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

Ladies and gentlemen, good evening, and welcome to Hitachi Energy India Limited's Q3 FY '25 Analyst Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. N Venu, MD and CEO; Hitachi, Energy India Limited. Thank you, and over to you, sir.

Thank you, Michelle. Good evening, ladies and gentlemen. Thank you for joining us for the analyst call. I hope you are all doing well. Yesterday, we announced our results for the third quarter for the financial year '24, '25. Over the next 20, 25 minutes, I will take you through the -- our performance during this period ending December 31. 2024. We have uploaded the presentation on the stock exchange. And for your convenience, I will read out the slide numbers in case you are following via phone. With me in the room today, I have our CFO, Ajay Singh; General Counsel and Company Secretary, Poovanna Ammatanda; and Head of Communications and Investor Relations, Manashwi Banerjee. The quarter ending December 31, 2024, reiterated our constant efforts towards efficiently delivering on the energy transition. This resulted in the highest-ever quarter order intake and record order backlog, along with improved margins and collections for the third quarter of '24, '25. Despite the nascent signs of subduing economic momentum, we believe that just to accelerate, the energy transition will continue, adding more rigor to the energy segment and having a positive trickle-down effect in the coming quarters. Moving to the slide -- slide is not moving. Okay. I go to Slide #3. As you all know, at Hitachi Energy, we actively manage the health, safety and environment aspects of all our activities. Our performance in these areas is integral to our overall sustainability, plan and aids in our purpose of advancing a sustainable energy future for all. We continued our efforts towards strengthening our safety practices and employee well-being through multiple initiatives during the quarter. On the safety front, to ensure proper implementation of life-saving rules across our offices, factories, we conducted more than 500 on-site inspections. Our annual HSE week in November highlighted our need to constantly do the right things, including reporting safety and stands at working sites. Such continuous reiteration has helped achieve almost cent percent, close to 99.49% on-time closure of high-risk hazard situations. In addition to safety, we organized multiple awareness training sessions and health camps across our offices, factories and project sites. We had sessions on mental health and stress management and training on how to give first aid and ergonomics, including while material handling. Furthermore, multiple health camps and annual health checks were concluded. Moving to Slide #4. Our efforts in reinforcing safety was recognized by patterns across industries and the geographies. On the left, you can see some examples from our key customers. Sustainability and safety are 2 cornerstones of our day-to-day activities across all of our functions. In our constant endeavor to adopt and implement best energy practices, we have undertaken various measures during this quarter to reduce our carbon footprint and ensure better water and waste management. As part of this at our factory in Maneja, in Gujarat, we installed 930 kilowatts solar plant and have started using pipe natural gas in the canteen. Also installed a retrofit emission control demand for an existing diesel generator at our Mysore facility. Towards water management, we installed water meters and rainwater recharge wells at our Peenya and Maneja facilities. Furthermore, we are now using 15% of STP treated water for gardening purposes at Maneja and keeping track of water recharge wells at Halol. We also took a slew of measures for waste management, such as plastic segregation, recycling, reusing, oil liquids and refuse derived fuel at our Maneja facility. So becoming a sustainable in our own operations is critical in helping our customers, become sustainable in their operation. And it is heartening to mention that we've also been conferred a Green Leader certification in L&T's responsible supply chain assessment for ESG practices. Moving to the next slide, Slide #5. As you can see, the company reported its highest-ever quarterly order intake of INR 11,594.3 crores for the quarter 3 with a year-on-year growth of 838%. On the back of large HVDC order to transport renewable energy from Khavda and Gujarat to Nagpur and Maharashtra where a distance of 1,200 kilometers. Revenue was up 31% year-on-year to -- at INR 1,672 crores for the quarter and a favorable execution mix and improving operational efficiencies. In addition to this, notional ForEx exchange gains on export order delivery post profit before tax up 4x year-on-year to INR 184 crores. Profit after tax is up nearly 5x year-on-year from a low base of -- low base at INR 138.2 crores. During the quarter, the company also recorded the -- its highest-ever order backlog of INR 18,994.4 crores providing revenue visibility for several quarters. Furthermore, concentrated focus on collections have borne fruit, which, in addition to the advanced from HVDC project has led to a solid cash position and the company becoming a debt-free as of December 31, 2024. Some of the key orders in the quarter, as you can see, right side of the slide, a renewable part AIS substation; thermal generation 18 x 400 KV GIS orders; industries, 220-KV substation; metro rail, multiple transformer order for deploying in Bangalore Metro; and Rail, we have ICF 120 units of Traction Transformer; data centers, several transformer orders. So it's a combination of orders, not only from utilities, but the renewable industries, rail, infrastructure and data centers. Moving to the next slide, Slide 6. I think the slide you know but that may, while several industry estimates indicate a slower growth with GDP growth in FY '25 revised downwards to 6.4%, India is on track to become the third largest economy by 2030, '31. If energy targets remain intact as a currently marches towards its net 0 goal and energy investment gained momentum across verticals. The renewable generation sector in India is set to attract close to INR 18.8 lakh crore and the national electricity plant outlines an increase in the country's power transmission capacity by 35% by 2032 with an estimated investment of INR 9.16 lakh crore. India's data center market value is expected to touch close to $6 billion to $7 billion by 2027 at a growth rate of 12% to 14% CAGR between 2024 and 2027. The country's railway modernization is on track as the Indian rail has utilized 76% of its allocated budget so far in the year '24, '25. These expected and committed investments reflect the country's energy segment's growth trajectory for the immediate and upcoming future. Moving to the Slide #7. With this backdrop, Hitachi Energy continue to work with our