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

Ladies and gentlemen, good day, and welcome to the analyst call for ABB Power Products and Systems India Limited Q3 Results. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. N Venu, Managing Director and CEO, ABB Power Products and Systems India Limited. Thank you, and over to you, sir.

Good evening, everyone. Are you able to -- what about the presentation? So good evening, everyone. Thank you for joining us for the call today, and I hope all is well at your end and you continue to take all necessary precautions to keep yourself safe and your family members safe. So I'm going to refer to the slide numbers we already uploaded in the stock exchange just for your information, okay? And if you are able to see the slides, also good. And as our country appears to be slowly getting back on track and we see active COVID-19 case loads are coming down day by day, and more and more people getting vaccinated. You probably have seen yesterday, we have reached a very important milestone of 1 billion doses of vaccine. And that shows that we have more of the vaccination rate is really improving across the country. And while the vaccination is improving, we also see green shoots of economic recovery are also starting to become more visible now with core industries such as electricity, steel, cement, natural gas, fertilizer starting to improve. And with demand and economic activity picking up, business confidence also surged. We also see that business travel is also going up. And we share the same optimism, like all of you are feeling, and we are feeling much better about the state of economy as well as business than we were at the start of the year. So let me refer to the Slide #4. We retain our focus on keeping our people safe and healthy. Like they say, prevention is better than the cure. There is no better way to prevent than spreading awareness. We have continued conducting regular training sessions, consultation to our people, partners and also employee families to combat the spread of the COVID-19 virus, reduce HSE hazards at workplace, our sites as well as prevent any ailment arising out of a new normal. We have very special sessions to impart awareness ranging from life-saving rules to proper ergonomics and posture. That's to ensure our people don't neglect basic health while adjusting to new way of life. Our work is underpinned by safety, integrity and quality, which are our licenses to operate, and it continues to reverberate with our customers as well as through our high service standards. We are glad to be recognized by leading industry players such as [ Tata's ] for our values and commitment to safety showing us that we are on the right track. Moving to the next slide, Slide 5. As you all may be aware gloss of critical material, on top of this there are shortages ranging from microchips to coal, hindering firms in unleashing their full revenue potential since these are base elements for our industries and for our revenue-related things. In this scenario, while we have seen a steady rise in our orders, our revenue has been impacted even though we have had a meaningful order wins, we are about INR 64 crores worth of revenue impacted due to pandemic-induced delays, stopping us from pasting a full recovery. Yes, we managed a credible performance in sync with market realities. As you can see, we have more green in both year-on-year as well as quarter-on-quarter. And long-term fundamentals appear solid. Demand in the September quarter was driven by rail, data centers and utilities, helping us further strengthen our position in growth segments of the future or what we call our high-growth segments. The principal chunk of our orders pertain to renewable energy with solar and hydro projects, generating significant demand for our high voltage and grid integration products. Transformers do strong interest from rail and metro companies, alongside top utilities to cater to rising power demand. We put unwavering efforts at stabilizing our supply chains and improving efficiencies. At the same time, we made solid headway towards our sustainability goals in this quarter. This year, as you recall, some of you, we have announced our 2030 carbon-neutral strategy, and we have set ourselves as the short-term, medium-term, long-term targets to advance the energy transition underway in India, as well as around the world. We have committed, as part of our short-term targets, 100% renewable energy consumption by all over our factories, offices and project sites by March 2022. And I'm happy to share that as of today, we have achieved 100% possible free electricity at one of our factories, and we are very much on the way to reach our target by March 2022 in the remaining part of our factories, et cetera. In addition to that, we have completed all energy audits and associates management plans among other measures required to implement the transition to 100% fossil-free operations in all of our other factories as well. We started to champion the urgency and pace of change needed to reach net zero. Achieving the promise of carbon-neutral future means: Integrating large-scale renewable energy, overcoming complexity and capacity issues and cutting waste. In that direction lies our global initiative within the company to reward excellent environmental strategies and overall