One Nation, One Grid Frequency Mission as well as power for all Make in India initiatives. And an even strong gusto aimed to increase access to affordable, reliable, sustainable and modern energy for all. Together with customers and partners, we are co-creating innovative solutions across the value chain, leveraging capabilities in the digital and energy platforms and focusing on intelligent grids. Our goal is to enable customers to increase resilience and efficiency and unlock new business models now and certainly when normalcy restores. We have a proven track record in transmission and distribution, which means a core focus area for us, where we are #1 globally as well as enhance digital capabilities accounted to us now by Hitachi's Lumada platform. Our vision for the next 5 years is to expand our digital products and systems as well as significantly build on our consultancy services software to best-in-class quality, delivery and operations. Conventional products and systems will continue to play an important role in our portfolio. We will strive to grow faster than the market, center our leading market position while honoring UN sustainable development goals, especially Goal 7 for affordable and clean energy. So ladies and gentlemen, I would now like to end my speech here and request the operator to open for the questions.

[Operator Instructions] Our first question is from the line of Jonas Bhutta from Philip Capital.

Congratulations for a decent set of results despite the challenging times. I have 3 quick questions, 2 of which are more near to medium term and 1 is slightly more structural. The first one being, sir, we've witnessed in the quarter that our gross margins, which is effectively the material margins have expanded by almost 800 basis points. If you can sort of elaborate on whether this is a function of lower raw material prices or the sales mix. Was it a very product heavy quarter in terms of sales, which is why our material margin sort of spiked? And how much of this is sustainable? So the 44-odd percent gross margin, is this the sort of bandwidth which you are going to work with going forward? That's the first question.

Okay. So you'll ask all the questions or you want one by one?

We'll go one by one.

Okay. So Ajay, can you just talk on that, Ajay, my CFO?

Yes. So very good question. So basically, to answer this, this -- the 44% is, I will say, not sustainable at the long run. So this is majorly coming on account of the mix that we have operated in this particular quarter. We have operated some good margin orders that has helped in this particular. And mostly, it is on the mix side. So these are the 2 factors that has contributed to this particular margin.

But just to add to Ajay. As you would have seen, our order mix even in this quarter, predominantly, our focus is to go towards more products, services, digital and those kind of things in that. So our system operations as we continue to provide our projects and continue to provide our system offerings to our customers, but our strategy is going forward more towards offering our products and systems and services are for the digital portfolio. And that would get us into a high-growth corridor going forward in that. So that's our intention going forward.

Great. The second question was, again, sir, from -- if you were to draw out a prospect list for new orders over the next 12 to 18 months, how would you split that between utilities, transport, infra and industrial while we witness that transport infra contributed a bulk of your order inflows in Q1. But if you can elaborate on the utility side, particularly as the green energy corridor bidding that's been slightly deferred, but the positive part out of that is it's been deferred because to sort of amend contract to make Chinese participation in the -- or Chinese participation within these contracts. So does this have a positive impact on prospects? And then the mix of utility orders would increase much more than what you had earlier estimated if you were to draw a time line, that would be helpful, sir.

Yes. Yes. I think, again, thanks for asking this question. If you really look at our midterm to maybe another 12 to 18 months, so we -- right now, at this point in time, our put -- or at least the pipeline, we're seeing the momentum in the rail, and there has been a sustained momentum in opportunities attributable to this segment, that is rail segment. And due to various government initiatives like rail electrification and associated increase in demand for electrical locomotives. And we have been also actively participating not only by supplying our products and also by our grid automation. And wherever possible, we'll also supply our systems over there in that. With the government's focus on completely electrifying the remaining 27,000 or 30,000-plus kilometers by 2023, and we will continue to see these opportunities coming back. And in addition to that, what we're also seeing is regional and -- regional rails at least. We look forward to opportunities in the regional transport ventures like this one, Delhi-Meerut. And those are the opportunities are coming in a big way in coming forward in that. And when it comes to the utilities and yes, green corridor opportunities is quite big. And yes, it has been deferred, but I'm sure it's a matter of time that they will come back because so much of penetration of renewables is going in, and there is definitely a need for strengthening of the grids across the things, both on the evacuation side as well as strengthening of the grids to take the penetration of the renewable of such a magnitude. So in addition to that, what we have probably also not seen yet, but we're going to see the electrification. As the electrification of the mass bus rapid transport systems will start getting in, the need for the grid reliability or increasing the grids much more sustainable will be much more important in that. So these kind of -- the large bus, the charging system, what we call as a grid to plug, it needs a much more robust networks in that. And those opportunities is what we're going to see in the days to come with that.

