Power Mech Projects Limited (POWERMECH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 earnings conference call of Power Mech Projects Limited hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Dipak Saha from Nirmal Bang Institutional Equities. Thank you, and over to you, sir.

Hi, everyone. Good morning. On behalf of Nirmal Bang Institutional Equities I would like to welcome you all to the 4Q FY '25 earnings call of Power Mech Projects Limited. The management today is represented by Mr. N. Nani Aravind, CFO of the company, and Mr. S.K. Ramaiah, Director of Business Development. I will now hand over to the management for their opening remarks, after which we will open up the floor for Q&A. Thank you and hand over the call to you, sir.

Thank you, Puja and Dipak. Good morning, everyone. I'm Nani Aravind, CFO of the company. I have with me Mr. S.K. Ramaiah, Director of Business Development. Unfortunately, Mr. Rohit, President Business Development, is unable to join us today due to unexpected travel and meeting commitments. I take this opportunity to welcome you all to our quarter 4 FY '25 earnings call. The performance for the fourth quarter and full financial year FY '25 continued in line with our set targets. For quarter 4 FY '25, we reported a total income of INR 1,870 crore, marking a 43% increase over INR 1,312 crore in quarter 4 FY '24. EBITDA stood at INR 233 crore, up by 46%, from INR 160 crore last year. PAT came in at INR 117 crore, registering 39% growth compared to INR 84 crores in Q4 FY '24. The EBITDA margin improved slightly from 12.2% to 12.5% owing to better cost control, while PAT margin marginally decreased from 6.4% to 6.3% due to increased finance cost and higher minority interest cost. For revenue mix for quarter 4, in terms of revenue mix for quarter 4 FY '25, the mechanical business contributed INR 290 crore, a 65% increase over INR 176 crore in Q4 FY '24. The Civil segment, including railway, water distribution projects, contributed INR 980 crore compared to INR 725 crore in the same period last year, reflecting a 36% increase. O&M revenues rose to INR 533 crore, up by 51% from 354 crore. The electrical business saw a significant increase, reaching INR 25 crore versus INR 6 crore during last year, marking a 300% -- 315% jump. The mining business contributed INR 25 crore, lower than INR 41 crore in Q4 FY '24, showing a 40% decrease. Other income stood at INR 17 crore compared to INR 10 crore in the previous year. The revenue split for the quarter was 97% domestic and 3% international. While the contribution from power sector remained at 53% for the quarter and non-power sector accounting for the remaining 47%. For the full year of FY '25 we reported a total income of INR 5,279 crore, a 25% increase over INR 4,234 crore in FY '24. EBITDA for the year stood at INR 649 crore, growing 24% from INR 524 crore, and PAT was INR 327 crore, an increase of 32% over INR 248 crore in the previous year. On a full year basis, EBITDA margin declined slightly from 12.4% to 12.3% due to increased overhead cost, whereas PAT margins improved from 5.9% to 6.2% driven by lower tax expenses and higher other income. So the revenue mix for the 12-month period, mechanical business contributed INR 898 crore, showing a 30% growth over INR 692 crore in FY '24. The Civil segment, including railway and water works contributed INR 2,439 crore, up by 6% from INR 2,308 crore. O&M revenues rose significantly to INR 1,746 crores from INR 1,109 crore, recording 36% growth. Electrical business revenue stood at INR 67 crore, up by 26% from INR 53 crore. Mining revenues were INR 84 crore, a sharp increase from INR 44 crore in FY '24. Other income rose to INR 45 crore from 25 crore. So the overall business suite for FY '25 was 95% domestic, 5% international, with 59% of revenue coming from the power sector and 41% from the nonpower sector. The financial parameters of the company is concerned with better deployment of capital and improved operating margins. We have also witnessed an enhancement in our return on equity, which increased from 14.22% in FY '24 to 16.26% in FY '25. However, return on capital employed saw a marginal decline from 24.16% to 23.28% primarily due to delays in receivables realization in the water division, which necessitated higher utilization of working capital borrowings. We expect this to be a temporary impact. And with the anticipated normalization in collection and execution, return on capital employed is