Sanghvi Movers Limited (530073) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sanghvi Movers Limited's Q3 and FY 2024-'25 Earnings Conference Call. From the management panel, we have with us today Mr. Rishi Sanghvi, Managing Director and Mr. Sham Kajale, Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sham Kajale. Thank you, and over to you, sir.

Thank you very much for the introduction. Good afternoon, ladies and gentlemen, and thank you very much for attending our Q3 FY '25 Analyst and Investor Call of Sanghvi Movers Limited. My name is Sham Kajale, Chief Financial Officer; and along with me is Mr. Rishi Sanghvi, the Managing Director of our company. I quickly run through the financial highlights of our company, and then I will open the floor for the question and answers. So, in terms of financial performance; for the quarter ended December 2024, our consolidated income from operations was INR 208 crores vis-a-vis INR 156 crores in second quarter ended September 2024 and INR 151 crores in the first quarter, that is Q1 FY '25. For the 9 months period ended December 2024, our income from operation was INR 515 crores. This includes income from crane operation, INR 370 crores, INR 130 crores from renewable business vertical and INR 15 crores from Project EPC business. In Q3 FY '25, the average capacity utilization of our crane was 70% vis-a-vis 68% in Q2 and 77% in Q1 of FY '25. The average blended yield for Q3 FY '25 was 1.97% vis-a-vis 2.15% in Q2 FY '25 and 2.04% in Q1 FY '25. Similarly, year-to-date, that is December 2024, our average capacity addition was 72% versus 84% year-to-date December 2023. The average blended yield YTD December '24 was 2.05% per month vis-a-vis 2.19% December YTD 2023. We achieved on par performance as per the guidance given in the previous earnings call, that is in H1 FY '25 financial. On a consolidated basis, our overall EBITDA margin was -- for the 9 months period was 47%. The EBITDA margin for crane business on standalone basis was 52%, while the EBITDA for project and renewable business was between 15% to 20%. For the 9 months period ended December 2024, our net profit after tax was INR 103 crores. Our company has done a CapEx of INR 115 crores for the 9 months period ended 31st December 2024 and have purchased 25 cranes and other equipment. The company proposes to do additional CapEx of INR 150 crores in Q4 FY '25 and intends to purchase some 34 cranes ranging from 110 ton capacity to 800 ton capacity, which are backed by long-term contracts from various clients. Thus, on an annualized basis, our company may do total CapEx of INR 365 crores in the current financial year. We have sold 23 cranes, including some cranes which were shown under the asset held for sale during the 9 months period ended 31st December 2024 and have generated profit of INR 11 crores from the sale of these cranes. Company have also sold surplus freehold land and 3 residential flats in Chennai in Q1 of current financial year and have generated profit of INR 11.60 crores. As on 31st December 2024, company has a fleet of 350 cranes aggregating to INR 2,575 crores. This is excluding some 40-plus cranes, which are shown under the asset held for sale. As on 15th of January 2025, the consolidated order book of the company was INR 995 crores of which orders worth INR 814 crores will be executed in FY '24-'25. The balance EPC order book worth INR 181 crores will be executed in the next financial year, that is FY '25-'26. The spillover of EPC order book is primarily due to delay in project offtake and on-ground delays. Thus, the order book for the current financial year is INR 814 crores, out of which we have already clocked revenue of INR 514 crores in the first 9 months period ended December 2024. The breakup of crane order book and EPC order book is already shared in the investor presentation. Based on the current order booking position, inquiry pipeline and possible extension of current contract with some of our customers, we expect 15% to 20% top line reduction with respect to crane rental business. However, on a consolidated basis, that is crane rental plus renewable plus Project EPC business, we expect to register top line growth of 20% to 25% on account of volume, driven by renewable and project business. With this small introduction, I will hand over the floor to Rishi Sanghvi, our Managing Director, for his further comments. Thank you.

