Schneider Electric Infrastructure Limited ($SCHNEIDER)

Ladies, gentlemen, good day, and welcome to the Q4 FY '26 Results and Business Update Call from Schneider Electric Infrastructure Limited hosted by Elara Securities Limited -- India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Nemish Sundar from Elara Securities Limited. Thank you, and over to you, sir.

Yes. Thank you, Jitesh. Very good morning to everyone present here. On behalf of Elara Securities, we welcome you all for the Q4 and FY '26 Conference Call of Schneider Electric Infrastructure. I take this opportunity to welcome the management of Schneider Electric Infrastructure represented by Mr. Udai Singh, Managing Director and CEO; Mr. Omkar Prasad, Chief Financial Officer; and Mr. Mohit Agarwal, Head, Investor Relations. We will begin the call with a brief overview of the management, followed by a Q&A session. I will now hand over the call to Udai sir for his opening remarks. Over to you, sir.

Thank you so much, and very good morning to all, and thanks again for joining us. And I'm sure that you've got sufficient time to read the material, which we had shared yesterday. And as planned, I will actually take you through as to what the company has been. And the first thing which I want to start off with which you see on your Page 2 is something which we are collectively as a company, very proud of is selection and recognition by the IOD in terms of awards, which we have got 2 in a row. The first one, which we got in the later part of last year, which was the Golden Peacock Award for ESG 2025 for excellence in sustainability. That was something which we got last year in October, November. And then again, we have proven the excellence by winning the Golden Peacock Award for one of the most innovative products and services in 2026. And this is -- this is for what we are very proud of and sharing is for EcoStruxure XR Operator Advisor. And this is a new offer, which is one of its type, which is very beneficial to the end users who are maintaining assets at multiple locations of industrial sites. In terms of maintaining it in a much better and more efficient and more defined way. I would now would like to take you and again, run you first as to what your company's vision and mission is. The vision stays as what we are very focused on is leading the new digitized energy world by offering to all our customers and partners, fully innovated and connected products and solutions, which are ready for the then emerging power distribution elevated expectations. And we do this by using our balanced business models, superior quality and efficient supply chain, which keeps our growth and profitability resilient and sustainable. Now if you notice, there is a tag which we are talking about now, which is Advancing Energy Tech. Now we are now probably state to all our customers and stakeholders that we are their energy technology partner, wherein we electrify, automate and digitalize each and every industry, any business, homes, driving efficiency and sustainability forward. I would now like your intention on Page #4, which is a broad market outlook, which we see for the company in times to come, which is how is India faring and how -- because recent times every one of us is aware, the global headwinds which we have been facing and how do we see for the company, the situation ahead of us. Now it is a mix of some tailwinds, which you read at the top left, where the GDP forecast for the country actually still is about 7%. The CapEx plan and which is getting rolled out by the government is about 11.5% higher than what it was last year, which is typically about INR 12.2 lakh crores. And the power center utilities have been actually having a lot of declaration on the financial outlay which will be -- they will be doing in FY '27, which is roughly up by about 20%. Now these all indicators, they open up good avenue for us, for the company. But we should be also conscious about certain headwinds which we see, Forex fluctuations, the government political uncertainties, and also very importantly, the raw material. If you typically look at the raw material has gone and changed and it has moved north side quite a bit, just to give you like copper, aluminum in last 1 year, I'm talking about a year, which is between April '25 and March '26, has seen a upward movement of 30% plus. And so is steel, which is another component, which we use extensively in our products, which has seen close to 10% increase in the last 12 months. So these are certain headwinds, which we have to encounter and recognize while we leverage what is the opportunities coming across which are stipulated by the tailwinds which I said. Now what we are also trying to do is trying to tell you as to these 4 segments which we have highlighted, which are namely energy transition, transportation, the digitalization driven by AI and manufacturing, what does it open for us? And I'll spend some time in terms of explaining to you to best of my effort as to what this offers to us, and starting off with energy transition. India is sitting at a very sweet spot. We actually have come to per capita consumption of about 1.5 units per year, which is likely to almost go up by another about 30% by year 2030, which means that consumption will go up roughly at a CAGR of about 12% to 15% in times to come, which means more power, more generation, more distribution, where -- and these are the 2 areas where we typically operate. Now even if you look at the non fossil fuel, where the country had a target of 500 gigawatts, and I would not be having any hesitation in stating that India is moving at least about 8 to 9 months ahead of this target. We, as we speak, we are close to about 280 gigawatts already done. What also comes alongside this is the energy storage system based on batteries, which is typically about one. But for the best of the estimates of industry, this is likely to go up to 200 times to about 230, 210 by 2030. Now this offers -- and as I think you might have read, sometime later, there are slides where we are -- we have an offer on the energy storage system also. The point which I'm trying to make that energy transition by itself offers quite a good opportunity for your company. The other side, which I want to take is transportation. EVs are picking up. The government has a penetration plan of 30% by 2030. We have started moving in that direction, although there are turbulence in between and certain quarters, but we are on the path. Now