SPML Infra Limited (SPMLINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the SPML Infra Limited Q3 and 9 Months FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pranay Premkumar from Adfactors PR, Investor Relations team. Thank you, and over to you, sir.

Good evening, everyone. From the senior management, we have with us Mr. Manoj Digga, Director, Commercial and Chief Financial Officer; and Mr. Sujit Kumar Jhunjhunwala, VP, Fund Management and Banking. Before we begin the conference, I would like to mention that some of the statements made during the course of today's call may be forward-looking in nature, including those related to the future financial and operating performances, benefits and synergies of the company's strategies, future opportunities and growth of the market of the company's services. Further, I would like to mention that some of the statements made in today's conference may involve risks and uncertainties. Thank you, and over to you, Mr. Manoj Digga.

Thanks, Pranay. Good evening, and thank you for joining the conference call of our third quarter and 9 months of FY '25 financial results of SPML Infra Limited. I would like to extend greetings for a prosperous new year. As we are meeting for the first time in 2025, I will give you a brief overview of the industry trend, business updates, and we will also walk through the company's financial performance over this period. Regarding the water sector, the central government remains focused on building robust infrastructure with a specific focus towards the water infra segment. Given that the water crisis has now reached a very critical point and disturbing implications, it is much more imperative and urgent to act now to protect these vital resources. NITI Aayog has also reported that 25 major cities in India, including Delhi, Bengaluru and Chennai faced the imminent danger of groundwater depletion by 2025. United Nations has also projected India to become water stressed by 2025. There are other factors also affecting water resources like global warming leading to erratic monsoon and accelerated water evaporation and the increased urbanization and inefficient infrastructure to increase the burden of water supply. With existing and emerging challenges, a well-designed and a resilient water infrastructure system is an urgent need. As you are aware, the Jal Jeevan Mission was initiated in 2019 with an estimated outlay of INR 3.6 lakh crores in partnership with a state government to provide safe water through individual household tap connections by December 2024 to all rural households. This scheme has resulted in providing 15 crore plus household with functional tap water connection covering almost 80% of the Indian rural population. It is very admirable to see the continuous emphasis on water infrastructure through Jal Jeevan Mission, which has now been extended till 2028 in order to achieve 100% coverage. The outlay of INR 67,000 crores for the current financial has been announced in the Union Budget this year. We completely support this initiative and look at this as an opportunity for further contribute towards building an efficient water infrastructure network in India. Apart from these initiatives, our honorable Prime Minister has gone a step further as he plan to dedicate a project worth around INR 40,000 crores to link 11 rivers in Rajasthan, which is currently facing severe water crisis. He also laid the foundation stone of Ken-Betwa River linking project, which is estimated to cost INR 44,605 crores in Madhya Pradesh, which aims to solve the water issues in Bundelkhand region spread across part of Uttar Pradesh and Madhya Pradesh. Overall, the current government of India is very serious in securing the country's water future through strategic policy, sustainable initiatives and robust infrastructure development. As regards to SPML business and operation, coming to our business and operation, as we have been highlighted that the operate -- we operate in 3 major segment of water supply out of which river to the reservoir, which is a bulk business segment is our preferred business area, which basically includes laying large diameter pipeline for water transportation, while the other 2 segments are reservoir to tap and home to river. Q3 has been a muted quarter in terms of the revenue growth, not only for us, but also for the entire industry. The quantum of order awarded is quite low value due to delay in approval at the end of the central and the state government. With the new budget and fund allocation in place, we are confident that fresh tenders will start floating in which could help in to build a strong revenue projection. Our order book currently stands at INR 2,500 crores and orders around INR 2,800 crores are in L1 stage, and we are expected to get materialized into profitable order for us in Q4 financial year '25 and Q1 of '26 in tranches. We are building for a substantial number of projects value almost INR 9,000 crores, which are currently at bidding stage, and we are very confident that our strong prequalification credentials and vast experience will enable us to successfully convert those into order wins. We are pleased to announce that post successful evaluation of our financial performance, our long-term fund-based term loan of INR 477 crore has been assigned a rating BBB- stable. While the long-term short-term proposal -- proposed nonfund base of INR 200 crores has been assigned a rating of BBB- stable by ICRA. This has given us an opportunity to take in the regular limit with the bank at a lower margin and raise further debt for our future expansion. I'm also pleased to inform you all that SPML Infra has been achieved an all-time best ranked of 14 in the latest GWI World Top 50 Private Water Companies list. It's an accomplishment for us that we are among the top 15 companies worldwide dealing in water management. Our arbitration proceedings from which our repayment of debt is likely linked, are progressing satisfactorily, and the company is very much confident a substantial amount of cash flow will be received from the arbitration award for the growth of the company after repayment to NARCL dues. As regarding Q3 and 9 months financial year '25 performance, we will now move forward for quarterly financial performance. On a standalone basis, we recorded a revenue of INR 201 crores in Q3 financial year '25 as compared to INR 259 crores in Q3 financial year '24. As mentioned earlier, revenue has been impacted in this quarter due to lower order inflow in the market. But as I mentioned earlier, there are orders in L1 status, which provide us revenue visibility. Our EBITDA has recorded at INR 23 crores compared to INR 5 crores in last quarter. We recorded a PAT of INR 10.4 crores in Q3 financial year '25 as compared to INR 1 crores in the last year in the same quarter. For Q3 financial year '25, our EBITDA margin and PAT margin stood at 11.5% and 5.2%, respectively, which is in line with our targeted EBITDA margin. With regard to our 9-month performance, we recorded revenue of INR 622.7 crores in 9 months financial year '25 as compared to INR 867 crores in 9 months financial year '24. Our EBITDA has recorded at INR 75.7 crores compared to INR 11.4 crores in the same period in last year. We recorded PAT of INR 37.5 crores in 9-month financial year as compared to INR 2 crores in 9 months financial year '24. We are confident that going forward, our margin profile will keep on improving as we have been bidding for selected projects, which would improve our overall profitability. Before I conclude, I would like to mention that we are actively exploring opportunity in the battery energy storage system market, considering the huge focus of the government and the business volume going to come as we have adequately prequalified to participate in this tender as well as this highlights our expertise in the growing field of large-scale renewable energy activities. With this, we conclude our opening remarks. We now open the floor for question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of [ Kevin ] from Siddhant Partners.