Thanks, Sham, and good afternoon, everyone. I would like to now talk about some of the strategic initiatives that your company is taking. One, in order to leverage some of our core capabilities and with an intention to provide value-added services to our customers, we started a renewable as well as Project EPC business some time about 2 years back. As consistently mentioned, this is a high volume and low EBITDA business. In the current financial year, the company expects to achieve more than INR 250 crores of top line from the EPC business, which is a 10x growth as compared to the FY '24. And further, we will have a large order backlog going forward, which will be executed in FY '26. Now, this order backlog will continue to grow throughout the year based on the healthy inquiry pipeline that we have as of today. We continue to face headwinds in the crane rental business, primarily due to competition intensity and fragmentation, and therefore, your company is deploying a number of strategic initiatives as countermeasures. First, we have taken the strategic call to carve out Sangreen Future Renewables or the renewables business into a separate business vertical, and this has been successfully completed in the last quarter. Further, we will develop the Project EPC business, leveraging our relationships with existing customers. It is prudent to note that while these are top line heavy businesses and volume driven, they are low EBITDA businesses. At the same time, they will not put a strain on our finances as these are not capital-intensive businesses, but have high working capital requirements. We propose to do an additional CapEx of approximately INR 150 crores in the fourth quarter of this financial year, which is backed by firm long-term orders from customers across all sectors. The other strategic initiatives that our company management has already taken for the growth of the group as well as to increase the shareholder value is the activation of Phase 2 with Bain & Company, who are a global strategy and management company. We are exploring engine to growth opportunities for the company and the necessary growth capital for these opportunities have already been built. With this war chest, strategic plans as well as Bain, your company has taken effective steps. For example, the incorporation of a 100% wholly-owned subsidiary in the Kingdom of Saudi Arabia, which is a reflection of our ambition to geographically expand our core crane rental business. Further value plays are under development with Bain and should materialize in the subsequent quarters, subject to the approval of the Board of Directors. I would once again draw your attention for further information regarding the financial performance and strategy in the investor presentation, which has already been uploaded on both the BSE and NSE portals. Thank you, once again, everyone. And I would like to hand it over to our moderator to take the first question.

[Operator Instructions] The first question is from Harsh Saraswat from Elegant Family Office.

So, I just wanted to ask on this INR 150 crores CapEx, which we are planning to do in Q4, seeing our capacity utilization is already at 70% and yields also falling. So can you throw more light on this why we are doing it in one single quarter? And what are you seeing in the wind power specifically and other sectors also?

So, the capacity expansion that we are doing is not particularly for the wind sector. We have already indicated that we have firm orders across all sectors. We see that there is a lot of pickup in the activity -- economic activity going forward. The first 9 months, there was a slowdown, primarily due to the prolonged monsoon, the general election, which also resulted in a slowdown in government expenditure, private and PSU CapEx. Now the capacity utilization, we believe, will continue to improve going forward. And with that improvement in the capacity utilization comes the added benefit of pricing power, which is reflected in yield. The entirety of the CapEx that we are doing has been approved by the Board of Directors and the management is confident in deploying these incremental capacities from port to site or from the docks to the site as each of these cranes is backed with a firm long-term order.

So by this, can we conclude this that the execution in FY '26 will be much better, much higher due to the backlog of FY '25 itself and government spending increasing going forward?

We expect capacity utilizations to improve in the next financial year.

Okay. Okay. And any CapEx plan for Q1 and Q2 as of now?

It is subject to the Board of approval and will be declared at the appropriate time.

[Operator Instructions] Next question is from line of Sahil Kishore Jain from Seven Islands PMS.

So, my first question would be who are the top clients of the company?

Okay. So, there are a lot of IPPs who are currently operating in India through their subsidiaries. For example, Blueleaf, BluPine, then JSW Energy, then Iris Renewables. They are our main clients, including Vibrant, Juniper. So they are our key clients from the wind sector. Besides this, we have -- we are working with various big corporates in India. For example, from the power sector -- thermal power sector, we are working with BHEL, NTPC. We're also working with Nuclear Power Corporation. We are also working with all windmill companies, for example, Suzlon, Renew. We are also working with steel companies like Tata Steel, JSW. We are also working with hydrocarbon companies like L&T.

Okay. Okay. My next question would be, was Inox Wind ever your customer or they are still your customer in the EPC sector?

Yes, they were our customer in the past.