performance of manufacturing units. I'm happy to inform that one of our manufacturing factory located in Malaysia called common operators unit ranked the highest among 33 global units for waste recycling, little lighting, solar power generation and its use. In addition to making notable headway in decarbonizing our operations, during the quarter, we proactively constituted an environmental, social, and governance, ESG Committee of Directors to track our performance and increase shareholder's value. In today's Board meeting, this has been decided. And as you know, our company, our technology, and our portfolio shall enable carbon-neutral future for our customers. So we are taking a new role in not only announcing that carbon strategy 2030 carbon strategy but also taking the leading role in announcing the committee of directors at the Board level to track the performance of that ESG. So sustainability is at the heart of our purpose. At Hitachi Energy, Hitachi ABB Power Grids, sustainability at the heart of the purpose. And we are energized and motivated by the shared goal of accelerating a carbon-neutral future for this generation, for all the generations to come. Moving to the Slide #7, a resolute in our vision and goals within our control. We have ensured a well-rounded performance besides making headway in segments that will advance the energy transition. We have ensured inclusive skill development under various programs and initiatives, be it supporting young women in engineering colleges, through financial aid and career opportunities or advancing diversity and inclusion at workplace under our Diversity 360 program. Collaboration internally and externally is a key for us to co-create solutions that benefit society. And collaboration is also extremely important during these changing energy transitions. So we look at the whole picture of social environmental and economic value in our growth. We have continued to add our advice and thought leadership on key issues at prominent forums to build the narrative on energy transition and transformation. Moving to the Slide #8. So we believe that electricity will soon become the backbone of the entire energy system. It is, as we can see, crucial to the sustainable development of societies and industries, it needs investments in the evaluation of our power grids as well as in grid power. Education is a fundamental driver of the change we are seeking. Since the start of our stand-alone operations, we have been investing in academia and building solid underpinnings for the sustainable energy future. In the same fashion, in the quarter under review, we partnered with premier institute, IIT Roorkee, on smart and sustainable campus energy ecosystem. The project includes the setting up of an integrated energy and digital platform, embedding intelligent and futuristic energy, transport and waste management systems that can minimize harm to the planet. Our smart electric grid lab at National Institute of Technology, Warangal was inaugurated by the Hon'ble Education Minister, Mr. Dharmendra Pradhan. Our aim is to create the right educational framework and facilitate to ensure talent that can facilitate reliable and clean power for all. And we have made some progress there to drive sustainable development, which takes me to the economic enrollment in the coming September quarter. So moving to the Slide #9. I think here, most of this you know better than me, but just to tell you from our perspective, India appears to be on a recovery path. We see across the industries, the country is projected to be in the fastest growing major economies in the current financial year. The Indian government expects double-digit growth in the financial year 2022. And the growth rate is expected to sustain for the next decade or so. COVID cases are coming down, core sector output is going up, this is a good news. However, we have many risks for which we must remain watchful. Vaccination rate is going up but yet to be fully vaccinated. While the risk of infections around the festive season remains, we need to be cautious on that. Speaking of the operating environment for business, the aftermath of the first and second COVID wave has resulted in a slowing demand, while supply lines are being stretched thin with the tropic industrial force. Fuel prices on record high and core inflation, which excludes food and fuel, likely indicates impending inflationary pressure. While electricity demand is expected to grow between 8% to 8.5% in the financial year 2022, risk of power prices emanating from coal shortages may dampen supply. The good part is that the government has assured that there will not be any shortfall on the coal, so that's a very good news on that. So while we have great opportunities in the pipeline, but we cannot be fully sanguine yet. Moving to the next slide, on the Slide #9 -- Slide #10. In the third quarter, all the headwinds I have discussed notwithstanding. We remain the partner of choice for our products, services and software solutions. Transport and industries alone grow about -- of the order book and predominantly through direct sales. We continue to make headway in our key focus areas such as renewable integration, metro and rail, and all essential drivers of our business growth, and also in line with our Vision 2025. We cater to about cumulative of 1 gigawatt worth of cumulative