Congratulations for the good set of numbers.

[Foreign Language]

Is it better now?

Yes, it's better.

Congratulations for the good set of numbers and year-on-year improvement [indiscernible] question. Like currently guidance is given for L1 project and the future pipeline. I just missed that number, if you could repeat that number, like INR 2,500 crores is current order book. We have been awarded [Technical Difficulty] projects. What would be that number?

We have basically INR 2,853 crores. There are 5 tenders where we are L1, that is one. There are 4 tenders and roughly around INR 9,518 crore of bid which we have targeted to bid into going forward already announced and the tenders are going to be started soon.

Okay. Second question is, sir, can you help us with the cash and cash equivalent position in net [Technical Difficulty] as on date, let's say, 31st December?

The total cash balance around roughly around INR 270 crore, we are having the cash balance as on 31st December and roughly around INR 2,500 crores order book we are having in our book.

And debt-wise, the only debt which we have is something which is structured within...

Debt basically, we have roughly around INR 460 crore of debt, which is there in our book, which this is along with the interest, which we have paid in various tranches from the arbitration award up to 2028. So that will keep on coming and that will keep on going. Nothing is going to be paid from the cash.

Sure. I know that when we last met, we had this discussion. Just one question on cash and cash balance, sir, we had seen some number around INR 470 crores in your earlier presentation where some money was to come so...

That is the last time when we -- as we have issued certain warrant and certain equity, so roughly around INR 150 crore approx further warrant is going to come and certain amount of roughly around INR 30 crore -- INR 26 crores from Vivad se Vishwas is going to come. So if we add this together, then it will be around INR 450 crores.

So that's still awaited, that warrant subscription in Vivad se Vishwas?

Yes.

Is it expected in Q4, sir?

No, nothing -- Q4, we will expect some sort of Vivad se Vishwas money from Q4. The entire INR 26 crores can come or at least INR 15 crores will come in Q4. Warrant based on the need we will demand from the shareholders. At the moment, we are having INR 260 crore and then again, the bank guarantee at a lower margin we are expecting. So we don't -- we may not require immediately this warrant money.