Sure. And finally, my last question are now that officially, Hitachi's come on board from July onwards. From a strategic direction point of view, one of the key guiding forces for business with Hitachi coming in was its ability to fund clients to take on projects and then sort of back contract the equipment orders to the APPSIL. Where in that, how should one monitor that happening? Will it start with domestic projects? Or will that process be followed by -- will be driven by exports and then we come into the domestic market? If you can put out a time line as to, if at all, that is going to be the strategy going forward in the near term?

Yes. We -- as I said, the deal got completed only on July 1. And until July 1, there was a strict antitrust rule. So we cannot go and exchange the information and start looking at the projects. And then we started looking at the synergies only after the 1st of July, and it is too early to say on that. But definitely, we are looking at the synergies for offering both on the product portfolio side and offering the digital platform where Hitachi has invested in the Lumada platform. And we are looking at how can we from our energy platform and digital platform combined solutions we can offer to our customers. That's the one. And the second is, as you rightly said, we are also looking at the financing not only from the Hitachi side financing, also looking at financing from the JBIC and -- JICA and JBIC finance projects, how we can do that. So I think we will be in a position to update you. And right now, we are just only 4 weeks old, and we are working on that track.

And sorry, if I can sneak in one more, sir. Just last week, ABB India, the erstwhile partner company, launched an online portal for medium-voltage products like switchgears or MTBs and circuit breakers to be sold online. Is there a product sharing agreement between APPSIL and ABB for some of these products or that's a completely different product line that is only for ABB India?

No. As part of our carve-out and agreement between -- there is a long-term supply agreement between ABB and Hitachi ABB Power Grids, mutually -- mutual supplier agreement. So whenever a customer wants, so we will be in a portion to offer the products from the both companies. So ABB can offer our products, and we can also offer their products.

Our next question is from the line of Renu Baid from IIFL.

I have 2-3 questions. My first question is if you can share with us a little more in terms of what is the kind of opportunity that you're seeing today in the export market, especially Southeast Asia and subcontinents? And how would you see exports ramping up in the next 12, 15 months? Also, if you can throw some color on how was the performance of export during the first half and the current quarter?

Yes. Okay. So as exports, we talked about previously, is one of our key lever for growth. And we would like to leverage the existing our -- manufacturing. We have a 16 manufacturing factories in 5 locations, and these manufacturing factories also catering to not only for the domestic market but also to exports. And we also talked to you previously that our exports are in the range of 15% to 20%. And our key markets are not only Southeast Asia, but also Africa and South America and also some of other markets in that. So this quarter, I think we have had a good decent orders, but we're really looking at our first half of the years, and we have a decent growth in the exports in overall, if you take it the first half, 6 months versus last year, 6 months, then we have a decent growth of exports. So we have volume...

Sir, can you quantify recent growth numbers?

Yes, we have -- Ajay, you have the numbers of the first half export numbers?

So basically, the first half exports, we are around 20% -- in the range of 20%.

Yes. In the range of 20%. So we have been saying also our range of exports is in the 15% to 20%. So we have reached 20% by first half.