this alongside Vande Bharat trains, which today we have about less than about close to 100 trains, 80 already running and then another plan. The overall objective of government is about 400 trains by 2030, and I'm again very proud to say that most of these trains are being run by the equipment which are made by us. Other thing which I also want to speak about is manufacturing. Manufacturing contribution to GDP is going to go up by 5% in 5 years. This is a huge, huge opportunity for us. There are a lot of the schemes which have been rolled out, as you may be aware. The PLI, the Rare Earth Corridors, which has been made, the ECMS, the ISM 2.0, these are all facilitations being carried out by Government of India, which will give a boost to manufacturing under self-reliance program of the country. And therefore, the manufacturing will enhance. And when manufacturing enhances, it requires power distribution and power management, and that's where we work upon. And the last is, of course, data center is a known fact. Data centers are going big. We -- with the best of industry estimates are sitting close to about 1.5 gigawatts of IT load. There are a set of people who say that we should be close to about 8 gigawatts by 2030. And this is a reality because what we understand is there is about 3 gigawatts, which have been already in a very advanced stage of sort of getting signed up and getting rolled out in next 1.5 years to 2 years time. So this is going to be there. And where we see, we do a lot in the entire value chain of data centers. And that is where, which is quite a positive thing for us. We have certain actions, which we have undertaken, how to leverage these tailwinds, which you see the segmental growth and nuances which you noticed. And also how do we defend to our level best ability to counter these headwinds which are coming in front of us. I want you to take -- go to Slide 6, or Page 6 of our presentation or the deck which we had share, where we are extensively proud to share as to what we have done. And many infrastructure, Metro Energy and Chemical and Metals, where with our products and solutions, we are present, you see the first [Technical Difficulty] which are the secondary distribution along with the distance software and stack for one of the smart cities in North India. We speak about metro. These are the full distribution for the entire line, which we are doing in a city in Western India. The Energy & Chemicals was something which has been very close to us like metals, where we are trying to give transformers and the medium voltage solutions in metals, which is our core. I want you to turn to Page 7 where we are talking about what we are doing in the booming data center range, where we have supplied this in one of very established respected player where we are trying to do in terms of either supplying power transformers with fully digitalized solution or giving high-end relays, which actually make the infrastructure side much resilient and much active. All we are modernizing at many places by uplifting that technology with the present installed base has, and this is being done because the customer really believes in us and in our solutions and seize the merit, which we bring in terms of modernization, which we do in these areas. I would like to take you to -- as to what we are doing in semiconductor, in renewables, in other areas, which are the future ready segments. Now semiconductor, and I'm sure I'm not the first one to share with you, but India is at an inflection point. And this is going to be really driving -- this industry is really going to drive in my opinion and time to come. I'm so happy to share that in semicon, we have been engaging with the people who are investing big money in the country. And we have been there right from last 2.5, 3 years and our success has been continuing. We have been supplying the equipment, the software, the softwares which control operation, which gives advisories in this area. The one which you see on the left is something which we have given a digital solution to one of the customers in Central India. Then we have another success, which we which we have in -- under renewable space, where we have given the substation solutions, which are fully automated panels, which are given to manage the solar energy, so to say. And of course, we have another in the manufacturing side where we are trying to do it with supplying high-end transformers, which are fully digitalized and. Having said so, I would now request you to turn to Page 10, where we just want to share with you as to how brand has been performing, how is the brand of your company is being perceived by masses, by customers, by all stakeholders and the efforts which we have undertaken in the areas of CSR and sustainability. Now March end and April 1st week was very busy for us because we participated in Bharat Electricity Summit in Delhi, which was managed by Ministry of Power. And this is the place where we actually had displayed the offerings that the company has. And this went down, in my opinion, quite great. I was myself there for almost all the days. We had about 100-plus booth visitors, which comprise about 300-plus customers who came, who witnessed really gave those statements, which reinforce our own confidence in us about what, how and what solutions have been with them a great advantage in terms of maintaining site more seamlessly. And thereafter, we had another thing which was an Innovation Summit, which we as a company organized in the first week in Delhi again in Yashobhoomi. And this was a larger event, which was managed by us were about 5,000-plus attendees came, 40-plus CEO level people came in. We had about another 150-plus C level, C-suite people came in, and they saw the entire strength of Schneider, the entire portfolio basket of Schneider and -- which just proves that how do we have an extensive end-to-end capability of executing projects on time. There were about 200 government offices, which actually came in and saw as to what we can really do for the country in terms of building up infrastructure, which is highly digitalized as I had mentioned in my mission statement, how can we drive that for them is something which was really appreciated. And we also called in about 500 students to really see and how do they know as to what companies in India are doing, how they can get equipped for future because they are our future eventually. So this went on pretty well. And I would also have a slide, which