Skipper Limited ($538562)

Ladies and gentlemen, good day, and welcome to the Skipper Limited Q4 FY '26 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities. Thank you, and over to you, sir.

Thank you. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q4 FY '26 Earnings Call of Skipper Limited. Today, we have with us from the management, Mr. Sharan Bansal; Mr. Devesh Bansal; Mr. Shiv Shankar Gupta, the CFO; and Mr. Aditya Dujari, EVP, Finance and IR. So, without any further ado, I hand over the floor to the Skipper management for their opening comments. Over to you, sir.

Good evening. Good evening, everyone. A very warm welcome to all participants joining us today for the Skipper Limited earnings conference call for the fourth quarter and full financial year ended 31st March 2026. We sincerely appreciate your continued interest and support. FY '26 has been a defining year in Skipper's journey, marked by record financial performance, strong execution across all business segments and significant progress on our strategic priorities. If I were to describe FY '26 in one line, I would say this has been a year where execution, scale and operating discipline have come together to deliver record performance across all metrics. Over the past few years, we have been building a manufacturing-led scalable and globally competitive platform and FY '26 reflects the early outcomes of that strategy, not just in terms of growth but margin expansion, improved return ratios and stronger cash generation. Let me begin with the fourth quarter performance, which was our strongest quarter to date. We delivered highest ever quarterly revenue of INR 1,666 crores, registering a growth of 29.4% year-on-year, driven by strong execution across business segments. The Engineering segment continued to lead growth with revenue of INR 1,248 crores, up over 33% year-on-year, reflecting strong demand and improved throughput. Most importantly, profitability scaled meaningfully. EBITDA increased 40.2% year-on-year to INR 173.4 crores. EBITDA margins expanded to 10.4% compared to 9.6% last year. PAT increased 70% year-on-year to INR 75.6 crores, with margins improving to 4.5%. This strong bottom-line growth underscores the benefit of scale, improved cost structure and disciplined execution. Importantly, we continued to strengthen our financial profile with finance costs as a percent of sales reducing to 3.3% versus 4.4% last year quarter, reflecting better working capital efficiency and improved balance sheet discipline. Moving on to full year performance. FY '26 has been a record year for Skipper. We achieved highest ever annual revenue of INR 5,552.8 crores, representing a growth of 20% year-on-year. The Engineering segment grew 24% year-on-year to INR 4,359 crores, reflecting strong demand in transmission infrastructure. The Polymer segment crossed INR 500 crores, delivering its highest ever revenue with strong volume growth. Profitability improved consistently during the year. EBITDA margin expanded to 10.3%, driven by operating leverage and higher quality order execution. Finance costs reduced to 3.9% of sales, improving earnings quality. We delivered our highest ever PAT of INR 207.3 crores, a growth of 42% year-on-year with margins expanding to 3.7%. In addition, we saw improvement in return ratios. ROE improved to 14.1% compared to 12.3% last year. ROCE, return on capital employed remained stable at 21%. Debt-to-EBITDA remained stable at 1.6x. Debt equity at 0.62x, indicating controlled leverage. Overall, the year reflects a balanced improvement across growth, margins and capital efficiency, which is a key focus area for us. Order book, inflows and visibility. Turning to order book and growth visibility, we closed the year with our highest ever order book of INR 8,501.9 crores, supported by record annual inflows of INR 5,678 crores. Quarter 4 order inflow stood at INR 1,029 crores. The order book remains well diversified with 90% domestic and 10% export mix. A key milestone during the year was securing a large multimillion dollar order from a leading North American utility, which marks a significant milestone in strengthening our position in developed markets. And also, we are currently working with PGCIL in 25 active projects. We are currently executing approximately 5,000 circuit kilometers of EHV and HVDC transmission projects, reflecting both scale and complexity of our operations. Our bidding pipeline remains strong at over INR 33,000 crores, providing strong visibility for future order inflows. Operating leverage and capacity expansion. During the year, we made significant progress in strengthening our manufacturing capabilities, technological edge and global position. Our capacity expansion of 75,000 tonnes is progressing well, and we are on track to reach 450,000 tonnes per year capacity by June '26. Utilization levels has remained strong and are above 85%, indicating strong demand and execution momentum. As utilization increases further, we expect incremental volume to drive higher margin expansion, reflecting the structural operating leverage of our manufacturing company. FY '26 has also been important for capability building perspective. We successfully commissioned Test Bed 2, making us the only company global with dual test bed facilities at the same location, significantly enhancing our testing capabilities and global competitiveness. We also successfully completed plant audits across North America, Middle East, LatAm, Australia and Europe, strengthening our global qualification base. We also went -- go live with -- successfully with SAP S/4HANA RISE, enabling better process control, real-time visibility and scalable operations. Additionally, we also received the Great Place to Work certification for the fifth consecutive year, reflecting strong organization capability. I'd like to talk about the sector outlook. The outlook for the power transmission sector remains very strong and structurally positive. India continues to witness significant investment in transmission infrastructure, driven by renewable energy integration, grid expansion and electrical initiatives. The NEP outlined a multiyear CapEx pipeline, creating a sustained demand visibility. While FY '26 saw some temporary moderation in ordering due to execution size constraints, primarily due to the challenges such as increased right of way and forest clearance timelines on the ground and extended delivery cycles for critical equipment such as transformers and HVDC, which resulted in slower-than-expected bidding activity by CEA, allowing the industry time to strengthen execution capability. But the underlying tender pipeline continues to remain very strong, supported by robust transmission CapEx linked to renewable integration, grid expansion and system strengthening. Order awarding is expected to accelerate significantly from FY '27, approaching FY '25 levels. With this, I open the floor to questions.