partners, customers to advance energy security. So various projects. During the quarter ending December 31, 2024, we commissioned projects, including 2 to integrate renewables into the grid at 400 KV, 375 megawatt substations in Jaisalmer, Rajasthan, 600 megawatt substation in solar integration in Fatehgarh, Bhimsar, 600 megawatt station in NHPC in Baiya, Rajasthan, just to say a few examples. Moving to the Slide 8. Transition to clean energy to advance sustainable energy future for all is one of the most pertinent challenges of our time. We at Hitachi Energy are compared to accelerating the pace of the transition of employee -- important forums, collaborations and internal engagement. This quarter, we contributed to thought leadership and technology sessions in the CII Karnataka ESG Summit where we emphasized the importance of concerted efforts to accelerate the country's energy transition by adopting ESG practices. The Hitachi Energy team had a great opportunity to participate in Tamil Nadu's growth plants, where as part of focused group discussions of IT and IT-enabled services, segment development through strategic research, technology, transfer and skill development in the same. Our discerning customers are our growth partners. So there has been a regular effort to extend industry knowledge. Towards this effort, we convene the power system, communication user of around 2024 and organized a comprehensive technical training program on HVDC and STATCOM at our Peenya and Maneja facilities. Also a technical center on our transformer OLTC and [indiscernible] was arranged for Bhutan Power Corporation Limited officials. Such 360-degree efforts are made as the preferred partner for a multiple nation-building projects. I am proud to inform you that during this quarter, our Transformer business unit rolled out 100 -- 1,000 locomotive transformer as part of an order placed in 2017 to supply 600 units. These transfer manufactured at our Savli facility. Furthermore, we continue to hold multiple employee engagements on various topics from HSEV to learning carnivals. Moving to Slide #9. It was a busy quarter to say the least. In October, we culminated our mega event, Energy and Digital World 75, which witnessed over 2,500 attendees from customers, government academia in analyst and media. Here, we announced our plans of investing INR 2,000 crore in India over the next 4 to 5 years for expansions, capacity building and talent attraction. In November, we backed a lot HVDC order to transmit renewable energy from Khavda, Gujarat to the industrial center of north pole in Maharashtra, which has boosted our order books an all-time high, and our order backlog end of 31st December stands close to INR 19,000 crores. And to a long tail opportunities created by the energy transition, we have become the #1 products and services. In our ambition to enhance customer experience with strengthened and future focus service system globally, they work towards a new service business unit from the coming financial year of '25, '26 so this is going to be our fifth business unit in existing 4 business units, and this is a new business unit, which will start from 1st of April 2025. Moving to next Slide #10. This is about Khavda-Nagpur. As you're aware, PGCIL awarded a large HVDC orders to the consortium of Hitachi India Limited and BHEL. The order includes design and execution of 800 KV plus minus 800 KV, 6,000-megawatt bi-pole and bidirectional AC/DC link to transfer renewable energy from Khavda and Gujarat to the -- to Nagpur and Maharashtra. From the potential renewable energy zone in Khavda, this 1,200-kilometer link will feed into the country's 500 gigawatt renewable evacuation. An interstate transmission system under development. The project scope includes converter transformer, AC/DC control and production, gas-insulated high voltage switchgear, thyristor valves, 765 KV/400 KV substation and auxillary systems to be delivered by us and our consortium partners, BHEL. Moving to the Slide 11. Ageing installed base the agency to drive energy transition and our evolving workforce and systematic organization is shifted to digitalization solutions. We have enormous opportunities for the service segment ahead of us. Establishing a service business unit is the first step to develop service and digital proficiency and unify the customer service experience. With the new business unit coming into existence from the first of April 2025, the imminent India business focus is to tap to the existing installed and base of approximately INR 80,000-plus crores. In order to maximize our reach of the business units, we'll closely work with the service business unit shaping an end-to-end service opportunities in that. Moving to Slide #12. To provide some more color on the orders received this quarter, orders in transmission segment grew with and without large HVDC orders. Orders from industries were up about 60% year-on-year, while data centers grew sixfold at a low base, renewables have significant year-on-year decline of 68%, but we believe this is a seasonal decline with the aggressive push for renewable generation in the country. We expect significant demand from the segment in coming quarters. On the right-hand side, you'll see the order mix segment-wise project to lead with HVDC orders. Without HVDC, it is the product. Sector-wise, utilities are cleaner winners for both with and without HVDC orders, whereas on the channel side, direct end users take the lead with HVDC orders. And without the EPCs that take the lead whereas the channel side, direct end users lead with HVDC order and without its EPC, which takes the lead. So moving to the next slide, our value creator, our growth driver service export this quarter, services contributed 11% of our total orders, excluding HVDC. We have secured repeat service orders from major steel producers, to digitalize, transformer, Life Cycle services for our Thermal Power Plant Substation and SCADA system upgrades across utilities, industries and real estate. Additionally, we received renewable study order from a large domestic and global players. We also fulfilled space and control relay channel extension orders from utilities and program focused on digitalization through the EnCompass capacity reserve agreement. Excluding the onetime loss HVDC order, the share of exports grew to over 40% of total orders in the quarter 3. Key orders include 330 KV, 430 KV Circuit Breaker orders from Central West Orana Project in Croatia and AIS Equipment orders from PLN Indonesia for 70 KV, 170 KV and 500 KV, 245 KV and 145 KV AIS Equipment for Sangachal, Azerbaijan. We also received an order for an 800 KV current transfer from Canada for Hydro-Quebec. So there's quite a lot of momentum on our export strategy, which is playing very well across the geographies, which we are targeting and we plan. I now move to the next slide, Slide #4, and hand over to our CFO, Ajay Singh.

