Sterling and Wilson Renewable Energy Limited (SWSOLAR) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to Sterling and Wilson Renewable Energy Limited Q4 and FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Thomas Mathew, Head, IR, for his opening remarks. Thank you. And over to you, sir.

Yes. Good morning, everyone, and welcome to our Q4 FY '25 Earnings Call. We have with us today Mr. CK Thakur, our global CEO; Mr. Ajit Pratap Singh, our CFO; and SGA, who are our investor relation advisers. We will start today's call with the key operational highlights for the quarter and the fiscal year and industry outlook by Mr. Thakur, followed by the financial highlights from -- by Ajit, post which we will open the floor for Q&A. Thank you. And over to you, CK.

Good morning, everyone. Thanks, Sandeep. And a warm welcome to all the participants on this call. We are very happy to welcome our new CFO, Mr. Ajit Pratap Singh, to our team. Ajit's illustrious carrier spans 29-plus years, with the most recent being at Transrail Lighting Limited, wherein he served as its CFO and was instrumental in getting the company listed in India through a successful IPO. Earlier, he handled leadership roles at OPG, wherein he served as the group CFO and executive director's; along with leadership roles at large industrials conglomerate like JSW, Vedanta, Jaypee and Lohia Group. We wish him a bright and successful future with us. Let me begin with a quick update on our business operational outlook, beginning with our order book position. We closed the full year with a total order inflow of INR 7,051 crore. Of the total order inflows, the domestic market contributed nearly INR 5,900 crores or approximately 84% of the total order inflow in FY '25, with the rest coming from the international market comprising the 2 South African projects we won earlier during the fiscal year. The domestic order inflow represents a healthy year-on-year growth of nearly 21% this fiscal year compared to the fiscal year '24. In terms of order value, private IPPs contributed nearly 55% of the total domestic order inflow, while PSU contributed nearly 45%. Apart from our growing domestic solar EPC business, FY '25 also marked our entry into 2 new important growth market: battery energy storage solutions and wind EPC. With more and more projects in the renewable space moving towards the hybrid model, we believe a well-rounded offering like we currently provide to our customers is crucial to tap into the growth. We bagged 3 new projects in the domestic EPC market in the fourth quarter. We received our first order for wind EPC from a private IPP for a hybrid project in Rajasthan. The scope of work includes engineering, procurement and constructions of a 69.3-megawatt wind balance of the plant; and 55-megawatt AC, 75-megawatt DC solar BOS, along with 132 kV/33 kV pooling substation. Our entry into winds helps us provide holistic EPC solution for hybrid projects and opens up a new exciting segment for us. The company achieved L1 status for a turnkey solar project of 200-megawatt AC, 260-megawatt DC PV plant in Gujarat, India from a leading PSU developer. The company has also received a letter of award for a PV plant in Rajasthan, India for a -- from a domestic IPP. Looking ahead. Our India order pipeline continues to remain very strong. And we expect nearly 22, 23 gigawatt of orders to be bid out during this calendar year alone or in the next 6 to 9 months. Over and above the solar EPC pipeline, we will continue to target this project and select wind projects as well. In the international market, our efforts are becoming more focused on select projects in select geographies, including MENA and Europe. And our pipeline has also therefore become smaller to devote our resources accordingly, which has resulted in a small decline in our overall pipeline compared to December 2024. Our unexecuted order value now stands at over INR 9,096 crore and continues to provide good P&L visibility for the forthcoming quarters. Over 84% of this order book comprises domestic Indian projects, while the international UOV comprises primarily 2 projects each in Europe and South Africa. In terms of execution, our scale-up plans continued to remain on track, and the improved top line of Q4 is a sign of our efforts. And we are committed to address challenges of increasing nonfund-based limits and achieving better open credit terms with the key suppliers, thanks to our associates, partners, vendors and subcontractors and our internal team members for relentlessly working to achieve the Q4 top line. We continue to judiciously evaluate projects in India and overseas and are mindful of having to remain patient in order to target profitable orders. Moving to the Nigeria project. We are still awaiting final order signing and closure. Also, as I've been -- mentioned in earlier calls, post order signing, we expect the project to take 6 to 9 months to achieve financial closure. We would like to reiterate that the lumpiness in order inflow is to be expected with EPC companies like ours. And time lines for achieving projects closure could vary, depending on host of factors, including finalization of contractual terms, financial closures, et cetera. Our O&M portfolio outlook remains strong, and our portfolio stands at 8.7 gigawatt as of March 2025. As stated in the previous call, our large team of EPC projects which are nearing completion in the next couple of quarters will also feed a good pipeline of new projects for O&M, which should aid a meaningful pickup in revenues in these segments from second half of financial year '26. Moving to industry outlook. The Indian renewable story continues to make strong progress, and India will continue to be our single largest focus market. According to the MNRE, the country's installed solar capacity reached 105.6 gigawatt as of financial year '25, just 35% of 300 gigawatt target set for 2030. Financial year '25 witnessed our record-breaking additions of nearly 24 gigawatt in solar capacity, sharply up from 15 gigawatt in financial year 2024. This surge was largely driven by utility-scale projects, which contributed nearly 17 gigawatt and is our core focus market. Despite the record achievement, the pace is -- still falls shorts of annual run rate needed to meet 2030 target. On the regulatory front, the greenhouse gases emission intensity target rules 2025 sets specific emissions intensity threshold across industries reinforcing India's ambition to achieve net zero by 2070. There is substantial financial and strategic incentive for industries, especially in steel, cement and aluminum, to transition to renewable-based electrification, which in our view can continue to drive the private IPP market and C&I space. As India integrates [ higher sales ] of intermittent solar and wind power, the importance of grid stability has grown exponentially. Battery energy storage systems are now pivotal to balancing supply and demand and ensuring a resilient grid. In a decisive move, the Ministry of Power has mandated that all upcoming solar projects include co-located solar storage systems with at least 2 hours storage capacity, equating to 10% of the installed solar capacity. This initiative aims to improve grid reliability and will be essential to integrate the anticipated 500-gigawatt renewables capacity by 2030. The sharp decline has in -- the sharp decline in cost of lithium and battery bolstered by advances in technology and expanded manufacturing capacity has also made these projects more viable. Central Electricity Authority's National Electricity Plan outlines India's scale of storage [ ambitions ], with the market expected to grow exponentially in the next 5 years. India's wind energy sector is also seeing a revival. A noticeable shift is underway in the structure of wind tenders. Increasingly, new capacity is being awarded through firm and dispatchable renewable energy projects, which combines solar and wind components and is a market we are in -- increasingly looking to target. While there are several positives -- yet challenges remain. Competition in domestic EPC sectors has been pretty strong this fiscal, but we have continued to hold our own with patience and disciplines. Domestic manufacturing of solar modules and cells have been trailing demand. And the DCR content requirement of cells poses a risk of pricing and availability. Proposed U.S. tariff has added another layer of complexities, especially for our suppliers. And we are closely monitoring and working with our suppliers to mitigate pricing risk to the extent possible. It's a fast-growing domestic market. Our strong balance sheet -- we believe we are [ positions ] to tap the growth. With this, I'll ask Ajit to take you through the consolidated financial highlights. Thank you very much.