[Operator Instructions] The question is from the line of Balasubramanian from Arihant Capital.

Sir, my first question is on the trade receivable side, it's almost double in FY '26 compared to FY '25, INR 1,485 crores despite 20% growth. If you could share like what is the exact things are there? Is there any project-based billing cycles or any customer concentrations? Or is there any overdue decision?

Yes, sure. So, firstly, I'd like to mention that our trade receivables, none of them are sticky debtors. They're all running debtors with good quality customers. The reason for increase in debtors is -- there are 2, 3 reasons for that. Number one was, due to a technical reason, close to about INR 260 crores of funds, which was supposed to receive on the last week of March was received on the 1st and the 2nd of April. And because of that, we could not show it, obviously, as realized debtors in the month of March. So that inflated the debtors by INR 260 crores. Also -- I'll just continue. Also, the domestic revenue has seen an increase of close to about 45% year-on-year. which is, let's say, this year quarter 4 compared to last year's quarter 4, we saw an increase in domestic revenue by close to about 45%. And domestic, as we have maintained in the past also, it has a higher realization cycle compared to exports. And that 45%, coupled with GST amount has inflated the overall debtor number. So this is the primary reason. The INR 260 crores, which was due to technical reasons, could not be realized in the month of March and the growth of domestic revenue as compared to exports because exports had a challenge due to the current ongoing geopolitical challenges. Export revenue took a hit in the last year quarter 4. So because of this, the debtor number is seemingly high. However, we have already realized close to about INR 600 crores to INR 700 crores of debtors in the month of April itself out of this debtors which you are seeing in the month of March. I hope that answers your question.

The next question is from the line of Disha from Sapphire Capital.

Yes. So a couple of questions from my side. Firstly, on the order book. Currently, you have an order book outstanding of around INR 8,500 crores and a bidding pipeline of INR 33,000 crores. So what sort of conversion ratio are we looking at?

Sorry, could you repeat your question, please?

So the bidding pipeline of INR 33,000 crores, what sort of conversion ratio are we looking at?

In the past, we have achieved a conversion ratio of anywhere between 20% to 25%, and we hope to definitely maintain that with this bidding pipeline as well.

So around INR 8,000 crores, INR 8,500 crores order inflow can be targeted?

I mean it's between 20% to 25%, ma'am. So hard for me to put a number, but that's what we have seen historically in the past.

Okay. Okay. And coming on to your growth, so you've always maintained 20% to 25% sort of year-on-year growth. Are we still -- so that guidance still holds for FY '27 and beyond?

For FY '27, we are giving a guidance of 15% growth on revenue and approximately a 30% growth in bottom line.

Sir, we have the order book visibility. So we're still guiding for 15% sort of growth. So are we seeing any challenges in execution?

In terms of execution, we are -- obviously, see exports are a concern right now as because of the ongoing geopolitical challenges, export growth has been a concern last year, and it continues to remain a concern, though the opportunities in export markets are very, very large, and we are obviously in discussions with many large contracts in the export market. However, the execution -- actual execution of those will likely probably not be coming this year. And so that is one of the reasons why we have a conservative guidance of 15% on the top line.

Okay. And you also mentioned in your commentary that FY '26, we saw some extended timelines for this equipment delivery for transformers and HVDC. How is the position now? Have you seen any pickup?

