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 from 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 ended 30th June 2020. We have with us Mr. Nikhil Kumar, Managing Director; Mrs. M. N. Varalakshmi, Chief Financial Officer; and some of their colleagues in the management team on this call. Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. Documents related 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 quarter ended 30th June 2020. Thank you, and over to you, sir.

Good morning, everybody. Thank you, once again, for joining us today on our earnings call. I'd like to now discuss with you TDPS' financial performance for the quarter ended 30th June 2020. First, stand-alone. Our total income on a stand-alone basis for Q1 was INR 72 crores versus INR 95 crores for the same period last year. Loss after tax and comprehensive income for the quarter was INR 9.6 crores versus a loss of INR 1 crore for the same period last year. Manufacturing revenues for Q1 was INR 67 crores versus INR 90 crores. Exports and deemed exports was about 67% of our manufacturing revenues. The COVID-19 pandemic has severely impacted revenues for the first quarter. We could only operate for effectively 45 days, thereby lowering our sales and, therefore, we had an under-absorption of overheads. The manufacturing order book, including our Turkey operations, stands at INR 1,104 crores. Out of that, INR 319 crores is the manufacturing business, INR 707 crores is railway business and INR 78 crores is Turkey. Exports and deemed exports, excluding the railway business, is 62%. Order inflow for the first quarter was INR 99 crores versus the previous year of INR 118 crore. Order inflow from direct and deemed exports was INR 56 crores compared to INR 73 crores in the previous year. Project business revenue during Q1 was INR 0.92 crores versus INR 1.6 crores in the same period last year. Our order book for the projects business stands at INR 23 crores. On consol basis, our total income was INR 76 crores versus INR 93 crores in the same period last year. And the loss after tax was -- is INR 9.8 crores versus loss of INR 1.9 crores last year. Our consol order book is INR 1,127 crores, out of which manufacturing is INR 1,104 crores, as I mentioned earlier; projects business is INR 23 crores; and total is INR 1,127 crores. We continued to maintain a strong cash position of INR 164 crores. Now let me talk a little bit about the order book, market situation and guidance. Order book and market conditions. The recovery in the market is slowly coming back. While the international market did not collapse like the Indian market, we are seeing small signs of recovery in the domestic market also. And I expect full recovery to be in place by the end of the financial year. Our order inflow has been somewhat impacted in the first quarter. And our pipeline of orders is very strong, and we do not see any reduction in order inflow by the end of H1 or the end of Q3 in comparison to last year H1/Q3. It will take a few months for the full momentum to come back to what it was pre-COVID. If the domestic market continues to recover like what we're seeing right now, I'm sure that we will see comparable order inflow numbers compared to last year by the end of H2, which will then drive the forecast for next year. Needless to say that these forecasts are based on no further lockdowns. I'm happy to report a substantial order of 9 generators of 9 megawatt from a U.S.-based engine maker for a barge-mounted desalination plant to be delivered to Saudi Arabia. This order was booked in Q2 and not reported in Q1 numbers. These machines are to be delivered in Q3. In addition, we have received 3 more generators of prototype orders for 3 more engine types from the same engine maker. So our business with this engine maker is going well, and the future looks extremely bright. I'm also very happy to announce one more breakthrough order that we have received -- or will receive. We have been selected as a generator supplier for 10 generators for the Indian Navy for a specialized ship that will be built by Hindustan Shipyard. This is the first of many jobs that we expect from the defense segment. Although it will be revealed shortly, we have been working on getting the Navy approval for the past 2 years. We have seen the impact of COVID-19 on the railways segment for this year, where our customer has reduced the forecast by about almost INR 25 crores. This was due to the delay in production at their plant due to the lockdown. Effectively, that's about 3 months of production for this plant that corresponds to [ heightened cut ]. However, we will be back at full production rate from November this year, and we will see the full volume offtake from November onwards into the next financial year. The next financial year from this customer will definitely be INR 100 crores. The segments that are doing very well at the moment are engine business, steam turbine, gas turbine, special machines and also our replacement business. Our Turkey business will be extraordinary this year with sales of around INR 100 crores to INR 105 crores. We are waiting for the government policy extension to [indiscernible] next year. We expect the announcement any moment now since it is long overdue. But there is an impact on fresh investments in Turkey due to COVID-19, and we will see the effects of this in the next year's business in Turkey, which could be around 60% of the previous level. Coming to guidance. We have a fairly clear picture of this year, and we [indiscernible] guidance FY '21 was as indicated in our previous call. So manufacturing business, TDPS India, will have a top line of INR 475 crores to INR 480 crores [indiscernible]; TDPS Turkey, manufacturing business would be around INR 105 crores; our total manufacturing business, top line would be between INR 475 crores and INR 485 crores. The breakup for this will be around INR 200 crores, INR 205 crores of TDPS India manufacturing business in H1 and INR 275 crores in H2. In comparison, we did [ INR 215 crores ] as manufacturing business for TDPS India last year in H1, and we did INR 240 crores in H2 last year. On a consol basis, we did INR 270 crores last year in H1, and this year, we will cross INR 275 crores by H1 because of high sales from Turkey. So now one can clearly see the full recovery is taking place during this quarter itself, and thereby, by the end of H1, we will see better consol numbers compared to what we did last year H1. And then we will see our numbers improve in Q3 and Q4 based on the current order book that we have. Our project business top line would be INR 35 crores. This brings me to the end of my remarks. I'll now be happy to answer any queries that you may have. Thank you.