Thank you, CKT. Thanks a lot. We are very pleased to report that the company achieved its highest quarterly revenue since listing. That's big achievement. And our revenue has grown by 114% year-on-year. That's more than doubled basically from last year and down (sic) [ up ] 37% quarter-on-quarter to INR 2,519 crore, primarily aided by higher education and domestic EPC projects and the new international EPC projects. For the full year also, we have seen substantial growth. And our revenue has grown more than double by 108% year-on-year to INR 6,302 crore. In respect of our gross margin, our consolidated Q4 gross margin was approximately 10.4%, while our full year gross margin was 10.1%. Looking at the segment-wise result: Our full year domestic EPC gross margin has trended back to a target range of 10%, while our international EPC gross margin was approximately 8% because of certain legacy projects. Our O&M margin for the full year, EPC, that was approximately 21%. And there was a write-off of around 4 crores in the last quarter. Our operational EBITDA, that is operating revenue less recurring overhead, was INR 158 crore this quarter. That's around 6.3% EBITDA margin compared to approximately INR 90 crore in quarter 3. And that is reflective of the operational leverage achievable through improving our execution pace in the company. For the full year, we have achieved an operational EBITDA of INR 291 crore vis-à-vis a loss of INR 13 crore in the last year. Reported Q4 EBITDA was INR 116 crore. That is a 4.6% EBITDA margin. And that also got impacted by certain ForEx loss in the month of March 2025. For full year, reported EBITDA was INR 276 crore. That's [ growth of ] impressive 411% compared to the last fiscal. Quarter 4 profit before tax was INR 87 crore, and that's a growth of around 112% sequentially. And for full year, our EBITDA (sic) [ profit before tax ] was INR 163 crore vis-à-vis a loss of INR 172 crore in the last year. Reported quarter 4 PAT was INR 55 crore, and that's significantly high if you see compared to last year. There was noncash deferred tax asset charge of INR 18 crore in this quarter. We have been incurring this charge since quarter 4 FY '24 due to stand-alone profitability. The remaining deferred tax asset on the books is approximately INR 23 crore. And we reported full year PAT of INR 86 crore compared to loss of INR 211 crore in the previous fiscal. As CKT alluded to in his opening remarks, we have continued to make positive strides in our execution scale-up, as seen in Q4 results. And we'll continue to do the same. Now coming to balance sheet. Our net debt has seen a marginal increase of INR 3 crores compared to last quarter and was at INR 178 crore at 31st March 2025. Gross debt, however, has increased. We have taken a fresh term loan from a bank worth INR 200 crores, and the disbursement was done towards end of March '25. And that has also led to higher cash balance because that loan was disbursed and was -- we were keeping in our books. And we have not utilized as on 31st March 2025. With this, now we can open up the floor for questions and answers. Thank you.

