SPML Infra Limited (SPMLINFRA) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to SPML Infra Limited Q3 FY '26 Earnings Conference Call hosted by Go India Advisors LLP. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Selina Sheikh from Go India Advisors LLP. Thank you, and over to you, ma'am.

Hello, everyone. A very good afternoon, and welcome to SPML Infra Limited's Quarter 3 and 9 Months FY '26 Earnings Conference Call hosted by Go India Advisors. From the senior management, we have with us on the call today Mr. Manoj Digga, Executive Director and Chief Financial Officer; Mr. Samir Patel, Chief of Technology and Operations of BESS segment; Mr. Arun Agarwal, Vice President, Finance and Accounts; and Mr. Kapil Joshi, Investor Relations Officer. Before we begin the earnings call, we must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore moved in conjunction with the risk that the company faces. I would now like to hand over the call to Mr. Arun Agarwal for his opening remarks. Thank you, and over to you, sir.

Good afternoon, ladies and gentlemen. I welcome you all to the quarter 3 and 9 months of FY '26 conference call for SPML Infra Limited to discuss the operational and financial performance of the company. Our results and investor presentation have already been posted on the stock exchange website, and I hope everyone had a chance to go through them. Over the last 45 years, SPML Infra has built strong capabilities by delivering 700-plus milestone infrastructure projects across various states and earned valuable qualifications across the water and power businesses. Rebuilding on strength and reshaping for future, we are transitioning to SPML 2.0, focused on disciplined growth, selective bidding and higher-margin opportunities. The current fiscal have been pivotal with strong order inflows and steady execution across water, power and the emerging BESS segment. We remain focused on profitable and sustainable growth in these long-term growth-oriented sectors. Now moving on to some updates on the infrastructure sector. As India advances towards its Viksit Bharat mission, infrastructure continues to act as a key engine for economic growth, employment generation and long-term financial stability. The union budget of FY '26 reinforces infrastructure-led growth with a capital outlay of INR 12.2 lakh crores with substantial allocation of INR 85,222 crores for urban development, supporting India's Viksit Bharat vision. Continued emphasis on water infrastructure with INR 67,670 crores for Jal Jeevan Mission, INR 8,000 crores for AMRUT 2.0, INR 5,226 crores for irrigation and river interlinking and INR 3,100 crores for Namami Gange is structurally positive. The water supply projects under the overall allocation of INR 17 lakh crores for the Jal Jeevan Mission, AMRUT 2.0 and Namami Gange river linking programs and others will be implemented on a long-term basis. These priorities align strongly with SPML Infra's core strength in water, sanitation and reuse projects. We are well positioned to leverage on the opportunities to drive quality order inflows through selective bidding while maintaining margins and returns. India's energy transition targets of 500 gigawatt of nonfossil capacity by 2030 with installed capacity of already at around 263 gigawatt. The battery energy storage capacity is projected at 236 gigawatt by FY '32, translating into a USD 57 billion market by 2032. And the union budget for FY '26 reinforces this with INR 1,09,000 crores for energy infrastructure, around INR 1,000 crore of viability gap funding for BESS, incentive for lithium-ion manufacturing and financing reforms via PFC and REC. SPML Infra has strategically entered into BESS with end-to-end EPC capabilities and a 2.5 gigawatt Phase 1 manufacturing facility at Supa MIDC, Pune, which is expected to come up in Q1 FY '27, scalable beyond 10 gigawatt, supported by a technology partner with Energy Vault USA. We are actively and aggressively bidding for BESS opportunities, supported by strong policy guidelines, improving project economics and catering to grid scale demand. The opportunities are over and above current opportunities of approx INR 50,000 crores in power substations, which is also a core strength of the company. Coming to our operational performance, we are pleased to inform that for most of our recently awarded projects where design and drawing approval typically takes 6 to 12 months, the required approvals have now been secured. Project execution has commenced, providing us with clear visibility on revenue recognition and profitability from these projects going forward. During the 9 months of FY '26, SPML Infra witnessed strong order momentum, securing fresh order inflows of INR 4,324 crores across water projects in Jharkhand, Madhya Pradesh and Rajasthan besides Tamil Nadu. This figure represents the total project value, including order awarded through joint ventures. Our current order book stands at INR 4,358 crores, including the taxes, which reflects SPML's proportionate share in JV projects. The order book comprises approximately INR 1,540 crores of legacy orders and around INR 2,800 crores of newly secured projects, providing healthy execution visibility for the coming quarters. We have also bid for tenders worth approximately INR 8,000 crores in Q3, Q4 of the current year across the water BESS and power segments, which are active in nature. Our overall exposure in Jal Jeevan Mission is substantial. And for the JJM projects, billing and fund receipts received from the government is strictly in line with the execution progress, ensuring working capital discipline. We follow a highly selective bidding approach aligned with our prequalification strengths, focusing only on fully funded projects, DPR approved and higher-margin projects with robust contractual structures. We are well positioned to achieve our targeted business