Schneider Electric Infrastructure Limited (SCHNEIDER) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Schneider Electric Infrastructure Limited Q3 FY '22 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you.

Thank you, Mike. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q3 FY '22 and 9-month FY '22 conference call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric Infra, represented by Mr. Sanjay Sudhakaran, Managing Director; Mr. Mayank Holani, Chief Financial Officer; and Mr. Vineet Jain, Head, Investor Relations. We will begin the call with a brief overview by the management, after which we'll follow with the Q&A session. I will now hand over the call to Sanjay for his opening remarks. Over to you, sir.

Thank you, and good afternoon, everybody. I welcome you all to this call to discuss about Schneider Electric Infrastructure Limited's Q3 results as well as what we feel on the economy and the macroeconomic situation. How our end markets are behaving and what's our strategy going forward. Let's go straight to Slide #3. On Slide #3, you can see some extracts about how we believe that the economy is going to progress in a few quarters going forward. As you can see, the quarter ending September '21, the economy has grown almost 8.4%. We expect this growth to moderate to around 4.3% in the quarter ending December and 2.1% in the quarter end in March. We can look forward to a few quarters from now with some cautious optimism. What I mean by cautious optimism is that there are both headwinds and tailwinds to the economy, as you can see right now. The tailwinds are in terms of the pent-up demand in the economy, which could not have been fulfilled through the various waves of COVID that we have seen in the country, including Wave 3, which incidentally, was not as severe as many of us expected it would be. So there are some tailwinds over there. And on the headwind side, we see considerable headwinds in terms of commodities, shortages, supply chain constraints, supply chain disruptions and also, customers waiting for commodities to cool off before you can go ahead with the investments and things like that. So it's a mixed pack. However, the Union Budget, which was recently announced, does have a good thrust on infrastructure. There is a significant CapEx formation that has been announced. Also, I feel that the Infrastructure segment, which is primarily the segment that impacts us, will see a considerable portion of this CapEx being pumped into that. The Gati Shakti program, which has been designed around logistics, tech parts, transportation segments, like mobility, EV charging, et cetera, would also see some good runway for our business as we go forward. So overall, I would say we can look forward with some cautious optimism. I'll go to the next slide, how we feel that the end markets will behave. This is very much in line with what we had discussed last time, I think we do not have much movements in the landscape of our segments, as we go from 1 quarter to the other quarter. Power and Grid, the fundamentals remain strong. It is primarily evolving around digitization and modernization of the grid. We also see a strong thrust on solar and renewables here, with India's commitment to be almost 50% in terms of solar renewable generation very soon. So I think we can see some considerable investments on the solar side. A lot of investments in smart metering and software and SCADA and things like that, which should augur well for us with our strategy as well. On Minerals, Mining and Metals, I think the industry, like we spoke last time, has gone through considerable consolidation, price increases, increased demand, mergers and acquisitions, all that had to happen on top of the cost structure has happened. The profitability is good and the cash flows in this segment -- most of the companies in this segment see good cash flow. So I think we are all planning to reinvest into CapEx. So this should see a good uptick in the quarters coming forward -- going forward. Transportation, as a segment, which will remain strong in India, given the low penetration that modern transportation has within the country, whether it is high-speed rail or metro networks or airports, et cetera, we can look forward to continued investments on the transport side. Data and cloud, another area of strong investment in India going forward because of regulations and the fact that COVID has induced a digital behavior in most of us, which includes the use of data, apps, analytics and as well, remote maintenance, et cetera. Contactless maintenance, we see this also growing very fast and well in the coming years. So I think overall, the segment landscape remains the same, unchanged, positive, and we can look forward to more growth in these segments going forward. We'll go over to the next slide, just to ground ourselves on our strategic priorities. This is nothing new. We stay course on the transformation that we began a couple of years ago. The idea is about disciplined execution here, whether it is more digital, more services or partnerization, focusing on our core segments and diversification into areas that are growing better and also, on the green side, which with ESG becoming more and more of a corporate responsibility as the right thing to do than a good thing to do, I think we will also be focusing on the Green MV, both in terms of products as well as advising our customers in terms of software and digital as to how they can contribute towards the overall ESG programs within their organization as well. Going over to the next slide, a few examples on how we are partnering with customers to make things more digital, more modern and more connected, and how we can leverage the apps and analytics to be more predictive, et cetera. A few examples to that extent. The first example is of a state distribution utility company where we work with the customer to -- and engage early to give them the benefits of a smart RMU, which is a connected product connected to a SCADA, which is probably a thing that's catching on right now. More and more customers seem to be adopting to this, and our idea is to make sure that the customer realizes the benefit of a smart RMU in his usage and continues to invest CapEx on these lines, leading to more digitization and better customer engagement. Going over to the next slide, is an example of how we are using analytics on the cloud to make installations better for our customers to be more predictive rather than reactive. Predictive maintenance does bring does bring a lot of efficiency to the customer, both in terms of optimizing downtimes as well as for our organization in terms of scheduling and manpower sourcing for the service installed base to be more productive. So here is where we are using an EcoStruxure Asset Advisor as a tool to monitor the medium-voltage installed base within the customer to make sure that we can be of help to the customer in trying to be more predictive about what's going to happen with their installed base and taking necessary action prior to those events rather than be reactive about it. Going on to the next slide. Here are some of the projects that we are doing on the smart city side. Our influencing ability with the customer in terms of what technology they should put in has helped our partners secure business with customers, with end users using smart and digital products, which is how we are expanding our coverage through the market by more and more partnerization. So this is an example of how we work, tripartite between us, the customer and the partner to ensure that best-in-class products are deployed with our customers. Going on to the next slide, has a couple of success stories. One is about the electrification of the country of Bhutan, and one is about electrification in our own country. We are partnering with EPC in Bhutan, 2 or 3 EPCs in Bhutan to ensure that we are able to deploy world-class technology products into the country of Bhutan, from our stable. And we have continued to serve this customer well even during the challenges that we have had during COVID times, where entry was restricted and -- and even during severe supply chain constraints, we have managed to keep up to our commitments on delivery and good execution capabilities. So these are some of the examples which we feel will create stickiness between the customer and us for many, many years to come. One thing we would like to share with you is that -- and going on to the next slide, one thing which we would like to share with you is microgrids and the changing energy landscape in India. India, for a very long time, was very traditional in terms of its generation and distribution. Generation was always centralized, but that's changing. That's changing because of a couple of reasons. That's changing because of the mix of energy from both renewables as well as traditional sources. So there is a word that we appoint for that, which is called as prosumer, where a consumer can also be a generator of electricity at different points in time during the day. He could be a net generator or he could be a net consumer, but he will always remain a generator as well as a consumer. The grids will get more complicated because of this. And why are customers doing this? Because at certain times of the day, they might not have reliable power or they might have waste energy, which can be converted into electricity and stored like, for example, a steel plant or a cement plant, et cetera, or a resort, which does not have 24/7 power availability. So there could be a number of constraints due to which a person would like to be a generator and a consumer of electricity. Of course, there are ESG considerations as well. People want -- their boards are pushing them to be more and more green and more and more conscious of the environment. So they have built this into their mission statements and would like to execute on that. This fits in beautifully with our strategy at Schneider Electric, because we have access to these customers, the core segments that we operate in, we have the relationships with the customers. And our offers, as you can see, whether it's consulting, hardware, software and our partner network and our ability to execute these projects and service the customers will come in very, very handy for multiple number of years, as the energy landscape in India transforms. So I think that's what I had to talk about on the strategy side. Now, I request Mayank Holani, our CFO, to take you through the financial update.