Thank you, Venu, and good evening all. Hope all of you are doing well at your end. So you see our constant effort towards improving overall operational efficiencies has helped us to maintain growth momentum in this quarter, quarter 3. So to see during the quarter, the company reported its highest-ever quarterly order of INR 11,594 crores, which is up by 838 percentage Y-on-Y. Revenue also went up by 31% Y-o-Y at INR 1,672 crores on the back of favorable mix and a good order execution during the quarter. In addition to the favorable execution mix, there was a notional ForEx exchange gain on the export order delivery that helps basically our profit before tax to INR 184 crores in this particular quarter. Profit after tax also went up more than 5x compared to Y-o-Y, and it stood at INR 137.4 crores. Operational EBITDA, if you see, for this quarter stood at INR 168.9 crores, resulting in a double-digit margin of 10.1%. So at the close of December 31, the company recorded its highest-ever order backlog of INR 18,994 crores providing the revenue visibility of more in the coming quarters. If I go to the next slide, Slide 15, I would like to share an update on how the numbers we had during this particular quarter, and let me walk through the particular specific slide in detail. Here, you see the other income, if you see exchange commodity gain, which we are talking earlier, is INR 51.9 crores, and that is how our total income is INR 1,672 crores for the quarter. Material costs were 59.2%, personnel expenses, 8.4%. Other expenses remained consistent, 19.3% and basically, depreciation was also consistent 1.4%. Finance costs compared to the previous quarter and the earlier quarter discount because of the average borrowing has gone down, so that has resulted in the lowering of the finance costs, and this has basically helped us to secure profit before tax of 11% and profit after tax of 8.2%. With this, I hand over to Venu for the closing slide.

