TD Power Systems Limited (533553) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the TD Power Systems Limited Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Devrishi Singh of CDR India. Thank you, and over to you, sir.

Thank you, Vikram. Good morning, and thank you for joining us on this call to discuss financial results of TD Power Systems Limited for the quarter and 9 months ended December 31, 2019. We have with us Mr. Nikhil Kumar, Managing Director; and Mrs. M. N. Varalakshmi, Chief Financial Officer from the management team on this call. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's financial performance have already been e-mailed to all of you earlier. I now invite Mr. Nikhil Kumar to provide key highlights of the company's performance for the 9 months ended December 31, 2019. Thank you, and over to you, sir.

Thank you. Good morning, everybody. Thank you for joining us today on our earnings call. I trust all of you would have received our results and investor presentations. Now I would like to discuss with you TDPS's financial performance for the 9 months ended 31st December, 2019. Stand-alone. Our total income on a stand-alone basis for 9 months is INR 346 crores, an increase of 22% versus INR 283 crores for the same period last year. Profit after tax for 9 months is INR 9.24 crores versus a loss of INR 4.5 crores for the same period previous year. The company has adopted the revised tax structure and has made tax provisions accordingly. Manufacturing revenues for 9 months is INR 328 crores versus INR 262 crores, an increase of 25%. Exports and deemed exports contributed 61% of manufacturing revenue. The total manufacturing order book including our Turkey operation and our railway business stands at INR 1,095 crores. The split up is INR 290 crores is the India manufacturing, INR 736 crores is the railway business and INR 69 crores is Turkey. Exports and deemed exports, including Turkey but excluding the railway business, is 74%. Order inflow. Our total order inflow for 9 months is as follows: including TDPS Turkey, which is now clubbed together -- in the future, we'll be clubbing our Turkey business as a manufacturing business -- our total order inflow is INR 419 crores for 9 months compared to INR 370 crores the previous year same period. Q3 order inflow for the current year is INR 186 crores versus INR 131 crores for Q3 versus Q3 of last year, this year versus last year. Project business for 9 months is INR 10 crores versus INR 13 crores the same period last year. Our order book for the projects business stands at INR 35 crores. On a consol basis, our total income is INR 375 crores versus INR 268 crores the same period last year, an increase of 40%. Profit after tax and other comprehensive income is INR 10.53 crores versus a loss of INR 12 crores last year. We continue to maintain a strong cash position of INR 152 crores. Now I'll come to the market situation and guidance. This year, we have seen strong order inflows in all segments of the business, from India as well as from exports. In particular, we've seen heavy order inflows from the gas engine business export and with steam turbine side domestic. We've seen the domestic market ordering in steel, wastage recoveries in cement primarily, distillery including ethanol business, and paper. And to a smaller extent, we've seen some business in sugar cogeneration. We think that the domestic market has bottomed out and signs of consistent recovery are clear and emerging. For us, the hydro business is flat at the moment in terms of order inflow, but there are some big orders in the export market and we are bidding strongly for them, and we hope -- and we are hopeful to secure a few of them. Our Turkey manufacturing business deserves special mention. We have almost EUR 10 million order inflow, and our factory in Turkey right now is running at full capacity. We have taken orders in geothermal, hydro and biomass. We hope to have consistent volumes in this market for '21, '22 since the inquiry and project business -- project -- sorry, the inquiry and order pipeline is very strong. We have secured breakthrough orders from a major U.S. engine based -- engine company into TDPS India. We have received an order for 3 machines, and we will then receive an order for 5 more machines, a total of 8 machines for different engine types. We will expect volumes to begin in '21, '22 for this since there's an 8-month qualification period after delivery of these machines. Delivery of prototypes is expected to be around May this year. Our traction line for railways is running at INR 8 crores per month starting from this month. Confirmation of volumes at this current run rate for 2021 has already been received from the customer, and they're going flat out. Let me move towards guidance. Manufacturing business, the outlook for this current year, '19/'20, is firm as per our earlier guidances of INR 480 crores to INR 490 crores. Q3 revenues, as noted, were in line with our guidance given in the previous earnings call. TDPS Turkey will end this year with sales of EUR 3.2 million, which is around INR 25 crores. So as a total, our manufacturing business has crossed INR 500 crores this year for the first time. We would like to put out our first guidance for FY 2021, the next financial year. Based on the current order book and visibility, we can -- we expect manufacturing revenue to be minimum INR 600 crores, up from INR 500 crores this year, including Turkey. All our subsidiaries will be profitable next year. We do not see any major changes in our fixed costs other than the historic trend line increases in employee-related expenses and operating expenses. Investments for the next 2 years will be mainly in the area of robotics and automation. We have already installed and commissioned the third robot into TDPS. We continuously keep adding automation and robotics to our production to keep our manufacturing at the cutting edge of technology. These investments, however, will be kept well under the depreciation numbers of TDPS. Projects business, top line is INR 34 crores. This business is decreasing, and we are initiating actions to downsize, and we will downsize our organization in line with the expected business. Subsidiaries, TDPS Turkey, TDPS Europe will make healthy profits this year. TDPS Japan and TDPS USA will make small losses. However, netting out those small losses, overall our subsidiaries will show profits and will contribute positively to the company results on a consol basis. This brings me to the end of my initial remarks. I will now be happy to address all the questions that you have. Thank you.