Last question, sir. This warrant money which is to come, is it primarily from NARCL or somebody or who are these investors, large investors?

The large investor is majorly it is from the promoter. And then the last time, we have roughly around INR 294 crores of preferential issue we have made, out of which roughly around INR 115 crores, which is going to come from the warrant money -- INR 118 crore, which is going to come from the warrant money and INR 37.5 crore was our earlier warrant, which we have issued to the promoter. So from these 2 warrants, the money is going to come.

[Operator Instructions] The next question is from the line of Raman from Sequent Investments.

Sir, in the previous quarter, you've guided that we'll do the revenue equivalent of FY '24 but there has been unexpected slowdown this quarter as well. So are we -- can we do the same revenue or it will be less than FY '24?

See, as I told you in my last 2 conversations because this year, because of the various factors, including the election and then the various other issues of the government, the deployment of fund by the government has reduced substantially. And as I told in the first quarter itself, that Q2, Q3 will remain tight, which has happened. It is almost all the company's Q3 results are not that good. In our case, we are able to match the more or less compared to our last quarter number. But Q4, again, I feel some betterment. But Q4, there will be a pressure. There will remain into the pressure, but some betterment from the Q3. But Q1 going forward, from next year, it should be better.

We are expecting that Q1 will be like we'll -- the business will be normalized, right?

I think Q1 should be normalized. By that time, we will have new order revenue also come into the picture. So from Q1 onwards, there will be much better into the revenue side and profitability side.

So also can you give us what can -- what is the revenue guidance for FY '26?

For FY -- this year, for the Q4?

No, next year, the whole year, what are you aiming?

See next year, it will be better from this year. We have the target of revenue jump 30% to 50%, that should happen. That depends on how quickly we get the order book, which are going to start coming in tranches from the Q4 and maybe slightly early part of the Q1. And then going forward, the further order, what happened in the last 8, 9 months, 6 months, there is a slowdown into the order position and order tendering and order allotment. I think the Q4, Q1 will be better because a lot of tenders are going to come. So that will give the more visibility on closing the order and that result will come into the next year performance.

So basically, the slow -- there was a slowdown in the tender in this year, which will be reflected in the next year, right?

I think part will be covered by the government in the next year, Q1 and Q2.

With respect to Q4, can we expect the margins to improve or will it be in the range of 4% to 5%?

As we explained in every presentation, our focus is not on the top line. Our focus will be on the bottom line. Number 2, there is enough order in the market. So at this moment, we can be -- and we are a very prominent player. So we can be very selective in taking the orders. So our target is getting the order between 10% to 15% margin, and we are still continuing with that. We are going to take -- we are targeting those orders only where we will have 10% to 15% margin.

Sir, I have a doubt with respect to the repayment of NARCL dues and arbitration. Can you please explain me the repayment of NARCL dues using the arbitration, which you were saying earlier?

The total our NARCL due, we have settled in by way of INR 700 crores, out of which we have already paid last year roughly around INR 224 crores. This year, we have further paid roughly around INR 13 crores. So and this year, with the sale of one property for which agreement has already been executed, we will further pay INR 30 crores. So roughly around by this year-end, there will be a loan book of roughly around INR 433 crores, which we have to pay in next 3 years -- next 4 years. And we have the arbitration award of roughly around INR 625 crores related interest. This accumulation interest is keep on increasing every day, whereas our loan book has been frozen at INR 433 crores we have to pay. Our target is to get the arbitration award is in next 3 to 4 years in tranches like one of the arbitration award at the Supreme Court final hearing level of roughly around INR 200 crores. So this we will keep on getting and part we will keep on paying to the NARCL. So NARCL total dues, we have to pay in 7 years out of which -- and NARCL is due has to be paid into the -- from the arbitration award. Arbitration of around INR 433 crores award has to -- dues we have to pay against which we have the arbitration award, which if we take the 4 years, which is our targeted period by which we should get roughly around INR 800 crores. So we are double covered into arbitration award. We are double covered into the period. So I don't think there will be any problem. Whatever amount is going to come from the arbitration, we are paying 75% to the NARCL, 25% further we are keeping for our cash flow purpose. So suppose we get the INR 800 crores, roughly around INR 433 crores we will pay to the NARCL and hence we further infused as a cash to the company for doing the business.