volume for the current fiscal with potential upside next year while maintaining our focus on assured funding, timely execution and margin-led sustainable growth. We continue to explore opportunities across water and power EPC tenders currently under various stage of bidding across Maharashtra, Madhya Pradesh, Jharkhand, Bihar, Kerala and other states. The total estimated opportunity size across these markets is approximately INR 5.7 lakh crores. Given our strong prequalification status, execution track record and regional presence, we expect a meaningful conversion of these opportunities into order inflow during FY '27. In parallel, we are strengthening our presence in the battery energy storage system segment. We are actively participating in various tenders floated by NTPC and other agencies with a clear focus on maintaining our targeted margin profile. Over the next 6 to 12 months, we see a visible pipeline of approximate INR 9,000 crores in BESS orders, and we remain optimistic about securing a healthy share of these opportunities. Coming to our BESS plant update, the development of the manufacturing facility is progressing in line with our planned time lines. The construction of the factory is progressing as planned with the structural framework currently being elected at the project site. The machineries are expected to reach us during February and March, after which commissioning will commence in a phased manner. We also anticipate making the plant operational from Q1. And coming now to our financial performance. As of 9 months of FY '26, SPML Infra has meaningfully strengthened its financial position with a steady progress on deleveraging, including around INR 317 crores of debt repaid over the last 2 years, which includes INR 47 crores of prepayment on the overall liability. The residual around INR 383 crores payable to NARCL is spread over 6 years and is expected to be fully settled through existing arbitration awards in hand of INR 621 crores, which is inclusive of accumulated interest up to January '26. While additional arbitration claim of INR 4,417 crores provides visibility of around INR 1,500 crores inflows over the next 7 to 8 years. Also, during the year, company has received arbitration awards sum of INR 30 crores, amounting to INR 22 crores from the CWSSB and INR 8 crores from Delhi Jal Board. With this INR 312 crores worth of awards has already been realized over the last 3 years. The company expect a sizable cash flow after the payment of agreed NARCL debt, which can be utilized for the future growth of the company. During the quarter, our credit profile was reaffirmed as stable by ICRA and further ratings are under review, reflecting the ongoing strengthening of our balance sheet and cash flow visibility. Our sanctioned bank facility has been enhanced from INR 205 crores to INR 505 crores by leading public sector bank. We have received approval for a surety bond of around INR 180 crores from the leading insurance companies, further enhancing our bidding capabilities. This expanded limit provides greater flexibility to bid for larger projects and manage working capital more efficiently. For 9 months FY '26, stand-alone revenue stood at INR 594 crores with EBITDA of INR 62 crores and PAT of INR 48 crores, translating into margins of 10.4% and 8%, respectively. Q3 FY '26 revenue was INR 231 crores, up 21% year-on-year basis, with EBITDA stood at INR 26.3 crores, translating into margin of INR 11.4 crores (sic) [ 11.4% ] and PAT stood at INR 20.5 crores with margin of 8.9%. EBITDA is up by 86% and PAT is up by 97% year-on-year basis. The completion of legacy lower-margin projects and increasing contribution from higher-margin new orders has already begun to lift profitability, positioning the company on a stronger and more sustainable earnings trajectory going forward. During the quarter, the interest cost has increased mainly on account of onetime interest cost on income tax for the earlier years post assessment and BG and LC charges and the interest on the mobilization advances on the new projects. In the recent budget announcement, the Honorable Finance Minister has proposed to carry forward the MAT credit for future tax liability only under the new tax regime. Accordingly, the company has planned to shift to new tax regime from the next financial year, where the existing carryforward losses can be adjusted with the future profit without need to make any provision for MAT. This will help the company to save the tax expenses of next few years and subsequently adjust the MAT credit. Considering the available allowable expenses under MAT, no MAT provision has been made in Q3 FY '26 and need not to provide in Q4 FY '26 also. The company is having a strong current ratio of 1.81x as of Q3 FY '26, which shows the sufficient liquidity into the company. The current ratio is slightly impacted in the current quarter because of the various bills raised in the end of the quarter and the realization of which will be received in the Q4. Further, the company is expecting more than INR 100 crores latest by 22nd April '26 from conversion of warrants, which would improve the liquidity further. With a significant portion of our projects now entering the bidding phase and execution momentum accelerating, we are confident of delivering a strong Q4 performance. Performance remains aligned with the guidance outlined earlier, has translated into tangible results in 9-month FY '26, and we remain well positioned to meet our full year growth for FY '26 and around 25% to 30% on the revenue and approximately 40% to 50% on the PAT. With the conversion of the awards from the various tenders currently floated by different states in water, power and BESS segment, we shall provide the guidance for FY '27 in our yearly con call along with the yearly results. That is all from us. We will now open the floor for questions. Thank you.