So, right now, they are not the customer?

That's correct. Currently, we deployed 1 crane, but that contract is now got over.

Okay. Okay. And lastly, is Chinese crane rental business in India, are they a competition to you?

What do you mean? See, can you explain your question?

I mean to say there are Chinese crane rentals company in India. So are they a competition to you?

As far as we know, there are no Chinese crane rental companies who are operating in India.

Next question is from the line of Vishal Jajoo from Mahindra Manulife.

Yes. So sir, the question was when we look at your CapEx figure, I guess you have increased the figure as what it was communicated post Q2 and Q3. So where are the signs where we are seeing capacity -- increased utilization levels? If you can just elaborate a bit more on the same.

See, basically, if you see last year, we did a CapEx of more than INR 300 crores. This year, we have cautiously reduced the CapEx number considering the fact that there was a huge monsoon in India, and there was a delay in project execution on the ground, there was a reduction in the CapEx, not only from the government side, but also from the private sector side on account of general election. So we have cautiously taken a call to reduce our CapEx in the first 6 months. In fact, in 9 months also. But now, the CapEx that we have planned is backed by long-term orders from various sectors, and it is generating good amount of yield, which is in line with the current yields of the company. And we just expect that the capacity utilization will touch around 80% in the Q4.

Okay. And since the new businesses that we have entered, whether it is Sangreen or the ventures outside India also that we are planning, those don't require CapEx, but those are working capital intensive. So would it be fair to say that this CapEx is predominantly for our core crane rental business? Should that assumption be fair?

Yes. The INR 150 crores CapEx that we are doing is for the core business, that is for purchase of the cranes. So, we are purchasing cranes for core business in India. Also, I would like to clarify that the business in Saudi Arabia is not is CapEx heavy because it is an expansion of our core business, which is crane rental services in a new geography, which is Saudi Arabia. Having said that, the entirety of this INR 150 crores will be deployed for projects in India for Indian customers.

Okay. So sir, if I may just split our CapEx figure into 2 parts. First 9 months and whereas the Q4 CapEx figure. So while I do appreciate that -- I do understand that this year's CapEx, including this INR 150 crore figure is lower than last year. But somewhere in the last 3, 4 months, we have increased this number significantly because as far as H1 or 9-month figure goes, we were guiding for a -- we had trimmed down our CapEx numbers, but now we are increasing it, right?

Yes.

Next question is from the line of Jay Trivedi from InCred Asset Management.

Yes. A couple of questions, 2 on the numbers side. What is the average life of cranes that we have now? And what is the amount of liquid investments that we have as on date?

See, if you are talking about the residual life of the crane fleet that we have, it is more than 20 years. And in the investor presentation, we have mentioned that we have a surplus liquidity of INR 178 crores, which have been deployed with various schemes of mutual funds and all are date funds.

Yes, sir. Sir, on the average life of cranes, I wanted to understand what is the pending life average on the whole basket that we have offering?

So we have 2 types of crane. One is a crawler crane. The life of this crane is between 35 to 40 years and the truck lattice or the -- sorry, tire mounted telescopic cranes, we have the other cranes that we have. The average life of this crane is between 25 to 30 years.

Okay, sir. So however, we depreciate our assets in 15 to 20 years, although our life is higher, is my understanding correct?

Yes, we are providing depreciation as per Schedule 2 of Companies Act. There are 2 sets of depreciation that we mentioned in the Schedule 2. So they are saying if you are having less than 100 ton capacity cranes, you should consider the economic life of a crane as 15 years. And if you have a 100 ton plus capacity crane, you should consider the effective economic life of a crane as 20 years. So, on straight method, the depreciation rate for 100 ton above crane is 5%. And for the less than 100 ton capacity crane, it is roughly around 6.7% per annum.

Second, on the EPC business, the current capabilities that we have, which we have built over past 2 years, what is the revenue forecast or any gigawatt number that you can give, the EPC that we can do? Any guidance there?