renewable orders during this quarter, [ allowance ] by expecting 150% jump in our performance in railway and metros, and 5% increase in the industries compared to the last year. We see a slowing in some industries start as start -- start investing in the CapEx. Our contribution to quality, however, left much for wanting. So we have to increase our share there in the months ahead of -- months in the coming. Moving to the next slide, Slide 11. Exports remained healthy, contributing more than 80% to the order book in this quarter. And cumulative, if you take 9 months, our exports are in the same veins as we have been talking about, between 20% to 50%. So exports, cumulatively 9 months we are around 42%. Among others, orders for the exports in this quarter, we received breakthrough of high-voltage orders from key utilities in South and Latin America, Eastern Africa as well as an order for our power system based on FMCG company in South Asia. Our southeast portfolio continued to deliver as we received a first of its scan automation order from Haryana state utility. Booked our biggest online reserved gas analysis orders from Coastal Gujarat. Our first wellcare remote asset management order in the renewable energy spare in Asia for a 715-megawatt solar photovoltaic plant in Rajasthan. And grid automation and cybersecurity orders for power stations, metals and petrochemical companies in addition to several others. Our consultancy business attracted companies in power, aviation, textile, manufacturing and specialty intermediate synthetic studies. Customers trust remained rock solid despite difficult market conditions. Moving to the Slide 12. Our 3-pronged strategy, that is protecting our people, preserving business continuity and preparing for the new norm, put in place at the peak of the pandemic, continue to support us in working uncertain market conditions. Even amidst commodity market and supply lines turbulences, we delivered a credible and sustained performance. As of September 30, 2021, our order backlog stood at INR 4,896.5 crores, which will unlock the revenue stream in the coming months and quarters. Our profit before tax was INR 47.2 crores, while net profit was over [ 6.14% ] year-on-year at 34.3%. Operational EBITDA stood at INR 55.6 crores in the September quarter with EBITDA margin at 6.5%. High entry buildup in our factories mainly for our high-growth products due to the supply line trends, deferment of revenue and high input costs impacted our cash flow. We had to borrow incrementally during this quarter. Easing of port congestion, stability in commodity markets, input costs are likely to bring relief and improve our short-term liquidity positions. Moving to the Slide #13. Our priorities ahead, as been also telling you in the previous quarters, often say, we are investing in India for the long term. While we aim to introduce new products to capture a bigger share of the market, our goal is to localize our portfolio, build indigenous capabilities. We'll continue to make in India, for India, for the rest of the world. Our key focus will remain protecting our people, along with that, building our capabilities in the high-growth segment such as rail, data center, renewable, HVDC and smart life, et cetera. The Indian government has set ambitious target in each of these segments, which I talked about. We will concentrate accelerating our growth to service digital solutions and exports, leveraging our strong local footprint. We have a comprehensive portfolio of future-ready and state-of-the-art products, software services systems to cater with them. Commitment to lowering the carbon footprint of our operations, product localization, digitalization of the grid will be part of our yardstick to measure our success. Nothing is complete without our people. Their safety, their growth and their upskilling will remain in focus for us. In this energy transition, it's crucial that we take on the challenge of accelerating the pace of change. We see ourselves playing a leading role through our digital and energy platform as the partner of choice to our customers, for the industry to advance a sustainable energy future for all. Moving to my last slide, it's very important slide. As you see that, how many of you aware that, we are already using an Hitachi Energy slides. Already aware that globally, our promoter company, Hitachi Energy went live on October 13, 2021. That means they have changed the name globally from Hitachi ABB Power Grids to Hitachi Energy Limited globally. So in India, we are in the process of securing approval from the Ministry of Corporate Affairs for a change in the local company name to align with the global entity. As you know that our shareholders have already approved the name change, and while I would hold sharing more information on that until the change actually happens. I can say that, I and my entire team are very excited to start this new chapter in our institute. Our new purpose of Hitachi Energy is advancing energy future for all. We are advancing the world's energy system to be more sustainable and secure. As a pioneering technology leader, we collaborate with customers and partners to enable a sustainable energy future for today's generation and those to come. So with that, thank you, ladies and gentlemen. I would now like to open the channel for your questions. Thank you.