[Operator Instructions] The first question is from the line of Rohit Natarajan from Aditya Birla Sun Life.

My first question has more to do with the -- a lot of projects of almost like 40 gigawatt of renewable energy is pending for PPA. So will this impact the order inflow for FY '26 as such?

So the pipeline that you have indicated in my initial remarks, so the projects close to 22, 23 gigawatts, are slated to be bid out in Q1, Q2. That are not impacted because of the -- any other issues, PPA signing and other issues. I mean, the next quarter's, [ onwards ], it may, but in Q1, Q2, this does not have any impact on our order inflow.

If I look at the historical market share as such, would it be fair enough to say maybe we can clock out of this 22, 23 gigawatt total serviceable market maybe 30% market share? 6 gigawatt kind of inflow should be possible.

It's difficult to guide you at this stage because if -- historically if you see the Q1, Q1 had been, I mean, witnessing the closure of the projects which are spilled over from the Q4, right? So there, if we look at -- so I mean, out of 22 gigawatt, no new project seems to be tendered out. Only those projects are there in the market. And looking at our -- the hit ratios, we are hopeful of getting better shares out of -- I mean, out of the projects that have been bidded out.

Got it. On the international front, the Nigeria order, we've been reading something about there are some import restrictions, local content policies, financial and currency challenges within Nigeria. And obviously this has led to a prolonged delay, all -- put all the renewable energy projects in slow track in that country as such. And there don't seem to be like a near-term fix for that. Is that a cause for concern? Or do you see that probably we should expect further delays in this region to get further order inflows as such?

I appreciate your concern. So there have been delays. I mean, in a country like African regions, things move slowly, but there is no negative news as such even after the Trump tariff policy announcements that is supposedly getting delayed. That's it. So I can't say at this stage that the project is -- I mean, has any negative news. It should not be a concern going forward.

So [ U.S. sector is ] committed to the project. This is being funded by U.S. EXIM, and they are still committed for the project. So there are delays, but there is no major concern, we believe.

No, I was reading somewhere like the Nigerian government is trying to promote the local manufacturing. So if you don't have the module and panels and they're locally made, things can possibly get further delayed. Plus obviously you have had Nigerian idiosyncratic issues like the currency issues, fiscal incentives not adequate enough, so is that being -- I'm talking about the country-specific issues. That's the thing have been lingering for a while.

No, Mr. Natarajan. So I mean, since this is EXIM-funded project, right -- and the supplies have to come from U.S. and other markets, right? And therefore, any local regulations on the supplies, I don't foresee that it will be deviating from the original terms and condition of the contracts, right, that we have been discussing with them.

Got it. And sir, my final question is more to do with the financial results part, on the nonrecurring overheads currency fluctuations part. I understand, some 15% of the order backlog, we still have international exposure. If you could, I mean, give us some guidance or some color on how these nonrecurring overheads will pan out in FY '26; plus also the DTA impairment, how much further it is to be impaired in FY '26. How will it -- will we get back to the normalized tax rate as such?

Sure. So in terms of nonrecurring overheads, majority of the portion is onetime write-off of bad debts and certain ECL provisions we have taken in the current quarter. In terms of ForEx losses, this is because the currency was very volatile in March. And these are primarily mark-to-market translation losses. These are not a transaction loss, because of our exposure to our other subsidiaries in Dubai. So this is basically a -- only book entry, not a transaction loss. And what was your second question? Sorry...

The deferred tax assets impairment.

Yes. And deferred tax, as of now, we have -- basically this is due to the difference of the expenses which are not allowed in tax. Primarily, as of now, these are like provision for bad debts; leave encashment; gratuity, provision for gratuity; and provision for bonus. And as of now we have outstanding of -- amount of around INR 22 crore, INR 23 crore that is expected to be utilized in next year or next 1 or 2 years.

[Operator Instructions] The next question is from the line of Ganeshram Rajagopalan from Unifi Capital.

I have 2 just in follow-up to what Rohit had asked. The first one is on the foreign exchange loss. Could you please detail that a bit more for us? Because my understanding is that there are some hedges on the projects that you undertake. And there is some amount that you give to loans -- in terms of loans to subsidiaries that you do not hedge, but how come this is -- I mean this foreign exchange loss that you've incurred this quarter. And is this a cash loss? Or is this something that eventually, if the currency stabilizes, will be written back? That's the first part. The second is on the deferred tax asset. Could you please help us understand in more simpler terms as to exactly what this charge is? And maybe if I think ahead, next year, and -- what could be the extent of this charge? Just these 2 questions, please.

Sure. So in terms of [indiscernible] translation loss -- sorry. Can you be in mute if so -- nobody is -- somebody is not speaking?

Yes. I have muted. You can go ahead.