is on what we have done on the grid side. And this is a case which has been done. You can find this video in YouTube also, where we have done in Tata Power Odisha, which is actually the West Odisha, they have 2 of them, there's a Western, there's another one. But this is something which came out where the customer -- there's so many states that the Schneider solutions, which were proposed, supplied, implemented and what benefit this actually is bringing to Tata Power as such in the state of Odisha. I would just like to take you to another slide, which is the Page #13. We just -- and just to share as to how we have been progressing on a charter, which we have rolled out for ourselves in areas of ESG. And if you see, we have certain tiles which we have captured, which are very relevant and pertinent to ESG journey of any corporation. The CO2 emission has come down by 83% in last year, 83% reduction we have been able to manage. And I'm so happy to share that 100% electricity source from renewables are actually with -- everything is renewable either by on-site solar or buying REC bonds. There has been 0 incident in 4 factories, which we are running at the company. And the gender diversity, we have -- we strongly believe on gender diversity, and we have been able to take it to about close to 20%. That is by far I would say that is one of the highest in our peer industry group. Skill development, we have -- I think you may be aware, but we are, again, so happy to share that we have 11 skill development centers in government and government -- which are state-run ITI centers, where we have been training youth, and we have trained 1,000-plus youth in last year. We have also gone ahead in this area in terms of electrifying communities. We have distributed upwards of 3,000 portable solar lamps, which were given in areas where there was scarcity of power. And of course, as I mentioned before, we got recognized because of these efforts, which we entered, and we are also awarded the Golden Peacock Award for ESG in 2025. I would like to give you an update, and there are 3 pages, which we'll speak about as to what we are doing new because we realize that we need to improvising ourselves by bringing in innovation, which are focusing on making customer site management better and improved. So the first one which we are talking about, and I would like to take your attention to Page #15 is the dry-type transformer. Now dry-type transformer just for a simple explanation, it is a transformer, which is casted. And we have a design, which is a global design, which is called Trihal. That is something which we do at 33 KV class. And we have actually supplied close to 170,000 units worldwide across 100 countries. And what specifically which this brings in is if you notice, is E4C4F1 class which is one of the, I would say, is one of the most stringent, more robust endurance class made in dry-type transformers. And that is what we are going to bring in Baroda. And we will start catering to especially areas like data centers, areas like metros, areas like commercial buildings, residential complex, hospitals, hotels, those areas. And another important element, which I want to point out, and there are other things which are pretty technical, is that the compliance business transformer has around seismic. India is a complex country. When you travel from north to south east to west, there are various seismic zones. I do not want to make it and sound it more technical, but there are various levels to which the equipment and installations have to comply with. This transformer by far complies to the highest standard. I would like to take you to this another page, which is Page 16 in your deck. And this is another element which India needs. And this is something which we showcased and it sought a lot of attention in the innovation hub which I just described some time ago, which is something which we call as One Digital Grid. Now in very simple layman terms. This is a tool which advises, guides and interacts with the DISCOMs in terms of telling them how do they make the grid work most efficiently. So what it actually does using AI is it not only captures as to where default is, how do you bring it back, what is the least cost of bringing it back, where -- which asset geographically place where, how to attack it. And then all of this was actually -- does the planning, how do we do? How do we modify, how do we scale up, how do we scale down? The operations and the asset management, which is very important for keeping the down is something which is done very well on this. And this is, as a flexibility. This is available on cloud as well as on-premise, as we call it. And this comes up with a deep AI-based modeling and it also differentiates itself in terms of having a chatbot. So if some operator -- and this is extremely unique, the point which you see, which we are calling as grid AI assistant, where then if you like, ChatGPT, if somebody wants to really put the question to the software or the system, they can just ask and get answer to the best of breed answers, which can come out and it can advise the operator who is not perhaps as conversant as he ought to be. Now I would also would like to take you to the last of the offers which we launched, which are energy storage for smarter energy future. There is one thing which you remember, I discussed some time ago where we are sitting close to about 1 gigawatt hour, and we are expected to go by 2030 to at least about 210 and about 240 gigawatts by 2032 as per the plan and the government quantification. Now what we have done, if you look at this, what we have done, and we are trying to bring in all solutions of from Schneider side, which are either power distribution, power management, software, the structure, the design. We are trying to give a combination of this, and we are working, especially with all those clients who are really looking for one of the best of the breed solutions fully automated, fully connected which can actually help them to unlock the peak savings and the time of use of utilization in provision of power quality and of course, give them a power back. So this is something which we are trying to do, a new offer, which is being launched, we are trying to see as to now how do we secure business. And this because demand is just going up. Now at this point in time, I'll stop, and I'll request my colleague and our CFO, Mr. Omkar Prasad, to take you through the financials of the company. Over to you, Omkar.