So, for us the EPC business, we are a very prudently cautious company. It is very lucrative to build a massive order book and which can make flashy headlines. We have gone cautiously in terms of securing the order books where we feel that we are capable and confident about delivering the projects. Looking forward, we do believe that next year in terms of the EPC, revenue will definitely look better than FY '25. And as of right now, we are not giving any numbers with respect to the gigawatt or forecast on the EPC volume.

Okay, sir. Next sir, we see that the new cranes, which we are buying, those are long -term contract-backed. Any yield expectation that you have on those contracts? Have they been finalized?

Going forward and with respect to these CapEx and going forward also, the company will try to maintain an average blended yield of 2%, which is a strategic call that the management is taking.

And the last question would be the GCC investment, which we'll be doing where we have already incorporated the subsidiary. What is our right to win there? And what is the -- what are the capabilities that the company is building for that? Any color you can give there?

So, Sanghvi Movers Limited is the largest crane rental company in India, Asia and the fourth largest crane rental company in the world. So, by scale, size of operation, our capabilities with respect to safety, quality, technical provinces, execution on operations side, repairs and maintenance, planning and engineering, we benchmark ourselves internationally, and we are already ranked as #4 in terms of size. We believe that we can transfer a lot of these operating technical and safety capabilities to Saudi Arabia, which gives us a differentiated and clear right to win in that market.

Sir, any particular reason for choosing Saudi Arabia? Just maybe, top of the things that we have in our mind from a strategy point of view?

So, in general, the GCC and MENA region is an attractive geography for a crane rental business, primarily due to the oil and gas, petrochemical, and more importantly, all the development that is taking place. In the past, UAE, then Kuwait, then Qatar were the companies that were driving the growth in the region. And now looking forward for the next 10 to 15 years, there is tremendous amount of growth and potential in the Kingdom of Saudi Arabia. They have -- the country has recently won the FIFA 2034 World Cup. The World Expo is there before the FIFA World Cup. And His Highness has created the Vision 2040, which involves a lot of giga projects that are being built across the country. All of this, along with the oil and gas market, which is driven by Saudi Aramco, makes the country a very lucrative and high potential market.

Next question is from Mohammed Umer from Paul Capital.

In the Q2 earnings call, the company has provided a full year revenue guidance of INR 950 crores to INR 1,000 crores with a strong confidence. However, as per the latest Q3 disclosure, the revised expectation stands at INR 814 crores, almost INR 150 crores below the initial target. Could you please elaborate on what specific factors led to the shortfall, particularly given the revision occurred within just 3 months from initial guidance? Additionally, with an order book of approximately INR 300 crores set to execution in Q4, do you still consider this is a realistic achievable target? Or do you foresee any further execution risk that investors should be aware of? And looking beyond the current year, we also noticed that the order book for FY '26 appears relatively thin at this stage. Do you view this as a temporary situation or there is any structural headwind in the business environment that could impact next year revenue visibility?

So, I will answer your first question. See, in the Q2 or the H1 FY '24 investor conference call, we have not given any guidance in terms of top line revenue for the current financial year. I don't know where from you got this number of INR 1,000 crores plus top line in the current financial year. If you look at the investor presentation for H1 '25, we have clearly stated on Page #18 of the investor presentation that our order book as on 31st of October, it was INR 898 crores. Now it has gone up to INR 995 crores. So, we have never mentioned in our investor presentation that our [indiscernible] current financial year will cross INR 1,000 crores.

Not in the presentation, but was in the call. If you look at the details of the call, you will find that INR 950 crores to INR 1,000 crores, but not in the presentation. I agree with you. Okay, go ahead, please.

Okay, the next part of the question, Rishi will answer.

So first off, we have an order book today of INR 995 crores. We have clearly mentioned that we expect the revenue for this year to end at, Sham?

Roughly around INR 800 crores plus.

INR 800 crores plus?

Yes.

Whereas, as we move into the EPC space, the project offtake on the ground is not in our control. We work and cater to IPPs. And there are a number of interfaces at site that are beyond our control in the scope of the project owner, which due to multiple reasons can result in a delay or spillover of the order book. So we have already given an indication that of this INR 995 crores, more than INR 100-plus-crores will spill over into the next financial year. The second point that you must look at is that we are confident in delivering this INR 300-crores-odd of order book in Q4. So safe to say that the company's top line will very easily cross INR 800 crores. There is no -- this is in line with what the management has consistently been communicating across all investor calls and investor presentation. Could you repeat your last question, gentlemen?