Yes. So the ForEx loss, this is only translation loss. This is not the transaction loss and it is not related to our operations. Basically it is the exposure of what we have, as a stand-alone entity, to our subsidiaries in Dubai. So the loans and advances given to them that has been translated as on 31st March, and it's only a book entry. The moment this -- currency will get stabilized, this will get squared off and will come back. And on your second question, on deferred tax. This is -- this has been created out of the expenses which are allowed as per Companies Act but not allowed as per taxation. And these are primarily the provisions which has been created for leave encashment, gratuity bonus. Certain carryforward losses are also there. And this outstanding amount as of now is around INR 23 crore, which will be utilized in next 1 to 2 years.

Understood. So essentially you're saying, another INR 23 crores, that will be, I mean, prorated and extended over the year. So next year, if I look at FY '26 -- and maybe 12 crores or something like that. That's what you're saying.

Yes, yes [indiscernible] profitability how it is, but yes, we have INR 23 crores available to be utilized in future years.

Understood. And maybe if you could just tell us the nonfund limits, right? Have the drawable limits and sanction limits changed?

Yes. So as of now, we have a total limit of -- nonfund-based limit of around 4,500 crore, as against appraised limit of -- that's very high around 10,000 crore. And we are also -- because business is improving and margins are better, we are in constant touch with our lenders as well as some new banks to get sanction of some additional nonfund-based limits to help the operations.

Is there a time line as to when that would materialize?

So it will be gradual. We expect something to materialize in this month itself, basically in May. And in first quarter, some more limits might come...

If that comes, will the -- if that happens, will you be able to execute around 2,500 crores a quarter sustainably, in this month, [indiscernible] in this month...

So there are multiple factor, will -- execution will be through nonfund-based limits as well as the open credit which we get from the vendors. So depending on the execution speed and other factors, we can do the execution. So nonfund-based limits is one of the factor. That will also help in getting new contracts. Basically our nonfund-based limit is generally interchangeable between LC and bank guarantee, so we can use judiciously wherever it is required to get new projects and offer the bank guarantee for them or to give LC to our vendors and get more supplies.

Maybe let me -- I'm sorry. I know it's a follow-up, but maybe let's -- let me just ask this another way, right? So assuming you get the nonfund limits through, does this mean in Q1, Q2 you can exceed your Q4 run rate? Or will it be muted compared to that?

So last quarter, if you see, we executed more than 2,500 crore. It means we can execute, even with the current limit, 2,500 crore if other factors are favorable to the company.

The next question is from the line of Kunal Shah from DAM Capital.

So couple of questions. Now the first bit, as the base has been like reset for the company for F '25, how are we expecting the order inflow and revenues for F '26 in a base case scenario? Any revision or changes to the previous guidance?

Yes. So as you are aware, that the renewable industries depends on a host of factors. And while the quarter 1 and quarter 2 pipeline seems to be visible, the clear visibility for Q and -- Q3 and Q4 project by project is still to be worked out. While you can clearly see from the national growth plan perspective -- I mean the overall opportunities in FY '25, '26 will be better than the last fiscal. And therefore, I mean, based on our trend abilities and we now expanding into the wind and the solars, we clearly can foresee that, I mean, our order book positions will be better than this fiscal.

Okay, understood, sir. And just thinking it a bit differently, let's say we close with a 9,000 crore order book. Now out of this 9,000 crores, how much will get reflected in the F '26 as revenues based on the time lines?

That will depend -- we can overall say that we'll be exceeding this year's revenue target by 15%, 20%, from the UOV that we have on 1st of April. And the new orders will be coming. This is primarily because of many factors that is impacting the project commissioning and other things, but the growth prospect seems to be definitely better than this year's. And, say, the growth will be something better than -- I mean, in the range of 25 -- 15% to 20%.

Yes.

Sir, F '26 over '25 should be 15% to 20% revenue growth essentially.

Yes.

Okay. Now secondly, you mentioned on the fund and nonfund-based limits. Like, now [ just ] when we start the year with these 4,500 crore nonfund-based limits, what is the revenue potential base is that? And some assumptions with respect to the open credit, et cetera. And secondly, for this 15% to 20% growth in terms of revenues, what are we factoring in, in terms of our limits going up, basically, during the first half of F '26, if any?

So as of now, the limit is sufficient to meet our target. However, the moment we'll get additional limits, our open credit might -- will reduce that because that's more expensive. Nonfund-based limits come at a better cost. And we expect some additional limits to come in first quarter itself before June. And then maybe some more limits will be tied up in Q2. So we are speaking with the banks, existing lenders as well as the new lenders; and we expect a good progress in terms of getting new nonfund-based limits. Fund-based limits, we don't require. In fact, we don't get [ drawing power, us ], because we have negative working capital. So we'll require only nonfund-based limits for our business growth.

Understood. And is there any assumption of the open credit business that we will be doing for F '26? And what was it during F '25? If you could just help with that.