Thank you, sir. Thank you very much. So good morning, everyone. Myself Omkar Prasad, CFO of the company, Schneider Electric Infrastructure Limited. I would like to give you the brief update on the financial performance for the 12 months and fourth quarter 4. I would like to bring your attention on Page #19, where we give in the summary of the financial performance of key 3 KPIs, which is orders, sales and profit before tax. As we see in the historical quarters, the orders growth was actually consistently very strong, and we own year-to-year growth of 27.4%. The sales, we have grown 9.6% year-to-year, and the profit for the year is 10.1%. Bringing to your attention to quarter 4. Before that, I want to give you the external perspective, which you know better than me that the Q4 was not a normal quarter. It was completely unprecedented in terms of the external geopolitical and also due to the commodity market because of the such a dependency on the geopolitical happened. In spite of that, the orders, we continue to see and that's why if you look at last year, the growth was and then we continue to at least keeping the momentum on, and we've maintained the growth while ready moderated around 1.4%, but together, we try to make sure that we should not be and that's why if you look at the order overall the backlog which is there, is around 50% up from the last year. And that shows the complete robustness in terms of what we have on the hand to execute in the upcoming quarters. Sales was quite modest, be able to have the flat sales in spite of so much dependency on the customer. Our product goes to the company who actually have a CapEx-intensive engineering company. They also had a dependency and they had an impact because of these geopolitical crisis. There are many orders we've seen in our Q4 execution that the customer intentionally, or you can say because of dependency on the LPG, dependency on the other, their processes. They are asking us to hold the dispatches and shift to the next quarter. So then in spite of that, we're able to have INR 590 crores of sales in this quarter. And profit, 6%, I will give you the more brief in the next slide what actually deliver which impacted our profit in this quarter. I want to move to the Slide #20, where you have the P&L for the 12 months. We discussed about the sales. Coming to the gross margin, the gross margin when you look at, it slightly dropped. If you look at it in terms of margin, it is close to 1.6%, 1.5% drop. The idea these 2 things. One is the drop is coming completely because of the external commodity impact. And there, our company also got impacted, as we remember that last quarter, we discussed that we had inventory hold. So Q3 was not impacted much, but Q4, we see a good impact on the -- because of the commodity. And also the mix of the revenue will be in the way we have the service mix, then we have the transitional standard products and then we have the projects and equipment supply. That mix also has impacted the gross margin. Other expense, I will talk about the more employee while you see the growth of expense in 11.6% against the sales of 9.6% in both ways. I just want to say that employee cost 11.6% is the 2 parts, 1 is from operation, which is close to 9% increase. And then we also have increase in head count because of some technical engineering and staff being deployed to support global. So we don't keep this cost here with us. So 11.6% is not exactly looking from over 9 points like-to-like sales. There's some recharge happening here. So employee cost has increased 9 points like-to-like. Other expense, 11.5%, while you see this number percentage-wise, but if you look at overall percentage to sale 12.2% versus 12.4%. If you follow the last year's financials, there was the impact in earlier years on account of the ECL in the budgets and all which we covered last year very good, and that will help us in other expense. This year, we also realize we are not impacting any bad debts, that's a good news. So -- but the realization in terms of what we had bad debts last year at this year, there's a delta. So we can't -- there's no provision so we can't relies more than provision. So that's why you see another expense like-to-like a little bit increase in this year, which is more, I will say, it will one of last year. Rest, I will not be because it's more in line with our planning in terms of CapEx, depreciation and finance costs. Exceptional costs. Just I want to bring your attention in Q3 when we updated you that there was labor code impact, and we restructure on the salary and all done in the month of December. That was more on basis than draft code. That impact was taken in Q3 was around INR 24 crores. When we restructured the number, the net final impact is coming only INR 14 crores. That INR 14 crore in exceptional item, what you see is because of labor code. And last year, INR 18 crores again is coming because of a reversal of the direct tax litigation where we move and operate with our. So there was a reversal of interest cost in the exception item. I want to move into the Slide #21, where Q4 performance. We discussed about the sales and margin. Margin largely, as we said, that's largely impacting all of the commodity. Almost 2.5% is coming from commodity and rest is coming from the sales mix. Now this quarter will be happening because sales and then also the overheads, there's a big impact in that. So when I say phasing impact trend, but Q4 because Q4, we do all the other costs booked in basis. And sales when you look at the overall year it get catch up. It's not something that's not the case. It is the cost is like to like it's not single. But if you look at percentage, yes, because sales has not grown in that way because of the external market conditions. Rest is all in line that we plan. The depreciation, if you look at in Q4 is largely the -- you all approved the CapEx to invest, and we have started capitalizing from Q4, end of the Q4 and then impacting the precision is coming. So that's all. And I now hand over to our moderator to open for the Q&A. Thank you.