[Operator Instructions] We have first question from the line of Smriti (sic) [ Kirti ] Jain from Sundaram Mutual Fund.

Sir, Kirti here, sir. Congratulations for very positive outlook, I would say, and good order flow, I would say, for the quarter sir, very good order flow. And third consecutive quarter we have seen a very good order flow, sir. So sir, just, first, I will start with, sir, currently your manufacturing -- you -- as per our computation it's INR 490 crores, right, sir?

Yes, I said INR 480 crores to INR 490 crores for the India, and EUR 3.2 million, which is around INR 25 crores, for Turkey.

Right, sir. What you have done YTD sir? As per our computation, we eliminate intercompany and calculate the -- what is our number you have done YTD as per we have done?

So YTD for India is INR 328 crores in manufacturing and Turkey is -- one second -- I think EUR 1.5 million you can take Turkey.

Okay. So we have done INR 340 crores, and we are expecting kind of INR 150 crores, INR 160 crores kind of manufacturing in the fourth quarter?

INR 155 crores to INR 160 crores in -- for Q4 and around INR 11 crores from Turkey.

So 4Q would be like a similar on a Y-o-Y basis? Like, last year, 4Q was a very strong year. So such kind of lumpiness can be there, broadly? Because last year, we did a [indiscernible].

No. We've seen that Q2 and Q4 is where we have maximum sales, and that's because of half year ending, many of our customers are also -- have year ending in September. So there is definitely a pull from the market in Q2 and Q4. Q1 and Q3 tend to be depressed quarters for us. But what we do is we manufacture consistently throughout the year and then the peak of sales takes place.

Okay. Sir, in terms of next year, sir, order flow also looks healthy, sir, at this point from the key customer for Q4 and Q1. Any -- like the order flows also directionally looks healthy, sir?

Yes.

Order flow momentum?

They've had a very good January already. Exceeded our expectations, to be honest with you, and we are seeing same kind of situation continuing into February and March.

Okay. Okay, sir. Sir, in terms of margin, generally, like what is the PBT margin we would be targeting, sir? Because now as per Ind AS, the -- some of the forex gains because of our hedging policy comes below the line, what would be the PBT margin you would be targeting?

Yes, I have not put out that number as yet, Kirti, because...

With this year, sir -- you generally review the guidance now, sir.

Yes. So this year -- so you can take our gross contribution to be somewhere in the region of 30% to 31%, okay? And then you can do the calculation based on that.

[Operator Instructions] We have next question from the line of Dhwanil Desai from Turtle Capital.

Congratulations for the very good set of numbers. Sir, 3 questions from my side. First question is, sir, this year on consol basis for this quarter, our gross margins have slightly dipped and the copper prices have been going down continuously. So how -- I mean as probably you guided for 30%, 31% kind of a gross margin, sir, that is considering the drop in copper prices? Or I mean copper remains hedged from our side?

So copper has dipped recently because of this coronavirus problem and the scare, and it's like maybe just to a couple of weeks old. It's not going to impact. So we have booked a lot of copper recently when the prices have dipped in the past few weeks, have booked a big chunk of copper, which will start affecting the numbers. Once the copper comes into our production system, which could be somewhere around April, May, and then the sales would take place a couple of months later. So it's not going to have any immediate effect on the bottom line.