likely to improve significantly in the coming quarters. Other key developments during the period include the operating cash flow, which remained neutral, nil, primarily due to the pending realization of receivables in the water division. We are actively engaging with the clients to expedite the certification and clearance processes and are confident of realizing the outstanding dues in the coming months, which will help restore the positive operating cash flow. Net current assets excluding cash and cash equivalents have increased from 121 days in FY '24 to 128 days in FY '25 due to delays in certification of the water works and delays in realization of receivables, resulted in the increase in the current assets of the company and stabilization of the MDO business from 2027 onwards, we can expect a significant improvement in the net working capital days. The gross debt and net debt remained controlled despite delays in certain certification of water bills and delays in realization of receivables. As on 31st March 2025 the gross debt is INR 641 crore and the net debt stands at INR 48 crore. The debt-equity ratio as on 31st March '25 stands at 0.33x. Regarding the reference to the order book is concerned, during the FY '25 the company has secured orders worth of INR 6,437 crores. The order backlog as of 31st March stands at around INR 58,258 crore; after excluding FGD orders of INR 4,264 crore, the backlog is around INR 53,994 crore. Further excluding the two MDO projects, the executable order book is INR 14,387 crore. We continue to actively pursue tenders and are targeting to secure INR 10,000 crore of new orders by March '26. During FY '26 we anticipate a significant increase in order inflow, particularly from the power sector across segments such as O&M, Mechanical, Civil construction and BOP, if you see. As on date, we have already secured orders worth of INR 972 crore during the quarter 1. Our strategic focus will remain on high potential areas including industrial plant operations and maintenance, railway and water infrastructure as well as MDO projects. All our existing projects are progressing well and are on track as per the planned schedule. For FY '26 we have set a revenue target of INR 6,500 crore, which is subject to the pace of traction in MDO business. EBITDA margin is expected to remain consistent with FY '25 levels. We are confident of receiving 25% year-on-year revenue growth. Margins are expected to remain stable with a potential upside depending on the contribution from the mining segment. The order book outlook for the current financial also appears comfortable, supporting our growth trajectory. Power Mech is well positioned to demonstrate execution and conversion in the range of 40% of its opening order book annually. Additionally, the MDO business is ramping up steadily, and we expect both O&M and MDO segments to drive significant growth in the coming years. So with reference to our MDO business is concerned, our MDO business is progressing steadily. At the KBP Mining Kotre Basantpur project, we achieved a key milestone with the release of 564.16 hectares of notified forest land by the State Forest Department in July 24. Tree cutting for the first year was completed by March '25. Equipment mobilization has been completed, and mining operations begin on 15th April '25. As of now, approximately 1.7 lakh cubic meter of overburden removal has been completed, and coal production is expected to commence from Q2 FY '26. At the Kalyaneswari Tasra project, OB removal and coal dispatch operations have been ongoing since January '24 with approximately 6.4 lakh tons of coal dispatched to sale as on 30th April '25. The project received environmental clearance for 3.5 million tonnes of washery in October 2024. Design consultants have been appointed for railway slidings and washery development. Engineering and vendor finalization activities are in progress. Site mobilization is underway. The Phase 1 R&R Colony construction on 4.5 acres is completed, and handover to project affected families is in progress. Approvals for Phase 2 colony construction over 41.11 acres are currently under review. So while sales current coal offtake is below the plan due to limited external washing capacity available outside, we are actively working to resolve these constraints and ramp up this mining production. So with this, I now request Mr. Ramaiah to update us on the key business development initiatives and future outlook of the companies.