These continue to remain a constraint, and -- which is why we saw lower-than-expected bidding activity in FY '26. Now we've seen some of those bidding activities pick up again because, obviously, the overall work to be done in the transmission sector is very large, and the bidding has rebounded in month of April itself. On the ground execution, well these equipment constraints and the ROW constraints remain. So that is an ongoing activity. And that, again, has to be seen on a project-to-project basis.

Okay. Okay. All right. Fair enough. And sir, on the CapEx for -- any sort of guidance, what sort of CapEx are we expecting for FY '27?

We have -- For FY '27, our CapEx guidance will be similar to previous years. It will be about INR 250 crores.

So by June end, I think we'll be around 450,000 metric tonnes capacity. And I think you mentioned that by FY '28, we'll be targeting to reach 6 lakh metric tonnes. Is that correct?

Correct. That's right.

How would the scale up be?

As in like the capacity...

The Additional capacity expansion, yes.

So we are planning about 75,000 this year and again, 75,000 next year.

So this current 75,000 will come by June and then post that, when will the -- when are we target -- so this...

No, no. I meant post June, I meant post June. This current 75,000 that is coming online at 4,50,000. This is a spillover from last year, which we were expecting to commission in March, but now that is extended till June. But the new capacity expansion, post this 4,50,000, we'll be taking on another 75,000 plus 75,000 in the next 2 financial years in FY '27 and '28.

So the first phase of this 75,000 metric ton will be ready by FY '27 end?

Yes, expectedly, yes.

Okay. And also you mentioned...

Sorry to interrupt, Ms. Disha. May we please request you to rejoin the queue ma'am.

Yes, sure.

Next question is from the line of Abhijeet Singh from Systematix.

Good to see a great set of results, both on revenue and margin fronts. First question would be on the exports, sir. We've seen some kind of weakness in both order inflows and execution in Q4. So on the outlook of exports and particularly the execution, order inflow and margins. So just want some commentary on the outlook in the near term. And have we thought about a change in strategy because Middle East was one of our main export markets. So is there a possibility of redirecting some of the order inflows or trying to target some of the order inflows from other geographies that we are present in, let's say, LatAm or Southeast Asia? That is my first question.

Yes. So, Middle East definitely is a concern right now. However, we expect that the situation should ease up soon there. So the order inflow as well as the execution should resume from that market. We are obviously diversifying to other markets as we've reported that we've secured a large contract from North America in this quarter also. We are in discussions with other large contracts -- for other large contracts in those developed markets like North America and Europe and Australia. And of course, our traditional markets like Africa, LatAm, et cetera, we are focusing there more to make up the order loss from the Middle East market. So I think all in all, our long-term trajectory of increasing our export order book to about 25% and then eventually 50%. That's very much our long-term target. And we are working towards that. Of course, this year, currently, because of all these geopolitical issues, we are facing a temporary blip in -- towards that target.

And sir, is there an impact on other export markets other than Middle East of this entire situation of geopolitics on decision-making or ordering, let's say, North America or LatAm or Southeast Asia. Because of all of this uncertainty and geopolitical issues, is there an impact on decision-making and ordering situation there as well in the last 2 months...?

There is an impact not on the demand side, but there is an impact because of the freight -- the sea freight increasing. So, overall, there is -- the customers are taking a longer time to decide because they have to bear the increased sea freight now. So that is -- I think the customers may wait for the sea freight to rationalize again because right now, after the -- since the war started, the sea freights have gone up significantly.

Absolutely. And sir, so given all this, would we be able to maintain our margins of 10-odd percent? Or do we have levers to maintain that kind of margin because of the increased input costs and increased freight costs, et cetera?

No, the freight cost -- again, the freight cost doesn't impact us because; A, our export is only about 10% of our order book. And on top of that also, we have a healthy mix of FOB and CIF contracts. And because even the CIF contracts with force majeure conditions, et cetera, we are able to renegotiate the ocean freight. So we don't expect any hit to us on the account of the ocean freight. On account of the commodity prices, et cetera, as we maintained in the past, our -- we have a healthy mix of variable price and firm price contracts. And firm price contracts come with significant amounts -- sufficient buffer to take care of the commodity price increase. So, we don't expect much of an impact on our margins.

[Operator Instructions] Next question is from the line of Aditya Welekar from Axis Securities.