[Operator Instructions] The first question is from the line of Sukrit Patel from iSight Fintrade Private Limited.

I have 2 questions. My first question to Mr. Singh is, I just want to understand power guidance on what type of strategic levers are you prioritizing in FY '26, '27 to expand Schneider's footprint in smart grid and digital solutions and to accelerate renewable integration and manage risk from regulatory transactions and global supply chain. That's my first question. I'll ask my second question after this.

So thank you for asking this. I'm -- I don't know whether you are aware, but I think the first solution, which is towards modernization of grid in the country is by us, which has been running in one of the South states since 2012. And I think what we see as where India is moving to is driving robustness and modernizing grid, and that also has become very pertinent and important now because the amount of integration of renewable power is likely to happen on a grid, which has been conventionally very robust in the country. . The second aspect, which is extremely important, where we have a right solution is the multidirectional flow of power or energy between multiple widespread sources. There was a scheme which has been launched by -- where people are putting solar, rooftop solar and other things, which are eventually leading them to behave like what we call prosumer, which buy and sell power board. So we have software, which we call as micro-based solutions, which actually takes care of that flow. It is nothing but it really showcases you the physical flow of power and how do you manage it. There's 1 solution which we have. Another solution we have -- on the software, which I was explaining you if you might have understood, is the One Grid Platform, which integrates elements, which comes together on the grid solutionizing which is primarily a SCADA or an ADM solution, or we have a solution and is nothing, but how do you manage a distributed energy resource. And the outage management system and a maintenance system. So all this actually is likely to happen. And as a matter of fact, government by itself is trying to set up now training centers in the country where the intention is to train the discom people as to how to perhaps upskill themselves in terms of using the grid and the tools to manage the grid more efficiently. And we are also in process of setting up one of the such skill center in North India to -- which will be used by PFC to train people.

My second question to Mr. Prasad, again, a forward-looking one. Just want to understand what type of capital allocation and risk management frameworks have been applied in '26, '27. Balance dividend payout with funding for grid modernization projects. Any hedge against Forex and commodity volatility? And any liquidity buffers that will be put into place to sustain for the large-scale infrastructure contracts?

Yes, yes. So 2 things, I think I will take first coverage against the hedging of products and commodity. We have both. And -- but as a policy, we have a certain policy, we don't know one covers 100%. So commodity having is completely covered up to the 50% to 60%. And for Forex saving for any independency on the import, we do 2 types of hedging. One is also the hedging, particularly on order by order, and then we also have a net ARAP Forex hedging. So that is cover. And what do you see the impact here in the P&L? And that's why I see that impact is lesser in our P&L because the hedge benefits also have given some good positive in the GM impact would have been more in the quarter 4. The second thing you were asking about more on large infrastructure projects, mostly what we try to do, the large infrastructure project, which is more than 6 months delivery period. which always sit with the customer with some variable contract. It means -- what it means we make so that we give the price today, but if price may go up, we try to negotiate that differential has to be recovered from the customer. So that on the -- most of the applied and the large infrastructure project, which takes more than years and all. So that process already there, what you see here. But if you look at it in terms of our contracts, it's a mix. We do have, we call big projects more than 1-year execution period. That's less there. But the impact which you see here the contract, it was supposed to be delivered and booked in somewhere in the Q2, and we have to deliver in this quarter, That impact is more. We saw the delivery period is less than 6 months. I hope I answer it.

The next question is from the line of Mahesh Bendre from LIC Mutual Fund.

Sir, during the quarter, the revenue growth was almost flat. I think in terms of around 1% growth. So in the presentation, we have mentioned that delivery deferrals and external factors impacted the quarterly sales. So could it possible to share more details on this?