[Operator Instructions] The question is from the line of Hardik Gandhi from HPMG Shares & Securities.

Congratulations on a set of good numbers. Just wanted to know on 3 questions. First is, given that we did not pay tax this quarter, and you mentioned there is a tax adjustment, which is about to happen for the earlier losses under MAT. So can you quantify the amount of outstanding losses which we can avail in the upcoming quarters against the profit?

We have roughly around INR 200 crores of loss and then the further assessment is going on. So next few years, we don't have to pay tax.

Okay. So for a few years or for a few quarters.

A few years because we have the accumulated loss, which will be sufficient for this year, next year and one more year definitely.

Right. The second question was on the line of the BESS front where we can see a lot of players are entering, they are putting up their manufacturing, right? So just wanted to understand from your end, whether, first of all, are we on track for Q1? Are we expecting numbers to start coming in our top line as well as bottom line in Q1? Or are we expecting meaningful contribution later on? And second is, we did mention earlier that we are going to set up a container manufacturing facility also, which would help backward integrate. So just your thoughts on these 2.

Two things as we -- Arun has explained, our BESS plant is on track. We are expecting the commercial production in Q1. Basically, the construction work has almost completed and is in the advanced stage of progress. Machinery equipment order we have already given and they are expected to come in February and March. So we -- our BESS plant is on track. On the tender, we are already participating it irrespective whether BESS plant start or not, we are participating into various tenders, roughly around INR 4,000 crores worth of tender we are participating. There is a visibility of roughly around INR 8,000 crores to INR 9,000 crores going forward into the BESS tender, and we are participating into that. And based on our selected criteria and margin category, we are hopeful that we will get in the Q1, some order Q1. Next year, we will get a substantial order from the BESS operation also.

Yes. And for the container manufacturing facilities.

Containers, we are still evaluating. We are -- first, we have to internally prepare the DPR. And yes, we have the plan to do that. But till date, we have -- we are evaluating our internal level, internal committee and at the Board level. Once they approve, we will declare and we will inform to you in our subsequent con call.