[Operator Instructions] Our first question is from the line of Abhineet Kulkarni. There seems to be no response from the line of Abhineet Kulkarni. We will proceed with our next question, which is from the line of Saurabh Shah.

A couple of questions on the financial slide, which is Slide #11. So in terms of now slowly hopefully if COVID doesn't come back in a meaningful form which affects our operations, what kind of revenue line do you see for the next 3 -- in the next 3 months? Or how should we look at a normalized kind of number for the revenue from INR 850 crores? Last year, it was INR 950 crores. So do you see this trajectory kind of going up sharply or you expect this to be similar in the next 2 or 3 quarters? How are you seeing the order execution time line minus, of course, any COVID surprise?

Okay. So thank you for the question. As you know, we don't give -- being a listed company, we don't give any forward-looking statement. But I'd like to give you a little bit of pointer so that you understand. I think with the COVID, as you rightly said, hopefully, it's behind us and we don't see big waves as we have seen previously. And we expect that the revenue to come back to pre-COVID level -- slightly better than the pre-COVID level.

Okay. So with the order kind of intake going up, especially on a Q-on-Q basis, do you expect that to accelerate? I'm not talking about in the next couple of quarters. So just given the way we had announced the demerger and the focus, are you seeing a slightly higher uptick in the revenue growth rate at all? Or just should think it will be in the INR 1,000 crore range only?

No. We see, as you can see our 9 months cumulative, we're already seeing an uptick in our revenue. And if you really look at the 9 months year-on-year, there is already 11.5% increase in the revenue, right? So that is considering the COVID situation. So definitely, we would look at uptick in that.

So where do you see -- which segments do you see the highest growth coming from, necessarily reflected yet in the order book, but in terms of new tenders being put out, where do you see the most relevant growth for the business in the next 2 or 3 years?

I think the next growth segments are very clearly we have been articulating. One is that the rail segment is definitely a big growth. Rail segment is, 1 is like across country, one is that India is railways ambition of net zero by 2030, so that is accelerating 100% electricity -- electrification of the rail, so that is a different growth area. In addition to that, we see also the cross-country occupation and we see a regional rail. And then also, we see some of the metro rails today, if you really look at rail and metro, our systems, radar systems. So that is a definite growth area for us. And then 1 more big area where we are yet to see is that the high-speed rails. So those are very big projects and that will really see a huge amount of growth in the rail. That's a 1 segment. And the renewable continue to have the growth. As you know, the government of India's target is to have 450 gigawatts by 2030. So even if you take a factor, so we need to do at least 2 to 3x more than what we have been adding renewable, right? So that is a huge amount of opportunities and growth for us. And then the data center, third one is the data center, is also a high-growth segment with the data privacy laws coming in. So this has a quite high growth things, in addition to the traditional things. I mean, when the industry CapEx starts, so we will see those things are also coming up in that.

Just given, as you mentioned, these 3 growth segments and these COVID kind of headwinds going away, so what kind of margin profile do you see because year-on-year, again, we see a slight dip in the margins. So from 7.2 to 6.5 in terms of operational EBITDA, how do you see that going forward? Do you expect to shipping request new kind of orders, renewables, you mentioned data centers and all that. It sounds like there are certainly much more private sector-oriented. Do you see better margins going forward on a sustainable basis?

Yes. So again, we don't give a forward-looking statement, but we have been always saying that we have a clear strategy and plans in place to bring this operational EBITDA to a double-digit range over a period of time in a sustainable manner.

So what would be your kind of -- I know it's not a statement of when it would happen, but what would be your target? Would this be the next year, 2 years? How do you see that?

Yes, next 2, 3 years.

Our next question is from the line of [ Kunal Shah ].