So if you look at revenue, as we you see our backlog was very strong. So it was not a challenge in making the deliveries just to customer puts and get the in the quarter, okay? So we are trying to, first of all, deliver wherever we have a material ready. And second, customers are also willing to pay and take the delivery in this quarter. What we observed many of the customers who had a dependency on their -- in the customer ultimate use. They also started saying that because of the other dependency and they also got impacted with this crisis, they are asking us to hold the deliveries. And that's why the revenue has been moved from this quarter to next quarter. And when I say external factor, that was very cautious because we also don't want to take every hit in this quarter. and we only prioritizing the customer delivery where the material which is ready and with the all impact, which can impact less rather than get all the deliveries made and then keep the higher impact. That was the idea. So the team has in the company, I mean very well to manage with customer expectation and trust at the same time, making sure that we get minimum dent in this quarter.

So the delay -- I mean, from an end consumer point, are the private companies? Or is it that they were a public sector undertakings or SEBs?

No sir, in earlier I think we clarified in terms of GTM, we have a different GTMs it's -- I'm going through the EPC or if I'm going to go even to a large infrastructure in the company, both way it is impacted. Largely, it's EPC because the EPC has a customer. So they have a larger dependencies.

Okay. And do you think that will get rectified in this quarter?

Fingers crossed, sir, I think that's why we are looking at and I heard the news yesterday again that there's some -- again, some crisis going to come from U.S. and. So I don't know that keep the finger crossed that all the essential LPG companies who are getting business sold. So I hope that will recover in Q1.

Sir, last question from my end. Sir, Udai sir just mentioned about the solution in battery storage, energy that segment. So do we have the technology or is it that we will get it from the parent? I mean how are we placed in that?

So good question, sir. Thank you for asking this. We do not make batteries, okay? And -- but the rest of the items either we made by ourselves or we are trying to partner with somebody who can give a piece of it. So essentially -- and batteries I would say, battery is something which is also -- the technology has been evolving. The advanced MST cell technology has been actually being worked also, and we are not a master in making battery by ourselves. For large-scale stationary usage. So the entire portfolio, which you see, which comprises of many things, which is AC and DC power equipment and alongside it, which was a software-led arrangement which manages this flow of power is something which is done, which is our own to a large extent. There is some alliances and partnership, which is happening on some convergent systems to make their entire offering done. So long and short answer, we are making the entire system. We are getting batteries from somebody who's actually good in making batteries because battery is not our forte. The rest of it is primarily ours. The entire solution design is Schneider.

The next question is from the line of Anirudh Agarwal from Valuequest Investment Advisors.

A couple of questions from me. First is on the data center opportunity, right? So you spoke about the multiple products that we now have, which go into data centers. If you could give us some sense of the kind of opportunity that you see from data centers in quantitative terms with all the products that we have. And we obviously also mentioned that 3 gigawatts of capacity is kind of getting signed up for the next couple of years. What sort of revenue uplift or order uplift, whatever you can share on that will help us quantify the opportunity better for the company?

See, data center is something which is going to be incremental to us because of the rate at which it is going to go up. Now depending on the location, depending on the arrangement, depending on the class, depending on the redundancy level of data center, the volume of equipment, which we can supply to a data center typically varies. Now we can supply the equipment right from the receipt of power at 132 kV and then go down to a level to what we call as a low voltage level, which is 415 goals. And anything in distribution at multiple floors physically, we can do it. Now to answer you whether it's A or B is actually difficult because the design of these hyperscalers, which they want to implement and roll out with India clearly is different. The level at which they want to make redundancy as they call it, is also different. The requirements coming up by colos who make keeping in mind some arrangements with the tie up with the hyperscalers actually dependent mostly on the hyperscaler design. I think which can be of one basic fundamental reason that they are not alike. Now -- but what it promises is that in different formats, we will have something or the other for the company to really supply and leverage the data center.

Right, sir. Sir, if you could help us with -- of the current order backlog that we have, what percentage would be from data centers?

Maybe if under control of my CFO, maybe typically about 10% to 12%.

10% to 12%. This percentage, how do you see that kind of moving with the sort of action that we are seeing on ground over the next couple of years?

Should go up.

And sir, final thing, if you could broadly quantify the amount of orders that have got shifted for delivery from Q4 to further quarters, what is the broad quantum of the delivery deferrals that we've seen in this quarter?

About 10% to 12%.

I'm not sure we can take the numbers in this call. But I think a couple of orders we can consider.

The next question is from the line of Ashish Ajit Golechha from Bee Ventures LLP Fund.