It's a mix of both, basically. Sometimes -- like LCs, sometimes we give for 3 years, but we'll get it paid in a -- in 1 month. So we keep a [ judicial ] mix of both open credit as well as the limits available. There's not a specific percentage that, "This much will be open credit. This much will be under nonfund-based limits." It depends on the availability, basically; and nonfund-based limits also because it is interchangeable between bank guarantee and LC. So we use wherever it is required, both, for the growth. If we require more towards new business, we give bank guarantee instead of LC, using LC, to vendors. And we'll get support from vendors to get the open credit.

And that's -- also depends on the project time line, et cetera, right?

Got it. And just lastly, there appears to be this constant volatility in the O&M gross margin business. Like, in the last quarter, we thought we are nearing that 25%-odd steady state, but now there's some bit of dip this quarter again. Is there a one-off over here?

This is one-off for the quarter, but this O&M business, you have to see holistically for full year. For full year, we can safely assume we -- this year, we have done around 20% gross margin in O&M business. Safely, we can presume that we'll be in 20% to 25% range in terms of O&M margin. This year, there were certain one-off expenses which we booked in last quarter. That's why quarterly O&M margin is low, but full year, it is 20%.

The next question is from the line of Sagar Parekh from One Up Financial Consultants. As there's no response, we'll move on to the next question. It's from the line of Puneet from HSBC.

Just a follow-up on this, if you can elaborate on what kind of one-off expenses do you have to book in the O&M which led to the fall in margins here.

So there are certain provisions and one-off LD in one of the project.

Receivables.

Yes, one -- certain provisions in terms of -- in our receivables. That's what we booked in FY -- in Q4. And there were some LDRs which was booked in quarter 4. That has resulted in reduced margin for O&M.

Okay, okay. So that's right. So -- but you're saying 20% to -- is -- to 25% is the normalized margins one should run within O&M part of the portfolio.

[ Correct ] [indiscernible].

Secondly, if you can also talk a bit about any additional work that you are seeing from Reliance Industries.

Yes. So, I mean, last time also, we discussed. And all of you are aware that we are doing their pilot project. So for the portion of the project that were allotted to us, that is almost completed, under commissioning. A few of them have been commissioned. New parcel of land has been given to us for, say, around 9 gigawatt -- 9 megawatts, I'm sorry, 9 megawatt [indiscernible] construction now.

9 megawatts, okay.

So that's the -- basically the pilot project. On the bigger-size utility-scale projects, we have submitted our offers. And they are under different stage of the plannings and trying to understand that -- when the projects can be launched and all, but from our side, we have already submitted the offers. So this is in the progress, you can say.

Okay. And is there an understanding that the project will come to you? Can it go to the other vendors as well?

Last time also, I told you this can go to other vendors. This can come to us because of the kind of pipeline they are discussing about. So I mean no such vendors in the country has that kind of capacity to, I mean, claim that he will be the only sole vendors. No, it's not possible. So when -- they can decide based on the merits. And we believe that we are, I mean, very strong on our merit, and therefore, we'll get -- a major portion of the orders should be coming to us. That's what I can tell you at this stage.

And just to add, what CK said. The revenue guidance what we have given or we are giving, it is excluding Reliance and excluding Nigeria, without -- yes, without these two.

Correct [indiscernible]. And lastly, on the battery front, there have been a lot of new battery bids coming in at very low tariffs. Are you seeing the benefit of that both in terms of newer orders and also lower cost on the battery prices for projects which you are executing?

So basically the development of the projects that have been bidded out, right, around 9 gigawatt kind of projects have been allocated, right, in the -- to the various IPPs, but only few of them have taken off. It is true that the battery -- lithium-ion battery prices have gone really historically down. And that's the reason that, the government of India and the other -- in fact, [ in the other govs ] also, people are trying to move from intermittency to the fixed power kind of things. So either through the solar battery or through only [ this obligation ] in the existing solar plant or the other establishments; or through maybe the solar, wind and battery. So market tractions will happen in this -- I mean, through these segments. That is for sure. And if you see the tariff, the fixed tariff on the basically round-the-clock power tariff, if I say -- so that is comparable to the -- I mean, better than the [indiscernible]. That's what the people are claiming. So market traction definitely will be seen in these segments.

Sir, what I'm trying to understand is you have -- other than the BESS projects with JSW which is in the limbo currently, do you have anything else which you're executing on the BESS side?

So we have executed a few smaller projects for Reliance. We have executed a few projects outside India. So currently, other than JSW, no, but frankly speaking, now there are a few tenders which are in the bidding stage. And having, I mean, got the very sound experience for the BESS projects, I mean, domestically or internationally, we believe that we should be getting a few ones, right...

And can you give the size of this opportunity here currently which is available for tendering?

[indiscernible] and the -- currently the bids which are out, I -- under process, they are around 100-megawatt-hour to 300-megawatt-hour kind of things, a few projects, but I mean like NTPC is talking about 10 gigawatt hour of the pipeline in next few years. So everybody is trying to understand that, how it's going to impact the market, what kind of the pricing would be there. So all those things. But since this obligation of 10% storage has come, along with the solar plant, the market will definitely see the traction.