Congrats for the good set of numbers. Sir, my question is with respect to our order bid pipeline, it's quite healthy at INR 33,000 crores, and our exports are just 10% of our order book. So given you have just told that we are targeting 15% top line growth next year, so -- means we have a large amount of domestic market to cater. So can we not diversify from exports to domestic and focus on domestic and maintain our top line growth at to 20%? Just wanted to understand that part.

The domestic ordering also, as I've mentioned that FY '26, we saw lower-than-expected bidding. A lot of key projects, transmission projects for which we were expecting to be bid last year, they have shifted to this year. For example, the Krishnagiri REZ Phase 1 project; the Vizag, Kakinada, and Tuticorin project; and also the 800 kV Rajasthan Barmer project. So these, which we were expecting the bidding to come last year, they've all shifted to this year because of the constraint in the critical equipment like transformers, HVDC. And of course, the ongoing challenges of ROW, et cetera, at site. So, if you see overall in the industry for the bidding in FY '26, it was significantly lower than FY '25. So our order inflow, though we have maintained our overall order inflow of INR 5,600 crores, which is better than last year, but it is still lower than our own estimation. So I think domestic, there is -- whatever the scope is there to maximize our effort will be there to maximize the domestic sales in exchange of the export this thing. But we want to be conservative, and that's why we are giving a conservative guidance of 15% growth for -- on this elevated base.

And subsequent years means, on a long-term basis, the growth rate will continue...

No, of course, absolutely. We -- from next year onwards, definitely -- like I mentioned, this year, we expect the bidding activity to be very, very robust. And obviously, we also expect that the export markets, they will open up again towards the later part of the year. So I think with both the things opening up, for sure, we can expect to come back to the 20% to 25% growth run rate from next year onwards.

My second question is on margin guidance for '27. So we have a huge bid pipeline. So if you can throw some color around what kind of quality of projects in that bid pipeline are there which can enhance our margins because you said our bottom line will grow by 30%. So from that perspective, if you can throw some color on the bid pipeline, from where those bids and where those projects will translate to our order book? Will they be margin accretive from that perspective?

Yes. So there are 2 parts to your question. I'll address the second part first, which is about our confidence on the bottom line front. So, as because the bottom line growth, which we are guiding for, that is resultant of our existing order book itself, which is due for execution. So looking at the quality of that order and looking at the -- overall our execution, which is why that confidence of 30% growth in bottom line is there. That is not linked to the orders which we are targeting because the orders which we secure will -- some of them are [ bidding ] for execution in this year and majority will come for execution next year. In terms of the bidding pipeline, it's a healthy mix of domestic and international. We -- like I mentioned to the previous caller that we are diversifying our exports from Middle East, and we are looking at other markets more aggressively, including developed markets like North America, so -- from which we have secured a good order in this last quarter also. So I think, overall, we should be able to diversify the export base quite well and start securing those large export orders from this year itself.

So just on the margin guidance on FY '27, if you could specifically throw some number on that? EBITDA margin.

On EBITDA margin, again, look, we have -- if you see this year, we have delivered almost a 50 basis point improvement compared to last year. Obviously, our effort will be to continue to improve our margins and achieve our long-term aspirational margins of 12%. Now how much of that we will be able to do this year? It is a challenging year with increased costs, et cetera. So, again, despite that, we definitely should be able to increase margins, but I'm not able to give an exact guidance of how much it will translate to the EBITDA. But long term, we will definitely move towards our aspirational margin of 12%.

Next question is from the line of Naman Parmar from Niveshaay Investments.

So, just I wanted on the industry side perspective that if we see that the overall NEP plan for the transmission distribution of INR 9.2 trillion, out of that INR 4.25 trillion is already done. I think by '27, it will be ending and INR 4.25 trillion would be for the next 5 years and the new transmission CapEx that the government has come up with the -- for renewable evacuation, the INR 7.2 trillion. So don't you think the opportunity given that the NEP plan and all the evacuation provides a very good fundamental to grow in the coming future given your growth guidance. So I just wanted to understand what was the PGCIL tenders that has been floated in the FY '26? Because if we see PGCIL tenders for last 2, 3 years that has majorly increased from INR 25,000 crores to INR 36,000 crores in FY '26. So just wanted an understanding on that side that how much tenders have been floated and how much tender you are able to win from that?