Okay. So, looking beyond the current year, can we -- for the FY '26, the order book, relatively very thin, like you have INR 150 crores something. Do you view this as a temporary situation or any structural headwinds in the business environment?

So, the spillover of order book for the next financial year is INR 181 crores. There are a lot of inquiries in pipeline, which will eventually converted into order book, which we have not talked about. So there's no structural...

We have not given you the order book for next financial year, gentlemen. We are just talking about the spillover of this year's order book going into next year.

Correct.

Okay. Okay. Fine. I got it. Got it.

I request to please be accurate in the numbers that are being presented.

Okay. So there's no order book for the next year, it's just a spillover from this year, yes?

There is an order book. It hasn't been disclosed.

Okay. Fine. Perfect. My next question is, over the past 6 months, Sanghvi Movers' market capitalization has declined nearly 2/3, leading to significant erosion of shareholder value. Given your deep understanding of the business and the opportunity ahead, do you believe it would be prudent for the promoters to consider purchasing shares from the open market to stabilize the stock price and restore investor confidence? Or do you feel the valuation is still high and would be better to wait for a further correction?

Sham, do you want to or should I...

See, basically, promoters currently do not have -- do not want to give or rather management do not want to give any comments on the market capitalization number, how it has moved in last 9 months or so. So, currently, we do not have any plans to buy back the shares, and we do not want to comment whether the company is valued at a right price or no?

As a management, what we are focused is on a long-term strategy, what we are doing in our business and in catering and solving our customers' pain points. So thank you for the question. We don't have a comment.

Next question is from the line of Vivek Patel from [ Ficom Family Office ].

I just had 2 quick questions. Firstly, the revenue share from windmills has gone down from 49% to 44%. Are you seeing any execution slowdown in the wind space? And according to you, which sectors are you seeing a slowdown in, other sectors?

Yes. So, the first 9 months execution and project offtake was slow, again, due to multiple reasons. First, there was a prolonged and early onset of monsoon. Second, there was a general election in the country whereby complete government spending in the first 6 months had slowed down, and consequentially, private and public CapEx slowed down. Project offtake is now improving, so we are seeing traction across all sectors. And we are bullish in the demand for cranes going forward. And this can be clearly seen through the Q4 CapEx numbers, which, as I would like to mention once again, are backed by long-term orders, which are all in and around 1 year. Sham, over to you.

Yes. I would like to add that last year, India has done a 3.2 gigawatt windmill erection. In the current financial year, based on the numbers that we have, it is not in the public domain. The best of the information that we received, we have completed, India is estimated to completed roughly around 2.5 gigawatt of windmill erection till 9 months. So, based on the order book execution, which we feel since we are on the ground, we may end up doing the windmill erection between 3.5 gigawatt to 4 gigawatt. So, the reason of telling all these numbers is that there is an overall slowdown in windmill erection in the first 6 months, primarily on account of maybe monsoon in the country. The overall output or the overall erection of windmill has also come down significantly, and that is reflected in the decrease in the overall contribution from the windmill sector in our revenue composition.

And secondly, I think you already sort of answered it, but I'll still ask it anyway. In Q3 FY '25, the gross yields were slightly below 2% and capacity utilization was 70%. So, on the operational front compared to the industry, what could potentially be the main cause for the diversions versus the industry?

I could not hear the last part of the question.

Absolutely, absolutely. I also could not hear anything.

So, I was saying that in the last quarter the gross yields were roughly around 2% and the capacity utilization was at 70%. So, on the operational front compared to the industry, what could be the potential reasons for the cause of this divergence versus the industry?

Our estimate is that our yield will settle down around 2% going forward. This is the overall competition intensity in the industry.