Sir, I just wanted to understand, what can be the growth rates in each of our end markets, if I were to think from a 5-year perspective? And therefore, how should we think about ABB Power's growth rate in that time period? What I'm trying to understand is that as we understand, apart from data center, the metros, the renewables are anywhere between 5% to 10% kind of growth market, if I understand correctly. I would love to hear your thoughts on this one. And what should be the multiplier at which ABB Power can grow over [indiscernible]

So again -- so we will give you a bit of pointers for you to make an assessment. So we are very consistently saying that our strategy is to grow higher than the market, okay? The market is growing X percentage and we are going ahead in the market, we want to go ahead in the market because we are taking a lot of actions, proactive actions and as the reason that. So there are some segments are growing high single-digit now, right now, and we see they are slowly moving to close to double-digit things as the economy is going up and also the headwinds coming out of the COVID will slowly recede. So all these thing factors put together that these segments will start moving towards single-digit to slowly coming to the high double digits -- slowly coming to the double-digit side of that. So that is what our assessment. We also see energy transition is a big thing coming in addition to the thing that we talked about. And energy transition is -- enable lot of investments in the grids, in the power systems, not just the quota on recently released report on the International Energy Agency who released the report on India's testing. As per them, to take care of these kind of challenges and the growth elements, India need to add the power system to the size of Europe in addition to the existing system. So that's the kind of the growth levers we are seeing in view of the decarbonizing energy transmissions, interconnections, HVDC et cetera. That's why we have -- I've been also telling you, maybe we have the very few companies, we never stop investing even during COVID. So as we are talking, our investments are going in various factories close to INR 200 crores, INR 250 crores, lot of investments are happening and expanding, localization, expanding our portfolio not only for the local market but also to the exports.

Sure. Sir, and would it be possible to put a size to each of our end markets, a very rough number?

No, we have not been giving those sizes, Kunal.

Sure. No problem, sir. And sir, my second question is pertaining to ABB India and Hitachi Power. If you can help us refresh the difference in end markets that we are catering to? Especially I wanted to understand from a context of spaces where there are applications for both LV and HV where both can participate, do we collaborate or how does that relationship work?

So again, Hitachi Energy Limited, our end customers are very clearly defined. So we are utilities, industries, infrastructure, transport and also the new segments such as data centers, mobilities and renewable integration sectors like that. So our portfolio, a whole other company portfolio lies on 4 businesses, that is high voltage and high voltage. And then the next 1 is the transformers and the third one is the grid integration. So grid integration, we mean is -- we mean the substation, the HVDC, the power quality and then e-mobility is part of our grid integration. And then the grid automation where we talk about substation automation, then SCADA, enterprise software, asset performance that's all of us in that. So there are some areas. So this is our portfolio and end markets very clearly defined. So there are areas where take, for example, a data center and the data center customer approaches us with both the high voltage and electrification. So we do coordinate, wherever possible, collaborate with [indiscernible] but there is no compulsion on us that we have to only grow with someone from extra [ way in that ]. So while there is anti-competition font of an ABB to us, but there is no reverse spare anti-competition laws is there with us. So we are free to offer our things. But having said that, we will try to, wherever possible, to collaborate and co-create these kind of things.

Sir, if I understood it rightly, there are certain products which are overlap in terms of where both you and ABB India are present because our understanding was that the portfolios are clearly defined and bifurcated into different end markets, as in LV, HV?

There are no products are overlapping between us and our previous company, Kunal. So all the products are clearly distinctly different. So what you're talking about applications, take for example, data center, so whether what our previous company can do and what we can do, there may be some overlapping here. But other than that, the products are very clearly defined and segregated.

Best of luck for the future quarters.

Thank you.

Our next question is from the line of Renu Baid.

I have few questions. So my first question is on the performance. If you remember, right, in 2Q, we had almost INR 200 crores of slippages in revenue due to COVID second wave. In the second quarter we were expecting relative improvement in the pace of execution. However, again, because the supply chain challenges, INR 64 crores short of expectations because of these constraints. So effectively, are we somewhere looking at execution pace slowing down for us for external matters, or you're also seeing customer readiness to access these deliveries being soft? And by when should we expect revenues coming back to close to the INR 1,000 crore level in terms of the overall trajectory? If you could give some more insights on this.