Right. My second and third question is also on the similar line. Second question is you did mention that you will continue to invest in physical product lines, so as notwithstanding the recent challenges with pandemic. But from a 2- to 3-year perspective, what could be the new product lines or factories that you're looking to add and expand for domestic market as well as for the export opportunity? And third question is again to Ajay. If you look as -- from an annual perspective, we are paying approximately 4% royalty fee and 2% management fee to the parent and group entities here. So how do we see some of these long-term costs moving towards -- as a moving in terms of trends for CY '21, '22 from a medium-term perspective?

Yes. So let me ask -- let me answer your question, and then Ajay will come on that. So investments, as you know, that we have been in India for the last 6 decades. And we are continuously investing it and upgrading our manufacturing facilities and bringing the new products. And depending upon the -- depending upon any particular time, we always have investment plans. Our expansion plans are ongoing, and we will be bringing the new products. At this point in time, we will not be in a position to give you a specific names of our factories or expansions. But I would say that at any given point in time, we have more than INR 150 crores worth of investment projects are ongoing at this point in time.

we are expanding?

Yes, expanding. Yes.

[Operator Instructions]

Yes. I'm just Waiting to reply from Ajay on royalty and management fees.

Okay. So basically, our products are technology-based and it requires some ABB technology for which we need to basically pay royalty and technology the group companies. So -- because the resultant technology holder is a global company and accordingly, we are paying roughly approximately -- we expect that 4% of the royalty will be continued until this year-end. And going forward also, depending upon how the new management comes that we are not aware. But then I see that at least for next year, we are going to be in this particular range.

Yes.

[Operator Instructions] Our next question is from the line of Renjith Sivaram from ICICI Securities.

I wanted to take it to opening. I think the last year somewhere, we got some orders for e-mobility, where are the opportunity in this and what's the size of those? Is there something which we are contemplating to expand? If you can throw some light on this e-mobility portion.

Yes. So what we did is that in the month of January, we also announced through a press release, we have signed an MoU with Ashok Leyland. As you know, Ashok Leyland, one of the largest bus manufacturers in the country that we are developing using our flash technology and called TOSA. And this technology enables us to charge the bus in less than 20 seconds. And we are developing the pilot, and that's where we announced it with on that particular time. And at this point in time, the project is ongoing, and we expect that project to be up and running maybe by first quarter of next year. And what we basically believe is that with the both of our Grid-eMotion Flash charging technology, what we have deployed right now as part of the pilot and also Grid-eMotion Fleet technology where it can be useful for mass charging of the buses or any other kind of mass transport systems in that. The reason -- you can look at that, we have close to now 2 million buses in the country. And out of this, at least the 16%, 17% is state-owned buses. And as part of the government is that 5,500 buses are expected to be electrified by 2022 or '23. And we see there a lot of opportunities of these kind of bus charging technology where we bring in some grid to plug technology and that has an encompassing entire digital solutions. Not only the charging, but also look at energy consumption, reliability and optimization and also looking at those kind of things.

Okay. So we will also be participating in the recharging tenders which EASL and others are planning to come out with?

Yes. We are looking at a thing, and our -- we are not a charger supplier, you need to understand. We provide the charging system, which includes the charger, but our charging systems would enable the large scale charging.

Okay. So we've -- so if I understand it correctly, we are not a charging station supplier?

No, we also do the charging station, but it is not like a charging -- a charger like how you charge a car. This is the charging stations, right from the plug -- right from the grid to the chargers.

Our next question is from the line of Rajesh Nichale from Reliance Industry.

My question is with respect to the ongoing open option for ABB Power. And from the various media reports, which we've heard and read, the power grid business as the various lead valuers were ranging in the price range of INR 8,000 crore to INR 12,000 crores. And how come for the open offer purpose, it's been only valued at INR 3,600 crores?

Okay. So Poovanna, can you answer this, please?