And again, for the first 9 months, as has been mentioned time and again, there are a couple of reasons that we are now talking about the drop in utilization and also yield. One is the prolonged monsoon, which has resulted in some clients releasing cranes because there was no physical activity taking place on the site. There's a slowdown in government and private CapEx due to the general election. And there is a reflection of a reduction in pricing power in the first 9 months on account of competition intensity and fragmentation. Going forward, in terms of yield, as Sham has already mentioned, we are confident that it will settle around 2%. And the fact that we have announced INR 150 crore CapEx in Q4, all of which is backed by long-term orders, signifies that the utilization will move up in the next financial year.

Next question is from the line of Mohit Shubh from Shubh Labh Research.

Sir, my question is about the market share that we have with Wind EPC as well as Project EPC business.

I cannot hear the question, Sham?

Market share, he was talking about the market share, right?

In?

Market share in Wind EPC as well as Project EPC business?

So these are very nascent businesses. We have just established them less than 2 years ago. It is an unorganized sector. There are no listed players in the EPC space in wind, barring one company, which is KPI or KP Green, one of those 2. And there are a dearth of EPC providers who are unorganized in the renewable wind space. In the Project EPC also -- there are large to small clients, we primarily create competitors where we primarily cater to the hydrocarbon sector. Again, it is too early to comment on market share because both businesses are nascent. What we are focused on is building an order book that the company is confident on delivering to our clients and then taking it from there.

Next question is from the line of Krupa Desai from Electrum Capital.

Sir, can you give me [ overview of ] gross blocks for 9 months FY '24?

FY?

FY '25, 9 months FY '25 gross blocks?

INR 2,575 crores.

And sir, can you give a ballpark number of the Wind EPC pipeline? And for the 9 months, the EPC EBITDA margins are in 20% range. So is this sustainable?

I will answer your second question first. So, going forward, we are hopeful -- this is a one of a kind of margin that we have got actually because we got some good pricing in some of the contracts. Going forward, as a conservative company, we would like to state that the EBITDA margin for Wind EPC and Project EPC will settle down between 10% to 12%.

Okay, sir because KP Energy is [ already ] making in 20% range, like in higher teens.

They are already in this business for last 3, 4 years. We are just entering into this business. And currently, we are just doing the subcontracting of the contract that we are getting from our customers. So we need to build that kind of capabilities to get that kind of margin. So we are in the learning stage. And once we develop the internal in-house capabilities, our EBITDA margin will slightly improve.

And sir, how is the overall competitive intensity in this Wind EPC space?

I think Rishi has just answered that question. They are more from the unorganized sector, except KP Energy.

Next question is from the line of Sunil Jain from Nirmal Bang.

Sir, my question relate to Wind EPC, whether our cranes are getting used into Wind EPC -- in the Wind EPC, our crane. And then second thing, if these cranes are used over there, then how we account for the profit or revenue of that crane, whether that is segmented into crane revenue or EPC revenue?

Okay. So, I will take this question. So the crane [ car ] deployed in the Wind EPC segment. So our clients are taking a -- giving us a turnkey contract to SML that includes [ Sangreen ] component. So the crane revenue is obviously getting built into crane business and the Wind EPC revenue is being booked in SFRPL, that is Sangreen Future Renewables Private Limited, which we have carved out with effect from 1st of October. So all Wind EPC revenue other than crane, it is getting booked into that company.

Okay. So, pure EPC business, not of any crane?

There are some intercompany transactions because of the secular nature of the contract. The cranes are -- the cranes revenue is initially booked in some cases, directly in SFRPL and they -- in turn, they take the cranes from SML. So there's an intercompany revenue segment, which we have deducted and shown in the investor presentation. So it is roughly around INR 19 crores in the third quarter of the current financial year, which is carved out and shown separately.

Okay. Ans sir, second thing about this Project EPC. So we had seen a lot of volatility in their EBIT margin. So can you explain what is the nature of this business and why this volatility comes?

See nature of business, Rishi will explain. I will explain you the EBITDA margin volatility. See, earlier, we took those contracts and we earned some margins, which was a decent margin. Now as I mentioned to -- in the earlier answer, this EBITDA margin, though it is almost 18% to 20% in the reported numbers, it will get settled down between 10% to 12% going forward. Rishi, can you answer the peculiar nature or the nature of contracts that we are taking in the Project EPC segment?