Thanks, Aravind for your initial introduction and bringing out all the financial numbers. And thank you to the investor community. I think Aravind has given key features of the company corporation and the finance and then the order backlog and the revenue and all. Some of the key aspects I would like to build up on is that in the quarter 4 particularly there were some key important orders, we have secured. Adani Power Mirzapur about INR 424 crores for the civil and structural portion of 2 x 800 megawatt units. Then the Koderma, another 2 x 800 megawatt project coming up by DVC, BHEL is the EPC contractor, INR 579 crores for the civil and structural work. Then there was a major breakthrough in NHAI for the Deoghar Bypass 49 kilometers of HAM project INR 972 crores. Then there was a scope expansion of the government medical college scope, which we are doing in Uttarakhand that is about INR 231 crores. Then other major jobs, which we have secured in this current year are Kaiga Nuclear Power Corporation first time we have taken the 2 x 700 megawatt 5 and 6 Unit stage, INR 563 crore. Then South Central Railways, INR 107 crores. Then Nigeria, Dangote, first time we have taken a major O&M job, a 2-year long term O&M contract for the plant feature commissioned captive power plant, INR 109 crores. Then Coastal Energen Tuticorin O&M 1,200 MW, INR 114 crores. Then GMDC Akrimota O&M 2 x 125 MW, INR 227 crores. Then Vedanta Talwandi 3 x 660 MW, 5-year O&M. This is one of the major contracts we have secured in O&M, INR 951 crores. For this is a -- now as far as the business outlook is concerned, there have been key breakthroughs in the major orders, which were secured in the O&M and then particularly Vedanta, Adani, the new investments they are making for the huge power sector investments, Nuclear Power Corporation, which is coming with new projects. Then, a significant improvement in the export orders, particularly in the O&M side and the maintenance side of the jobs, which we have taken in Middle East and Nigeria, that is INR 324 crores. There is an improvement over the last year, whatever we have done. Then the BHEL also is coming with a lot of EPC contracts and there are -- obviously, the opportunities are coming in BHEL power sector, then roads. And then steel segment will come up slowly. Then the major features are the O&M, there seems to be uptick in our operations, both in ordering and as well as in revenue and all. In fact, the order backlog on the O&M has gone up significantly from INR 2,197 crores to INR 2,749 crores compared to last year and this year end. Then, of course, there is an adjustment on the FGD jobs, which are slow moving, which is not taking share because of various factors involved in that. That is about INR 4,263 crores from the Adani side. And then the civil side, there is a significant improvement in the order backlog from INR 7,814 crores to INR 8,472 crores. And their O&M, I've mentioned. Electrical, of course, their business is slowly coming down for the obvious reasons, we have taken a business call. And their business is continued to be driven by the domestic sector with 98% of the work -- with about 54% of the -- sorry, their domestic is almost 98%, international is about 2%. Then power sector is about 60% and 40%. Non-power sector is 40%. Then with MDO, the backlog has gone up from INR 57,053 crores after adjusting INR 53,994 crores because of the FGD order adjustment. Then of course, there are certain things on the market side, we have to understand is that some little bit of order backlog initial last year was due to the -- a lot of elections process, which was there for the general elections and the state elections. That was why many of the tenders were postponed. And later on, it has picked up in the second, third and fourth quarter. Of course, that election period, there was obvious slowing in the market. That is one of the things. But as far as the general business environment is concerned is that power sector is taking a big shape with about ongoing contracts of INR 2 lakh crores. And new investments are expected about INR 4.5 lakh crores because of the ramping up the capacity from 220 gigawatts to almost 300 gigawatts. Then railways as usual and then roads, the investments continue to grow with the same pace. And there is improved opportunities in the case of Middle East and then in the West Africa. That is where we are trying to give attention for the new investment coming in the power sector there in a big way. This is as for the general thing. And then we are at present looking at a total opportunity for the current year, about INR 30,000 crores. And that should be a combination of the power sector because in the case of power sector, I would like to be bring out certain key features. If you look at it overall for the last 1.5, 2 years, total ordering, which has been done is about 32,420 megawatts worth a value of INR 1,96,705 crores. This is a significant order input into the system, EPC orders and then BTG supply orders and then certain other miscellaneous orders, which have been placed by various customers. And then major customers, which have placed orders on BHEL and also L&T are Adani about 10,920 megawatts and then NTPC about 11,580 megawatts. And then DVC, 3,200 megawatts, NLC 2,400 megawatts and their orders also have come to BHEL and L&T. From Mahagenco Koradi, 1,600 megawatt; Singareni 800 megawatt; UKAI GSECL, Gujarat State Electric Corporation Limited, 800 megawatts; and then Chhattisgarh State Power Generation company, 1,320 megawatts. Therefore, BHEL is fresh with orders. That is one of the positive things, obviously. They have got total ordering of -- BHEL has got a total ordering of something like 29,420 megawatts for INR 1,69,182 crores. L&T has secured 2 major orders at Nabinagar and [ Gadarwara, ] 4,000 megawatts, about INR 27,523 crores. Total Adani orders on BHEL is about INR 31,270 crores, mainly BTG supplies and also BTG supplies for about 10,920 megawatts. And then total NTPC orders on BHEL is 7,580 megawatts for INR 58,090 crores. Therefore, total NTPC and BHEL orders on BHEL, NTPC and [indiscernible] orders on BHEL is INR 89,360 crores. And BHEL for the last year has secured INR 92,534 crores and with a backlog of INR 1.95 lakh crores. Of course, L&T and BHEL are the major power sector players; therefore, this will -- if you look at the present and future, the annual capacity reduction should go into 8,000 to 10,000 megawatts, offering significant opportunities. Then O&M opportunities will increase about INR 1,200 crores to INR 1,500 crores per year only in the new capacity additions, which can come up. And CEA, Central Electricity Authority has planned a commissioning program of 16,760 megawatts in the current year. Of course, last year, there was a setback in the commissioning. All those projects are getting -- going to be commissioned in this year. And then plants under construction is more than nearly 33,000 megawatts Therefore, apart from that, because of the impetus on the thermal power to manage the grid stability, there are ongoing plans and development plans for various power developers and all up to 43,000 to 44,000 megawatts that can entail a future investment of nearly INR 4 lakh crores. Therefore, power sector is really booming. It will go up in another 3, 4 years in terms of ordering. And then in terms of capacity pressures, it will go to 2030, '32. And then, the -- as part of the national infrastructure pipeline, we have seen the continued focus on the roads, railways, infrastructure, metro jobs, water systems, et cetera. That is how the -- we look for that. The opportunities will continue to be more and more available for the company. And then O&M is a new shining aspect in our operations and all. That is what I would like to say. Thank you.