Good afternoon, everyone. I hope all of you are doing well and are fine. Okay. So Slide #12. Moving to orders. The market is looking [indiscernible] and recovering, and that shows up in our numbers to our out. [ OG ] order intake for the quarter stood at about INR 292 crores or INR 2924 million, which is a growth of about 74.8% versus previous year same quarter. And for the 9 months period, the order growth stands at about 44%, and -- which about order growth of INR 8897 million versus INR 6197 million in the previous year same period. And this growth has been led by mainly, the momentum in Mining, Metals and Minerals, mobility and other diffused segments. If you see -- and if you have been following our results quarter-on-quarter. So this is consecutively fourth quarter with positive order growth. So starting from Q4 of financial year 2021, where we had posted about 13% order growth followed by 16% in quarter 1 of this year, then 51% in quarter 2 and now, 75% in quarter 3 of this financial year. Partly, this has been also last year, we had some cancellation, but even at gross level, there has been a very good order growth and -- which has helped us in creating a healthy backlog. And we continue to be cautious in terms of what kind of orders we accept in terms of cash security and the margins. Next slide. Moving on to sales. Sales for the quarter grew at about 27% versus previous year same quarter. And we -- actual sales for the quarter is about INR 600.5 crores. This is the highest ever sales in a single quarter for your company. And it's a kind of landmark in terms of -- and this has been facilitated by obviously, the customer project movements and the liquidity, which has been helpful in the quarter. And if you had seen in the last quarter, we had some issues with the customer project delays and as well as the liquidity, which led to a lot of buildup of inventory, which we have been able to liquidate in this quarter and which is showing in our numbers. For the 9 months period, we have about INR 11,903 million in sales, which is a growth of 13.4% versus previous year same period. Moving on to next on the P&L. So the P&L is quite aligned with the way -- or the strategy we have been working on, which remains focused on securing cash and margins and we continue this journey. Margins for the quarter has been impacted, to some extent, by the raw material inflation, which has been troubling since quarter 1 of the financial year and though to some extent, we have tried to mitigate it through price hikes and also, renegotiating with customers wherever possible and making price solution claims on the variable price contracts. So with this, in spite of the raw material inflation, we have been able to maintain this level of margin. And the profit after tax stands at about INR 524 million versus INR 333 million in previous year same quarter. That's an improvement of 1.7 points versus previous year. In -- next slide, please. So far profit for the 9-month period, the sales growth is about 13.4%, and the margin has dropped by about 1.4 points, again, but mainly impacted by the raw material inflation and to a small extent, by mix. And at the profit after tax level, we have a profit of INR 276 million, which is 2.3% of sales versus INR 102 million in previous year, which was 1%. So an improvement of 1.3 points on the net profit level. And in terms of the performance, you see we are working on our strategy, which seems to be working and working well. And we continue to work towards this to achieve the objective of achieving a green bottom line for full year. Thank you. I close here and leave the floor open for Q&A.