[Operator Instructions] We have a first question from the line of Rohit Balakrishnan from Vrddhi Capital.

Nikhil, sorry, this first question was just if you could repeat your guidance. Actually, when you were saying, I think I couldn't hear it. So I'm sorry if you can repeat that. And then I have a couple of more questions, which I'll ask if that's okay. Hello?

[Operator Instructions]

No. I have the question. I'll just maybe repeat the answer. So the guidance is INR 475 crores to INR 480 crores for TDPS India; EBITDA margin, 10% to 11%; TDPS Turkey, INR 100 crores to INR 105 crores; and we'll have total top line for the manufacturing business between INR 575 crores and INR 585 crores. This is what I gave as the guidance.

Yes. Got it. So not any change as such from what you had said in Q4. So I just wanted to check that. Okay. So on the current quarter, I just wanted to understand. So clearly, the overheads were pretty -- I mean just -- because the top line was lower, so the overheads will absorb that. But I mean if I look at some of the other companies that have released their results, there has been a substantial cost reduction on the -- on other expenses, and to an extent, some expenses on the employee side also, which has not been the case for us. So I mean, anything you would like to comment there? I mean, is it the nature of our business that we couldn't really cut out beyond what we are today or any one-offs were there? So if you could just maybe spend some time there.

Well, we have basically provisioned the salaries for everybody in the first quarter at the same level as it was in Q4. So although we haven't paid out, still under some negotiations with some of the union members and other things, we still have provisioned it. So that's why you will not see a reduction in our employee-related costs. In fact, actually, we had some additional costs due to -- in the first quarter due to additional transportation costs to bring our people with all the social distancing norms, we had to almost double the number of vehicles that we had to hire. So we had some increase in those costs. We had a dramatic reduction in traveling costs, obviously, because nobody is traveling. So overall, there is a reduction of about 4% to 5% in the costs, but it's not maybe as significant. I had not -- I'm not aware of what other people in the industry have reported.

Sure. And you mentioned these -- you mentioned about 2 new businesses that you won. One is in the U.S. and the other was with the Indian Navy. So all these will get executed in this current financial year or will it be for the next financial year?

So the Navy business will go to the next year, and the business from -- for the barge-mounted desalination plant will be executed in Q3.

Right. So this desalination engine that we are doing, this is a new segment that we have entered? Or is it something that we have already had? Sorry, I...

Yes, this is -- basically, it is an engine-driven power plant, but it's a unique application. It's a barge-mounted desalination plant. And there are 9 machines of 9 megawatts. So it's an 81-megawatt power plant on a barge, which gives the power to barge-mounted desalination plant. So the barge will basically go to different cities in the Middle East [indiscernible] cities which are on the coast. So this is a very unique project. Yes, it's a new business for us, but it's a very unique project, and we hope that this will be some kind of a regular business in the future also.

And this is a 9-engine order, right?

9-engine, 9-megawatt. Yes.

Okay. Got it. Got it. And Nikhil, if you could also comment a bit about the raw material situation. I mean is there some pressure on that? And in general, pricing situation, given, I think, overall -- demand being overall muted, is there any pressure on your gross margins? Because our gross margins declined Y-o-Y, but increased Q-o-Q. So just wanted to understand, I mean, what should one sort of look at as a more sustainable gross margins?