Sir, this INR 433 crores, which you said the NARCL due by the end of FY '25, is it different from the debt component, like which you mentioned earlier of INR 460 crores?

So as I told you, now we are -- this year, we have to pay around INR 44 crore, out of which INR 40 crore by sale of property, which we have identified and we have executed the agreement also, INR 4 crores from the FD interest and the cash flow position. So INR 40 crores out of this INR 40 crores, we have already received certain amount as advance. That advance we have paid to the NARCL. So as I told you, INR 224 crores we paid last year, INR 44 crores we are paying this year, minus INR 700 crores is INR 433 crores.

The next question is from the line of Aditya Sen from RoboCapital.

Sir, I just wanted to confirm when you say targeting 12% -- 10% to 15% margins, so that is EBITDA margins, right, not PAT margins?

[Foreign Language] We don't have to pay any interest, only the Ind AS adjustment we have today. So whatever is the EBITDA that is the PAT because depreciation [Foreign Language] So basically, the gross margin, which we are going from the plant and now there are certain overhead expenditure, which we will allocate to the various projects. So very small percent come to the agri project into that. So margin -- gross margin will be 10% to 15% net margin between 8% to 10%.

The next question is from the line of Prathamesh Dhiwar from Tiger Assets.

Just a couple of questions. So sir, first, just wanted to know like what's the reason for the order delays in the industry, in the water industry? Because I think we are saying it from Q2, Q3. So what is the main reason we are getting a lot of order delays?

If you see, the Jal Jeevan Mission itself renewal was pending. So that's the reason all the orders which are linked with the Jal Jeevan Mission, either they have -- they tendered but -- and not allotting the order or they are not doing the tender, so which has done now because Jal Jeevan Mission, they have extended up to 2028. And the government, various tenders have got stuck into the government action because the government was very silent in Q3 and -- Q2 and Q3. Now the entire tendering has started process. And we have applied into the INR 2,800 crores, which is there in our hand. We are expecting in tranches in part maximum will be this March or maybe early by April, we will get this order. And INR 9,800 crores, the order which is in the tender position, we are expecting that by the first quarter, all the tenders will come. And there also, we should get a substantial portion. So it's an issue with the water department because of the Jal Jeevan Mission renewal was pending, all the tender was slow, which is applicable to all the water EPC company. But now the tender, as I told you, last 6 months since the tender has not come, we are expecting a substantial growth into the Q3 and Q1 into the tender. And some part of the last slowdown will be covered up by this 2 quarters.

And sir, my second question will be on the BESS side. So what sort of growth and orders are we looking at from this segment? And when are we expecting any orders from this segment? And how much it will -- is going to contribute in top line in coming time?

If you see that this INR 3,000 crores, INR 2,853 crores specifically, these are the orders which we are in hand. This we are expecting in tranches this quarter and the early part of the next quarter. And this INR 9,800 crores, we are getting -- we are expecting a substantial on to that, but let's see how it pan out. And every order which we are targeting, it is going to be completed in 3 to 3.5 years. So whatever order we will get, 1/3 of that, roughly around 1/3 is going to be executed into every year. And all this tender is basically we are targeting 10% -- 12% to 15%, 15% margin. So whatever is the margin into the turnover that is going to come into the revenue into the book. So that's the growth is going to come forward going forward plus our existing turnover.

So actually, I was asking about our battery energy storage system business. So from there, what sort of order and when are we expecting orders to come in? And...

Battery, BESS has recently started. The tender has also started recently. So we are expecting at least one order of battery energy storage system into this financial year, 2025-'26. So we are not -- one order we are expecting in the whole financial year at least, if we get more, then it is better, but water business, we are going to expect them more.

So in value terms, can you define like how much that order will be for BESS?

In the BESS?

Yes, yes BESS.