[Operator Instructions] We have the first question from the line of Parthiv Jhonsa from NVS Brokerage.

Yes. Congratulations on a good set of numbers for this particular quarter. I have got a couple of questions actually. To start off with, the first one is, I was just glancing through your financials over the last couple of quarters. And I've seen that your December quarter is particularly a very good quarter. Over the last 3 to 4 years, you have made profit only in the month of December quarter, whereas the other 3 quarters, during the financial year, have been making losses. So my first question is, can you just help me -- give me some reason for the same? The second is your raw material expense, what I can see over last 5 years that have said from 2017, '16 onwards, it has gone up from almost 55%, 60% to nowadays, 72% in this quarter. So will this pressure continue even for the fourth quarter and going forward for the next 1 or 2 years? So can you just help me out to understand the same? And what are the measures, what company is taking to control your -- all the other expenses? And plus, we believe that your debt currently stands at almost about INR 550 crores, INR 600-odd crores. So what are the plans to improve that situation going forward?

Okay. So let me -- do you answer 1 by one?

Yes, sir. Yes.

First, you're talking about the seasonality of the quarter because quarter 3 over the December quarter. So it's seasonality of the business. And if you see -- and that's the reason every year, you see that it's a spike hike coming in the Q3. Just majorly, in course, we are in the electric side of the business. And the September quarter, usually in India, we have the raining season. So due to that, many of the businesses that we are not able to execute or the projects are not able to deliver this because of the raining and water logging and other issues. So it's the seasonality of the business, and it will continue the same. We try to minimize the load in the December, but spikes will be there because of the season of the business. Second, you were talking about the material cost. So if you see -- in this business, we never have 60% of the kind of -- this kind of material cost. If you see from last '16, '17, we have 73% of the material cost, which reduced to 68% till last quarter. So this quarter is a bit different quarter just because of the RMI, all the raw materials are going up, prices are going up and then the global supply chain issues are there. So a few of the electronic items are not available. So there are a few exceptional reasons, which is adding to the higher side of the material cost. It's a temporary issue. It's not something that we at the company level are facing, it's a global issue in almost every company in the sector is facing the similar issues. And third, you are talking about the other expense, if you see journey from last couple of quarters, you will see it's in a reducing trend. Every - we have -- I will say that company management has done very well on this side. And now, the [indiscernible] view kind of scenario for this kind of volume, this is a bare minimum number of other expenditures should be there.

Okay. And sir, can you just throw some light about your borrowings? How you plan to reduce that? And considering you have got some very good orders this particular quarter. So what can be the run rate in the last quarter, we're almost at the mid of the February. So just almost about 1.5 months to go. So can you just give some figures on the run rate and the margins for this particular quarter?