Okay. But this 30%, 31% number that you are estimating is irrespective of this drop in copper prices, right? Is that fair to assume?

Yes, that's fair to -- it's fair to say that, yes.

Okay. Okay. My second question is, sir, on the Turkey. I think you mentioned that probably this year we'll close with EUR 3.2 million kind of a number. And so I think our turbine manufacturer from India in the recent call was talking about challenges in the Turkey market. So do we see anything like that on the ground for us for our product in that sense?

See, we have a manufacturing unit in Turkey. So we are not only looking at the steam turbine business in Turkey. In fact, the Turkish market is actually pretty small for steam turbines. It's a large market for geothermal, which is mainly driven by what's called a organic Rankine cycle turbine, it's not a steam turbine. It's a different kind of turbine. And it's a big market for hydro. To a smaller extent, there's a market for biomass, which is the steam turbine business. So our -- and you can say about 80% plus of our orders in Turkey have come from geothermal and from hydro. And this is -- both these segments are heavily promoted by the government of Turkey because there's a lot of investment coming into this because it's a renewable. And we have taken all -- practically all the business in both these segments because we have a local manufacturing plant. And delivering local generators gives the power plant owner an additional feed-in tariff, which makes it very attractive for him.

Okay. Okay. Okay. Got it. So I mean our outlook on Turkey remains quite positive in that, right?

Yes. It's totally different. I mean our Turkey -- most of the Turkey is based on the renewable side of the Turkish market. And we have products for both geothermal and hydro, so...

Okay. Got it. Got it. Yes. And sir, last question is for the next year's guidance that you are talking about of around INR 600 crores. Now we will be seeing around INR 480 crores, INR 490 crores this year in manufacturing side. And we have the traction, whatever orders are starting next year ramping up at a run rate of INR 8 crore a month that we are talking about roughly INR 90 crores, INR 95 crore. So I mean given the strong order pipeline and the inquiry that you have, the rest of the business, are we expecting 10%, 15% kind of a growth? I mean are we being conservative in giving INR 600 crores number?

You're totally right. I mean, I am being conservative with INR 600 crores, I'm being extremely conservative with INR 600 crores, but you're totally right. I will upgrade the guidance next quarter.

Okay. Okay, got it, sir. And sir, lastly, so I mean, let's say, we grow our manufacturing division by around 20%. The costs on the employee side and other expenses side, do we -- shall we assume in line with inflationary cost? Is that the number that we should assume? Or should it be kind of linked with the increase in volume? How should we look at the -- those costs?

So I will say, look at the -- see, we have enough floor production capacity for this entire INR 600 crores. So we're not going to add any major fixed costs into our company. We have a historic trend line growth of employee-related expenses between 4% to 6%, and the other fixed costs are maybe growing -- we kind of kept them flat because we have been able to look at productivity improvements and things like that. So approximately, you can say 4% to 6% increase in the fixed costs overall, including employee-related expenses and factory cost. We -- that's the main goal of the management to keep it at that level, plus/minus 1%, 2% could take place, but we always try to keep it less than 6%.

[Operator Instructions] We have next question from the line of Rajat Setiya from Vrddhi Capital.

Sir, how much did we do in the railway side in this year?

INR 34 crores will be done this year.

And what is the expectation from the next year on the railway side?

Around INR 100 crores.

Around INR 100 crores. And in terms of the continuity of that order, there is no -- I mean, there were some news articles or rumors about the order continuity, I mean...

So there was one article that came out some time back. And there was a subsequent article which came maybe a couple of weeks later. So our customer has -- the locomotive has passed all the tests. And they are producing at full rate right now, they're producing 8 locomotives per month. So they are at full steam ahead and locomotive has performed really, really well.

All right. So basically, starting next year, we would be doing INR 100 crores every year from that order itself?

Correct. With potential for upside is also there. There are some discussions, but let's see. Right now, it is INR 100 crores.

Okay. All right. And in terms of gross margins, I'm sorry if I missed it, they were little down in this quarter. So what really happened?