BESS is depending upon which orders we will get. It starts from INR 500 crores to INR 1,000 crores or INR 300 crores to INR 1,000 crores. So which order we will get what to give. We'll keep you updating on every quarter.

The next question is from the line of [ Ajinkya ], who is an individual investor.

I just wanted to ask you about like what are the -- what is the time line and what is the revenue recognition of these orders you're getting? And like how are you recognizing revenue since you said you will complete the orders of 3 to 3.5 years? So I just want to know more about it.

This is the accounting standard. So there is a very clear guideline provided by the accounting standard on the revenue recognition. But if you very thumb rule, you can take because the orders are in the 3.5 years completion. The large portion will be very less revenue because it's mainly the touch-up and final billing and final start-up revenue, et cetera but most of the revenue will be built into the next 3 years. So if it is INR 1,000 crores order, like in the Jharkhand, we are expecting roughly around INR 620 crores and maybe February, that order we will get. If that is going to get that in every year, we will get roughly around INR 200 crores order into the revenue -- convert into the revenue. So next 3 years, it will be converted 2 years, approximately INR 200 crores every year. And the same way other orders, which we will keep on getting that will be converted into approx 1/3. It can be slightly here and there. But for your calculation purpose, you can take 1/3 of your total revenue of the order will be converted into revenue every year, if it is a 3 year. If it is a 4 year, then 25% of the order, which will cover into every year.

And another question is more on the financing part. Like what could be the breakout like short-term and long-term debt? And how are you planning to finance the -- like since it is in a capital-intensive business, how are you planning to finance the whole orders next year?

As I told you this, our NARCL it's all long term, basically only the -- only like this year, we have to pay INR 40 crores in accounts, we have to short term as INR 30 crores which is left into -- which we have to pay into this year. Rest all are long term because all are linked with the arbitration award and long term, we have to make the payment. Whenever the arbitration award comes, we have to pay 75% and 25% comes to the company as additional cash. On the working capital, we are expect -- we have applied for certain BG limit. Whenever that BG comes, it will not come into the financial date. It will be only the nonfund-based limit. We don't require any fund-based limit because we have the sufficient cash flow in our book. Only the BG is required for bidding and that is we are going to take from INR 200 crores to INR 400 crores from the various banks. Whenever it comes, it will be only into the contingent liability. It will not be in the financial debt.

Just a follow-up question. So do you see your finance cost going up in the coming quarters or year?

This finance cost, as I told you, it's INR 400 crores -- INR 700 crores is inclusive of interest. Every quarter we have to provide into the books of account. It's only the Ind AS adjustment. We don't have to pay anything or any cost element into our book. Roughly around that INR 9 crores is basically and there is some [ JCA ], there is some operational -- this mobilization advance some interest we have to pay. That's the reason slightly the finance cost has been increased. Otherwise, our finance cost will be roughly around INR 9 crores every quarter, which is the Ind AS adjustment. It is nothing we have to pay. It's only the provision.

[Operator Instructions] The next follow-up question is from the line of [ Raman ] from Sequent Investments.

Sir, what was the total warrant size which was issued to promoter? And I think there were 2x the warrants were issued. So what was the total warrant size? And what will be the funds used for?

So the total warrant from the promoter and so -- promoter and investor is roughly around INR 155 crores, which we had to receive, out of which INR 37.5 crores of the promoter which has been issued earlier will come in the Q4 or maybe Q1 into the next year. Rest INR 118 crores, which has been issued into the last preferential offer will be received into this year, '25, '26 and maybe part into the '26, '27.

And what will be this INR 155 crores used for?

So basically we have allotted 2 times. One time we have given INR 50 crores to the promoter out of which INR 12.5 crores, we have given INR 37.5 crores, which is going to come that I have told you this year, Q4 and the first quarter, we will get that amount. And the rest will be the new preferential offer very recently, which we have closed roughly around INR 118 crores of the warrant amount, out of which roughly around INR 80 crores, INR 85 crores of the promoter and rest from the public that are going to come into '25, '26 and '26 -- early part of '26, '27.

No, I'm asking what will be the funds used for like to fund -- are we using this to pay the debt or...

Or working capital, we don't have to pay anything to the NARCL because all the fund what we are raising, it is only for the business of the company.