No. So actually, it is not a question of only PGCIL tenders. As you all know that the tenders are floated by PFC REC and all tenders are TBCB tenders, Tariff-Based Competitive Bidding , where PGCIL is one of the bidders along with several other private sector developers. So it is one thing that PGCIL has been able to maintain successfully a market share of 50% in all these TBCB bids. But it is not in the hands of PGCIL because they are dependent in terms on the ministry and PFC REC for those bids to come out. Now the bid volume itself has been lower compared to FY '25 as because the sector is already carrying a huge order backlog and the execution is slow, as I mentioned, due to ROW and due to critical equipment. So which is why I think CEA purposely held back the bidding in FY '26. But it is expected now even in PGCIL CapEx guidance, they have guided that annually, they can -- we can expect to see bids of INR 90,000 crores to INR 1 lakh crores coming up in the market. So they have been guiding that in their investor presentations also. And also, they have guided for increase of CapEx spending. So they themselves did CapEx of INR 35,000 crores in FY '26. And they have guided for INR 37,000 crores in FY '27 and INR 45,000 crores in FY '28. So which is why I think that they are also guiding that in FY '27, they are expecting to see good amount of order inflows, which will translate to that higher amount of CapEx in FY '28.

Understood. That was about the PGCIL. Then rest would be your Adani, Sterlite and Tata Power that also used to come with the major orders. So how much would be -- we will be bidding for that private player and current order book consists of how much from the PGCIL orders or utilities...?

Our current order book in domestic is predominantly Power Grid. We have less than 10% share from the private player right now, but we are looking to increase and do business with other private players like Tata Power, they are now quite aggressive. Of course, Adani, Resonia. All of them are now coming up in the market quite aggressively. So we are looking to do business with them as well.

Okay, understood. And lastly, on the debt, you mentioned about the INR 33,000 crores of bid pipeline. So if you can bifurcate how much would be the domestic and how much would be the export side?

I think about -- say, about 60% to 65% is domestic and the balance is exports.

Next question is from the line of Bharat Sharma from Three Sigma Asset Managers LLP.

First and foremost, congratulations, Mr. Sharan, for a brilliant set of results. I just wanted to understand your views in the entire space. Two things. One is that I see that you people are coming out with regular CapEx and capacity increases. And with whatever guidance you are giving, you are probably going to stay in the range which -- of your current capacity utilization. But as my earlier, say, person asked that market is too huge, right? So, just wanted to understand your view that what constrains us from probably increasing it to much many folds than what rate we are going in.

As in increasing capacity faster?

Yes, I just wanted to check that. Because obviously, the market provides a lot of more opportunities, right? Is my understanding right or wrong? I don't know.

Sure. Well, I think, see, we are increasing capacity in tune with the execution capability also because see, our business is very involved in terms of engineering output, and it is very manpower heavy. So I think it is not just about capacity building, it's also about capability building. So at the same time, what we are doing is that we are having to add a lot of skilled manpower, lot of engineering skills -- and that also is a big constraint in terms of execution. So -- and of course, if we try and increase capacity too much, and then we will probably have to compromise somewhere on the margins perhaps. So exports, anyway, the growth is slow where we are dependent on a lot of approvals and certifications and various plant audits that we have to go through in the export market. So there is a time cycle for realizing the export opportunities also. And in domestic, of course, as the market is expanding, we are also expanding our presence in the transmission line space. At the same time, we are increasing our total addressable market by adding other segments like substations into our portfolio. We are already executing close to about 4 high-voltage substations right now. And that will help us build our QR and be able to address the other big part of the overall transmission line CapEx, which is the substation portion. So I think in terms of growth, we are quite happy. We have delivered a plus of 30%, 35% CAGR growth in the last 3 years. And even on this elevated base, again, I think leaving aside the temporary this year, which is where we're guiding for a 15% growth, we are quite confident that we'll come back to 20%, 25% growth numbers from next year.

I just want to check, this substation comes under infrastructure EPC guideline.

Correct. Yes, it does.

So it's a slightly lower margin business, is my understanding right?

No, that's not true. It's similar margins to our Engineering business. The infra business itself, yes, of course, is lower margins. But overall, for a project basis, yes, it's similar margins.

Okay. And sir, would you like to actually also share your views in terms of the overall, I'd say, we hear a lot about shortages of transformers and shortage of a lot more other products in this entire space. Like share your views on this entire industry like...

It is a constraint not just in India, but all over the world, I would say. We are seeing the same shortages of critical equipment in pretty much every market where we are active in. So it is definitely a bottleneck for faster project execution. I think various utilities all over the world are trying their own strategies for overcoming this. So it is a constraint right now, definitely.

Next question is from the line of Divyansh Thakur from Finterest Capital.