So I think as you talked about, Renu, it's a kind of different set of challenges in this quarter, and that's the reason we have -- we did miss it. But from a customer side, I don't see any of those limiting factors because I've seen many of the customers are, in fact, like they are asking us to accelerate the pace of executions, et cetera, and that. There could be a single-digit percentage of the customers not lifting because we also have a strict cash over revenue policy. And even though if customers being ready -- ready -- until customer pays, we will not be able to ship it. So that is always has a single-digit percentage thing in there. But I think having said that, we do believe that the customers looking at taking the material, we would look -- we will -- we are cautiously optimistic to come back to the pre-COVID level what you're talking about in this quarter onwards.

But at least, do you see the headwinds on execution and because of these external reasons easing out from 3Q, 4Q onwards as we are already in the second half of the fiscal year, or they might contest for some more time?

See, headwinds, especially on the ports, et cetera, I don't think it will go away overnight or in the next couple of months or things like that. But what we have also taken action is that better planning, better booking of the ships, well in advance, taking extra actions to book those kind of things, so those actions, in our view, should mitigate that problem.

Got it. So secondly, with this transition to Hitachi Energy, how far are we now with respect to complete control coming in the hands of Hitachi? And if you can share some view in terms of by when are we expecting the closure of this overlap of tech and IT charges which we have with ABB? And also by when do you think should be the remaining 20% acquisition of the stake happen in the JV by Hitachi globally?

Yes. So let me -- you asked the 3 questions, Renu. Let me just -- on the transition to Hitachi Energy, as I told you, I've shown in my last slide, globally, we are done on 13th of October. So we have completed -- when I said completed means, our name globally has changed from Hitachi ABB Power Grids to Hitachi Energy Limited. So that is what is the call. So there is no change of our strategy. There's no change of our line of business. There's no change of our base, which we serve our customers, et cetera, to continue to be run by...

No, not from the business perspective, but just from 3-year transition of that from a daily subset of portfolio -- for Hitachi ABB portfolio. Yes.

So that is 1 of that. So second, when it comes to India, I also told you, it is under process so we will slowly come that. Second, the Hitachi ABB Power Grids joint venture, which was supposed to be from 3-year period, that is which started last year, 2020 July and it will go up to 2023. So until that, the remaining 19.8% stake, which ABB was holding it, they will retain with that. And please note, this minority stake is only at the group level, at the global level.

Group level, yes.

So that is for the previous and it will stay there. So and the third is IT costs you're talking about. As you know, we have already explained last time our -- right now, we are under a TSA exit cost with -- ABB is providing the IT services support. But at the same time, [ totally ] we are building our own state-of-the-art world-class rebar system globally. And those things will continue until 2023.

Okay. Until 2023 till the JV structure exists?

Yes.

Got it.

Sorry.

And lastly, if I can, on -- no, I just clarified, those overlap of the costs will continue until the JV structure of 80/20 continues with ABB, right?

Correct.

Yes. Sir, lastly, on the business side, 2 things: A, you mentioned the transport industry now are almost 50% of the orders that we have. How large have you now scaled up in terms of revenues? And B, were expecting that these portfolios of a long term obviously only be 50% or higher. So broadly, does this mix broadly look sustainable for us in revenue terms as well? And secondly, on power quality, where you highlighted compared to some of the other focus areas, power quality witnessed some decline. So is this more because of the timing of the opportunity coming in the end markets with the customer and delaying revenues or probably we have seen increased competitive pressures or probably loss of some orders to the competition?

Power quality, in our view, is purely a timing perspective. That's one. And then your first question was that -- the industry's growth is sustainable. And we were saying, especially on the transport and industries, right, and I was also telling you in the beginning to another colleague, that one of the high-growth segments where we are looking at is transport and we will see a multiyear growth with so many drivers I talked about in that. So basis which -- and also slowly the industries are making a small, small CapEx. And with that, we should be in a position to see this, it's not at least 50% but very high visibility of this.

Our next question is from the line of Umesh Raut.

Sir, my first question is related to the gross margin for the quarter, which are -- which is at around 41%, which has increased on a year-on-year basis despite raw material prices has went up significantly. So any reason -- particular reason why, I mean, gross margin has improved year-on-year despite the commodity variations going against us?

Okay. Our CFO, Ajay, you're on the call?