Sure. Thank you. In terms of the open offer, this has been calculated in terms of regulation 8(4) of the takeover regulations. And that's taken into account all valuation parameters, including book value, comparable trading multiples and other parameters as a customary for valuation of shares of such companies. And in fact, for this purpose, valuation reports from 2 independent agencies were obtained. Bansi S. Mehta & Co. undertook an independent valuation exercise and issued a valuation report dated March 24, 2020, in terms of regulation 8(4) of takeover regulations, and derived the value of INR 851 per share. Ernst & Young Merchant Banking Services LLP, undertook an independent valuation exercise and issued a valuation report the same date, which was at INR 847.1 per share. And accordingly, the offer price of INR 851 per share, which is the higher of the above was taken. The offer is being made at a price of INR 865.92 per share comprising of INR 851 per offer share and an interest of INR 14.92 per offer share. It's computed at the rate of 10% per annum for the period from March 30 being the date of making the public announcement and June 2 being the date of publication of detailed public statement. And APPSIL was listed on March 30 subsequent to demerger of ABB India Limited Power Grids business. And since APPSIL was listed only on March 30, 2020, the interest component has been calculated with reference to that day to the publication of the detailed public statement. The acquirers are best positioned to address this query in terms of the valuations that you've raised. And ABB Power Products and Systems India Limited is not involved in the fixation of the offer price and therefore, is not in a position or able to respond to questions pertaining to valuation, open offer price and related interest.

Thank you, Poovanna.

I understand, Poovanna. But ultimately, it's the valuation of your business. So even I understand that the acquirers are determining that, it's far from the real value which your business has actually.

Yes.

Yes. Rajesh, as I said, this is something...

And just if I may add, these reports, which you said Bansi S. Mehta, E&Y, which has come out on 24th of March, when were the appointees? How long did it take for them to arrive at this valuation?

I would not have the date of appointment as such, but it's a long-drawn process that they were appointed because it -- valuation have to be completed. So maybe we can check with the acquirers and come back to you in terms of the date of appointment.

Sure. It's quite a coincidence that their values are more or less in a very less than 0.5% range, INR 847 and INR 851.

Our next question is from the line of Laxmi Narayan from ICICI Mutual Fund.

I have a couple of questions. Yes, it is said that culture eats strategy for breakfast and the company is now Hitachi ABB, and that will be definitely a change in the culture. It's important to acknowledge this and then work through. May I know what specific thing you have done to address this? And has it been put as a priority, number one, because that makes that drive the company forward?

Yes. I think this is a very good question, and We would be very delighted to answer this. And as you know, we are 130 years of legacy and Switzerland and Sweden based and the European background. It's a multicultural organization at any given point of time. In any of our management teams, we have at least a minimum of several passport holders sitting across that. That's where we are proud of it. And that's where we are doing it. Now after the July 1, I think we are now owned by Hitachi. But there is a -- I would also like to answer you in a way that when Hitachi has acquired, they liked our strategy, and they wanted us to deliver the strategy. And as I said, we continue to headquarter our headquarters in Zurich, Switzerland. Our new Hitachi ABB Power Grid is headquartered in Zurich. And we continue to run by the same team or Claudio Facchin, the group CEO of our organization, and it will be run through both of the joint venture Board where Hitachi and ABB will be there in that. And yes, culturally, definitely, we are a different thing. But when we had our first meeting, together with -- after the day 1. And what basically we are looking at it is that it's -- when you look at Hitachi's CEO was asking us that you need to be proud of the culture of what you have. And there are differences. We must acknowledge the differences, but at the same time, Hitachi is looking forward to building a vision that is a culture of ABB and the culture of Hitachi. That's exactly what we are working towards, building a vision-based culture on that. And where we can learn from each other. And from Hitachi side, as you know, the Japanese companies are highly respected in the planning wise, in the designing, in the quality aspects of that. And whereas in case of our company is known for pioneering leadership and so on and so forth in that. So that's exactly where we are planning to do this vision and bringing both cultures together. And that's where we are proud to be part of this going forward.