We had a couple of -- I mean, we had a few orders which contributed to that dip. We had one large machine that we had on the 2 Pole, this larger machines, about 60-megawatt. We had one machine that we sold at a bad price and that -- this hurt the numbers little bit. But overall, the business is doing good.

Okay. All right. And sir, one final question. You mentioned that one Indian company, engine company has given some 8 orders machine -- 8 machines order to us. Sir, when will the delivery begin?

I didn't mention anything about any 8. I said this is a U.S.-based company, U.S.-based engine manufacturer. And that, as I said -- that would start from May, and then there'll be 8 months of testing.

We have next question from the line of Lalaram Singh from Vibrant Securities.

May I know the order inflow by domestic and exports, can you split that for this quarter?

Yes, INR 50 crores accounts to...

INR 50 crores domestic, right?

INR 147 crores has come from direct and deemed exports and including Turkey, and INR 38 crores from the domestic.

INR 38 crores from domestic? Okay. And do you see that domestic order inflow to be much better than this in the coming few quarters?

Yes. It's going to -- see, in the worst years that we had, like maybe 2 or 3 years ago, I don't remember exactly it was 2 or 3. We had -- total domestic was something like INR 95 crores. And now we are running around INR 40 crores a quarter. It's definitely improved.

Okay. I think in one of the -- in recent past, we've also done INR 50 crores and even INR 60 crores a quarter there. So -- but you're saying that INR 40 crores a quarter run rate is something which we can maintain and on that we can also foresee a growth.

I'm quite upbeat about that. I'm seeing a consistent order inflow and negotiations taking place, order flow -- order inflow taking place with both our major customers in the captive power plant business. And so it's -- there's no doubt that the captive power plant business is here to stay and every brownfield/greenfield investment taking place in this country is putting up a captive power plant. So this 10-megawatt to 50-megawatt business will continue in a big way in India.

And so you are referring to greenfield CapEx also, or is this growth driven primarily by WHRS, which is being put in the existing plants?

So right now, it is more -- mainly brownfield, I would say, not so much greenfield. So it is -- wastage recovery, like I said, wastage recovery. Steel is also actually pretty strong. Distilleries, including the ethanol plants, and paper and to a smaller extent sugar cogeneration.

Got it. And in Turkey, you are saying that you're running at full capacity, so do we need to incur CapEx to increase the capacity to support the good demand?

No, we don't see the demand increasing dramatically from this level. We have a wait-and-see policy right now on further investments in Turkey.

Got it. Can you throw some light on environment in U.S. geography also?

So U.S., we have seen -- I mean, we had -- most of our development work has been done for the shale gas industry and for the mobile power units for the shale gas industry. And a lot of business that we got in the past 2 years is from -- was from that segment. But we have seen that in the past few months the -- especially with oil prices coming down, this business is again coming under stress. So we don't expect major ordering to take place in this business in the next year. However, having said that, there are other industrial power plants -- sorry, industrial sized units, 10, 20, 30 megawatts, which are required once again, basically the heat recovery systems or wherever steam is used as a part of a process for paper, for chemicals, food, those power plants are still coming up in the U.S., and we see a strong pipeline sufficient for us to have good growth in the U.S. compared to this year for next year. So -- but the shale gas industry, which I expected to be driving a lot of the growth, that is not going to happen next year.

We have next question from the line of [ Vivek Kumar ], individual investor.

My question is on the gas engine. So if you can -- because you have a -- and also steam on the Europe part. How is the demand from the customer now that he has -- that has changed, because this -- we read lot of articles that he is winning a lot of the orders. So can you throw light on steam and engine demand from our old customer and also steam Europe outlook?

Yes. So engine, as I said, gas engine, we've had an extremely good order inflow. We have -- we picked up -- we got big orders from Russia, and we got big orders from Australia. So really, really large volume ordering. So that's driving the growth for us on the gas engine business. Inside Europe, there's still steady demand and -- but the growth has really come from these 2 countries for us for this -- for the past few quarters and also will be for the next quarter because there are some more jobs under negotiation in these 2 countries.

Understood. What percentage of -- sorry, go ahead. Go ahead.

Yes, what percentage of business coming from gas?

No, no, what percentage of that customer are we catering to? Like the new owner, what percentage of his demand are we meeting? Like who can we, like...