Thank you, Ajay. And now I move to the next slide, the last slide, Slide #16. Yes. Slide #16. The closing of penultimate quarter of FY '24, '25, all our efforts are channel toward carrying the growth momentum not only for the last quarter, but also into the new financial year. In order to maintain the growth trajectory, the company will focus on maintaining its leadership in core segments including utilities, HVDC, along with strengthening our presence in the segments like data center and industries. Furthermore, concerted effort will be made towards accentuating export and digital contribution to the company's overall growth. From a business standpoint, we are starting to lay the foundation of our new service business in India and leverage the largest-ever backlog for revenue and profitability attrition. The focus on improving the overall operational efficiency to boost productivity and quality continues. On the functional side, there will be no letup in our endeavor towards creating a robust safety culture as it is interest in our DNA. We remain agile with an eye on upskilling, reskilling and holding capabilities that can stand the test of time and meet today's and future energy requirement. So with that, ladies and gentlemen, I close my presentation and open the channel for questions. So operator, can you please open the channel for the Q&A.

[Operator Instructions] First question is from the line of Subhadip Mitra from Nuvama.

Firstly, I would like to congratulate the management for a great set of results and entering double-digit margins earlier than guided. So congrats on that. So my first question is with regard to the HVDC order. Would it be possible to outline what would be the size of this order in your order book?

No. Subhadip, we told last time also, we don't like to give exact numbers. As you know, similar projects are also ongoing, so we don't like to give the exact number on that.

Understood. Also, the amount that has got included in your order book, would that be after excluding the quantum that goes to BHL?

Yes, of course. BHL thing, we don't book, right? We book only our orders.

I'm sorry, sir, I couldn't hear you clearly.

I said the BHL portion is not booked in our books. Our books, what is there in this is pertaining to our order.

Perfect. Perfect. Understood. Understood. And am I correct in understanding that most of this would be indigenously manufactured with a lower import component?

Yes. You're absolutely right.

Okay. Secondly, with regard to the upcoming 3 HVDC projects, the Bhadla project, Khavda Ulpada and [indiscernible], would you be assuming that most of these would get ordered out over the next 12 months? And are you participating in all 3 of them?

As I said, we have -- just to give a background on the HVDC technology, this technology has been invented by us when we part of ABB 70 years back this year -- not this year, last year, as we celebrated 75 years in India and HVDC technology, we celebrated 70 years globally. Today, globally around 150 gigawatt worth of billings run through our technology. In India, including the one which we have received lost this quarter that is Khavda, Nagpur, totaling 16 HVDC links out of that 8 links runs with our technology. So that is the kind of invention and continue to invest in the technology to ensure that we remain close to our customers. And as you recall, we have seen this thing coming in, and we have we opened our manufacturing facility, especially in Chennai, and we have end-to-end capabilities doing that. So we will try and participate as many tenders as possible with that. So our view of the 2 tenders which you are talking about, one tender may get finalized in the next 6 months or so. And one more tender maybe the lost quarter of the fiscal -- new fiscal year. That -- this is our asset spend, but as you know, it's -- it depends upon the customers' finalization plants and there are many other plants et cetera.

Understood. Last question from my side, sir. With regard to the QIP that you have announced, if you could also outline what would be the usage of the funds?

We will come back on that, Subhadip because we just want to give -- we'll come back on that. We'll answer that question, usage of the points. As you know, just -- you recall during October last year during our EDW, we have announced INR 2,000 crores worth of investments and is basically for the future growth and capital expansion. We announced in October 2024, significant capacity expansion for our transform factory, upgraded facilities, testing facilities and also the capacity of the attraction transformers and expert companies network control and also that's what we announced. But in addition to that, uses of the funds also from short and long-term working capital requirements and strategic initiatives expansions. As you know, this is an enabling resolution. So we basically gives the -- it gives -- it enables the management to be ready and whenever it is needed.