Excellent. And my second question is that how do you bring predictability to your business? And what steps you have taken for the same? Because we understand some other projects are lumpy and then you are fixed base goes up because of accommodating this. And then that goes away, it becomes as difficult, right? So how do we ensure predictability to your business in the next 3 years or 5 years?

Yes. I think, again, we have done a lot of these things previously, and we -- as part of our transformation program, we brought in power up as the transformation strategy. And as part of that, we have 3 main strategic pillars. One is that we want to be a growth engine. And the second one is doing the different business model. And third one is the execution is the key because of the quality and the on-time delivery, et cetera, like that. And cutting across these 3 is our 2 foundations were innovation and people. And that's where we have been focusing on the last at least 4 years. And today, we are able to bring in much more predictability in our business. And then we still need to do it, but there are lots of market situations like COVID kind of situation is unprecedented. And you cannot, in a position, to factor those kind of things in any way. And leaving that, I think, by and large, we are in a position to now say and our [ stat ] ratio is improving, I would say that.

Sorry, I haven't concluded. So just on that predictability, in general, what percentage of your revenue is like, at any point in time, is there in terms of a kind of an annuity-based thing or something like that where there is clear predictability?

No, when you -- sorry, come again, annuity-based means?

So products you actually export, you do various other things, like grid automation, et cetera, right? So what is in general -- as a thumb rule, there is certainty of some business at any point in time for you, right? What's the percentage like broadly number which you...

Yes. Both of our revenue comes out of our backlog, okay? So we have right now, as I told you, INR 5,133 crore for backlog. And our book-to-bill ratio is we need for some of the businesses, but very less in that. Most of our revenue comes out of our backlog. So that's the predictability on that.

We'll take our next question from the line of Bhavin Vithlani from SBI Mutual Fund.

Congratulations, Venu and team, for good performance amidst difficult times. I have 2 questions. First is the Atmanirbhar Bharat program, which has been announced. And does it structurally change the competitive landscape for the T&D industry? And do you believe that this calls for a higher growth rate and better profitability going forward? And any areas that you would like to highlight? That's my first question.

Sure. So Atmanirbhar Bharat Abhiyaan is absolutely -- is an important step in the right direction. And when it comes to our company, ABB Power Products and Systems India Limited, we have been in this country for more than 6 decades. And we are probably the only country -- very few countries within our group where we manufacture more than 80% of whatever we produce in that. So having said that, when it comes to the competition, I think competition is important for our customers, where customers get a lot choice and both in terms of the technology, in terms of the prices and other things. And it also brings a lot of innovation for all the players. So when it comes to us, our take is we always want a level playing field where we can really bring our innovation, innovative products and technology to our customers in that. So when it comes to us, I think, by and large, our portfolio, we have quite a robust supply chain, and we always have multiple supply chains, not only in one particular country, but also in that. So that's where I think we are better leveraged to -- for this particular thing.

Sure. But does it improve the competitive landscape for you, I mean, in terms of better profitability over the next 1 or 2 years?

I would not say a better profitability. For sure, we are in a better position to offer our equipment. We always have been taking a stand. We would like to compete, and competition is good for the customers and good for everybody. And we would -- we have been competing, and we would like to compete.

Sure. The second question is on the exports front. While you did answer to the earlier participant, but can we expect a steady state growth in the export because many of the peers that have been talking about the realignment of supply chain and the ongoing trade war with China also is leading to a beneficial interest for companies in India?

Yes. No, I think we have been consistently saying that in our exports in the range of 15% to 20%. And That's exactly what we are working in that. And we continue to invest in expanding our thing. As and when, there is a definite -- any particular information, we will be happy to share. At this point in time, our focus is to leverage our existing manufacturing footprint. So not only for the Indian customers, but also for the rest of the world. So with that, a big thank you. Operator, if you could close and those who have any questions, please reach out to us that we would be very happy to engage and then answer to your questions.

Thank you very much, sir. Ladies and gentlemen, on behalf of Hitachi ABB Power Grids, that concludes this conference. Thank you for joining us and you may now disconnect your lines.