Sorry, we are not giving any forward-looking statement for the margin side. Reduction of the loan is concerned, so whatever the additional cash flow, we are depending on these operating businesses, we are using to pay off our trade payables and loans through which we are reducing, and it's in a reducing trend only. Yes, I think from -- on the loan part, if you look at from the March quarter, it has been from the last year and it has been on reducing trend. You'll see...

Correct, correct, correct. But I just wanted to understand that where can we expect to be to reduce substantial amount?

So substantial amount will take time. So once we are turning profitable and the cash collection because what has happened in last couple of financial years, actually from 2021 and '21, '22. [indiscernible] has impacted the cash flows significantly, right? Last year also, in the, let's say, January to March quarter, it will improve, then second wave of COVID, second wave impacted -- continues even in beyond 1 quarter. So hopefully, I mean, this quarter, wave has not been that serious. So we should continue the positive trend.

We have the next question from the line of Anuj Jain from Globe Capital.

Congratulations on the very good set of numbers. I need to understand, sir, one thing. I mean, this quarter, we have done exceptionally well. So I mean, how is the Q4 shaping up as of now? I mean -- and the second question is, in the last con calls, we have spoken about the orders from the smart metering side in the Bihar region and UP region. So can you give me some color on that? And apart from that, the EPC order which you have got from Bhutan, can you please quantify the exact figure?

Also, see, on your first part on our next -- this quarter, I think as Vineet mentioned, we don't give any forward-looking prediction for the P&L. But you can see, last in terms of backlog, we have good backlogs. And last year, last quarter has been good in terms of order book. So we have a healthy backlog of positive from the previous year. So that helps in generating revenue. And Sanjay, you want to address the other part?

So on the smart metering side, we have not picked up any orders specifically of meters, pertaining to smart meters in the previous quarter. We are working on a few opportunities. We are working in a very selective basis through EPCs because what we are actually interested is in the software part of it. The hardware part of it, we are actually agnostic even if the EPC kind of buys it from the vendors directly as well.

Okay. And sir, can you please quantify the order EPC order from Bhutan, I mean...

It's pretty substantial, but because of the confidentiality agreement with the customer, we are not in a position to disclose that.

Okay. Okay. And sir, in the last few con calls, we have spoken very high on the opportunity in the data center segment. So can you give me some color? I mean, how it is shaping up?

So it is shaping up pretty decently. I think we have had 2 wins in this space, pretty substantial wins in this space. Again, because of the confidentiality agreement with the customer, we are not allowed to talk about the nature of the project and the names of the customer in public domain, but it is shaping up very well. And we have -- we're making good steps towards scale development in this place -- in this space.

Okay. Okay. And...

Mr. Jain, sorry to interrupt. I request you to please join the queue once again for a follow-up question. We have the next question from the line of [ Chaitanya Deepak Shah ] from Silverlight Capital.

Good evening. Sir, my question is regarding your basic turnover. If you could give me a break up, how much of this would be on the hardware or the product side? And what would be the software -- what would be the software side?

Actually, we are not tracking hardware and the software differently because we are in the industry, hardware and the software both go hand to hand. So we are dividing our revenue in the 4 segments like transactional, service, system and projects. So that way, I can give you, that transactional is 14%, service is around 12%, and this project is around 8%, balances equipment.

Okay. All right. And sir, I also wanted to understand, I mean, the spaces that we are working in. There's a lot of competitions like competition with players like ABB and now, ABB Power. Do we have any sort of competitive advantage against them and can you give a brief description of why some customers would prefer Schneider over [indiscernible]?

See, definitely, I think we have competitive advantages. The competitive advantages we have is the immense portfolio that we have on the product side, on the services side, on the software side and the skills that we have acquired and the relationships that we have with our customers. So this is the competitive advantage. And it's not one specific competitive advantage, it is an advantage of doing multiple things correctly and in a disciplined fashion.

Okay. And so I just have one more question. What would be a revenue mix in terms of government versus private, if you could give that breakup?

In terms of utilities, our business with utilities is close to 40%, 45% is what we do with utilities. But -- exactly, because we generally work more with the EPCs and also, exactly how much is with government or private debt is difficult to tell because our business, it's large part, comes through the EPCs or the contractors.

So we do very little direct business with end users, apart from some segments like Minerals, Mining and Metals and cloud and service providers, a few industries. Most of the other businesses are indirect.