So in the project EPC segment or wind, Sham?

No, project, he is asking.

So, in the Project EPC segment, we cater to the hydrocarbon space, where we are involved in the execution of lump sum turnkey or LSTK, engineering, procurement and construction composite jobs. We take on activities such as on-ground and underground piping, ducting, fireproofing, blasting and painting, structures, erection, fabrication and equipment erection and alignment, along with some -- at times some portion of civil activities. This is the composite jobs that we provide in the hydrocarbon space. And the typical clients are customers such as Toyo, Technimont, Technip, Bridge and Roof, Haldia Petrochemicals Refinery, HPL, CPCL, BPCL; these are our customers.

Sir, last question about this Wind EPC and Project EPC, how much is the debtors day?

So for Wind EPC, most of the IPPs, they are clients and the credit terms is 30 to 45 days. And it is -- the current outstanding debtors days for Wind EPC is roughly between 45 to 60 days. And for Project EPC, it is between 60 to 90 days.

Then it will generate good ROCE business?

Because there's no capital employed, no?

Next question is from the line of Priyanshu from [ Brighter Mind ].

Sir, my question is on Wind EPC side and which has already been answered by you.

Next question is from the line of Chetan Kumar from [indiscernible].

Sir my question was regarding the order book for cranes. Sir, in your presentation, we see that the order books for cranes is about INR 421 crores. And if we were to deduct the 9 month revenue that we have realized for it, it's about INR 370 crores. So we arrive at an approximate unexecuted order book of INR 50 crores. And in the presentation, we have highlighted that the orders to be executed in Q4 FY '25 for cranes is specifically INR 142 crores. So I just wanted to understand, is my numbers right? Or are we expecting some additional orders?

Yes, we are expecting some additional orders in the Q4.

Next question is from the line of Abhilasha Satale from Quantum Asset Management.

So my question is largely industry related. If you see in Q3, the actual execution has improved. We are seeing in some of the EPC contractors revenue for wind mills. However, as far as we are concerned, we are now seeing that kind of pickup in our numbers. So -- and as you have also mentioned that if we will end the year flat, so actually H2 should be better than the last year's H2 because H1 was much slower. Then, in that case, where are we lacking? Are we substantially losing market share to the unorganized segment and therefore, we are not able to show that in our numbers? This is my first question. And second question is what is the outlook for the next year? Like, if the execution picks up in next year, then how much increase can we see in our CapEx numbers?

Sham? I didn't understand -- I couldn't hear the question.

Okay. So, I will answer. See, basically, as Rishi mentioned, we have not decided anything on the CapEx to be done in the next financial year. That will be a Board decision, and it will be communicated to you in the next conference call, maybe. So if you see, we are very conservative company and considering the drop in the utilization and the yield and onset monsoon in the first to second quarter, and overall deduction in the CapEx from the private and public sector, we have consciously taken a decision to curtail down our CapEx figure. Otherwise, there's no point just do a CapEx when the capacity utilization is less than 70%. We'll just buy the crane and it will remain idle. Now in the fourth quarter, we have intentionally taken a call to increase the CapEx because it is backed by a solid order. And that is the primary reason. We are not -- there are some organized players who are also buying the crane and we have already mentioned that there is a competition intensity, and that is also dragging down the overall pricing power. And that's why we have given a guidance that our overall average blended yield will settle down around 2% going forward. I hope I answered your question.

Yes. But even at that -- the yield is going down, but in that time, actually the execution should improve, right? Because if we are also taking a competitive yield, then in that case, we should not lose market share in the execution. That's the overall point.

Correct, correct. So if you're not doing this CapEx, then definitely we will lose the market share to other players.

Next question is from the line of Ashish Soni from Family Office.

Sir, in terms of your Wind EPC business, I think you said you are still incumbent sort of player. So qualitatively, where do you stand like compared to a matured player, and where do you see -- when do you see you can get to the mature level of maybe that -- example-wise, margin-wise or capability-wise sir, if you can throw some light, because I think the way you explained about Saudi Arabia, why you want to go there, and what are the capabilities. So, if you can throw some light, where do you stand in terms of maturity from your perspective qualitatively?