So -- but the engine test that we are talking about, where we're supplying, you can say it's about 50%.

Okay, okay. Steam? Steam?

On the steam side, Europe is -- will be about flat for us next year compared to what it was this year. We have supplied good number of machines, larger-sized machines, 40- to 55-megawatt, and that we have a few more orders in the pipeline, and it'll remain flat. I don't see big growth taking place in this business in Europe next year.

We have added few gas engine clients, you told people you've added and you'll update on the guidance regarding those. Are you -- the U.S. engine maker is the same thing that you're talking about, your last quarter you told you added 2 engine clients.

I'm not mentioning the name, but it's based in the U.S. Yes.

So you have added another customer is what you said, so there's talks such thing going on? Like, what stage is it?

Last time I had said that we were expecting -- so we were expecting orders from this U.S.-based company. We got those orders now. So we are in -- very much into the qualification program for 8 engine types. And the other big European customer, that is not moving forward at the speed that we expected. Maybe it will happen next quarter, but -- we're pushing, but it's not happened as yet.

Okay. So given all this, our outlook for next year is INR 600 crore in manufacturing, right?

Yes, sir.

Yes. And then the rest will coming from...

Sir, I apologize. Would you like to come back in the queue? [Operator Instructions] We have next question from the line of Dhwanil Desai from Turtle Capital.

So one question. I think we have INR 150 crores cash and we did buy back last year, but I think recently, we gave a notification that we will consider interim dividend. So I mean are there any plans to utilize this cash through buyback? Or you think that the dividend has become a more attractive option? I mean, any view or thoughts on that?

So we can't buy back for a year since the last buyback, and still have some time for that. And we are -- we have discussed in the board meeting yesterday interim dividend. We will let the market know shortly.

We have next question from the line of [ Mayank Sheth ], independent investor.

Sir, one small suggestion I have; if after each conference call, we could forward a copy of the transcript in text form as a PDF file to the BSE and upload it in our company's website, that would be helpful for all the investors.

We will upload it to the company website.

Sure, sir. So coming back to my questions, we indicated that we plan to downsize the project business. I would like to know, would there be any onetime expenses to downsize it, like we had in EPC business?

No, no, no. It's just -- it's a small group of people, and we will not have any cost like we -- nothing close to that. It will just be gradual attrition of people and that's it.

And any pending warranty commitment in this business?

No.

Okay. Then my, sir, second question is over the last 2, 3 years, our receivable cycles has increased. So for this year and the next year, what kind of receivable days we can expect?

You can approximately keep it the same. But I don't see any reduction taking place in this because it is still -- money is still tight in India. And when we export to some of our larger customers, and since the volume of export is increasing to the larger customers, we do have longer credit cycles with them compared to domestic.

And inventory days, sir, any changes?

No, I think we will have to maintain this level of inventories, because if you see the guidance that we have given for next year also, this level of inventories will be required.

Understood. One last question, sir. Given that euro/INR is around INR 78, INR 79, do we still expect the same EBITDA margin of 8% to 9% this year? And given this exchange rate, what could be the EBITDA margin for the next year?

No. So we have booked a lot of euros this year at a rate, average you can say INR 82, and we have discharged all the euros at that rate for the whole year. We have also booked a fair amount of euros for next year at around INR 82. So that -- all that -- so all those foreign exchange gains comes below the -- it doesn't come into the cross contribution level. So yes, we can maintain -- we can -- we will cross -- with a better factory utilization, we will definitely cross 11% EBITDA margins next year.

We have next question from the line of [ Manish Bakshi ], individual investor.

Just one question on the current capacity that we have. Based on that capacity, what is the maximum revenue that we can get to, given that we are expecting INR 600 crores next year?

So [ Manish ], all along we've been talking about INR 700 crores, INR 750 crores. But we are -- as I said in my earnings call speech, we are also investing -- every year, we're going to be investing in debottlenecking, adding robots, automation into the manufacturing system. So I feel that we could push this to INR 800 crores, INR 850 crores also in the future. So in the near future, there's going to be no capacity additions, and we're going to keep flogging the assets.

Okay. And another question I had was between September and December last year, I saw on the BSE website that there is a lot of open market purchases from TDPS Employee Welfare Trust. Is this linked to the ESOP plan that you've launched or what exactly is this?