Understood. And lastly, one clarification. The JSW order is a part of your order book. Or is it still an MOU...

No. It's part of our order book.

It's a part, okay. And what is the value of that?

It will be around, I think, 234 crores, around 250 crores. I don't remember the exact number, but it is, I mean, around 250 crores.

[Operator Instructions] The next question is from the line of Nirav Vasa from ASK Investment Managers.

Sir, my question pertains to the nonsigning of PPA. The quantity of projects for which the PPAs have not been signed is quite huge, so I wanted to understand your perspective. Or according to your understanding, why are the PPAs not being signed? And other, the second part of my question is like how strong is the transmission and evacuation capacity in the country, the pace at which we are increasing the renewable capacity. Is the transmission and evacuation capacity is working in the -- with the same length? These are the 2 questions that I have.

So basically this question does not pertain to EPC company, right, because EPC business comes only when the projects are basically in the market. So you are right, so -- but as the overall business macro level, if you analyze, then signing of PPA -- which is tariff adoption and the connectivity issues. So those are 2 areas which have been -- I mean, primarily from last couple of quarters, if you see, those who have been impacting the expeditious development of the project. So why it is happening is maybe basically because of -- I mean it's not our -- I mean, the area to answer this question, but I mean, just for the macro perspective, I can answer you. That's basically the tariff adoption takes place in the state government, right? So it is for them to adopt the tariff. And some of the states, they feel that, I mean, the -- because of the, I mean, declining price and all, it's becoming difficult for them to adopt that. So just they are taking a little, I mean, longer time, but the government of India has been harping on every state government to expeditiously sign and adopt all the tariffs, right? So that is one area. On the development of the transmission systems. So there is a committee set up. I mean [ normal ] committee and all. So they are trying to see that the -- to ensure the grid stabilities, how the green corridors can be maintained. And I mean huge investments are there. All those -- the pipelines, the projects are under the advanced stage of construction and all. It will take some times, but temporarily -- I mean you are right that there is a jerk on the development of the PPAs that could have -- that are stuck up because of the -- either the tariff adoptions or some of the projects because of the transmission line, but otherwise, I mean, the target that we have been -- I mean, if you see that -- this year target, I mean, the target was a little more than what the -- at a country level that people have achieved. Otherwise, I mean, the solar capacity of -- could have easily gone beyond 24 gigawatt that has been achieved this year. So those are the micro things that are impacting the business development, but it's okay. I mean, other than that also, there are enough the business pipeline that is being seen.

Sir -- but on one side, around 40 gigawatt of capacity doesn't have PPA. 26 gigawatt is what we had in a year. Maximum 30, 35 gigawatt of solar capacity can be added in a year, as per my assessment, so effectively we have practically 1 year's capacity which is -- for which PPAs have not been signed. So in the light of this scenario, what are the chances that the impact of this can come on the entire ecosystem, including EPC contractors? Any delays in projects? Any changes in terms? How do you see that?

So the number of projects that we have in hand, they are not impacted, right, the UOV. The number of the projects that we are targeting in this financial year's, they are also very clear. I mean either they are -- I mean our share, if you see there, are from IPPs and from C&I sectors. The C&I sectors are not impacted. The open-access projects are obviously impacted, but then there are enough number of PPA and connectivity already signed, like NTPC and all. So they are all in the solar [ park ]. So they are all, I mean, through. So government tenders are not impacted because of that. So basically, I mean, at the minor level, if you say, yes, there is jerk. The people are worried about, I mean, for sure, but then for the -- on the broader levels, then companies do not have any options. We have to meet the target of, I mean, 300 megawatt by 2030. That calls for around 50 gigawatt of bidding every year's and execution of, say, 35 to 40 gigawatt, right? So even if there is a shortfall, there would be enough space for us to play, right? So that's the basically point. Even if there is -- there will be shortfall, but then we have enough space to play around.

The next question is from the line of Purva Jhaveri from One Up Financial Consultant.

I am audible, right? So I wanted to ask. How much of the order book is in Khavda? And what is the risk to the project execution if there is India-Pakistan war?

India-Pakistan is a very, I mean, interesting question, right.

Highly speculative.

I think -- I mean it's not, I mean, proper logical to discuss this question in this call, right? I'll skip this question. I'm sorry.

Yes.

But at least can you share how much is the order concentration in the Khavda, order book concentration?

Order book concentration is around 4-plus gigawatts in Khavda, and they are at different stage of the project.

[ About ].

[ Yes ].

Okay...

Yes, mostly completed, correct.

Our project is mostly completed in Khavda, so we are in advanced stage of execution.

[Operator Instructions] The next question is from the line of Subhash V from Value Investments.

Am I audible?

Yes, yes, we can hear you. Please go ahead.