My questions was already asked.

Next question is from the line of Pranjal Mukhija from GrowthSphere Ventures LLP.

Yes. Congratulations on a great set of numbers. Sir, I have 2 questions. So the first question is actually around the HVDC-based transmission infrastructure buildup that we're going to see between the period of FY '28 and FY '32. I think there are some 5, 6 projects that are going to get bidded out under the TBCB and with like a total capacity of close to 15,500 circuit kilometers. So, just wanted to understand like how are we placing ourselves to capture some of this opportunity? I understand PGCIL is the -- has the largest market share, but like are we also like trying to reach out to the private players there and trying to create some sort of relationship there? In this question, I wanted to also understand in the current order book, what is the proportion of HVDC that we have? That's the first question..

Okay. HVDC -- so definitely, we are focused on taking business from the private players. Right now, our share -- our market share from the private players in our order book is low, but we intend to definitely increase it in the future, and we are in active discussions with a number of them for doing that. For HVDC, in our current order book, I don't have the numbers offhand, but we are executing a couple of projects of HVDC already. So we are fully qualified for that opportunity. And yes, some of the HVDC projects which were due for bidding last year, they have shifted to this year. So they will definitely be bidded this year. And subsequently, more such HVDC projects will be coming for which we definitely will be playing an active role both with Power Grid as well as private utilities.

Right. And sir, secondly, I just wanted to understand from a technical point of view, we have mentioned that we recently commissioned Test Bed 2, and we've become the -- I think, the world's only company with dual test bed facilities, which can provide an integrated setup for lattice towers and monopoles. So if you could just like maybe spread some color on this as to like why this is so significant? And generally, like why are we the only company in the world having this capability now and why other players not able to do this?

No. So, again, there are other test beds perhaps with other players. However, we are the only company having a dual test bed in the same location. So that's a big advantage for international customers because they are able to witness simultaneous testing of multiple structures at the same time, which is very useful for international customers. That is a unique ability that we have. And also the other thing that we -- other significant capability of our test bed is that it is the highest capacity in the world. So it has the capability to test the highest voltage towers. In fact, for this quarter, we set the world record of testing the heaviest tower ever tested, which was a single tower of 293 tonnes. Now we are going to break our own world record by testing another tower of 350 tonnes next month. So these kind of heavy tower testing capability doesn't exist in most test beds on the world. So according to us, it probably we are the only test bed all over the world, which has the capability to test these heavy capacity towers. And of course, with the dual test bed, then we have the ability to test multiple of them in the same location. So this is significant because engineering and testing is a very important activity before which without completing the main execution of the transmission line cannot happen. So with our enhanced capability, we are able to bring down the lead time required for the entire engineering activity and ensure faster execution for our customers.

So does the customer actually give a higher preference to a potential supplier with such kind of a setup?

Of course, absolutely because overall, the project lead time, like I said, the engineering and testing is a significant amount of lead time in addition to the supply. So not only are we able to give the supply faster, but because we are able to do the engineering and testing faster. So that brings down the overall lead time for the customer.

Next question is from the line of Komal Iyer from NBG Investments.

I just wanted to understand your guidance what you said was 15% on revenue and growth 30%. So PAT growth would be 30% despite the inflationary pressures on raw materials which we are likely to see?

Yes, absolutely. Because, like I mentioned, our contracts have already got that buffer to absorb the increased prices which we have seen.

Okay. And any particular raw material which you are seeing short supply, which you said last year led to delay in the orders? I mean government also delayed granting orders due to ROW and shortage of critical equipment. So how is the shortage of equipments now in this year?

That is different, ma'am. So that is not our raw material. The shortages is in the critical equipment, which goes into the transmission line and substations, which is the transformers and the HVDC equipment because without which the system cannot be commissioned and which is why the bidding activity itself was curtailed by the government. So -- but our raw material is...

Okay. And how is the thing on our raw material front? Yes, this year how is this thing.

So, our raw material, there's no constraint because we only -- our raw materials are 100% indigenous. We don't have any import content. So our raw material, there's absolutely no disruption whatsoever.

Next question is from the line of Soumil Jain from Lucky Investments.

Congrats on a good set of numbers. I just wanted to understand the HVDC opportunity...

Sorry to interrupt, Soumil, your voice is breaking.

Is this better?

Yes, please go ahead.

Yes. I wanted to understand the HVDC side of the opportunity better. Per 1,000 kilometers or per line, if you could call out the TAM for our products? And secondly, the share of EHV orders in our order book today or in revenues. Any sense on that would be helpful.