Understood. And just last question on the bottom line, where next year, given that our legacy projects will be in the last phase of execution, our new projects will be kicking in as well as the BESS will be kicking in, right? So all these will be giving a margin boost, right? So I'm just assuming our bottom line to grow by what percentage? You mentioned a 50% bottom line CAGR, but I think so it should be more than that given the BESS as well as the new projects are more value accretive?

No, this guideline, what we have given guidance that is for this year and the Q4. The overall year growth, we expected roughly around 25% to 30% growth into the top line and roughly around 40% to 50% growth into the bottom line. That is for this year. As we have informed in our opening remarks that the yearly guideline we will give into the -- our yearly con call because by that time, we will have the clarity on the various tenders which are at the moment floated, and we have participated into that. Based on the visibility of that, we will give the annual plan of the next year in our yearly con call. Plus we are in the process of preparing our AOP. Once that will be prepared, it will be better for us to give you the guidance for the next year.

The next question is from the line of Maitri Shah from Sapphire Capital.

A few questions. Firstly, on the current order book that we have of INR 4,300 crores, do we have any power projects right now in the order book? Or this is all water-related projects?

We have legacy power projects. The new we have not taken any power project. We have bidded (sic) [ bid. ] There is -- in power, we are very actively into the substation. And from the last year substation, volume was very low. But from the last few months, various tenders of the substation has started coming, and we have participated into that. So at the moment, our legacy project has roughly around INR 200 crores to INR 300 crores of the power project. But the new order, nothing is in the power.

Okay. Secondly, what -- how much is the receivables we had left to receive from the JJM side? And also if you could give the JJM portion of the order book, if that's possible?

Can you pardon, again?

JJM order.

JJM order. JJM -- the old order, as we have told in the opening remarks, old order, we have roughly around INR 200 crores to INR 300 crores in the legacy that left into the JJM. The new JJM orders all as per the new scheme of the government, where we have received 2 orders from the JJM, one in the Bharatpur and another is into the Kekri, which is recently and which are executing well.

And what is the value of these new orders?

One is INR 1,438 crores, second is INR 380 crores something.

INR 380 crores. Okay. And the receivables outstanding from JJM currently are?

JJM old, we don't have. In the Kekri, we have recently towards the end, we have issued certain deals, which we are expecting the commence in this month.

Okay. Next question I had was on the closing order book for '26. So are we expecting any order inflow in quarter 4 from the power side? And what sort of order book value do you expect by the end of FY '26, if that number is possible? Any targets you have?

Till date, as I told you, the entire new order book, we have received INR 4,323 crores, which includes the JV. If you take our share outstanding is roughly around INR 2,817 crores. We had legacy order of roughly around INR 1,540 crores. So the total order as on 31st December is roughly around INR 4,358 crores. We have bidded for roughly around INR 8,000 crores of orders, roughly around INR 5 lakh crores of order visibility is there in the various states. Whenever that will come, we will keep on bidding. So we are...

Any targets you have for March '26 closing order book figure for -- including the water and the power business?

March '26 order book will be as it is because now whatever tender is coming, if we bid, it will not convert by March. So March '26, this will be the order book INR 4,358 crores.

But we'll be executing some of the orders in this quarter, right? So what sort of orders are we expecting in the quarter 4?

If you see in the bidding process, it takes from bidding to conversion and the signing of agreement or LOI, it takes roughly around 3 to 4 months. Although we have bidded to INR 8,000 crores of orders, but we are not expecting that to be converted into by March. It may be in the first quarter, we will get some conversion of the bidded order.

And what is the win ratio we have on these orders that we bidded?

Pardon?

Any win ratio we have for the water orders or the power orders that we bidded?

There is no win ratio as such because as I told in our remarks that we are very, very selective on certain criteria of our order selection. We don't bid where the funding is not there. We don't bid where the margin is less than 10%. So if it is -- if there is a margin -- our bidding is always more than 10%. So we can't -- that way, there is no thumb rule that how much bid and how much getting converted. But definitely, we are the leading player and we have the PQ and we have the ability. We are expecting a sizable order in the next year from the order opportunity what we have in the water, power and BESS.