Okay. So my first question was about the wind EPC order that you have got, the hybrid order. So I think, 3 quarters ago, I attended your con call. And I asked you a question whether you would be interested in wind EPC sector as well, but you clearly said that you're concentrating only on solar EPC and not on wind EPC, so what changed this decision for you to take the hybrid order? And also I think the wind EPC has lesser margins than solar, right, so do you still stick with the same margin guidance of 10%? Or will it be lowered if you win more wind EPC orders?

No. So if you can recall, if -- I mean, if you have -- we would have discussed this point. So risk in the wind is basically from the wind turbine side, right? So land-related risk, access risk and the performance of the wind turbine. Our strategy for wind business is very clear. We are not going for procurement of the wind turbine or doing the land access or the land with these things, right? And it's only BOS that we are, I mean, concentrating on, and this order is also for the BOS. So this is ample space. Even if the wind -- as business overall, growth is seen, I mean, a huge traction. The BOS part, which could be around 30%, 40%, is also a good space for us. So there's no [ risk on it ] as such. So that's -- that gives a USP to basically provide a holistic solution to our customers.

So are the margins similar to the EPC, or does it change? Does it reduce...

I mean margin in the -- is a similar job. So solar BOS or the wind BOS, I mean, equipment remaining same, the business remaining same, the margin remaining same.

The next question is from the line of Mohit Kumar from ICICI Securities.

My question is on the -- what is the progress on NTPC execution? And how much is the order still to be executed? And have we commissioned the [ Khavda ] 1.3 gigawatt in this quarter?

This quarter means you say before June, right?

Yes.

Yes.

Before June. Are you expecting to commission in this particular Q1, FY '26?

[indiscernible]

No. So out of the total 3 gigawatt -- yes, you are right. So slightly over 3 gigawatt. So around 2 gigawatt, for sure, it will be commissioned. And another 1.2 gigawatt, they are at various stage, but then we are still expecting modules to be supplied by them, right? So if they are able to supply the modules in next couple of weeks, this can be seen, right? The commissioning is possible before, I mean, June. Otherwise, this may spill over.

So what is the...

It was not because of -- this is not basically because of our side. Our side, we are almost -- we can say we are in advanced stage of installation of other things. Some of the interrelated work which can happen only after [ module will be ] installed, that is only left out, like some cable connections and all those stuff kind of things. So we are expecting the modules to be supplied soon so that we can finish the project, but from our side, all civil works, everything is -- to that extent is complete.

Just to clarify. You're talking about 1.2 gigawatt commissioning in Q1 FY '26; the balance, later. Is that right?

So I say that over 2 gigawatt to be commissioned before June -- in June and 1.2 can spill over.

Understood, sir. My second question, if I may ask: How is the opportunity looking in the Middle East, of course, given that we understand that the opportunity is very high? Do we have the appetite to participate in the region again? Or can you just please throw some light?

We are just evaluating this Middle East market. So I mean no doubt there is huge opportunities. The project size is also -- it's a huge project size. They are coming up, particularly in Saudi and the Middle East, right, Abu Dhabi and Dubai and all those such places. 2 reasons that we are now keeping up -- away from the market is the -- a lot of Tier 1 EPC players have get -- or got into this market and they are at the -- they're operating at a very lower margin. That is not our appetite, number one. Number two, the terms and condition of the contracts, they are not conducive. So it's a basically lenders-driven market, right? So very stringent terms and condition in terms of penalties, acceptance or in terms of the [ BG ] requirement and all. Therefore, we are just watching that market to get corrections. And then as far as experience is concerned, we have huge experience. We were the first to get the largest size of project in [indiscernible], you are aware, around -- over 1,000 megawatt capacity. And so we have the office. We have our team, but right now we are not bullish in this Middle East market.

The next question is from the line of [ Rishikesh ] from RoboCapital.

Am I audible?

Yes. We can hear you.

Yes. Sir, my first question is if you could guide what should be our interest expense for FY '26 and [indiscernible].

So if you see, current year, this has ranged between 1.2% to 1.7% of revenue. And we believe that will be in the same range for next quarter -- next year also. The interest expense is -- what you see in the balance sheet is not exactly only on the debt. There are certain other interests also, which includes interest on advances, interest on LC discounting and some bank charges, vendor financing. So all those interests are there. So interest cost, you cannot per se link with the debt outstanding. Interest has a lot of other components also, as I mentioned. [ And ] guidance will be the same range, 1.2% to 1.7%.

Okay. Secondly, on Nigeria, could you update exactly what is the status there? And by when can we see the agreement to happen?

I just explained sometime before. I'm not sure you were there. I mean it's a very -- I mean, clearly spelled out that, I mean, these things are getting delayed procedurally. And it may take some time, right, but the project is on...

Okay. Can you...

[indiscernible] when to sign up the contracts and -- but I mean it will take 6 to 9 months, after signing the contract, for the financial closure and then to get the NTP.