[Operator Instructions] The next question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a great quarter, sir. So my question is on HVDC. So is this entirely done by the Indian entity or in partnership with the parent entity?

No, this is done by -- entirely by an entity.

And what will be the import content in this?

There will be, we will be importing some parts like semiconductors, which are required for that. And again, when you're talking about the import, for example, the transformer, you also import the CRG goal. So we need to look at those kind of things in that. But at least 80% to 90% of the products we manufacture here in the local -- in our factories.

The question on the fundraise. So you -- when you have detailed it out, so 4,200 looks to be a very big number when we compare with the INR 2,000 crores CapEx. So -- and generally, we have seen our gross margin about 1,200 and 5x you're running on asset turn. So this potentially could be almost a INR 20,000 crore kind of revenue potential so -- which looks to be very large. So is it -- does it include some part of capacity allocation from the global parent for the export markets? Or this will largely be for the Indian HVDC market?

As I said, as we also mentioned in our stock exchange disclosure on 18th of January that we are -- the Board of Directors have approved the proposal for raising funds up to INR 4,200 crores, right? So -- and this is an enabling resolution that will give us the flexibility to manage the capital structure of the company and react to any potential initiatives that might require capital. And we believe that it is prudent for us to take such an enabling resolution. Having said that, I also told in the previous question that this is part of that we already announced in October 2024, what we want to do, where we want expanding it. And we're also looking at -- and these expansions are not only in HVDC, but also in the transformer HVDC, our high-voltage businesses, it's for the domestic business as well as some part for exports in that. And this fund also will be -- can be used also for our short-term and long working capital requirements, strategic initiatives, capital expenditure for M&A and other related activities and some of things can be also used repayment of debt, servicing any present or future debt.

So this will be entirely fresh issue, right? I mean there won't be any OFS. So this does not include any OFS. It will be entirely coming into.

We will not like to comment on that. What we have already notified, I think please refer on that, we'd not like to comment on that. I mean as I said, this is enabling resolution. So we were not -- whenever we -- beside that time, we'll let you know on the timing, et cetera. But right now, it's an enabling resolution.

The next question is from the line of Mohit Kumar from ICICI Securities.

Yes. My first question is on the -- it looks like from the order inflow is that order was driven primarily by export and HVDC. Can you please comment on the domestic order excluding HVDC?

So I think because our orders growth is primarily driven by HVDC, you're right? But if you exclude the HVDC order also, our base order growth is also double digit in the quarter. As that growth has maybe fueled from partly export, but also domestic. As I said, domestic, we have data centers and industries, all those things have contributed for order growth.

Question was -- I was asking the question because there's a lot of activity in the domestic transmission, right? So to that extent, the last quarter, it seems to be a weaker side? Just asking you how do you see this panning out as we go forward?

Sorry, I didn't get you. You're breaking a bit.

Given that the large activity in transmission side in F '24 and YTDF '25. It seems like there's a delay in awarding from the projects. You said, is it fair to assume that this will pick up as we go forward?

I think first of all, we are not seeing that, but there may be a slight delay, which is expected, but it's not a major delay in awarding those -- some other projects. And we believe that, at least from our perspective, the pipeline is very robust, and we see customers are finalizing orders.

Understood, sir. My second question is what is the time line for execution of HVDC Khavda Nagpur and how does the revenue booking happens over the contract duration. Is it fair to say that bookings will be back-ended?

Sorry, what did you say?

Sir, my question is what is the time line for execution of HVDC?

Yes, it is 48 and 54 months contractually, 48 months is by pole 1 and 54 months by pole 2, that's our contractual thing.

And how does the revenue booking happen over the contract duration? Is it lower initially that it picks up? Is it fair to say that booking will be back ended?

Yes, it is low for sure. In the first 12 months is low, but then next 12 months and second year and third year, we'll have a bulk of the revenue coming in.

The next question is from the line of Mohan Krishnaswamy, an Individual Investor.

Yes. My question, again, is on HVDC side. I just wanted to understand the differences in the technology offer in the market, both the VSC and the LCC because one of your leading competitors publicly mentioned that the VSC technology, which they are exclusively operating in is superior to the LCC technology, but most of the bids in India is on the LCC side. But I also noticed that the Adani order, which was awarded to us, 2 years, 1.5 years back was on the VSC technology, which means we are fairly strong there as well. So any color on what is the preferred basis in India? And why it is preferred would be useful, sir.