The next follow-up question is from the line of Aditya Sen from RoboCapital.

Sir, as you mentioned that we have an order book of INR 2,500 crores and L1 of INR 2,800 crores. So by the end of Q1 FY '26, we will have roughly INR 5,000 crores of order book. And as you said that we do roughly 30% of execution each year. So that would translate to INR 1,500 crores of revenue. Is this understanding correct?

It should be.

But I'm asking this question because this is not tallying with our revenue growth guidance, as you mentioned 30% to 40% -- 50% revenue growth. So that is ranging between INR 1,000 crores to INR 1,150 crores. So I'm getting...

No, this could be because whatever is the roughly around -- this year, as I told you, this year, our revenue for all the water company, water EPC company was subdued, which I have told into the Q2 con call also that Q3 will be tight. Q4 will be better than Q3, but it will remain tight because very recently, all the money started coming and all the -- what order, et cetera, has started coming. But the next quarter, our existing order and the new order which we are targeting into the Q4 and Q1, the impact of that will come and you can take 1/3 of the total as a revenue to that year. That is a thumb rule, plus/minus 5%, 10%.

[Operator Instructions] The next follow-up question is from the line of Kevin from Siddhant Partners.

[Technical Difficulty]

[Foreign Language]

[Foreign Language] there are a lot of players who are also trying to sort of use bonds or surety bonds so to say. Are we not exploring that to sort of reduce the cost?

No, no, we are exploring. If you see the surety bond mainly started into the road project. Water project started, very 1 or 2 projects has come into the surety bond, but we are taking -- we are discussing with 1 or 2 insurance companies to get the limit into that. So whenever those projects which are -- where the surety bond can be used as a performance bank guarantee, et cetera, we will use that. So that process is also going on. We are using -- we are discussing with 1 or 2 insurance companies who are in the -- for getting the surety bond limit. But in water, very -- all the projects are not with the surety bond. In the road, it is more.

And sir, second just question on this warrants. This warrants, whenever it is infused money, will be convertible only at the pre-decided site, that INR 217 or something, if I remember it right.

There are 2 warrants. One is INR 118 and second is INR 215.

Sir, the left out portion is at INR 118 or INR 217?

INR 215, which is the very last preferential offer we have issued. All the warrant which is coming into that preferential offer will be converted into INR 215.

So balance which we have to receive roughly INR 130-odd crores from promoter and investor will be at this price, right?

No. If you see the warrant, there are 2 warrants. One is INR 37.5 crores, which is exclusively promoter, which we have issued passed back at INR 118. The last warrant, which we have issued to the promoter and various investors, that is at INR 215. So whenever the money will come, it will be at INR 215.

[Operator Instructions] The next question is from the line of Mayur Gathani from OHM Portfolio Equi Research Private Limited.

Sir, can you please explain what do we intend to do in the battery energy storage and where do we -- how do we get the CapEx from the same?

There are -- battery energy is a part of the transformer. And the government has made it mandatory that every companies who are in the renewable energy has to utilize 10% into the battery storage because the battery earlier -- if you see the battery can't be -- power can't be storage. But by now with this battery energy storage system, power can be stored and that can be utilized for the peak time and nonproduction time. So that was the main purpose of this battery energy storage system. At the moment, we are planning for the EPC of the battery energy system. So we will take the order and like we are converting and we are making to the container for the supply to this -- along with the transformer as a battery energy storage system that we are going to do at an EPC basis. Future, we have the plan to have the setting up -- we may plan for setting up the manufacturing of the battery container, basically the battery pack, et cetera, and to make the EPC. But at the moment, we will do as an EPC business for this battery energy storage system. Where there is like any other EPC, the same way it will be -- capital expenditure will keep on incurring and we will keep on getting the money by way of RA way.

So has the government floated any tenders currently on this or it is expected to float next year?

One or 2 tender -- 3, 4 tenders has come. We are floating to all these tenders. We are also participating. And we are expecting at least one order into the next financial year.

So what you're saying is basically with the renewable energy or other things, government has made it compulsory for having 10% as battery storage to store the power, and you will be doing the EPC work for that part of the business?