Sure. We -- there are 2 big factors. So one is that we have been -- during the COVID-19 -- during the crisis, especially during the lockdown period, there was a significant drop in the raw material prices, and we booked up a lot of copper and steel for this entire year. So this entire year, we will see lower prices overall for us compared to last year. So we should see an improvement in the margin. Second is that the exchange rate has become very favorable for us, both in euro and dollar. So we will see an improvement in the -- we should see an improvement in the gross contribution. I don't want to put a number right now. I will definitely give you a firm guidance about the gross contribution during the next earnings call, which will be better than last year for sure.

[Operator Instructions] We have next question from the line of [ Ankit Gupta ] from Bamboo Capital.

Nikhil, if you can just highlight how is the inquiry pipeline for next year looking like? This year, I think we are maintaining our guidance despite COVID. So if you can just throw some light on the order inquiry pipeline for next year?

Yes. So I was actually a little worried about next year's business the last time that we have spoken. And I think a lot of those fears have receded for me. We're seeing a lot of opportunities in all segments, including hydro and the engine business as well as some of the new opportunities that have been now created with the Navy. And also, we will see increased offtake probably -- most probably the increase offtake from our railway partner because they have to make up for the lost production from this year into next year. So at this point of time, I'm not giving any guidance, but we're seeing a very strong pipeline of orders. We will see these numbers coming in, in Q2. So when we report Q2 numbers, we will see good -- strong order inflow. Part of Q2 will be for execution this year, part of it will go into next year. But overall, I can say my worries are a lot less compared to what it was last quarter. So I'm actually quite upbeat about next year again. And I don't see any problem for us to do better than this year. It's just next year only. The only gray area for me right now is our Turkey business, where I don't see the same numbers coming in next year as we have this year. So I think, as I mentioned in the speech, it could be around 60% Turkey -- just the Turkey portion.

Sure. Sure. And the 2 large customer wins that we have had in the last 1 to 2 years, if you can highlight how is the order inquiry pipeline and the future order inflow that you see from these 2 customers that we have, one on engine side and another on the steam side, I think?

So on the engine side, the new customers that we have -- that's a business that we're very excited about, and we see huge opportunity over there. So I mean it's hard for me to pinpoint where it's going -- what the exact number is going to be, but we are on regular conference calls with them every week. We have a conference call with them on the review of the existing projects and the qualification of the generators. So there's a lot of effort being put in from their side also. It will result in big business. They have a big volume. Obviously, they have a big volume. They will start transferring the volume to us, which will start happening once the generators are qualified. And we have to just be a little patient, but it's going -- so far, it's going really well. The generators, which have been sent to them, they are now getting monitored on the test bed. They have to test it, qualify it. So those are the next few obstacles that we have to go through. But the machines work well in our factory, and they will work well on their own test beds. So we have to be just a little patient and wait till this qualification process is over.

Sure. And just wanted to understand, Nikhil, that the orders that we are expecting to get from them, have we displaced some existing suppliers of theirs or this is -- they were manufacturing these products in-house and now to reduce costs, they are outsourcing to manufacturers like us?

So we are completely displacing an existing supplier. That is their plan.

Okay, okay, okay. And any particular reason for your displacing that capacity...

The plan is complete displacement within 2 years, yes.

Okay. So is it that -- is the displacement because of cost or because of some issues with the existing supplier?

Yes, some issues. So I can't say it on the call, but there are some issues.

[Operator Instructions] We have next question from the line of [ Kirti Jain ] from Sundaram Mutual Funds.

Relatively a positive commentary for FY '22. Sir, just wanted to ask on the previous question, which you had highlighted that some of the railway orders had got deferred to FY '22. Sir, what will be the current year revised railway business target? And what would be -- we would be anticipating it for FY '22? First question is that, sir.

So it will be around INR 55 crores this year and next year will be INR 100-plus crores.

Okay. So despite railway shortcoming, how you're able to maintain the guidance, sir? Where we are seeing strong traction?

Engine business. Engine business from this new customer and also from -- engine business, basically. All export, all engine export business. And also some steam turbine orders -- international steam turbine orders. So we are seeing -- particularly, I would say, the engine business has been very strong.

Yes. Sir, with regard to the domestic steam and overseas steam, how you see, sir, in, say, vis-à-vis FY '20, how it will be in FY '21 and FY '22? How do you see the thing?

Yes. I'd see a reduction in the domestic steam this year. And the recovery is taking place for next year, but there's no -- I can't give you any firm guidance on that. There is a recovery taking place, and the order inflow has definitely improved from both our key customers on the steam turbine side -- domestic steam turbine side. But whether the domestic recovery will still continue or whether we will have some surprises along the way, it's yet to be seen. But as I've always been saying, the domestic steam turbine part of our business now is not so significant anymore, so it doesn't really matter. If it comes, it comes. If it doesn't come, we'll find other ways to make it up somewhere else.