That is great. Secondly, on the time line. So what sort of time lines you have on the water orders and the time line you have for the substation orders, the BESS orders that you're going to be bidding from now on -- time line on the execution?

In the water project, generally, it is coming from 2.5 years to 4.5 years because it's a design drawing project. So basically 3 to 6 to 12 months, it is required to get the approval of the design drawing and then roughly around 2.5 years to 3.5 years is for the completing of the project. Power project is normally 24 months. That is the period by which transformer 24 months to 28 months, that is the power because the substation and transformer is a long leading India, leads period. And BESS is between 1 year to 2 years. Samir if you want to add here.

And on the BESS side, what projects are we bidding for? Is this EPC and supply? Or are we also going to take part in the O&M part of the project? And also are we going to do the BOT projects as well? Any color on what sort of BESS opportunity we are bidding for?

BESS at the moment, we are bidding for the EPC only, but we are also exploring. At the moment, only EPC.

EPC and the supply from our own facility, correct, right?

EPC, it includes the supply, it includes the design, it includes the fabrication construction, everything.

So the entire 2.5 gigawatt hour, are we going to use that captively? Or are we expecting to sell that to any third-party EPC player as well?

That we have the battery pack facility. The same battery pack will be utilized for our EPC business, and we will also do the OEM for any EPC player who are in the BESS. So their battery pack requirement also, we will meet out from our battery pack plant. It could be both.

Okay. That is great. And also, so you gave some targets for FY '26, 25% to 30% growth. And for quarter 4 is looking quite heavy with the execution. Are we confident on this INR 350 crores, INR 400 crores of execution in the fourth quarter of FY '26?

Fourth quarter will be better. As I told you, in the design line, the approval is taking slightly longer time because that decide each and every aspect of the pipe size, pipe laying, area, forest, clearance, all these things are there at the design drawing time. And subsequent to that, it's a fast track and where we have a strong team of execution and a strong relationship with the suppliers, and we do maximum to the escrow account mechanism. We have the sufficient bank limit. So I'm not finding any problem in execution of the project. And since as Arun has told, we have got all the clearance from our 3 plant, all the major design and drawing approvals. So we are expecting a good healthy Q4 this year.

Okay. And 2.5 gigawatt hour capacity that Phase 1, what sort of capacity are we adding in the Phase 2? Is it similar or a bit higher?

We have the plan to enhance it to 5 and finally to 10.

Okay. And [indiscernible] capacity, what do you expect the revenue from this battery pack?

We will inform you into the yearly con call because by that time, we will have [ ROP ] ready. But next year will be substantially better compared to this financial year because, one, all the project revenue, which we got the design and drawing approval will be executed in full swing into the next year on our approved project. Second, there is a visibility of INR 5 lakh crore tenders, which are coming into the Q3 -- Q4 and Q1. We are expecting some revenue from there -- some order conversion from there, which may give us the result in the Q4 into the next year. BESS, we are expecting a sizable order. We are expecting the power sector substation good order. So we are expecting the next year will be much better, both on the top line and the bottom line. But however, the guidance we will provide you in our yearly call.

Yes, that's helpful. And the margins on the BESS and substation side, what sort of differential you have with the water? So are they in the range of like 12% to 13% or in the same range of 10% margin?

As I told you, we have a clear discipline that less than 10%, we will not take any business, be it BESS, substation or water.

[Operator Instructions] The next question is from the line of [ Hemant Soni ] an individual investor.

Just wanted to ask one thing. The operating EBITDA for FY '25 is, I guess, INR 43-odd crores. So even if I do a math and take your guidance of 40% to 50%, I mean, profitability, operating EBITDA should be close to INR 60-odd crores for FY '26, right? And we have already done an operating EBITDA of around INR 43 crores, I guess, in 9 months of FY '26. So is it -- I mean -- and guidance and the numbers don't match. So is it fair to assume that are we being a little conservative in giving the guidance for FY '26 in terms of profitability?