Sir, are you able to hear me?

Yes, sir.

Yes. Sir, my first question is your gross margin have deteriorated consistently from 39.1% in FY '25 to 37.5% in FY '26. And now it is 36.6% in Q4. Multiple calls, management has said mix improvement will drive margins. And -- if you see services has gone from 12% to 15% of the revenue book. If 300 bps improvement can happen in services, what 160 bps deterioration in gross margins. Can you tell that when will actual margin recovery happen? This is my first question. And the second question, I will ask when the first question is completed. .

Okay. the Q4 gross margin, but that was largely impacted because of many factors. But if you look at drop in the margin in FY '26 versus FY '25, there was a -- when you talk about the mix and services while growing. In services also, sir, we have a 3 components. We have a spare and then we have rating revenue like AMC. And then we also have a modernization projects where we say that either more revamp, where we call it projects. Mostly, what happened, the third category is growing compared to other 2. Other the 2 has better margins than third one, which is more national Unfortunately, the last one, the renewal and on field projects will also go as a CapEx model for many of the industry, and they are again, okay? So there's a competition happening even in that segment. is not based on the, you can say, margin very intensive. And they are also the penny end users and the company decide based on the L1 what you call the CapEx model. And there while revenue is increasing our service. But when you look at a mix of even service in middle modernization has actually margin-wise, it's dropping. But look at the whole story and an old story, I think the revenue, we are trying to capture the and improving the margin. We are working on all 3 ways. I think this if look at it and this year, which was unprecedented in terms of the commodity market. because this -- if you discount it, okay? And if you remove that, we are not of the margin. And that's why we gain a reason that when commodity even in this year, almost close to 1% is just because of the commodity, which are -- cannot be benchmark like-to-like. And if you remove that factor, the margin items from the company side that we are focusing how to improve and further bring some efficiency in some of the design and in terms of the how we serve customer and negotiations on the customer. So like-for-like is not there, sir, that's.

Okay. So second question is, you always position feel as a premium technology different center player in EcoStruxure, GMT, digital SCADAs but Udai sir was saying that we have also basically launched new products in the PPT dry-type transformer every other thing. Electrical segment revenue in the addressable market has not basically expanded. Can you tell us how will we basically go about basically winning the market share and how we are going about basically translating into commercial because commercials are not reflected. Even in my colleague who was asking questions on data center from value cost, the management answers were very opaque. It has been now nearly 2 to 3 years. The management is giving [Foreign Language]. So at least we -- from the investor community, we expect some clarity and some answers which are very straightforward.

Point noted, sir, to whatever I could hear. I mean you are unfortunately not absolutely clear. We try to tell as to what is seemingly possible and directionally. If we are not in a position to really quote absolute and an exact number in percentage because the dynamics seem evolving. We keep on deciding things which are in favor of the company. Like, for example, you said that there's a market share, and this is a market, how much market share will it come. So we may decide in certain areas, in certain operations and certain solutions, not to chase the market because we are trying to also maintain the point which you pointed out in your question one. We have absolutely and equally sensitive about profitability. So we are not chasing. We are selective in certain areas. We try to chase and be the market leader in certain areas. And that's a combination, and that's what we do by managing product mix, which also you mentioned in your question one. So I and my colleagues from the management hear you, but unfortunately, we'll not be able to give you an absolute percentage number as what you have been asking.

Please rejoin the queue for more questions as we are not able to hear you. The next question is from the line of Dikshant DB Wealth. So I'm sorry to interrupt, sir, your voice is very low.

Am I audible?

Yes, sir, you are able now. You can go ahead.

So firstly, we understand that the commodity prices is not on our hands, and we are trying to do our best on profitability and operating leverage will -- commodities are going up. But sir, last quarter was a really good order inflow. And going forward, what do you think we can do on our operating leverage which will be also a margin rate. The whole year, this year, 1 thing that makes us wonder is the sales growth for the whole year, except for the December quarter was in single digits Y-on-Y basis. So December was a quarter where you were hoping that now we will see an acceleration, but it doesn't. So can you just highlight that what is now the next growth catalyst for us that the company is positioning itself towards because we clearly are really good at what we are doing. Customers are loving us. That's why they're awarding us, but could you give us some clarity?