HVDC, Soumil, I don't have anything else to add than what I told the previous caller that we saw some HVDC projects which were due for bidding last year, particularly this Barmer project in Rajasthan, that's shifting to this year. So, we expect the bidding to happen this year for those projects and several other HVDC projects also to come for which we will play an active part. In terms of EHV, almost all the projects that we are doing are falling in the 400 kV and 765 kV or 800 kV category. So they are pretty much almost 100% EHV focused only.

Okay. No, I wanted to understand the per line or per 1,000 circuit kilometers opportunity size for our products. That is something that I wanted to understand.

That will vary from project to project. It's hard to put a benchmark number on that. But essentially, look, we cater to 50% of the overall transmission CapEx, which is, let's say, if the transmission CapEx is INR 1 lakh crores annually, then our addressable market is INR 50,000 crores on the lines front. The other INR 50,000 crores primarily goes to substation, for which also now we are evolving as a key player. So -- but there, again, we will take time to ramp up our sales in that sector. But as of now, obviously, we are -- the entire INR 50,000 crores of transmission line portion is fully our addressable market.

Got it. And you made a comment citing the quality of projects that will lead to better margins, this is the visibility that you have from your order book today. Is that a function of higher 765 kV and higher HVDC share in the order book? Is that how we should interpret that?

Yes. In terms of the quality of orders, we have been maintaining that with the -- earlier, we had a lot of non-T&D sales in the company also, which were lower margin. Now our sales are predominantly for T&D and which is why our margins have seen an improvement along with operational leverage. Going forward, there are several opportunities that we are working on with better product mix, more monopoles, more export markets. There, definitely, we also see opportunities for increasing margins.

Next question is from the line of Gunjan Kabra from Niveshaay.

Congrats for the good set of numbers. So first thing is that where do you think is the highest bottleneck right now in the transmission system in terms of lead time as well? So is it more on the higher kV side and the larger part of the order tendering that you said right now in the call of around INR 90,000 to INR 1 lakh crores this year would be predominantly more on the higher kV side or distributed evenly between all the kVs? How is it going to be?

No, I think definitely, Gunjan, the bulk of the CapEx will happen on the higher voltages. Having said that, we are seeing a growth in lower voltages now also. Recently, what we have started seeing is that earlier, most of the large TBCB projects were on interstate basis only. But now even in intrastate, there also, we are seeing good amount of bidding activity happening. So, certainly, in those -- currently, the intrastate projects that have come for bidding, they are of only high voltage of 400 kV or 765 kV. But I have a feeling that even the lower voltage projects of 132 kV, 220 kV, we will see those coming up under TBCB bidding soon because I think Government of India is promoting most of this CapEx to come through TBCB as because there's a lot of private sector interest to become transmission line developers. We have seen an increase in the overall number of players bidding in all of these TBCB projects.

But if we see on the execution front that you said 15% growth this year. So is it because of the clearance and the ROW issues? Will they get accelerated now because of the transmission bottleneck because renewables is already getting installed and everything. So are these processes going to be accelerated now in terms of clearances or because maybe the time line when you take the order, the time line is defined, right? So is it that the time line of our orders is for the next year or it has got delayed?

No, I think A, 15% is not a bad growth number to take on, on this elevated base.

Correct. Correct.

Again, why it cannot be more aggressive? Obviously, our effort will be to grow 20%, 25%. We're giving a conservative guidance because right now, like I said, number one reason is exports are at a bit of a challenging situation, and there is not full visibility of when Middle East markets will open up again and when overall global shipping rates will come down. So that's probably the #1 reason. Number two, probably last year, looking at the muted bidding activity that took place, of course, so even our order inflow was lower than our expectation, although we did better than the previous year, but it was lower than our expectation. So, I'd say that the combination of these factors, 15% is a reasonable number to take up. Obviously, our effort will be to go higher than that.

Yes. But generally, order bidding is fine. I mean that was a little slow last year that was for any X,Y,Z reasons. But we have the order in place, right? And just from -- considering from the end user demand, I mean the demand of building up the transmission network is also high. So from that perspective, I was asking whether the execution is getting delayed because of -- because there are a lot of externalities.

We are seeing, of course, look, project time lines on the ground are getting extended because of the right-of-way constraints. So, definitely, even though we are carrying a healthy order book, definitely, the order execution on the ground is probably not to be with the scheduled time lines because ROW, et cetera, constraints do delay the project.