[Operator Instructions] The first question is from the line of Pritesh Chheda from Lucky Investment.

Sir, a couple of questions on the FY '25 number first. So if you see the mix has improved in but we don't -- and Civil hasn't grown -- Civil has grown less than the company growth. So there should be some level of margin expansion, but we don't see it coming. If you could highlight the reason. Second is on water projects and the receivable expansion. This is called out by a lot of companies. So if you could tell us exactly what is the problem in the water sector? And what will be the due course of correction there. So -- and then I have another 2 questions, which I'll take up.

Thank you, sir. With reference to the EBITDA margin, even though revenue, O&M and other operations increased also, there is no positive moment in the EBITDA margin. While it is likely the less cost mainly; during the year, we received major orders from the power side. So we started the new plant -- new projects where the establishment cost will be more at the initial stage, so which will be recovered in the subsequent period. And moreover, this Water division, we anticipated more -- we planned INR 678 crores of turnover, whereas we achieved only 70% of the targeted number, mainly because of the Jal Jeevan mission where we are executing projects in water in UP government. The project time lines for Jal Jeevan mission have has been expired. And since November, there is no certification on these water projects are concerned. And this is basically 50% fund is allocated from the central government and 50% from the state government. Due to Kumbh Mela project planned at UP level, so the state government -- both central and states have not allocated any funds during the Q4. So hoping that this quarter, we are getting the funds. So there is a realization pending from receivable of around INR 210 crores for Water division. There's WAP uncertified portion of around INR 215 crores, total around INR 415 crores value of -- INR 425 crores value is pending from the certification as well as the receivable from the UP government is concerned -- regarding Jal Jeevan Mission is concerned. So we are hoping that this quarter, we'll -- expecting some allocation of funds from the central government and the state government, we will recover that money in this quarter.

Sir, to the first question, then, why are you not calling out margin expansion in FY '26?

FY '26 also, we are expecting new orders from the power sector. So the -- more or less, we are maintaining at the same level of EBITDA because the MDO business operations have just started. And once we reach the peak rated capacity only, there is a chunk in the improvement in the margins are concerned. O&M side, yes, there's a possibility of increasing the margins, but initial establishment costs will be there for the new projects to start in the current year also. So we -- in my remarks, I mentioned that margins are expected to remain stable, but there's a potential upside depending on the contribution mix from the mining segment.

Sir, in the 29,000 megawatt model to BHEL and 4,000 to L&T, so let's say 32,000, 33,000 megawatt. In this 33,000 megawatt, how much of civil and balance of plant will be retained via BHEL and L&T? And how much has been ordered out. So that we come to know what is left to be ordered out?

So there are 2 aspects of BHEL outsourcing it. Now they have got some plants because they've got a huge order backlog and they see their limitation -- some capacities is available, which they're using it anyway. Ongoing projects are also there, the old and finishing projects. Perhaps 3 or 4 projects they are planning to do the BOP as a subcontracting in the key areas in the balance of plant, that is coal handling, ash handling, civil works, balance of civil works and some of the water packages and all. That is going to be there on a sub EPC basis. That is expected to give a significant opportunity of about INR 8,000 crores to INR 10,000 crores in the market that we are also looking at that opportunity. The second aspect, as is rightly asked, is the normal subcontracting outsourcing they do for the entire execution. That is the civil, structural, mechanical, all those things. That the available -- based on the available market order what BHEL has got, we anticipate an opportunity of about INR 30,210 crores in EPC orders and civil orders and then structural work orders. And L&T also has to subcontract main part, execution works and also balance of plant. And then some of the balance of plant works in civil, structural and mechanical works. Therefore, the -- from the power sector itself, as far as our type of operations is concerned, there are 2 opportunities. One is the traditional business, what we are doing in civil, structural and mechanical works. That is around comes to about INR 30,000-plus crores, including L&T. And the new BOP concept, sub-BOP concept, which BHEL is going to implement it in a couple of projects that is expected to feature an opportunity about INR 10,000 crores. That is what we are aiming at. And that is one of the reasons perhaps we'll be bullish for the more ordering in the power sector this year. And that will also lead to more opportunities in the O&M sector also.

So how much is ordered out in this or this is yet to be ordered out?

I think it is a progressive phenomenon. What I can say is that at least about 60% of it we have to order it in this year, 60% to 70%.

My last question is, what is the scope of work in Kaiga 2 x 700 megawatt nuclear?

Yes, Kaiga, it is 2 x 700 megawatts, this one [indiscernible]. The main work is in the plant, civil and structural works for the turbine island.

Okay. And who has given you this order?

NPCL, Nuclear Power Corporation Limited.

And this is a first time order, right?

Sorry, Nuclear Power Corporation is given to BHEL. BHEL is the...

Turbine island. So they gave you turbine island to BHEL and BHEL gave you out for those.

Correct, correct.

And this is your first time order, right?

First time, we are taking nuclear -- because the type of work, what is in the non-reactor side of the work, that is on the turbine side, turbine island is similar to a power sector. The same turbine island features are there. Therefore, we are quite familiar in doing the structural, civil and then the turbine foundations and all those things.

The next question is from the line of Jainam Jain from ICICI Securities.

Congratulations on great set of numbers. Sir, firstly, I need a couple of data points, starting with unbilled revenue, mobilization advance and advances to subcontractors as in -- of March '25.

Okay. Do you want the numbers sir, breakup?

Yes, yes.

One minute, sir. Work in progress is INR 890 crores as on March '25. Mobilization given to subcontractors is INR 20 crores and advance to subcontractor is INR 200 crores.

Advance to subcontractors is, sorry?

INR 200 crores.

INR 200 crores. And unbilled revenue is INR 895 crores, right?

INR 890 crores. INR 890 crores.

INR 890 crores. And mobilization advance?

Mobilization advance given to subcontractors or from the clients, you are asking?

From the clients.