If you see the yearly number of our last year EBITDA, operating EBITDA was INR 62.88 crores. At this -- in the 9 months, we have made the EBITDA of INR 61.71 crores. So we are able to exceed the entire last year EBITDA into the 9 months approximately. And we have the Q4 also, which we feel will be slightly better because of our approvals which we have obtained. This quarter, we had the EBITDA of INR 26 crores. So the next quarter, we should have slightly better on this. So that's the guidance we have given.

Sir, I was actually not factoring it in the other income. I was talking about the operating income.

The other -- operating EBITDA, which you are saying the other income minus?

Yes, yes, yes.

I have the numbers in front of me, I guess. They are close to INR 43 crores for 9 months of FY '23, I guess, on a consol level. No. If you do that, then even if you minus the other income, which is basically the interest income and various -- that income, which is related to the operation of the company. So if you minus here and if you minus into the last year also, so it will be reduced by INR 16 crores from here and it will be reduced by INR 11 crores from the last year. So it will be roughly around INR 50 crores and here it is around INR 44 crores. And we have the last quarter again, which will be substantially high. So we will be [indiscernible].

Yes, sir. So it should be close to INR 60-odd crores for FY '26. So it is basically flat on a quarter-on-quarter basis. I mean it will be basically flat, right?

As I told you, the last quarter will be better. I can't give you the number, which -- whether it will be 60% or 65% or what. The revenue should grow EBITDA -- total EBITDA should grow more than around -- the PAT should grow more than 30% to 35% -- 40% to 50% and the revenue should grow by 25% to 30%. That is the overall guidance. Exact number, we will not able to give, but we can only tell you that the Q4 will be better.

So Q4 should be better on a quarter-on-quarter as well as year-on-year basis, right?

It will be quarter-on-quarter and it will be quarter of the last year also.

The next question is from the line of Sanjay Nandi from VT Capital.

Sir, just like as you mentioned, like we would be getting some orders from the BESS space to the quantum of INR 8,000 crores in the coming years. So can you please quantify like what would be the entire world for the BESS? What kind of industry size would be for the BESS?

Samir can you highlight here?

Yes, sure. So the orders which we anticipate will be purely grid-driven segment. So it will be more related to 5-megawatt DC block systems and 6.26 DC block systems.

So sir, can you please specify the entire industry size of the BESS, what kind of industry we would like to be catering with our new capacity for the industry size?

Yes. So the entire industry size is about 236 gigawatts for the next 5 years. So by FY '32 for India, this is the scale, 236 gigawatt hour. Now what SPML is doing is we are positioning for at least 5 gigawatt hour in Phase 2, which will be in the next 1 to 2 years. And then we will expand that further to 10 gigawatts.

And on a contrary of 236 gigawatt capacity by FY '32, where we are standing as of now, sir?

Because this is also driven by the tenders which is floating around the market.

No, I'm asking...

So this will driven by that.

What is the current capacity as on date as we talk, sir?

What is the, sorry?

What is the current capacity of the BESS as we stop that you are guiding for a 236-kilowatt kind of capacity by FY '32, right? So what would be the capacity as we talk, sir?

So in terms of the container itself, it's 5 megawatts. That's the capacity. 5 megawatt is like 5,000 kilowatt hour, okay? And...

It is as on date, right?

Yes. As of date, it's 5,000 kilowatts. You can put it that way. So 5 megawatts into, let's say, 100-megawatt projects, you're talking about 20 containers. And if you talk about 1 gigawatt, you're talking about 100 containers.

And what is the broad margin profile?

Here I also wants to add, like if you see the 266 gigawatt, which we are planning by 2032, which is size-wise roughly more than INR 5 lakh crore business, which is going to become into the next 5 years. And it will not be equally distributed, but that is the minimum which the government has already announced. INR 5 lakh crore business into the BESS is already there or it will grow further.