So thank you, Mr. Mohan for the question. I'll just add at the beginning, let me reiterate once again, the HVDC technology has been invented by us 70 years back. And this technology today, both VSC and LCC put together, 150 gigawatt worth of lines we are running around the world. And this technology, we need to -- we have been investing in continuously both LCC and VSC. And this technology needs to be -- continue to invest it, continue to localize it, continue to develop the skills to execute this project. It's a very complex project. Once we have end-to-end capabilities, then it is easy to execute that. That's exactly what we did. So we -- as far as any technology concern, whatever a customer choose, we have a very competitive, I would say, in our perspective, we have a very competitive, comprehensive offerings to our customers, whether LCC or VSC. Having said that, country like India, where you are talking about transferring 6,000 megawatts in a one link, the LCC makes more cost effective compared to the VSC technology. VSC Techno has limitation from a technology standpoint to tons per 3,000 megawatts or more, you need more of those things require -- requirement to be directed. But as I said, end of the day, we leave live to -- this to customers, to -- we'll offer both the things. We have the complete end-to-end capabilities in India to whether it is LCC or VSC just for information, as you rightly said, it's the Mumbai project, which is completely executed from this -- from India on the VSC technology.

Yes. And, sir, my second question is -- on the larger potential. Now today, India has about 33,000 megawatts of HVDC transferring capacity. When you compare that to, say, China, China is close to 300,000 megawatts. And our own power demand is running into capacities 4 lakh megawatts. So where do you see this growing? I mean do you think it's a multi-decadal opportunity where we are just about 33,000, maybe adding another 30,000, 33,000 in the next 5, 6 years? Can it keep growing because we will increase the share of HVDC of the total capacity line?

I believe so in my view. I was articulating this at least in the last 2 years or 3 years that India used to have a one HVDC project for every 4 or 5 years. But today, the need of hour is 1 project per year. And then now the need of hour is not 1, but 2 projects per year. So it is completely evolving it. we need more and more HVDC links to ensure that anywhere you produce the green energy, you are able to transmit to the load center and very seamlessly at the same time, ensuring that the grid is robust, flexible and secure and this technology plays a major and vital role. And you talked about China. I don't have the figures off the high end to give you that, but absolutely, compared to any place we have to have many more links going forward in that. And that's why we are investing. We are investing in our factories. We are investing in the capacities. We are investing in the people as well.

We'll take the next question from the line of Vinod from PhillipCapital.

Congratulations on a great quarter, sir. Just to again harp on HVDC. You have a 50% market share in India, and I believe, globally also, you have a similar market share. So what is it that makes ABB rather Hitachi stand out in HVDC? What is your offering? How is your offering stacking up against what competition is offering? I think globally, it's basically GE Vernova and Siemens, which are offering similar products on the DC side. So what differentiates Hitachi? Is it your localization drive or can you just elaborate on what makes you...

Yes. Thank you, Vinod. We don't talk about our competition. We talk about ourselves. So as I said, we have invented this technology. And since then, we have been investing it, right? One other things very clearly stand out is that we continue to invest, continue to bring the value add, continue to bring -- reduce the footprint, losses, everything. In addition to the localization creating the local competency, and those are the things we clearly stand down. And on top of that, our execution capabilities, okay? That also is a very clear differentiation we bring it to our customers.

The other thing is if you look at the national electricity plan, intrastate is also an equally big component. So do you see DC technology making any inroad in the intrastate grid as well? What the other kind of -- what we are witnessing in the intrastate grid?

No, I think intrastate, depending upon, there are some states are quite -- again, it makes -- every technology makes sense, whether it is AIS, the AC or DC, what we need to look at is our return on investment standpoint. If it is a longer distances or you have a weaker grid, it makes even more commercially viable for those kind of things. I think this is where is the thing. But the technology standpoint will work anywhere. There are many examples outside of the world where for a shorter distances is for a lower 1,000 megawatt itself, which people have been using this technology because of the inherent qualities and benefits it has.