INR 240 crores.

Okay, sir. And so, in terms of CapEx guidance for FY '26, like last quarter we had guided for INR 750 crores of CapEx in coming 2 years. So how much are you looking to spend in FY '26?

FY '26, may be around 500 crores we are planning, sir, both for washery and the regular CapEx together.

Okay. So, we will be raising that for that purposes. You had guided for INR 500 crores of debt addition in the last 2 years, right -- for the next 2 years.

No, no. The total - it will add entirely through debt. We have raised the QIP of INR 240 crores earmarked for the equity for the washery. Initially, we'll use this money for the CapEx and the debt will be added only limited and most likely it will be added next year. INR [ 160 ] crores will be added in this year.

Okay. And sir, initially, we had an order inflow guidance of INR 12,000 crores for FY '25. And right now, as far as I understand, we have an order inflow of INR 6,400 crores. So can you highlight something on that part? Like why have we missed out on that process, that thing?

So, last year -- this year we are targeting around INR 10,000 crores order inflow, sir. We have a closing order value of INR 14,387 crores. So another INR 10,000 crores we are proposing for -- planning for the order inflow during the year. So around 25% of the revenue growth we are projecting for the current year, so -- which is roughly around 42% of existing order. And the present -- current orders also, we can execute up to Q1, Q2, whatever the orders we received, we can also plan for Q3, Q4 execution.

Okay, sir. And is there any update on the mining business side, on the KBP mining?

KBP mining, the mining machinery has already been -- equipment mobilization has been completed, sir. And OB removal also started from 15th of April. So they're likely to generate the coal production from Q2 onwards.

[Operator Instructions] The next question is from the line of Vinay from Hathway Investments.

Just wanted to know the waterworks problem that you're saying receivables, is that localized to only UP government? Or is it a much larger problem?

Sir, all these UP water projects are given under the Jal Jeevan mission, which is the central government is -- main focus from the central government fund basis only, we have given these works to the UP. So UP also contributing 50% of the fund. So due to Kumbh Mela works, they diverted all funds from the Kumbh activities. So they could not able to allocate any funds from the state side. And the central government said Jal Jeevan Mission initially, they have given time lines for 5 years to complete these projects and which expired in November '24. During last budget, again, the extended for till '29, these time lines. So the allocation of funds are supposed to happen in April, May. Due to this present ongoing situations in UP, I mean, Pak and India issues and other things. So there is a delay in terms of allocation of the Jal Jeevan mission funds. So we are hoping that now the issues are settled now, so probably they will allocate funds to state and -- center and state both will allocate the funds now. We're hoping that these funds will be collected during this next month.

Yes, my question was, is this only with UP or do you have water works projects outstanding receivables from other places also?

Wherever JJM funded projects, everywhere, the 50% fund has to be allocated from the central side.

So it is the central fund that is pending, not the state fund.

State also, because UP, because of Kumbh Mela, they diverted funds. So now they are allocating funds now. So except UP, the rest of the people, there is no problem. 50% allocated is happening from the state side.

So if you can just tell us from the unbilled revenue of INR 890 crores, how much is pending due to water works? You said INR 215 crores is for UP. For others how many more?

No, we are executing water works only in UP, sir. There are no other.

Okay. So INR 215 crores out of INR 890 crores is for UP for the water works?

Yes.

Okay. Secondly, your order book for the year, last year was how much? INR 17,000 crores something, right?

Yes. Because there is a FGD nonmoving order is there, which we removed it from the order flow. And after removing that, it is INR 14,000 crores. So it is INR 4,264 crores we have adjusted in the current order. And then after adjusting INR 14,387 crores is the actual running order.

So that has reduced from INR 17,446 crores of last year, or what was the figure last year? Similar figure.

Yes, INR 17,362 crores to INR 14,387 crores, exactly.

Okay. And what percentage of your total revenue comes from water works?

Water works approximately around 10%. Last year, it was 20%, sir. This year we achieved around 9%.

The total order value is INR 2,723 crores. And then there is another additional order of INR 699 crores from the O&M side. Now O&M has to pick up once the -- more connections are given. And the INR 273 crores, that is based on this yearly -- and we have completed around INR 1,864 crores for the last 2, 3 years.

So this year, we achieved around 9% of the total revenue.

We will take our next question from the line of Ankur Kumar from Alpha Capital.

Congrats for a good set of numbers. Sir, I wanted to harp upon the guidance for the next year. So earlier, our guidance was INR 7,000 crores. Now you are saying INR 6,500 crores. Am I right, sir? And what is the -- basically, is it like the Jal Jeevan, which is causing us to reduce this payments?

No, sir. Actually, we actually planned last year around INR 10,000 crore order inflow. There is an -- inflow was reduced because of the last year due to general elections and other issues. So we were not able to get more orders. And even power side also, there is no much orders, except last Q3 and Q4, we got the major orders that impacted the order inflow. And now the existing previous track is that we are executing 40% to 45% between -- on the opening order value. So based on that, we revised the value to INR 6,500 crores level. And moreover, mining also, the offtake arrangement is not happening at Tasra because of the outside washery capacities are not available. So we have conservatively considered this growth of 25% because this year also, we achieved only 25%. So the same range of growth we have projected sir.