Okay. Sir, finally, last question. What would be our CapEx plan for FY '21? And what will be the Turkey equity requirement for FY '21?

Turkey has no equity requirement at all. So we -- at the moment, we have -- they have taken some loans from the parent company, and all those loans have been repaid. Subsidiary has repaid all the loans. So we have no loans outstanding. And what was your first question? CapEx...

CapEx plan in India and Turkey manufacturing, sir.

Varalakshmi, can you answer that question, please, CapEx for this year?

Yes. So we are looking at around INR 15 crores to INR 20 crores for this year in the parent company.

Both put together, madam, India and Turkey?

Turkey, we will not require anything.

Yes, we are investing a lot of money in [ automatization ] of the plant. So next time you come to the factory, you will see a lot of automation, robots, and we are really investing heavily into automating a lot of our processes to make sure that we get productivity and also quality. So it will -- next time you come, you will see a big change in many parts of the factory where we invested this automation.

So sir, manpower cost, can it come down, sir, like, as retirals come or as people say -- leave the job, there would be some manpower thing, sir, reduction which can happen in the factory workforce?

I think we will not be able to retrench people. So it's a -- see, we have gone up for a salary freeze this year. So this year, the salary will be frozen across the board for everybody. Now we are investing in productivity. So we will be able to increase the sales without increasing the manpower cost in the same proportion. That's our goal.

[Operator Instructions] We have next question from the line of [ Vivek Kumar ], an investor.

On the Navy thing, is it repeatable or is it a onetime order? My second question is, is the Indian desalination opportunity that you're seeing is from the same customer we have added? Because you were saying some trials were happening with one customer. Or is it a completely new customer? And if you can name just to understand the kind of customer...

It's a major U.S. customer, a major U.S.-based engine maker. So I guess you can figure out who it is.

But you were also talking about another engine customer that you are working on. It is different, right? These are different people from -- or both are from U.S.?

No. Only one is from the U.S., other one is from Finland. So one is from the U.S. [indiscernible]. And the second question, yes, Navy is a repeat -- every year, there are jobs from the Navy, so there is a lot of money being spent on the modernization of the Navy. So there is -- a lot of ships are being built for -- whether they are freight ships or whether they are destroyer ships or whether they are diving ships or even submarines. So there is a massive program. And this Make in India thing has been taken very seriously by the Navy. So we were buying these generators from outside India up to now, and now they have completely switched over to -- they will completely switch over to us. So it's nice, highly profitable, highly specialized machines, but very good business to be in because we have to generate -- build on the generators to basically survive during high shock conditions and wartime conditions where there could be high shock loads, frequency loads and things like that. So I think it's a really interesting business to be in, very high margins and decent volumes.

So this is like a replacement, so every year they'll be buying -- whatever they'll be buying, they'll be buying from us, which is we replace somebody who -- some guy in the foreign, right? It is just coming to an India player.

Yes. We are basically replacing some foreign manufacturer, yes.

And you're -- good to hear that you are doing a lot of automation. So will it result to increase in margins after we cross INR 700 crores, like, a substantial increase in EBITDA margin? Can we go to 15%, 16%? Or it is more of productivity, and it depends on what kind of margins we get now given that we will see definite increase in EBITDA as the sales go up?

I don't think that the productivity gains are going to have a 4% to 5% effect on the net margins of the company, but we will see incremental increases maybe, I guess, around 1% to 2%, but it's a sustainable improvement for the future, and we're not going to add cost. We also improve -- keep the quality at a very, very high level. We have to keep investing in automation to keep the factory modern and world class. So I hope we can reach the -- so the -- if we can scale up the production to INR 700 crores, INR 800 crores, and we are on the track to do that, then we won't see the corresponding increase in the fixed costs. That's the intention.

Got it. But how much -- this is a very difficult question currently given COVID, but how many years do you think we are far away from INR 700 crores, INR 800 crores like -- because we are already near INR 600 crores? I'm not asking to give a guidance, but just in your -- like what do you hope when this would happen?

Hopefully, next year. In worst case, 2 years, I guess.

[Operator Instructions] We have next question from the line of Rohit Balakrishnan from Vrddhi Capital.