Got it, sir. And sir, can you guide us like what would be the margin profile of the BESS like on a soft note and also on a higher note, sir, broad margin range, sir, when this will operate?

As I told you, it's a very clearcut guidance of our company that less than 10%, we are [indiscernible]. So that is one. In OEM also, we will try to get the 10% margin. And BESS on the EPC, definitely less than 10%, we are not going to do that. So for all our new projects, including the BESS and power and water, you can consider 10% minimum as our margin.

And what could be the peak margin, sir, in this business?

Peak margin, we will keep on announcing -- whenever the order will come, we will get the order because 10% is the minimum, but maximum we can bid and whatever we can get that. But 10% is the minimum. For your calculation, you can consider 10%. Anything -- but we are taking like other projects, whenever we take, we try to maximize more than 10%. But 10% is the minimum by which we will take.

[Operator Instructions] The next question is from the line of Hardik Gandhi from HPMG Shares & Securities.

Sir, just wanted to have one follow-up on the power segment where anything other than BESS we are planning to bid for?

If you see Hardik, historically, we are the company which is focused into the water and power. And when we say power, then it is a substation, which we made. Because the renewable energy, this thermal more or less stopped from last 2, 3 years, and it was more towards the renewable energy, our power substation business has reduced substantially. But suddenly, the thermal power business has started in a big way. We are expecting roughly around INR 40,000 crores to INR 50,000 crores of substation business, which are going to come into various NTPC and various other states and the PSU unit. We are targeting that order also into our kitty.

Right. So -- but that, I think, is -- that is to be planned after 3 to 4 years because all the greenfield thermal plants are expected to get commissioned by 2029, 2030, 2031 right? So by when do you expect us to start getting at least the orders in our books?

Order is already floated. Like if you see the roughly around INR 8,000 crores to INR 9,000 crores of substation order is already floated. It is coming on a daily basis. Every month, you are getting the substation orders. One that's new, they are improving the substation. They are including the BESS into the substation. And this substation work is continuous. So we are expecting next year, we are expecting a sizable order into the substation. And we are going to take at least 1 or 2 orders of substation also.

Right sir. If you can just quantify like INR 8,000 crores to INR 9,000 crores orders, we are expecting 10% -- around 10% to 15% of orders from that kitty or given our experience, we can have a bigger chunk?

We should get 1 or 2. Now the substation business will be normally between INR 200 crores to INR 500 crore order. Now it depends which order we get, but we should get 1 or 2.

Right. By next year, we are expecting.

Okay. Understood. And what is the execution time line of the substation projects?

This requires a transformer where the lead time is 24 months.

Understood. 24 months [indiscernible].

[indiscernible].

The next question is from the line of [ Kritika Khurana ] from [ Finstock ] Investments.

So my question is, how does the competitive landscape for BESS in India look for a midsized player like SPML?

Can you repeat again, Kritika?

Yes. So my question is how does the competitive landscape for BESS in India look for a midsized player like SPML? Also like what is the minimum take-or-pay commitment, if any, in your 10-year agreement with Energy Vault?

Energy Vault, we have already procured the license. We have purchased that. And now it is every year, our order execution, we have to pay 1.75%. No?

1.75%.

1.75% is the royalty, which we have to pay for which -- against which they will give us all the upgrade in the technology, which they will develop. So in one way, for our R&D facility, we are paying this much amount. On the competitor side, on the other sector other than BESS. In the EPC business, it is mainly to the PQ. And whoever has the PQ, he has -- they have the eligibility to bid and take the order. We are in the top 4 to 5 companies in India into the water and maybe top 10 companies into the power. So that gives us the mileage to take the orders compared to other midsized players who don't have the PQ because of our maturity and existence of more than 40 years and our execution of 700 projects, which we have done. We have the qualification of almost all type of water and power projects which are going to come, and that gives the advantage compared to any other midsized player because we can take the order.