Yes, sir, it was for the stock purchase only.

Because typically I see that normally ESOPs lead to a dilution in equity. So are you buying it from the market and then giving it to your employees?

Yes, we are buying it into the welfare trust and we'll be then giving it to the employees. And we're done with it, completed the project.

So that means our ESOP plan will not lead to any further dilution?

No. No. No. Not...

Not. There are 2 parts of the ESOP plan. One part of the ESOP plan is where we have given ESOPs where we'll purchase shares into the trust, and those will be given to the top management of the organization. We have another part of the ESOP, which is SARs, S-A-R-S, and those would be an addition of shares. We estimate that to be something in the region of 300,000 to 400,000 shares addition.

Okay. And they'll invest through what period?

3 years.

Okay. So 100,000 a year approximately, dilution.

[Operator Instructions] We have next question from the line of Kishan Shah from Isha Securities.

So the -- on the financial side, our capital work in progress has increased from INR 1.5 crores as of FY '19 to INR 3.3 crores. So what is this exactly on account of?

This is some machines that we are buying for our [indiscernible], so CapEx invested.

Okay, okay, okay. And -- okay, this will be capitalized by this year itself or will it -- will anything flow over to the next year?

Most of it will get capitalized by Q4. There'll be a little slipover for Q1 next year.

Okay, okay. And the investments also have increased from INR 10 crores to INR 20 crores, so INR 19.9 crores. So what is that additional investment?

We have invested into LTDs INR 10 crores...

LTDs?

Yes.

Okay. So could you tell the interest rate on that?

8.6%.

8.6%, okay. And there's no working capital as of now, right?

No.

Working capital -- sorry, we misunderstood the question.

The borrowing is INR 658 crores -- sorry, INR 65.8 crores.

We have a sanction limit of INR 90 crores. We will be hovering around this.

Okay, okay. But there's no short-term borrowing?

No, no, no.

We have a sanction limit of INR 90 crores, and we're utilizing INR 65 crores. And if the business goes up, we may utilize more, but we won't take an additional limit or something like that with the bank.

We have next question from the line of Lalaram Singh from Vibrant Securities.

I have one bookkeeping question. This quarter, the finance cost was INR 1.9 crores. Does that include some forex element?

Yes, it includes, because we have done hedging, so we may...

Yes. What was the quantum of that?

Around INR 45 lakh.

Okay. Okay. My second question is in the working capital, can I get the payables figure separately?

Yes. It is INR 120 crores on consol basis.

INR 120 crores. And in this quarter, we have seen in receivables, inventory, both have gone down. And so can I get the CFO figure for this quarter, how much cash did we generate from operations?

The cash generation this quarter. I think, sir, maybe this question, we can take it -- can you just call us, and we'll give you the numbers. Give us some time to get the numbers for you.

We have next question from the line of [ Mayank Sheth ], independent investor.

Are there any plans to downsize our Japanese subsidiary? And in case there are, what could be onetime expenses for that, sir?

So we have already downsized from 12 people to 4 people. And we will keep this 4 for some more time. But even if we have to downsize it from this point down to 2, it's not going to be a major impact.

I understand, sir. Sir, my next question is, usually, what percentage of our manufacturing sales comes from the customers that we added in the last 4 to 5 years?

4 to 5 years?

Yes, sir.

I don't have that number off the top of my head, sir, right now. We'll have to really look at that. We...

On an annual basis, we can. Maybe the March we'll be able to tell.

We can tell you that maybe, once again, you can call us, we'll do the numbers and have that number ready for you.

Sure, sir. I'll connect off-line. One more question. Sir, this is more from the long-term perspective, have the -- has the company taken any keyman insurance policy in your favor? And what is the succession plan in case there is need -- any eventuality and immediate need for the second line of the management to take over?

There is a very strong succession plan in the company. We have a very strong management team, young ambitious leaders are emerging, and I don't see any problem for someone to take my position if the need ever comes. So we -- I am very proud of my team.

And have we taken any keyman insurance policy, sir?

Yes, we have taken, sir.

What could be the approximate value, sir?

I think we will take this call off-line, sir.

We have next question from the line of Rajat Setiya from Vrddhi Capital.