The next question is from the line of [ Ruchita Parikh ] from iWealth LLP.

Congratulations on a good set of numbers. So sir, my question was mainly on the industry side. So we are seeing that there will be around INR 9 lakh crore of investment on the transmission side. So I just wanted to understand how much of this will be on the substation side and as per the like [indiscernible].

I'm sorry to interrupt, ma'am. Your voice is breaking. We couldn't hear you clearly. Ma'am, use your handset, please.

So sir, my question was mainly on the industry side. So there's this investment that we've pointed out that INR 9 lakh crore of investment on the transmission industry. So on that, I just wanted to understand how much of that would be on the substation side? And under that, how much would be, let's say, 765 KV transformation capacity? How much would be for the 400 KV, 200 KV. If you could give a broad breakup of that.

No. I think we don't have offline figures now. But if you go to the NEP '24 plan, you have the complete breakdown over there in that so we don't have in that. So in our view, this INR 9.16 lakh crore is basically for the transmission, which includes HVDC transmission which includes 765 KV, 400 KV transmission because that's where the ISTS comes into picture of that.

Right, right. But we don't have something like how much would be for the substation part?

I don't have the offline numbers.

Got it. Got it. And, sir, just because I missed this point, this HVDC project of us. So by when do we see the execution of it?

Yes. I've already said that, but let me reiterate once again. So the schedule for us from the customer is 48 months for a bipole 1 and 54 months for bipole 2. So that's where we are on track to complete that. And if your question was on the revenue that also I talked about is that our revenue will start slowly coming up in the first year and then start picking up in the second and third year, and that's where bulk of the revenue flow comes in today. .

The next question is from the line of Vimox Shah from Goyamlabdhi Fintech.

Congratulations, sir, on the great set of numbers. I have a question there in the presentation, you showed that strong growth in the data center segment right? So what is the expected future contribution from this segment in company's revenue?

Sorry? No, this is orders. What...

The expectations which is helping.

Yes. So as I said, we don't give any forward-looking statements on that. But data center is as we have been also saying for several quarters. This is one of our key growth segments and the data centers are really growing in the country, basically by usage of the data and privacy loans, et cetera. And more and more the A ready data centers will further add more things just for your information, query on the Chat GPT requires at least 8 to 10x more energy than Google Search, and that clearly shows that the data center market is really an upstream in going forward.

Got it. And another question is like in the last meeting, I think you mentioned that you're also exploring the opportunities in the battery storage side. Can you provide an update or any progress in that area?

We said energy storage. Energy storage is also one of our key initiative we are looking at it. And we do not have anything to tell you at this point in time. We are looking at the market, assessing the market, what are the technologies that makes sense and how do we localize those other things at this point in time. It's in our mind.

Okay, okay. And one more last question is like what is the current status of Ladakh HVDC project? Any expected time line for the base?

Sorry? Yes. Ladakh, as of now, customers are working on that. So either when they will do that, we will start discussing on that at least from our standpoint, end of next financial year coming financial year.

We'll take the next question from the line of [ Yash Mehta ] from Artventure.

Hello, am I audible?

Yes, Mr. Mehta.

So I had a question on the HVDC order. So how much portion of the HVDC order will be for the service line?

Sorry?

How much of the portion of the HVDC order will be services?

No. I think right now, what services, you mean the commissioning or what exactly you mean?

Yes, the commissioning part.

Yes. We don't tell the exact number on that, but it will be roughly a ballpark of around 10%. .

The next question is from the line of Sagar Gandhi from Invesco Mutual Fund.

Sir, my question is on yesterday's press release, which mentions them -- which mentions that there is a cost of its kind thing which has happened where in the consulting team has entered into a capacity reserve agreement for nearly and your -- for renewable studies with the customer in decarbonization space. Can you explain this in more details here?

So this is part of [indiscernible] contract where they have asked us to allocate resources to help them conduct various renewable studies, just indicating how the anticipated growth is in the renewable market. I don't think we have shared customer name, and we will not be doing that.