Okay. Understood. And sir, is the company planning any further institutional fundraises to support the BESS CapEx? Or will it be entirely funded through promoter infusion and internal accruals?

If you see from the last 2, 3 years, we have infused roughly around INR 460 crores part which is conversion of debt also. INR 460 crores has been raised into the company. The liquidity is sufficient. We are further getting INR 100 crores of the warrant money in the Q4 and early part of the April. So at the moment, we have sufficient liquidity plus we have INR 500 crores of bank limit. We have INR 200 crores -- INR 180 crores of surety bond limit. So at this moment, the liquidity is more than sufficient. You can see from our current ratio which is 1.81. And at the moment, we don't have any plan.

[Operator Instructions] The next question is from the line of [ Priyanshi Mehta ], an individual investor.

So I had questions regarding the margins of the company. So our operating margins have been under pressure due to legacy projects. So what percentage of the current order book approximately, I think, around INR 4,500 crores consists of this low-margin legacy contracts? And when do you expect the mix to shift entirely to high-margin project?

As I told you, out of the INR 4,358 crores gross order, which includes our share of JV also, INR 2,800 crores is the order which is having the higher margin, which is the order which we have acquired in last 1 year. And INR 1,540 crores is the legacy order. This legacy order will be completed into the next year or maybe one more year. And this new order contribution and proportion will keep on increasing into every quarter, one with the existing order; second, whenever we will start taking the new order and the execution will start.

Okay. Okay, sir. Got it. Sir, I had another question. This with the recent INR 159 crore surety bond limit secured, how much of a breather does this provide in terms of bank guarantee limit? And also does this free up cash previously held as margin money?

No, it's free up. Basically, it's earlier when we started with the NARCL, that time any BG, et cetera, we had to give 100% cash margin. So now we got the regular sanction from the bank. The margin has reduced substantially low, and it is a continuous process, and we will keep on reducing the margin. So that is on the bank side. On the surety bond, we don't have to give any margin.

The next question is from the line of [ Kamal Jeswani ] from U First Capital.

Congratulations on a good set of numbers. I just wanted to know that are we also pursuing any projects in wastewater management?

Waste water management, we are qualified, but our focus is into the bulk sector, where the pipeline, et cetera, is laying of the pipeline. That is our preferred because there we have a great connect with the suppliers and the execution normally become fast. But yes, we are qualified for the wastewater, and we are also looking into the wastewater.

Okay. And generally, what are the margins in this pipeline water projects, which we are currently doing.

As I told you, less than 10%, we don't take.

10%.

Minimum 10%.

Minimum 10%. Okay. Because I just -- I met one of the corporates recently who is into wastewater management. They are probably having margins closer to 20%. So I was just thinking it's a great opportunity if we are qualified, we should also explore where margins can double. So that's why I just thought of checking with you if management can start.

It's a project to project specific. It can be 20%, it can be 10%, it can be 15%. Somewhere it is less than 10%. We don't take, but there are a few guys who are taking less than 10% also. It depends on project to project. Waste management has certain complexity and certain CapEx nature. So slightly the margin can be better. And like the distribution also has some complexity because you have to go to the city and you have to do the household connection. So there the complexity is slightly high. The duration is slightly high, then the margin can be slightly high. When you do the bulk, then on the outer side, you keep on laying the -- education is very fast. So slightly margin will be lesser than to the waste management. So it depends on to both plus and minus, and it's a call of the company take on each project whenever there is a bid come and we bid for that.

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

Looking ahead, we believe SPML Infra is strongly positioned for sustainable growth with a strong focus on water, power and BESS, disciplined bidding, a strong balance sheet and an improving credit profile, we are entering the next phase with a greater financial resilience and clear profitability visibility. Thank you for joining us today and for your continuing trust and support. We remain confident in our growth journey and committed to consistent delivering strong results. Should you have any further questions, please feel free to reach out to us or our IR adviser, Go India Advisors. Thank you once again.

Thank you.

Thank you, sir. On behalf of Go India Advisors LLP, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.