Sir, seasonally, our quarter 4 is usually the best quarter, what is the reason for this seasonality?

I wish I had a clear answer for you for this. I would love it if we had 4 equal quarters.

I mean, usually, orders are tilted towards -- I mean, deliveries are tilted towards quarter 4? Or is it something just happening by chance?

Not by chance. It happens every year, so it's not by chance. But I guess everyone -- all our customers also need to increase their own sale, so they buy from us, end user need to claim depreciation, so they want to install the machinery. So this is what happens, I think the bunching effect takes place in Q2 and Q4.

We have next question from the line of Lalaram Singh from Vibrant Securities.

Nikhil, may I know our market share in India? Have we gained market share? And what would be your global market share, excluding India? And also, if you can throw some qualitative comments on trends in the global markets within the products which we are catering to? And how our positioning has changed over the last couple of years? That will be helpful.

India, we have a very high market share, I would say 80 plus percent. That continues to be the case. We haven't dropped market share. We haven't added market share. Globally, in different segments, we have different market shares, but I would say overall we could be 1% -- 2%, maybe 3% global market share in the products -- in the ranges that we supply. The trend in the global market, I would say that overall there is still a small shrinkage of the market taking place every year. It doesn't affect us. Actually, it improves our chances of success, because there is pricing pressure for incumbent players in the global market. And we are better prepared right now with larger installed base and more competitive pricing to be able to meet the price level, which we'd expect from the market. But I have seen that there has not been so much of a dip, overall shrinkage of the market over the -- in the past 1 year or 2 years, let's say, 18 months, let's say, compared to what it was, let's say, 4 or 5 years ago, where there was a dramatic 20% shrinkage in the market. Maybe I see stable trends or more or less stabilizing trends taking place in the global market also. There has been a lot of downsizing which has taken place from our competitors, some of them have closed down. Most of them are in bad financial health. So we are very -- from that point of view, we are very well positioned to go aggressive and pick up more market share.

Got it. So globally, we are at 2%, 3% market share, so which means that we have enough headway to increase our market share, right?

Yes, we have enough headway to increase our market share. The engine business is -- still continues to be a very large portion of the global business in our ranges. And the engine business is really good because it's the same product we'll keep making again and again and large volumes. But getting into the supply chain of a large engine maker takes a lot of time and lot of effort. So we are -- as I said, we are already part of one, and now we've added a second one. It's not even a done deal in terms of us being qualified and in the supply chain, but we have that opportunity right there in front of us. That, again, will change the numbers dramatically. So I think we'll see as time comes that we will improve our market share. And these engines, these engine guys, they supply to large data centers, emergency power all over the world, sometimes gas engines are used as baseload power also and distributed power. So the engine business is still pretty strong.

Got it. One last question, if I may. Is there any particular strategy which we have outlined to increase the gross contribution in our business on a permanent basis, whether products categories which themselves have higher margins, or is there an element of service which can be included in our business?

We want to increase our gross contribution. So it's going to come from a combination of cost reductions, having products that need less material, some better currency hedging, some portion is going to come from increasing prices in some segments wherever we can. So it's going to be a combination of everything. Everything contributing a little bit. And hopefully, we should get to something like 32%, 33%, which I think would be extremely good situation for us.

We have next question from the line of [ Vivek Kumar ], individual investor.

Sir, any update on wind? That's my first question. Second is INR 600 crores from manufacturing. And apart from that, we would have these railways, right? Is my understand right?

Apart from INR 600 crores we will have, sorry?

Railways business like Armstrong's.

No, this is inclusive. All manufacturing business is included in INR 600 crores.

Okay, okay, okay. And wind business sir, are we doing anything on the wind side?

No. We had one customer who -- and we -- Senvion, they went bankrupt, we've been able to collect all the money, most of the money from them. So we -- it's not a very -- it's a high-risk business to be in the wind business right now in India.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments. Sir, over to you.

Yes, thank you, everybody, for joining our conference call. There have been some questions that need further answers. So please do feel free to get in touch with us, and we'll be happy to answer them. We look forward to interacting with you once again at the end of the next quarter. Thank you.

Thank you very much, sir. Ladies and gentlemen, on behalf of TD Power Systems Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.