Yes, yes. Thank you, Venu, and thank you, Umesh, for the question. And so let me give a color to this. So in the current quarter, if you see compared to the earlier quarters, our gross margin improvement has mainly come because of the product mix. So it is a product mix that is helping us in the -- for the gross margin improvement. And compared to the earlier quarter, if you see, our exports and service has improved compared to earlier. That is also contributing for the gross margin improvement. But largely, if you see, it is on account of the product mix.

Got it. And sir, going forward, because we are targeting ...

Just to add to our CFO, we are showing this Slide 9 continuously, how our strategy is to go towards more products, services and software and those kind of things. As you can see that our product services has much more bigger share of valet than the projects. So that's also our strategy to move towards a high-growth segment and also towards good margin segments.

Got it, sir. Sir, so going forward, do you see structurally our gross margins [ tremending ] about 40%, say? And are we consistently improving because we are targeting higher share of revenues from exports as well as from services?

Yes. I don't want to put a target on the gross margin. As I told you, we have taken a target of ourselves to come to operational EBITDA at double-digit margins. So that is what is our endeavor to do that. So we will do all that. We'll also do operational improvement but we'll also look at the gross margin improvement by adding more value-added digital service, et cetera.

Okay. Sir, my second question is, if you can shed some light on the competitive intensity especially since last 3, 4 quarters because one of the players -- domestic players is coming back aggressively in the market into the power production systems. So how do you -- how you are seeing the competitive intensity right now?

I think when it comes to competition, so we have seen all these players before also. We will also see players after that. And our view is that the competition is good for the sector, good for our customers. And what we also always pause for is a level playing period in that. So we have a very clear strategy to bring the differentiation in front of our customers, differentiation in terms of the technology, differentiation in terms of the digitalization, differentiation in terms of decarbonizing efforts of the customers. So all these things would give us a due respect and due share in the market, and that's what we will look at it. We will -- always compression will be there. It was there also previously.

Okay. Sir, my third question is about the -- in the previous con calls you have mentioned the HVDC pipelines in the near term, considering 3, 4 projects which are under discussion. So just wanted your view on the time line? And second, on the high-speed rail metro project -- high-speed metro project -- high-speed rail project between Ahmedabad to Mumbai, where initial package ordering has been done and now some tendering work is expected to start. And you have mentioned previously in the con call that there will be a synergy in between Hitachi and the funding agencies because of the same parentage or same country, that is Japan. So basically, just wanted to know your view on the ordering from the HSR opportunity. And which particular products we are expecting orders to come in for HSR?

So let me answer your first question. I think first question on the HVDC is a very important question. So we have been telling very clearly, the energy transition is quite big. The HVDC technology is an extremely important technology in making a grid more flexible, make robust and enabling the penetration of the renewable even more in that. So basis which we also said that we believe, at least 1 HVDC project to come for bidding in the market for 1 per year, at least for the next 3 to 4 years. This is what we have been telling and we are consistent in that. And we see that while we're talking 1 project is under bidding, there are other couple of projects are under -- various stages of approval to come for a bidding, and that's exactly where it is. So basis which we are taking a lot of actions yet to localize some of the equipment and bring them more scale and improve our efficiencies, et cetera, to take care of those things whenever it is available for us. That's number one. Number 2 is on the high-speed rail. Now we are part of the Hitachi's ownership. So we do qualify for this, whether the Japanese fund is there as a step component as part of wherever our portfolio comes, let's call it a step component. We do qualify for the step component of those projects. And we are working with our companies in Japan on this HSR, basically the high-speed rail project Ahmedabad to Mumbai. And right now, as you know, the civil has been awarded and then the work is going on. So this electrical and the balance of systems, SCADA and things like that will come maybe in the next year or something like that.

[Operator Instructions] We have the next question from the line of Jeetu Panjabi.

Thank you so much for this presentation. I've got a few pointed questions at a high level, right? So I heard you say that you want to grow at the rate -- you expect to grow at faster than industry. I'd love to understand how you articulate your competitive advantage -- source of competitive advantage to do that? Two, when you sit down with the Japanese Hitachi bosses over there, how would they calibrate success for this company in India? And how would you personally calibrate success in your eyes as well? And what would be the most difficult part of the journey to get there?