That's correct. We are, in any case, transformer. We are implementing the transformer for any water unit -- power unit because that is the transformer. Every power unit needs the transformer. We are the -- we are from the last 40 years, we are supplying and is constructing the transformer. Battery energy storage system is a part of that transformer. So we are qualified for all the type of transformer and battery energy is a part of that. So no separate qualification is required. We are qualifying into all the battery energy storage tender.

The next follow-up question is from the line of Raman from Sequent Investments.

Sir, earlier, you said you are also planning to set up a manufacturing plant for manufacturing of battery packs?

At the moment, that is not. But going forward, there can be a possibility. But at the moment, we are doing only the EPC. We are planning to do the EPC business, of the battery energy storage system.

And my one more follow-up question is with respect to the order book. You said INR 2,500 crores of order book, out of which -- what is the L1 order book with respect to L1 projects?

At the moment, we -- other than our existing order book of INR 2,500 crores, we have the INR 2,853 crores of tender where we have already qualified as L1. The order LOI we are going to get converted into this fourth quarter and maybe early part of the next quarter in tranches because there are 4 orders, 4 or 5 orders into this INR 2,853 crores order. And we have identified and participating roughly around 12 to 15 tenders of roughly around INR 9,000 crores, which are going to come into this quarter and early part into the next quarter. That will also get converted into LOI, part may converted into LOI. So these are the order potential which we are going to get into this year and early next year. And as I told you, because there was a delay in the process of tendering of water because of the water tender because of the Jal Jeevan Nissan, so we are expecting a sizable further order going to come into the Q1 and Q2. That is where also, as I told you, we are -- from last 45 years, we are into the water and power sector, and we are qualifying company for almost all the water orders. So further water order, whatever tender will come, we will further participate into. So there are 3. One is existing book of INR 2,500 crores. Second is the existing L1 of INR 2,853 crores. Third is the existing tender, which has already been floated, roughly INR 9,000 crores, which we are targeting. Tender is more floated, but we are targeting into the INR 9,000 crores. Fourth, the tender which was not floated because of the government slowdown are going to come going forward. So these 4 elements will cover into our next year order book.

And sir, from the INR 90,000 crores bid, which you bidded for, what's the conversion rate like the win rate?

In INR 9,000 crores, which we are targeting to bid?

Yes.

The tender has already been floated. It should come. Conversion of tender into the order, basically, it's very forward-looking. So I will not able to do that. But all there we are qualified and a few of the orders which are of the bulk and we are targeting to take that. So it should get -- a reasonable amount we should get. But conversion, it will be the -- informing to the conversion or indicating may be the forward-looking.

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. Manoj Digga for closing comments.

Thank you for participating into the Q3 annual con -- this annual con call. As we told you in the past, the water business was slightly difficult in the last 2 quarters. We are expecting that the headwind to come out. And the Q3 and going forward, the next year should be better for all the water companies. There are a lot of tenders which are there, a lot of tenders where we are in L1 and a lot of tenders are going to be floated and this will give us a substantial opportunity to take the new orders. So we feel with these new orders and with the existing order book, we will have a good year, going forward, which is going to come. Along with the water, there is enough, enough opportunity into the power sector because of the BESS and the government focus into the water irrigation, river linking and the BESS, it will give the company an enormous opportunity in the next 5 years to grow in a sustainable basis, both on the top line and bottom line. As I told you earlier also, our -- we have taken the target that we will not be focused into the top line. We will be very, very focused into the bottom line. And we will target to have an order book, which is good profitable and which is easy to do, complete and which is meeting out our target of taking the order. So our target is INR 5,000 crores to INR 7,000 crores every quarter, not that, whereas the opportunity is very, very high in all these sectors. So that's our target, and that's the way we are moving forward. Adfactors is there as our Investor Relations, Kapil Joshi is there for our Investor Relations of the company. We keep on coming to Mumbai. So anybody who wants to discuss in more detail, understand more about the company, we will be happy to meet. We will happy to discuss. We will be happy to share the information. We keep on sharing the information to the Stock Exchange on all that update. We keep on getting the same from our website. Thank you, sir.

On behalf of SPML Infra Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.