I take it questions. I think you asked about the Q4 order intake. The Q4 order intake because of uncertainty in commodity market, we were very, very selective. We will only selecting the orders where we can get certain leverage in terms of whether prices and even price increase, so variable class. So these are certain controls we put into when we booked the order with the customer and negotiate with the customer. Still in Q4, when we're booking the order of any customer was not very keen to pay based on the variability and all, okay? And that's the reason that we took that call okay, let's hold it. Okay. So that's the reason you see that selectivity may reasoning to have a low order booking in the Q4. Operating leverage obviously the Q4 is pure seasonality, I can tell you. If you look at it in terms of the numbers. I'm talking the absolute number. If you look at is not that significantly increase as we are looking in terms of the percentage. So if you look at -- it might obviously to grow and this operating the seasonality. And over the year, 12 months, you saw that it's making sense in terms of the percentage. So that's only I can just want to clarify on the operating leverage. On sales side, you were saying about the single digit in the 3 quarters and then quarter 4 was in double digit. This is again, I said in the earlier earnings calls, -- it depends on the customer prior. And since our projects are more engineering-based customer at clearance and depending on there to give clarity and to dispatch. So many things would happen and things are getting deferred, while we have a very strong pipeline, but it also depends more on the customer side to get the clearance to dispatches. So mean as far as if you ask me that all the order is there, we will definitely execute it. It's just the customer giving clearance. I just also want to tell you that remain sales, we are also very careful in terms of not on clearance, but also with the cash. We don't want to give open credit all the customers. So we are very mindful that when we dispatch, we have only a credential-based customer where we keep open credit. Otherwise, we always try to make and secure the cash. And the cash, sometimes the customer delays in making the payment. So that's why we're trying to hold the also deliveries. So those all actions we take make so that in the safeguarding the interest of the company while we make it, but also we should not lose cash. And some time, this will also keeping momentum on the revenue.

I would request you to please rejoin the queue for more questions. The next question is from the line of Abhijeet Singh from Systematix.

I hope I am audible?

Yes, you are.

Sir, whatever our offerings in the best side. I mean you explained briefly, but just to get more clarity. So apart from the battery in the -- apart from that, capture and also or we source.

So it's the combination, sir, like, for example, the entire structure will be made in India. The switch gear will be made mostly here, and then the few which we do not make, especially in the DC range, we will get in from other sites. So it's a combination. And actually, it depends on the sizing of BESS system. The modularity of the BESS system and the way we are going to combine them together, that will quantify the amount of work, which will be done by us here and amount of work which will be asked, but we'll be sourcing it from our side.

Right, sir. Sir, what is the scope in our BESS project, let's say, of INR 100 project, what is our addressable market?

Sir, not a very straightforward answer because we will not be -- because there are various as I think Omkar was mentioning about that. The BESS go-to-market is slightly different. There are people who actually have been buying on CapEx model, there have been people who have been buying on the OpEx model. We are trying to see as to which is as best and to which customer do we supply so that the continuity and our -- eventually the cash is secured in terms of getting it on time. So it's very difficult to quantify the market. What I can again say that in times to come, there will be a great need of BESS. There are so many people who will start making BESS, and we are trying to create a niche for us by giving something which is 2 notches more than what actually is given by a normal BESS integrator or a supplier.

Exactly that is what I was trying to understand because there are a number of players who are talking about best capabilities and integration capability. So how competitive would be in comparison to those players? There are 20, 30 players talking about presenting this in manufacturing or software. But there is it is really hard to assess the competitive advantage that we have. So that is what the question it. And sir, are you looking at also for data center products? Are we -- have you already doing -- have we done it already as that some kind of order for data center and exports?

We are exploring about the export piece. And in terms of competitiveness, we are not the best, of course. We are not the cost leaders because we really retain and deliver quality. And the certain USPs which we drive is consistent quality and backed up by advisory software, which makes BESS system operate and run more efficiently for longer duration of time. And out of those 15, 20, 25 players, we are not stacked in top in terms of cost competitiveness. But then there are many customers who really come to us because of the other merits which they're seeing what is coming up from SEIL.

In the interest of time, that was the last question for the day. I now hand the conference over to Mr. Nemish for closing comments.

[Audio gap] to host this call. We would also like to thank all the investors and analysts for joining this call. Udai, sir, would you like to give any closing remarks to the investor.

Yes. So first of all, thank you so much for really coming and asking these questions, which we love to clarify. You can understand that we, at times, are not able to really answer all your questions and cite you some numbers, which perhaps you are interested in knowing because we ourselves are perhaps not in a position to really give you an accurate number, so to say. What we tell us -- what we tell you is a directional number, which your company actually is trying to work along and make it happen. So thank you so much for being with us in this call and hearing us out, asking questions, which were very pertinent and important, which gives us direction and also sort of gives a cue as to which are the areas which perhaps is you are very inquisitive about. Thank you, and all the best for time to come. Thank you.

Thank you. On behalf of Elara Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.