What is the order backlog right now, sir?

Moving -- INR 14,387 crore, sir, without MDO.

Without MDO, okay.

Yeah, plus INR 972 crores value of orders we received during Q1. So around INR 15,200 crores is the right now order in hand as of today.

About this total order book that we have, INR 53,994 crores, when will this be executed, the rest part?

Rest is the -- remaining is the MDO order, sir. This is '25 to '28 years of period is there for the execution of that entire order. [indiscernible]

Actually, there are 2 aspects of this backlog order. One is the traditional business, what we are doing, that backlog is about INR 14,387 crores. That cycle time will be -- the pending order cycle time will be somewhere between 2 to 3 years, generally. That's why that 40% ratio comes for the revenue there. Whereas, as Aravind has rightly said on the MDO waters, the 2 MDO orders, that has got a long duration period as a matter of mining and then selling the mined products, the coal -- coking coal to the customers. That has got a longer period.

And, sir, this year we expect INR 10,000 crores of order inflow.

Yes, yes. That is based on the couple of developments. One is the huge order flow, which has gone into BHEL and L&T and further orders are expected on the power sector because the government is keen to ramp up the thermal capacity to avoid the grid problems. Second is the perhaps expected this offtake, which will come up in the infrastructure and railways, roads and then some of the private sector investments also is expected to come. For example, Adani is making huge investments in power sector also. And then JSW is making investment. JSPL is coming with the investment. And then infrastructure, we expect the continued progress will be there. And that is why -- because we had achieved, if you look at it in 2023, '24, almost INR 8,850 crores. Therefore, the company has got that wherewithal to manage those type of orders. That is why we pegged the orders as INR 10,000 crores. Last year was an exception because of so many other factors.

Got it, sir. And, sir, in terms of next year, that is FY '27, what kind of execution do we expect here?

We are targeting 20% to 25% of growth next year also. Roughly around INR 7,800 crores to INR 8,000 crores.

The next question is from the line of Mudit Bhandari from IIFL Capital.

In terms of our MDO projects, so firstly, whether our washery, which we earlier expected to complete in September '26. So whether that is on track? And secondly, for FY '26, what amount of revenue for both MDO projects would we be able to get? So I think earlier, we said around INR 300 crores to INR 400 crores. So whether we'll be able to achieve that?

Yes, sir. We are on track, and we are targeting to complete the washery by September '26. So far, we have placed an order for INR 120 crores worth of machineries, which we ordered -- placed an order and the balance also we are following. So the major equipment designing, so we already completed and LOIs are already issued to the vendors. We are targeting to invest almost INR 500 crores of investment during the current year itself so that we can conclude -- I mean, we can close the -- we can complete the washery by September '26.

Okay. And secondly, in terms of our debt, so you said we will not increase any net debt from FY '26 -- '25 levels to FY '26. So, we can expect that net debt to remain stable. Is that right on an overall basis?

Yes, sir. We are focusing on the realization of receivables from the Water division, and we want to reduce my working capital utilization. This year already, we utilized more debt than the last year. And we will take the term loan for this washery. Maybe utilization will -- for the time being, we'll use it from our LC facilities and working cap -- LC facilities and the huge funds. And next year, probably by end of this year or maybe next year, we'll use the term loan facility for the balance CapEx requirements.

Got it, sir. And last one from my side. So we said about subcontracting -- sub-BOP work, which we expected to be opportunity of around INR 10,000 crores. So I think earlier you were talking about core BOP project, which had around 50% of the total thermal power CapEx opportunity. So roughly, would you be able to give range that what this INR 10,000 crores is what percentage of total thermal power CapEx?

See, I told you as the traditional part of the business, both L&T and BHEL comes to INR 30,210 crores. And then there is going to be some sub BOP things, which I'm expecting at the -- as on today, the reading can be a couple of 2, 3 projects can be there because they have called the tenders for the Singareni also. And UKAI, they have already awarded for the 800-megawatt BOP. And the Korba West has come, which BHEL has taken at a value of INR 11,800 crores recently for 1,320 megawatt. And that is where we are expecting another INR 10,000 crores on the sub-BOP opportunities, and it can go up also based on what the BHEL decision takes place. But whatever is the balance, which has been already taken up and then the Adani portion of the orders, there is no construction, which is done under the BHEL. It will be done by Adani directly, and we are working on that, where for about 4,800 megawatts of various ordering is in process, and we have already taken orders from Adani for the new orders for the updates from BHEL as construction part of it. Therefore, L&T, they have to start the subcontracting work for their INR 27,523 crores of ordering. That should be expected in a couple of months, should start. Therefore, BHEL -- it depends. One is on the BOP I told you. And then on the traditional business, about INR 30,210 crores. That is what as of today, we are keeping a track.

The next question is from the line of Krupa Desai from Electrum Capital.

Sir, my questions are already answered.

The next question is from the line of Maitri Shah from Sapphire Capital.