Sorry to interrupt. I will request. Please come back in the queue for further questions. The next question is from the line of [ Bhavik Shah ] from Emkay Ventures.

Am I audible?

Yes. We can hear you.

Okay. Sir, a few questions. Sir, question, what will be your order inflow in FY '26 ex of Reliance? And sir, how much time does it take for an order like Reliance to achieve financial closure once we get the order? And third is, sir, what is the receipt of indemnity we are aiming in FY '26? And my last question is why the other income negative.

Sure. So I'll answer for the first question, first. And then Ajit will take up for the another 2 questions. So financial closure is not something which pertains to me. So it's basically Reliance, once the project is concluded, is the EPC order that we will go for. And I don't think that's the basically hindrance for Reliance projects to come up, right?

So we can immediately start with the project...

Come back again, please...

So we'll be able to start with the project immediately as we get the [ budget ].

For us, yes. The moment the project is awarded to us, we are within the -- as per the project time lines, we can start doing the work.

Okay, yes. And sir, the other questions...

Ajit, other 2 question, for you.

Sorry. Can you repeat, if you don't mind?

Yes, yes. So what will be your order inflow for FY '26 excluding Reliance? How much receipt of indemnity we will get in FY '26. And what will -- why the other income negative.

So as we indicated, FY '26, we are looking for a growth of around 15%, 20% in terms of overall order intake.

Okay, okay. I think that was for revenue, not for order inflow...

Order intake, also same growth we are looking at, around 15% to 20%. In terms of indemnity, nothing has been crystallized.

Okay.

[indiscernible]

And yes. So crystalized indemnity is not there, but around 850 crore, we can expect to receive. That has been intimated to the promoters. And that should be due in September...

No...

So that will be based -- I mean they are, I mean, the outflow from the project...

850 crore is the current outflow from the project...

So basically -- so I mean, the number that you see, that 850 crores, is the outflow on the project, which is at the various levels of the litigations, understanding and all those, once crystalized. So if -- I mean our expectation from the client is 850 crores. So out of 850 crores, if something is falling short of that, we'll go to indemnity. And once it is -- the order comes in our favor, it will go to the project company.

Understood. And sir, why is there a negative...

I'm sorry to interrupt, [ Mr. Bhavik ]. Please come back in the queue for further questions. The next question is from the line of Faisal Hawa from H.G. and -- Hawa and Company.

And yes, one more question, Faisal, [indiscernible]. Other income is negative because of the ForEx loss that got configured over there. ForEx loss has been adjusted against other income. That's why it came negative.

Right.

For the quarter, not for the full year. For the quarter, it is negative. For the full year, if you see, it's positive 39.6 crore, the income positive. Please go ahead -- yes. Is it clear?

Yes.

Yes, sir.

Sir, what is the kind of reduction we are expecting from our fixed cost like the -- our central office expenses, in view of so much competition coming on from other players in EPC? Is there any chance that these expenses could be cut down so that we are much more competitive for newer orders?

We will work on that, but as of now, we'll not indicate any reduction. We'll continue with the same trend what we had in the last year.

And sir, are there any international orders that we are bidding for also? And what is the size of those orders that we have already bid? And have you budgeted for any wins there?

Yes. So as I have told you, that -- I mean our focus is more in the domestic market. International market, we are very select -- in a very select geography and only those orders we are targeting which are very conducive to our requirement, right? So good terms and condition, better payment terms, not much risk. So having burnt our fingers in past, we are very careful. So if you see the last year, the order inflow, it was over 1,000 crores. Before that also, it was over 1,000 crores, so we are targeting in the range of 1,000 crores to 2,000 crores orders, if it keeps on coming, from Africa and European market. European market means we'll say that -- the Iberia, Balkans regions, where not many players are there and then you can still command some better margins. So only those regions, we are targeting.

And are we -- after appointing the new CFO, are we also trying to plug in positions from people who have resigned in the last 6 to 7 months? Or we will let those posts be vacant mostly or just promote from the organization upwards.

So I'm reviewing the entire org chart. And there would be some new recruitments also in certain key positions. And whatever we can manage with the additional resource, we'll continue to manage...

And is there a chance that Reliance -- yes.

If I -- just to supplement Mr. Ajit's answer. So basically organization is not starved off. So a few people leaving us here and there does not impact the business, day-to-day business, right, but always, as you grow in the business size, there would be always requirement to see that if the -- fresh blood is required or something like this. But there has not been a mass exodus kind of situation. And that's not really alarming us, very frankly speaking, yes.

And is there a chance that we could get some large orders from Reliance in the first half itself because we have done the first pilot for them?

No. So we've done the first pilots. A few projects are under bidding stage. It's difficult for us to assess at this stage that it will come in first quarter or second quarter, but yes, the team is working from their side, from our side. We are engaged gainfully and we are working on this.

Thank you. Ladies and gentlemen, that was the last question for today's conference call. With that, we conclude today's conference call. On behalf of Sterling and Wilson Renewable Energy Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.