So just I have 2 questions. So given you -- so I mean given what we are seeing with the currency as well, I mean, would it be -- I mean, just wanted your view, on your competitive positioning vis-à-vis other -- your others players that you compete with, especially in the export market. So given our positioning would be even stronger, do you see any potential new wins that maybe is the annual -- I mean maybe you don't want to talk specifically, but just if you can talk a bit about that, I mean, is there anything in the annual which can really -- which has -- I mean this currency movement and, in general, our overall cost benefit can give us a shot in our [indiscernible] new customers or new opportunities. Could you just talk about that? And then I have one more question, but if you can just talk about this.

I don't think we are playing the currency card on this right now, Rohit. We are not dropping the prices and trying to improve the market share. In fact, we feel it's better for us to improve the margin. That's our goal. We have sufficient -- we have a lot of references in the international market. And it takes a certain amount of time to convince that a certain group of customers, a certain segment of the market who despite all our references will still want to buy a European product. So we have to keep working on that, and it's not a price-driven issue. So we don't want to compromise the margins on the existing business just because of the currency situation. In fact, we want to see better margins coming in for the company because if we drop the prices somewhere, then we have to drop the prices everywhere. I'm not willing to do that. And the currency movements can go both ways. So today, it is something and then tomorrow, it can just swing the other way. So it is not worth taking that risk at this point of time. I think market development activity should go on the basis of quality, on the basis of reputation, on basis of credibility of the organization, and that's how we want to penetrate the market.

Fair enough. And the other question I had was on the traction motor business. So while this year, the railway business, there is a shortfall given the situation. But I mean, is that -- I mean any potential of -- not in the next -- immediate next year, but slightly longer term, any chance of increasing our -- like overall business there with the same customer or new customers getting added? Because that is a business that you've been quite positive about.

Yes. See, there is a lot of -- all I can say at this point is that there is a lot of discussions going on within our customer, the Indian Railways, to increase the offtake beyond the contracted amount. And there are a number of scenarios being worked out. And these locomotives have already been put into operation, and Indian Railways are just -- are using them heavily. Some of these locomotives are not drawing -- the total number of carriages that they have is 4 kilometers long. So that is the kind of transformation that these locomotives have brought to the Indian Railways. And there are some -- at this moment, there are discussions going on for increased quantities. I cannot disclose how much. It may materialize next year or the year after that, but it will definitely happen. And we are pursuing other opportunities, obviously, in the railway business, not with this customer also, but also directly with the India Railways. But we will talk a little bit more about that once we see actual orders. We will -- probably next earnings call, I should have some news to give to the market.

Sure. And just 2 more questions, sorry. Just -- one was, Nikhil, so inventories have increased. Is it due to -- as you mentioned, you booked a lot of raw material at lower prices. Is that because of that? And one more question on financials was that, just checking, I mean, given the environment, are there any provisions that you see from your customers in terms of receivables, et cetera, I mean, just to be sure. Just these 2 questions.

The inventory is up because we were buying for a larger production for -- originally larger forecast for Q1, which was originally forecasted to be INR 115 crores. We ended up with INR 65 crores, INR 67 crores. So we could not -- I mean that material was already in the pipeline, and we were -- inventory has built up. Second question about -- sorry, what was your second question?

No, we will not have to make any provisions for the receivables.

Got it. Got it. And any inventory gains have been there in this quarter or not substantial, given we had booked inventory at a much lower rate?

No, there is nothing.

Okay. So it will reflect in the consumption when we actually consume it, so not...

[Operator Instructions] We have next question from the line of [ Manoj Dua ] from MD Investments.

My first question is, we have developed so many new lines like Navy, now -- so many new segments we have added. And a lot of costs must have been gone in developing all these products, maybe in R&D, now in test samples, and et cetera. So -- and we have created a lot of -- just we have to scale some -- in those areas to get INR 800 crores, INR 900 crores sales. So going forward, how much cost has been capitalized? Is 10%, 11% EBITDA margin normal? Or we are capitalizing so much cost on new things that we are not able to find what is the real margin?