So -- but you need to understand this is a thing where we are articulating that we need to move from a project-base to program base because the energy transition tailwinds are very huge. If we have to meet the deadlines of the customers, it's important that we need to reserve the capacity for the customers so that we are able to take care very efficiently and also bring the synergies between that. For example, if you have -- every time you do onetime engineering and you're replicating it, you stop that, every time you are taking out engineering and then doing execution and then once again, one more time engineering execution. So the trend around the world, what we have seen is that you do one time and replicate 2, 3x projects. You do -- you design for one project and execute for 3 projects. Without what is happening in the whole cycle and efficiencies and also the cost benefits where can be derived for both the customers and our stakeholders. And this is one example of a capacity reservation where our customer has signed with us for a certain given period of time.

So sir, this is a global customer or Indian customer?

Indian customer. Indian customer.

Okay. So they -- I mean, capacity reserve in terms of manufacturing capacity reserve or only your -- I mean employee.

It is not -- it is basically when we are doing a study. So whatever the study is instead of doing one study for every project. So we are great for we'll do the studies for 1 year or something like that.

The next question is from the line of Prathamesh from Antique Stock Broking.

Congratulations on a very good set of numbers. So I had only one question related to your revenue guidance. Sorry, your margin guidance. So you're maintaining that double-digit margin guidance for FY '25?

Yes. Thanks, Prathamesh. We have been always speaking on the same lines as you see we have already sussed the guidance level that we're talking. So still, we carry the same intention.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

Sir, when you spoke about excluding HVDC, the order inflow growth is in double digits. So you mentioned -- you were talking about Y-o-Y growth, right?

Yes, Y-o-Y.

Okay. And, sir, in this HVDC, it is primarily like you said that 10% will be installations, I mean 90% will be the product suppliers?

We don't call like that. It's installation product supply system engineering, everything is in a one-on-one only. We do not say that it is -- I said I've just given a figure just wanted to see that what could be the thing -- the services part, but this is classified under project, this will be classified under project.

So -- but why do you do that environment? Why not under products? I mean why you classify it in the projects?

No, I think we have a very clear definition of the product, product base. We supply our product and then our obligation gets over. Whereas, here, we supply the product, but then we have to integrate the product to ensure that the system is working there. So that's the difference.

But this -- does it have EPC portion also?

No, it doesn't have civil and other things part of this.

Ladies and gentlemen, we will take the last question for today, which is from the line of Varun Basrur from Julius Baer.

I hope, I'm audible.

Yes, sir. Please proceed.

Just on the order book side, with the exception of HVDC order.

I'm sorry to interrupt. Your voice is breaking. I will request you to use your handset, please.

Is this better?

Yes, sir. Please proceed.

So, sir, on the order book side, with the exception of the HVDC order, what sort of delivery or execution time line is there?

Sorry, sorry, what it is there?

With the exception of the HVDC order on the order book side, what is the delivery of the execution time line for our order book?

No. As I just said, our order books are -- it's depending upon on the project. For example, this HVDC project has a 48, 54 months, we will complete it. But when I said complete means, without stocking, we got slowly for the first 2 years, and then it will pick up second and third year. So that's why it is a various things, right? It has a visibility of our order book has a visibility for several quarters.

Right. But would you say that if you exclude the HVDC order, would the execution for the remaining order book be between the range of maybe 2 or 3 years? Or is it longer than that?

It is at least close to 2 years.

Right, right. Sir, and just a second question is that you seem to be sitting on a fair amount of operating leverage as the revenue ramped up. Directionally, I mean, I know you're not giving absolute margin guidance, but actually, where would you see the margins trend? Would it be high double digits, high teens or mid-teens or any guidance from your side would be helpful.

Yes. Thanks, Varun, as we have very clearly mentioned that we are -- we will not be commenting in any forward-looking indications. So we remain committed that we are talking and we know, pitting now step by step but that is how we proceed.

But having said that, our efforts of all these things to ensure that we improve on everything, all KPIs, right? So that's exactly our endeavors. Of course lead to market.

As there was a last question for today, I would now like to hand the conference over to Mr. N. Venu for closing comments. Over to you, sir.

So thank you very much for taking time from your busy schedule and attend to our conference call and thank you for your trust and trade, and we really looking forward to receive your feedback. Should you need any information, please do not hesitate to reach out to us, and we're happy to engage. And thank you, and take care. Stay safe.

Thank you, members of the management. On behalf of Hitachi Energy India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.