We have the next question from the line of Nalin Shah from NVS [ Group ].

Congratulations for the nice set of numbers in this quarter. My question is only very general, that I would like to understand that like many sectors, fortunes are related to the growth in GDP, the commercial vehicle, there's growth in GDP decides our growth. So similarly, for Schneider, what do you feel that this quarter performance is an excellent one. So what are the factors or economic trends with which your fortunes are related. And just if you can give us some general idea about -- I mean, going forward, whether the trend established in Q3, can we take it, I mean, this trend to continue for next 3, 6 quarters or something like that?

See, if you see the GDP is a lead indicator, but it's not the only indicator to the fortunes of our business, as you rightly said, right? Because we are fortunate enough to have a diverse portfolio and a play in diverse segments. So if you say the drivers of each segment are very different, right? For example, electrification is the need of the country. Electricity is the greenest form of energy. And on top of that, you add the diversification that's happening in electricity towards renewables and the investments that are coming in the renewable side. So definitely, this piece is going to grow. Secondly, we know that our grids have not been modern. There have been losses. There have been thefts. There have been a number of inefficiencies. There is privatization on the [ anvil ], but the privatization can happen only if the utilities reach a breakeven point, only then the government will be able to divest these assets. So you see all the indicators on this segment are positive and are not completely linked to GDP, right? Similarly, transportation. Transportation is very clearly undersaturated, under-penetrated in the country. And this government clearly understands that you need to put the infrastructure ahead of growth. So you see, the impetus on transportation and this kind of mobility sector is going to happen. Now, automobile is a mixed bag. Automobile, sometimes, defy the law of economy. So -- but then, our exposure is not -- we are not overdependent upon any one particular segment. That's why I told you that we are trying to build a diverse portfolio focusing on different segments. And I'm sure this diversification will help us through different economic cycles.

Correct. Correct. Correct. So can we expect this some stability of the Q3 kind of a performance to persist for next, at least, few quarters?

See, as I told you earlier also, the Q3 performance has an impact of the pent-up demand in the economy as well, right? When the inventory buildup that had happened and the second wave, which had prevented the revenue from -- so there is a little bit of normalization that you can expect. But from a lead indication perspective from the orders growth, you can see, you can, for yourself, see whether how it will be without us giving you forward-looking guidance.

We have the next question from the line of Jeetu Panjabi from EM Capital Advisors.

So I have 2 broad questions. If I look at your order intake numbers, which is a number north, is that a reasonable metric to use to project what is the sustainable growth rate over the next year or 2?

Over -- you have to look at it over a period of time, actually. It's not just about one quarter or the preceding quarter. You will take it over a period of time. And revenues, right now, we must understand that are not completely predictable, because of the supply chain shortages. There's a huge supply chain crisis as far as electronics is concerned. There are shortages in terms of the transformer components like CRGO and things like that. So orders and revenue, the timings might not happen with the same lag as it used to happen in the past.

Understood. Okay. The other question is when you sit down with the management team and as the Board direct the company, how would you measure success over the next couple of years? What are the goals that the management team has set based on what the Board has given directions?

I think profitability and turning around the situation on cash, that is -- those are the top most priorities, I would say. Mayank, would you want to add something?

Yes, you have rightly put up, Sanjay. So see confirming cash and improving the liquidity situation and improving the profitability, that remains the top priority. And if you have seen even last, maybe, there could be variations quarter-on-quarter, and there was a COVID impact since March 2020. But if you see last 2, 3 financial years' results or maybe quarter-on-quarter also. So there has been consistent improvement, right? So we hope to continue the same trend.

Okay. And just a linked question on that. So do you -- from what you're seeing around you and what you're talking to customers and whatever new customers you're [ minding ], do you have confidence next 2, 3 years or 4 years will be quite different in terms of being a good and upward trending business relative to the last 4, 5 years, which have been pretty choppy?

If you see we remain positive, the positive, it comes from a few factors about the long-term prospects of India as a country. The fact that we are transforming, and we see the need for transformation on all aspects like we spoke about on the energy side, on the grid side, the private investments that are coming in, the green investments that are coming in, the conscious call that's happening with the corporates in India to try and move towards a greener future. I think all these indicate to a brighter future, and that's the reason why we continue to stay invested in this particular business.

We have the next question from the line of Nikhil Desai from Karma Capital Advisors.