Yes, congratulations on the great result. I just have one question. So, for the MDO project, what kind of projections are we giving for the revenue for next year? So previously, we said around INR 300 crores to INR 400 crores of revenue by FY '26. Are we still sticking to that guidance?

This year we are planning around INR 208 crores from the Tasra mine and INR 64 crores from KBP. Both together, INR 272 crores we are projecting now.

And this will be over the INR 6,500 crores of guidance that you have given?

Yes, yes. It is a part of INR 6,500 crores only, ma'am.

It is a part of INR 6,500 crores. Anything over this will be added to the guidance?

Yes, yes. Yes.

The next follow-up question is from the line of Vinay Nadkarni from Hathway Investments.

Just one question on this. You are saying there's some ongoing order in Bangladesh. Any -- what is the size of this order? And is there any issue on that because of the disruptions there? And how much have we executed already?

No. Bangladesh, more or less, most of the jobs we have closed. There is not much to be done. And as of today, we are taking aback -- other look and looking at the situation, it's not so much this one prospective to go into Bangladesh.

So, no receivables outstanding there?

Around 5 lakh USD receivable is there. The final bills are under process. So we are expecting to receive these bills also by these next couple of weeks.

Okay. And these are unsecured receivables, right? No LC backing or anything?

Nothing, sir. It's EPC -- regular construction business.

And just one observation. If you can just look at your India map on your slide level, I think you should correct it.

Yes, yes. Okay.

[Operator Instructions] The next follow-up question is from the line of Jainam Jain from ICICI Securities.

Sir, on the Page 77 of PPT, we have excluded FGD order value of 43 billion. Can you please help me with understanding like why have you done that?

See, the implementation time lines for the FGD systems were revised by the government of India time to time and the regulatory approvals were also delayed. So the Ministry of Power issued recently also some directives that effectively -- they extended the deadlines for FGD implementation to the year 2029. So because there is no non-movement of these FGD orders and clients are also taking delay in terms of giving directions to us for execution of these projects. So we have taken -- after discussion with the negotiations with the company. So mutually, we decided to remove the order book to the extent of nonmoving orders are concerned. So around INR 4,264 crores order value of this Kawai, Tiroda and Mundra projects, we excluded from the order value, sir.

Yes. Basically, Supreme Court has taken a decision because of so many factors were there because of the complexity of issues in implementing new FGD orders. One is the retrofitting space issues, then power purchase agreement amendments, all these things were there and then technology issues, outsourced supply chain. Therefore, they have extended -- is not the first time, many extensions have taken place up to November 2029. And obviously, the developers who are having the uncertainty on the power purchase agreement amendments because DISCOMs have to pay higher tariffs, the judgments have slowed down on this. That is one of the, we have to say, conscious decision of...

So the order has not been canceled, but it has been delayed for the next few years -- after next few years, right?

Yes, yes. It can be revived. But as of today, it is not in our books. And we are all trying to settle whatever work we have done. One project we are doing at Udupi, that work is going on INR 963 crores. We have done about 35% to 40% of the work. That will be done. But as per the projects as Aravind said, that is not there.

The next question is from the line of Dinesh Kulkarni from Finsight.

Sir, my question is, as you mentioned, we are facing some issues with the Water division. Do you think this is something like a -- I mean, it's going to impact the industry as such in terms of receivables? Or there are in terms of like order -- not enough orders that you were expecting earlier and this is going to persist for next few years? Or this is like a temporary phenomenon? So what is your view on that?

It's a temporary phenomenon, sir, because of the time lines expiry. So the last budget has extended the time lines and only they have to allocate the funds to these projects by the central government due to their ongoing issues with cost and other things. So there is a delay in terms of allocation of funds. Till the time the funds allocation happens, the department -- client is not certifying these bills unless without the funds availability. So we are executing the projects and almost around INR 350 crores worth of -- INR 425 crores worth of works already executed and pending for different stages of certification. Once the allocation of fund happens from both central and state government, they will release the funds. So it's a temporary phenomenon.

Okay, sir. That sounds great. So -- but your view -- I would like to know more about in terms of the next 3, 4 years, what's your view? Like will the allocation of funds will be there to execute these projects? Or do you expect a decline in the funds allocation itself in terms of like what's your -- in terms of division or in terms of industry, what's your stake on that?

So this is the UP project-specific issue. And these projects almost we completed more than -- out of INR 3,000 crores, we completed INR 864 crores. And within a year, we can complete this work. So there is no issue. Once they allocate the funds, we can speed up the works and we can complete this in a year time.

But overall, Jeevan Mission, this one status is that they have reached almost 80% of the outreach of the functional house tap connections required for about 19.2 crores of households. Therefore, it has taken a good shape. That was -- UP was a specific issue. Balance 15% to 20%, I think, this government is determined to complete it, maybe another 2 years maximum.

Okay, but so we expect more work to come in this division or like this will be a stable, there is no growth you expect in the specific division for our company itself?