So first off, let us discuss where the intention to become an EPC player arose from. When the feed-in tariff regime was replaced by the reverse auction, there was a significant drop in the capacity addition in the country. In FY '14-'15, '15-'16, the country had added 5.5 gigawatts per year. Till date, we are not able to reach that kind of capacity addition 10 years down the road in any given year. So, the industry took a very long time to adjust to the policy shift. At that time, majority OEM players were providing complete product and project services and completing the entire erection of the wind farm. What happened consequently was OEMs took a step back and said that we will only supply product, which is the global operating model. This left most IPPs having to execute their own projects, and these IPPs don't have the capabilities because they are primarily funds like sovereign funds, pension funds and private equity funds who are trying to put up these platforms. So there was a clear white space in the market. The entire supply chain in the project execution space prior to this was deeply fragmented, unorganized, with relatively small players with poor financial track record, corporate governance and at the end of the day, performance capabilities. And these IPPs were starved for good vendors with a good financial capabilities, corporate governance and a delivery of track record. By this time, Sanghvi Movers had achieved a 15-gigawatt erection track record and had been present virtually in every single wind farm that was constructed in the country. So we got a tremendous amount of pull from the market saying that you have the capabilities, you're solving one of the hardest problems in the renewable wind space, which is the erection of the turbine, kindly help us or assist us in delivering balanced services around the mechanical, electrical, civil, transportation, which is logistics, surface logistics and in the land approvals and permits. And this is where the capabilities -- we started creating capabilities within Sanghvi Movers, and we will continue to develop capabilities to service these 5 different product offerings in order to provide a turnkey solution to the renewable wind energy sector. In order to say ranking margins, market share, maturity, the industry is still nascent. It is yet to be seen who emerges as the top 2 or 3 players in this space, one of which has reached and is a listed entity, the balance are trying to find their space and develop an execution track record. Till date, whatever projects the company has taken in this space, we are 100% confident in delivering those EPC projects as we have already delivered all these 15 gigawatts worth of erection. So the company will only take up those projects where our delivery is assured. So this is the strategic thought process, market pull by our customers and the in-house development of capabilities that has crafted this unique solution.

Okay. So, let me add another point to it. What I want to understand because you said matured player, I think you do a benchmarking with global as a crane rental company, right? So I'm trying to understand the mature player. I think somebody asked that question, [ that 20% ] margin. So, in what sense -- like what are the few factors where you can reach that margin, that might be your aspiration. So I'm trying to understand your thought process of reaching because you said you have a good track record because of which you got into this. But what are the factors which will improve margin and how many years your thought process right now?

So, we will see this in subsequent quarters, but the 5 areas that were described in terms of product offerings is where we will focus our capabilities.

Okay. And regarding the GCC business, so in next 1 or 2 years, how do you see it scaling up to like maybe 10%, 20% of your revenue? What's your thought process right now there?

Our ambition is to be a top 5 player in Saudi Arabia.

So may I ask like what is the market share of revenue target or at least something you're thinking in that line -- strategic thinking?

In order to get to a top 5 player, we need to have a 12% to 15% market share in Saudi Arabia.

Okay, which will be equivalent to how much, like some INR 1,000 crores, something or more?

At this time, we cannot share those numbers.

And the last question, this wind installations in India, I think you said earlier -- in earlier review, it was 5.5 gigawatt, what I heard, it might close by 4 and government is targeting 10. So from your perspective, do you think India can reach 10 gigawatt, which government is planning in maybe next 2, 3 years?

I think this is a better question for companies like Suzlon, Inox, et cetera. But we are geared up to cater to 10 gigawatts a year.

Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to Mr. Rishi Sanghvi for closing comments.

Good afternoon, ladies and gentlemen. Thank you for joining the investor con call. We appreciate the questions that we have had. The company continues to develop its core crane rental business, along with deploying several strategic initiatives, which in the long run will create an outsized shareholder return. We look forward to engaging with the community in our next investor conference call for Q4 FY '25. Thank you, and have a good day.

Thank you, everyone.

Thank you very much. Thank you, sir. On behalf of Sanghvi Movers Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.