No. I think that, Manoj, the volumes have to go up to INR 600 crores, INR 650 crores in TDPS India to see the real improvement in the EBITDA margins and the amortization of the fixed cost and things like that. So -- and also seeing the improvement in automation and all the things that we're putting in, all those things should give the results once the volumes go INR 600 crores, INR 650 crores. These developments with Navy and other things are coming from in-house technology. So we don't -- it's not going to be such a heavy cost. We have the ability. So a certain number of engineering man hours and certain amount of technology development that we do in-house or we buy some software programs, and it's not a lot of money. It's an internal company know-how and internal company development. It's intellectual property development. It's not -- we're not creating new assets in terms of hard physical assets. This is all intellectual assets. I don't think that as being the reason. I still see the problems where we did -- we were -- last year, we were supposed to end the year with around INR 500 crores, and we had this COVID-19 shock in March. And this year, we were supposed to hit INR 550 crores, INR 575 crores in TDPS India, but we're only going to be again around INR 470 crores, INR 480 crores, INR 500 crores. So there is a setback, you can say, of approximately INR 70 crores, INR 80 crores, which has a big impact on the margins. So that is -- we are definitely -- in these COVID times, it's easy for -- we're still living in this COVID-19 period. So it's -- we're right in the middle of it. So the numbers would have been great had it not been for this, but how to say, had it not been, it's just fantasy right now. We are in it.

No worries, sir. No worries. And my second question was regarding Turkey. Even if the incentive scheme is not forward from 2020, I was reading some articles, structurally, we have a lot of demand of geothermal renewable energy per se, and it makes still sense even they don't extend or they might give it in some another or something like that. What's your view on that?

So my view is that actually -- since we followed Turkey quite closely, is that Turkey is currently going through a balance-of-payment crisis, and they are finding it difficult to defend their currency. They don't have enough reserves. They lost a lot of money. A lot of the foreign exchange earnings takes place due to tourism, and due to this year's COVID-19 situation, they've had a 95% drop in the foreign tourists into their country because their country is also one of the hot zones -- red zones. So they -- I feel they have to extend this policy because this policy drives localization. And if they stop -- if we stop making the generators in Turkey, then they -- the entire market has to import generators. So -- it is not just generators which is coming under Local Content Rule, also the turbine is coming under the Local Content Rule and all the turbine-related auxiliaries like condensing systems, control panels. So there's a lot of localization which has taken place for the power plant business, not just the generator. If they take away the incentives, that entire ecosystem will suffer. I don't think the Turkish government is going to let that happen. It's going to -- they may ask us to improve the local content further from 55%, maybe they'll make it 65% or 70%, which is fine. But I don't think they're going to do away with it.

Okay. Okay. Glad to know, sir, that we have such in-house capabilities for creating new things and, going forward, expect some healthy returns on capital with the kind of work we are doing in the niche segment and so much effort we have put. So that's some good return on capital come in the future.

It will come, Manoj. Thank you for the patience with your investments.

We have next question from the line of [ Ankit Gupta ] from Bamboo Capital.

Nikhil, in your initial commentary, I think you had highlighted that you are seeing some green shoots on the domestic market side as well. If you can just briefly talk about from which sectors and -- the inquiry pipeline is looking good. And if you can briefly talk about this, the domestic side of the demand.

Yes. Just -- we're just seeing that some of the ordering, which got frozen during the COVID time, has restarted. So steel companies, cement companies, sugar companies. It's -- that complete freeze, which was there, has, I would say, thawed a little bit, and we're seeing some movement taking place in the market once again. So that's what I mean by saying that it is getting better. Not a full recovery as yet, but definitely there is -- it's not as bad as it was during the peak of the COVID crisis.

Sure. And it was actually bad pre-COVID as well. I see that demand scenario wasn't good at least till Q2 of last year.

Yes. You're right.

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

Sir, can you highlight about steam -- export steam market now that steam is suffering, where are you getting -- what end industries or the countries? Did we add any clients? What is happening in the steam market, our competitive positioning in the export steam?

Steam business is down compared to last year mainly because the domestic side is down. So -- but we have a high dependence on this segment of the market. Historically, we had a high dependence, and we're trying to take away that dependence by getting into other sectors. But the market is still quite good in terms of renewal -- in terms of biomass, garbage burning plants and -- then heat recovery systems. Some primary investment is also going into coal-fired power plants for steel and cement. So market is down this year compared to last year, but there is a strong inquiry pipeline. I think it will be back by the end of this year. We are very well placed everywhere.

So did you add any big clients there or is it the same old clients we are supplying to?

No, we have -- we're supplying to all the major customers in the world. So I don't think addition of new clients would be possible at this time. Right now, we are supplying to every major turbine maker in the world.

Ladies and gentlemen, that was the last question. I'd now like to hand the conference over to management for closing comments. Over to you, sir.

Yes. Thank you very much, everybody, for joining us on this call. And we look forward to interacting with you at the end of next quarter. If you have any questions, please feel free to reach out to either me or Varalakshmi any time in the future. Thank you.

Thank you.

Thank you, 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.