Yes. I think very good questions. So on the competition side, our competitive advantage, which you talked about, I think we are continuously -- as I told you, we are continuously investing, investing in the localizing of the footprint, investing to bring the -- sorry, let me just take a water. Investing in the localization of the footprint, investing also to bring our products, which so far, we are using a complete imported products to localize it. And third one is, we are also improving the skill sets of our people because the shift in the energy transition is making the total portfolios totally different, digital, artificial intelligence-based and so on and so forth in that. So that's the reason we are saying that we are able to now -- able to take care of the competition with this kind of multiple actions already in place, both localizing it and then improving our -- broadening our portfolio. And in addition to that, export is also one of our key strategy. We said exports is, over a period of time, we go to 20% to 25%. And I'm happy to tell you that within the 9 months' period, we already reached 22% of exports in that. So that is how our overall competitive advantage there. So how do you see the success from our shareholders' standpoint, our majority shareholder, global shareholder? So it's very important for us to know that how do we increase our shareholder value? And how do we increase our customers -- how do we improve our customers' processes, efficiencies? How do we decarbonize it? How do we ensure that we bring the more diversity? All this thing is part of our KPIs, which is also part of our global shareholders, who will see that successful of that. So sustainability, I talked about is a key important element, right? We are a technology provider, decarbonizing the whole of energy system. So we have to set ourselves as a benchmark. So that's the reason we announced that by 2030, we want to be carbon-neutral in all operations. And that the first step is, by end of this fiscal year, all of our factories, project sites, offices will be powered to 100% [indiscernible]. So these are the things we are setting ourselves as a target so that we are able to walk the talk on this and able to set ourselves as a benchmark of that. So we also committed -- started a Committee of the independent director -- sorry, committee of the Board of Directors on the ESG. All these things are quite important in the decarbonizing efforts of the energy systems there. So the success is stakeholders' value and taking care of our customers' things and our people.

And I think the 1 part is what in this journey will be the most difficult part that hinders you from getting there? Or what would be the biggest challenge to overcome in order to get there?

No. The biggest challenge is that we always have this kind of uncertainties like we have seen the COVID wave 1, wave 2, we see certain large jumps of support, et cetera. These are the uncertainties we have to face, so we've got to be more resilient, able to take care of those kind of things.

We'll take the next question from the line of Priyank Chheda.

One last question.

Yes, this will be the last question, sir.

So I understand you have been elaborating every quarter. As to how the synergies between Hitachi India and Hitachi Global parent has been improving. So if you can help us understand more and spread in light into how the business prospect has changed? And if particularly, if you can highlight on how the business share on the Lumada platform has been going to and the progress on that?

So as again, we have... Is there any cross talk? Okay. We have been saying that we started these synergies only after we became part of the Hitachi ownership because until that it was an antitrust. We were not supposed to exchange and share the information. So we started doing that. And the low-hanging tools are this like high-speed rail and those kind of things we are working very closely with them and seeing the movement on the ground is going very well. And we also said that the IoT platform Hitachi has invested very heavily on the IoT platform is a very respected IoT platform globally. We would like to leverage that IoT platform and offering our enterprise software suits on IoT platform. So we've been also discussing and doing some pilots here and there and making progress in that. So we have a very clear milestones on that. So we are on track as far as those synergies are concerned.

Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. N Venu, Managing Director and CEO, ABB Power Products and Systems India Limited, for closing comments. Thank you, and over to you, sir.

Thank you. Thank you, operator. Once again, ladies and gentlemen, a very big thank you for your patience and taking time from your busy schedular to attend to this conference call. Please reach out to us if you need anything. We are happy to provide and engage with you. And I'm really looking forward to the upcoming investors call. Hopefully, we will see each other face-to-face and that -- under that, please take care, stay safe. And also take this opportunity to wish you all a very happy festival season, Diwali, and et cetera. Thank you.

Thank you, sir. Ladies and gentlemen, on behalf of ABB Power Products and Systems India Limited, that concludes today's session. Thank you for your participation. You may now exit the meeting. Thank you.