Sir, 2 questions. One is on a broad industry level situation. What would be the total addressable market for the segments and the products that you work with today? You mentioned in your Slide 4 presentation, the 4 segments that you work in. And given your products and services, what will be the total addressable market there? And what's the kind of growth you would expect over the next 5 years? I'm not saying every year the same growth will continue, but generally, a CAGR kind of growth for this kind of products and services that you cater to.

So overall, I would say, in the next 3 years, if you look, the CAGR for the key segments that we are talking about, electro-intensive segments, should be upward of around 8% to 9%.

Okay. Okay. And the second thing, sir, is basically on the margins. You've been basically working with about 6% to 8% margins overall annualized. So is that a comfort number? Do you think that these are the kind of margins that is what the industry or what you have to work with? Or given your services and products initiatives, what would be the margin trajectory? And in what range would you be more comfortable with in a few years' time?

See, the margin, obviously, this is kind of the -- right now, the margin, what you see, remains stressed due to the extraordinary inflation which we see in the market. But we continue to focus even on -- the raw material inflation is beyond our control, but we continue to focus on our structural costs and have been optimizing it if you have seen over the last few years. And we'll continue on that. And beyond that, beyond the fixed cost improvement, we also continue to improve our mix, getting -- being more -- whether it's being more transactional, increasing the services mix of software, for which gives you an increased profitability. So these are some of the levers we are focusing on and continuing to do so to improve profitability going forward.

Sir, just a follow-up on that. So I mean, should we look at double-digit kind of EBITDA margins minimum in a few years' time? or -- I mean, it depends on the external environment of raw material prices as well, but in a normalized situation?

Yes. I mean, yes, we should be looking at that, but it will take time. It won't happen overnight. So it's a gradual process, right? So difficult to make a commitment as of now. But yes, we continue to focus and step-by-step, quarter after quarter to improve the profitability.

We have the next question from the line of Manish Goyal from Enam Holdings.

Yes. First of all, let me congratulate the entire team for the excellent numbers. Excellent, sir. Just bear with me -- a few questions. Just wanted to get a perspective. Like, how is the order pipeline building up? Like, in last couple of quarters, we did see challenges due to delay in decision making due to COVID-like utilities who are not fully functional and decision-making was delayed. So are we seeing that now, the momentum picking up and maybe, able to say, give some better perspective or you can quantify like what is the order pipeline, right?

So thank you, Manish. So see, the orders have been picking up in spite of all the challenges and COVID second wave and now, third wave. We -- probably people are more used to working in this situation and more used to remote working. So orders' growth has been positive even in this quarter. And the order, you need -- if you need the backlog, right?

So yes, that was my next question. I was trying to get a perspective, like, has the decision-making improved because still, our order inflow run rate is somewhere near INR 300 crores for the external customers. So I'm just trying to get a better sense as to -- has the environment improved? And how is the momentum...

See, definitely, it has improved. The environment, because a year back, people were still not much used to remote working especially in the utilities, government sector and if the physical meetings or visits were not happening, things were getting delayed. So we are in a much better situation as of now, and if you see the -- it's a visible in the order numbers as well. So even if you see the absolute number of orders for the quarter, it's quite good, extends at about INR 292 crores, INR 2924 million. And if you see, last 3, 4 quarters, it's around that average, right? Maybe 4%, 5% plus and minus here and there. So the order booking net in these 4 quarters has been between plus/minus INR 10 crore, INR 15 crores in every quarter. So -- and in terms of backlog, we are at INR 7,023 million, which is a growth of about 12% with the same period last year.

Correct. And my second question is on -- related to smart metering. In terms of what we see is that probably just a couple of days back, even ABB announced where they're probably looking to offer. Apart from normalized meter what they would have been selling, they announced launching of smart meters as well as offering the complete management solutions around managing the network. So -- and even Siemens has been talking about it a lot. So I just want to get a sense, like how are we seeing -- are we probably seeing that the tender has been floated for procuring such kind of services, competition intensity, if you can just give us some perspective?

So we have the full basket with us in terms of offers. On softwares, as we have multiple offers. We have hardware offers also within the group. And we have the capability to do it as well. But as I said, we would -- we want to conserve cash. It's not a business where you can conserve cash by -- because these projects will be very long-drawn projects. So we want to have an indirect route in doing this business because we would want to conserve cash. So that's the key aspect that has to be kept in mind. There are tenders. There are projects available, but our focus would be to create the service stickiness and the consulting opportunity more than anything else.