As on today, there can be some opportunities because southern states, there is some backlog of house connectivity for the drinking water that we are looking at in some of the southern states. And also Maharashtra, Andhra Pradesh, Madhya Pradesh and then Tamil Nadu. That we will see to it as and when it comes, we will take it up based on our experience.

Okay. Sounds great. Sir, my next question is in terms of the CapEx, which you just mentioned that we'll be having somewhere around INR 500 crores for this year. So -- but how do you expect for the next 3, 4 years? Will it be at these levels or you expect it to come down once we have the MDO in place?

No, the -- every year regular CapEx will be around INR 80 crores to INR 100 crores year-on-year, sir, for regular business. And for the CapEx on specific activity where we are planning to raise around INR 450 crore term loan. The remaining balance, we have QIP funds are available. So INR 450 crores debt addition will happen in the next couple of years.

Okay. Sounds good. And sir, my last question. Maybe sir, like I just want to know like what in terms of management, are we expecting any succession planning in terms of increasing the bandwidth of the management because I know we're doing a lot of work. So anything on those aspects?

The MD's son, present, who is Rohit...

Yes, he is quite active.

Who is the President of BD, he's only handling the -- right now the operations of the company and the major business development and admin and HR. So other new areas of activities, which he is trying to get more line of -- new line of activity as a strategic business. We want to induct him into the Board, maybe in the next couple of months we will decide and we will induct him in the Board of...

More than that, we are also strengthening our organization, overall organization. Of course, that is the main thing what Rohit will take the role -- lead role. He's already doing substantial work on operations, business development. Overseas operation is completely, he's looking at it. And he's looking at the routine aspects also and supporting to CMD. But the organization growth is there because of the new opportunities that come in the infrastructure and power sector, we have taken some senior level people also. And there is a substantial augmentation in our manpower resources, both in our own regular manpower and the subcontract manpower. What was about 34,335 headcount, including Power Mech and then the sub-contracted labor has gone up to 37,295 by April '25, an increase of 8.6%. And then O&M, there is because of the improved order backlog and all, the manpower headcount in O&M has gone up from 14,069 to 18,296. Therefore, parallelly, the organization strengthening is also going. Some reorganization also is going to keep up to the customer requirements.

Okay, sir. That sounds great, sir. Maybe last question from my end, sir. See, we are seeing a lot of things happening on the defense front in India with whatever we have witnessed in the last couple of weeks. So do we expect to do anything on this -- in this industry in this segment from the company's perspective?

I think defense is a little bit of -- as we know, it's a high-end technology and a lot of technology input is required. And that focus is not there. What we are now focusing the new energy businesses like battery energy storage and solar power. Certain projects, we are looking at it. Third, battery energy storage, government's plan is to ramp up the capacity to 50,000 megawatts by 2030, '32. There, we want to see as a developer and certain opportunities we are also looking. And solar power also, we are looking at as an opportunity, as an investment also. That is our focus.

Okay, so any inorganic path we are looking at? Any acquisitions and stuff like that?

No. Right now, there are no opportunities, sir. But non-power O&M side also, we are looking at. As of now, we are more concentrating in the power O&M. Large conglomerates and PSUs are also outsourcing O&M of metros, material handling systems, process industries and airports, creating a more high -- potential opportunities are there. We are looking at this space also to get more O&M.

Okay, so you expect next phase of growth from O&M itself, right?

Yes, O&M and nonpower side also we are majorly...

Nonpower, we are already working in certain segments.

[ Water ] division, we are working and on...

Like NMDC, JSPL, RIL and GMDC. And then the water project, for example, UV water project also has got -- it's a non-power segment. It also has got 10 years O&M, which is built into the system, which we have started as and when it gets commissioned. And then one of the areas we have entered is the township construction also. Recently, we have taken INR 972 crores from the Telangana Generation Company for the project in Telangana. Therefore, that is a new initiative we have taken.

And there are a lot of international infra opportunities also there, sir. Middle East, particularly Middle East, Africa infra investments, they've opened up overseas ETC or O&M project potential. Especially through local JVs, we can look at those opportunities also in functional level.

Thank you. Ladies and gentlemen as there are no further questions from the participants. I now hand the conference over to the management for closing comments.

Yes. Thanks for the investment team and also our team here. I think the key takeaways are that company is looking for expanding the business in O&M infrastructure and then the new opportunities come in the power sector, both for the new installation, BOP and our -- one of the new initiatives is the balance of plants, to undertake a complete job. That is because of the in-house strengths we are having in execution, it will give some substantial value addition to the company's operations. And then the -- to more focus on the Middle East because the investments are expected to come up in Middle East for the energy sector, which was shut down. Now particularly in Saudi Arabia and then UAE and other Middle East countries, a lot of opportunities are coming up. And we are also looking at some opportunities along with thyssenkrupp in the mineral and material processing with the new investments coming from the Vedanta side and then NMDC and then so many other developers. Therefore, overall, the growth momentum should be there, except for the last year, so this one we had and INR 10,000 crores of order booking should be reasonably targeted in the current year with about more than INR 30,000 crores of specific opportunities we are targeting as on date.

Thank you. On behalf of Nirmal Bang Equities Private Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.