And also on the export side, if we take some orders from the U.S. and other countries, Latin America and all. So what's the execution time line in those countries because it varies, right, from country to country?

Yes, of course. So again, it could depend on -- there are various types, again...

Will we be competitive in the U.S. market firstly?

We are quite competitive. Again, our products are engineering heavy and manpower intensive. So we have been competitive. We have been winning orders in those markets, and we are obviously targeting much larger orders there in that market -- in that geography and of course, in a lot of other geographies as well.

Okay. And the time line, sorry, you were saying...

Time line again would depend whether the contracts are with engineering or without engineering. So, again, contracts which we see come with engineering, there the time lines are significantly long, could be 2 years, 2.5 years plus also. But again, without engineering, the time lines could be shorter. It could be as low as 1, 1.5 years also.

Next question is from the line of Abhijeet Singh from Systematix.

Sir on the Polymer Products business, for the full year, we have done about INR 507 crores of revenue. And as far as I understand, we've been targeting some of the non-Eastern markets where we have lower presence compared to the Eastern market. So where are we in that journey? And if you could comment on the basis of market share and the competition that you are facing. And also on the margin of your [ unsigned ] business is still at a level which we would want to build from. So on both the aspects, if you throw some color.

Abhijeet, can you repeat the question, please?

Sir, Polymer Products business, the non-Eastern markets, we were trying to gain market share on the Northern market and the Western markets. So where are we in that journey? Have we been able to gain market share in this year? If you can comment market-wise if possible? And what is our margin target for this share of business...

Are you asking what is the growth in other non-Eastern markets? Is that what you're asking?

Right. Have you been able to achieve what we were targeting for, let's say, gaining market share from a lower base in non-Eastern markets?

So it is growing definitely. If you see our overall volume growth has been quite significant despite a challenging market in the polymer sector overall, but a lot of players have reported flat growth last year. We have grown our volumes by close to about 40% due to lower commodity prices, perhaps the actual growth has been lower in terms of value. But we have obviously increased our presence in the non-Eastern markets. But of course, compared to the larger national players, our presence is obviously small. We are predominantly focused still on the Eastern region and are likely going to be so in the near future.

Right, sir. And sir, lastly on the infra projects...

Sorry, you had a question on the margins?

Right sir.

So, we kept the margin steady in this business. But of course, it is still in the low single digits. As we've seen volume growth has started taking place. We've crossed this INR 500 crores of revenue for the first time. As we get closer to, I think, a number of INR 700 crores, INR 80 crores INR 1,000 crores, definitely, we will be much closer to the double-digit margins, which is our aspiration.

Right, sir. Sir, and lastly on the infra projects business, order book has sequentially decreased over the past 6, 7 quarters from INR 2,000-odd crores to INR 1,000-odd crores now. So, going forward, in the near term, do we see some kind of demand coming in from telecom or railway? Any project that you're targeting? So how would the trajectory look like for infra projects business in terms of the order book and revenue?

You're asking about the non-T&D revenue?

Yes. The infrastructure projects segment non-T&D.

No, no. So the non-T&D is not a significant portion in our order book now. It's a very -- yes, it's only about 14%. And that also is again mostly on account of the O&M project that we have -- O&M work that we have for the BSNL project that we did. So it's mainly on T&D only that our revenues are coming in. And even the infra revenue, which you are seeing is largely driven by T&D only.

Next question is from the line of Pranjal Mukhija from GrowthSphere Ventures LLP.

I just have one question. I wanted to confirm something. This additional capacity expansion that we are doing of 75,000 MTPA, it will come live in Q2. So this is the commercialization time frame, right? And like what are the assumptions around the optimum utilization of this capacity? It will get utilized in maybe a quarter or 2?

Yes. I mean, normally, to achieve full capacity utilization, it takes a couple of quarters. So I would say from quarter 3, perhaps we can expect to see a significant use of this capacity.

Right. And similar to last expansion that we did, it's going to roughly add some INR 1,200 crores kind of revenue yearly, right?

Approximately INR 1,000 crores to INR 1,200 crores, yes.

As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

Thank you to all the participants. Looking ahead, we are confident of delivering a significant better FY '27. A multiyear growth runway ahead -- lies ahead of us. With a record order book, rising capacity utilization, improving margin profile, expanding export footprint and a structurally scalable manufacturing base, Skipper is entering a phase where growth, profitability and return ratios are set to compound together. We appreciate your continued support and look forward to interacting with you again in the next quarter. Thank you.

Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.