Sure. Because now we are probably seeing that utilities, you may not directly come and probably float the tenders, but we have several other players or people who, probably, looking to put such a project on our developer kind of a model, with a payback of 7 to 8 years. So maybe, we are more comfortable dealing with them now?

Yes. Yes. You're right.

Sure, sir. And in terms of new order inflow, sir, how are we probably mitigating risk in terms of commodity inflation or shortages of material like? And are we probably getting in some price [ gradation] clause building for the new orders what we are getting?

So Manish, we are -- price [ gradation ] clauses, we insist with the customers, and we try to get wherever possible. But as you know, in the typical Indian customers, they even if I offer a customer say 10% lesser price on a variable cost, they still want a fixed price. Or even in case of say, tenders where you have no deviation that, okay, you have to give a fixed price. And if all the competitors are giving fixed price. So you have also no option, either you give a fixed price or you will get out of that business. So what we try to do is obviously, bill it in some contingencies for such cases and to manage the volume and the plant [indiscernible]. While having said that, we also have initiated the hedging process for commodities since last year, I think July, August. So that, though in terms of not very significant as of now, but that benefit has started coming in. And also, in terms of orders, we have limited our order validity time. So for a particular -- or a product, if the order validity earlier year, 1.5 year back used to be, say, 1 year -- or sorry, 3 months. So now, we have reduced it to 1 month. So if a customer's orders is not received within that period, then we gave a revised price. So that way, we are -- and as soon as we get the orders, we try to block the commodity and advance procurement of commodities so that our risk is minimized. So -- but obviously, all these things, the way commodities have been moving all, whether it's copper or steel or even now, transformer oil or even plastics. So all this have been able to mitigate it partly. Otherwise, the impact which has been there in last year, if we had not mitigated through all these actions, then the P&L would have been much worse.

Okay. And Mayank, a housekeeping questions as usual on the breakup of order inflow, order book and revenues?

You mean transaction systems [indiscernible], right?

Yes, yes, yes.

For the quarter, sales, for about a transaction is 14%, services 12%, project 8%, equipment 49%, and 17% IG. Transaction 14%, services 12%, projects 8%, 49% equipment, and 17% IG.

Okay. So -- but IG is part of the system?

IG is part of system, yes, yes. Equipment, project and IG put together is the system, yes, 74%. On orders, the split is -- again, this is outside group orders, equipment 42%, projects 28%, transaction 16% and services 14%.

And what will be the order inflow from the IG?

Mr. Goyal, we request you kindly come back in the queue for your follow-up questions?

Yes. I just complete the same question.

Yes. So IG orders, for this is about INR 190 crores, INR 1905 million in this year in...

Okay. And last, on the order book breakup segment...

Sorry, Manish. So IG orders for the quarter is INR 1650 million.

1 6 5 0? Okay. Okay. Okay. INR 165 crores. Okay. And last, sir, on the order book break up for the systems, transaction and services.

Can you repeat?

Yes. The same way, order book breakup. What is transaction and product?

42% equipment, project 28%, transaction 16%, services 14%.

That you gave for order inflow, right?

Yes.

No, I wanted for order book, pending order book.

Backlog, okay. Backlog is about 71% system, of which 49% equipments, 22% project, transactional 17%, services 12%.

We have the next question from the line of [ Surbhi Sarabhvi ] from Smiths Capital.

Am I audible, sir?

Yes.

Okay. Sir, I have just one question, and that is can you give some comment on the sustainability of the profit going forward?

Sustainability of the profit going forward, right?

Yes, yes.

See, as I mentioned earlier though, we don't give any forward-looking or projection of P&L for subsequent periods, but we are confident of continuing to improve the performance of the quarter.

We have the next question from the line of [ Daivum Modi from Hariakul Limited ].

Yes. Congratulations on a great set of numbers. Sir, basically, I wanted to understand what all entity Schneider has in India? And what are the terms for technology transfer and royalty for Schneider Electric Infra with the global entity?

Sanjay, would like to take the first part?

What are other group entities of Schneider are operating in India? And I mean, if at all possible, if you can just highlight the rough numbers of the same in terms of revenues or EBITDA or something like that?

No, we cannot give those numbers because those are not in public domain of the rest of the entities, but we can give you the type of entities that are there. So we have entities that are -- this is an entity which is focused on the medium voltage category of the business. We have entities that are focused on low voltage part of the business. We have entities that are focused on UPS and cooling part of the business. We have entities that are focused on industrial automation businesses. So this is the broad breakup, if I can give you.

So broadly 4 entities, 3 of these ones are medium voltage from yourselves. So totally, 4 entities, is that right?

Yes, I'm not trying to classify them as legal entities. I'm trying to classify them as businesses. The kind of businesses that we are involved in.

And so if you can, what is the name of these entities that Schneider has in India apart from Schneider Electric Infra, if you can share those?

I wouldn't know all of them offhand, but one of them is definitely Schneider Electric India Private Limited.

See, the -- sorry, I mean, there are many smaller entities also, but the big one is, one is Schneider Electric India Private Limited, as Sanjay mentioned, and the other major one is Schneider Electric IT Business India Private Limited. And the third one is the Schneider Electric President Systems, which has been listed earlier. And so there then a few smaller ones also, but these 3 are [indiscernible] companies.

And what would be the terms for technology transfer and royalty for Schneider Electric Infra?

So we don't have any royalty or technology, but also, we are having the trademark fees that we are paying that is 2% of the outside group sales base.

And in the intergroup orders that you get, would there be any fixed margins or like, it is a negotiated -- how does the commercial dump for the intergroup orders work?

These are based on our -- transfer pricing policy.

Okay. So there will be a fixed margin in the commercial, which will be allocated to Schneider Infra, or how will that work?

So this transfer pricing policy works on the basis of your cost plus a markup. So your cost for the product and markup and this is been audited by the auditors every year because we have to comply with it. And if...

So if you can quantify the markup that is marked over there?

So markup, I mean it's not one for project, product, services, import, export, there are different markups, which are applied. And it's not a one markup which applies to everything.

Sure, sir. And sir, currently, based on the kind of nature of the...

[indiscernible] could you kindly join the queue again for a follow-up question?

Just one question. Based on the kind of order book that we have currently, what kind of book and bill can we expect over this in the next 12 months?

You mean the order book?

Yes. What can -- basically, how much time will it take to execute this order book and sort of fresh order that one can expect depending on the kind of mix that we are having?

So order booking is depending upon the what kind of order, because it's usually business is from 3 months to up to 36 months. So that's kind of the order book we are carrying because transactional business will take 3 to 4 months, whereas the project business take up to 2 to 3 years as well. So it's no standard that we can say, okay, how much it goes. But you can say around 50%, 60% order that we are in between 6 to 9 months of the duration.

We have the next question from the line of Viraj Mithani.

Am I audible?

Yes.

Yes.

Yes. Congratulations on a good set of numbers. I have just 2 questions. My first question is like the companies like ABB, Siemens, they are all bullish on their export base. The parent is talking about meeting the company's base for the world, for the Southeast Asia at least. And they are also bullish about mobility data and building. Now, I understand we also have the same sort of businesses, [ mobile ] and buildings. So are we seeing the same traction here? Or...

Yes, yes, we are having very good traction in terms of mobility and buildings as well.

And data as well, we are doing well?

Yes. Yes.

Okay. And any thought by the parents on making India as a manufacturing base or something?

So India for Schneider is a pretty large country in terms of base revenues right now, all the businesses put together. And a substantial portion of the revenues do come from exports even today. So different businesses have different strategies, and different hubs through which it is serviced because some products travel well, some products do not travel well, right? I'm talking from optimization of freight perspective. Products that travel well and the entry barriers in terms of taxation, et cetera, do not come into the play. I think a lot of exports do happen from the country outside. Unfortunately, our products do not travel that well, as you can see from the portfolio, they are pretty large equipment and things like that. But there are plans to transform a portion of the portfolio to India and to work on the exports, but those things are right now, on the drawing board, and we will update you when they materialize. But the plan is definitely on.

But are we seeing the same traction in medium voltage? I mean, what I understand from companies like Siemens, ABB is that is a huge traction in the small voltage side of the business. So just sense of if you are seeing the same traction in the medium voltage?

Any particular segment you're talking about on the...

No, no. Medium voltage as a industry.

Medium Voltage in industry, it depends on the type of industry. So whenever you have mining, metals, cement, electro-intensive industries and those -- steel, et cetera, when the CapEx cycle goes up there, you will see a very large uptick in medium voltage.

That was the last question. I will now hand over the conference back to the management for closing comments.

Thank you, everybody, for joining this call. It was a very interesting meeting, and thank you for all the good questions. Let's stay engaged and look forward to talking to you next time. Thank you.

Thank you very much. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.