Thermax Limited ($THERMAX)

Ladies and gentlemen, good day, and welcome to the Thermax Q4 FY '26 Earnings Call, hosted by DAM Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Shah from DAM Capital. Thank you, and over to you, sir.

Yes. Good afternoon. Welcome to the 4Q earnings call of Thermax Limited. We have the management today, Mr. Rajendran, the Group CFO and Executive Vice President. Over to you, sir, for the opening remarks, post which we can take up the Q&A.

Thank you, Kunal. Good morning to all of you. For those of you who have joined the call. Upfront would want to inform you that Ashish Bhandari, our Managing Director and CEO, normally [indiscernible] this call, he's on travel and is unable to join this call. I will be taking this up today. I would be happy to answer your queries. Broadly talking about Q4, I think we came good on our plans for revenue, execution of jobs and resonating revenue this quarter better than the prior quarters. Our profitability was planned for us. The order book number, I think, as you must have seen and as an earlier disclosure we had done, we've booked a supercritical job about roughly INR 1,600 crores. So that has increased our order book number for the quarter. However, excluding that as well, our order book for the quarter has been reasonably robust. I think on overall other performance parameters and the cash balance, I think you must have seen the investor presentation. We're partly better off than the prior period. So I'll keep that comments brief and would take any questions that you may have on the Q4 numbers.

[Operator Instructions] The first question is from the line of Ravi Swaminathan from Avendus Spark.

My first question is in terms of the inquiry pipeline for the traditional sectors that generally include orders, including steel, cement, power and oil and gas, how is the momentum there in terms of inquiries and pipeline of orders? That's the first question.

Okay. Ravi, I think for that, the general order book outlook, both from a domestic perspective as well as in our international front is reasonably fair, reasonably robust. We're seeing a good pipeline on the sectors that you mentioned. Some of them are on the project for our industrial [indiscernible] as well as for our Industrial Products business, where there are other sectors like pharma, chemicals, FMCG that we focus upon, I think the order pipeline and outlook for are heating or water treatment air pollution from the businesses are also reasonably there at this point of time. So we feel confident of how the working platform looks on our order trends now at this time. However, a point to note would be the impact of war prolonging and any other further impact that could be having across various industries, both domestically and internationally. If that was to develop more on that front, then we believe that there could be some impact going ahead in Q2, Q3, which we all have to watch out for. So I think that's the cautious part that we have to be on the outlook.

And are there any pipeline of large orders from the power and steel side, just like how we had got this quarter, something similar can it pan out in the 20 to 24 months?

Not sure that -- well, there are quite a few on the refinery side and others that we are working upon, but I think there's one which we are reasonably confident of having a win, which is on the data center side, but that's more on the energy fund for our Industrial Infra business, this is for a supply of boilers testing turbine-based solutions for a data center opportunity in the global market. We're looking at that closely, and we are hoping that we'll be able to conclude that. We'll see where it doesn't that comes in, in quarter.

Sure, sir. And with respect to data centers, just double clicking on the kind of opportunity that is there. What would be the addressable market in India and outside India, especially in the U.S., that we can end up capturing to [indiscernible] any market size for chillers and some possible boiler supplies also.

Okay. I think, Ravi, I'll take this as your last question, and so that we can come back other questions as well from others. Yes. answer to this particular one on the data center opportunity is that I think the first one which we informed you was of the cooling opportunity that we had, both in the international market and the domestic one, the order [indiscernible] The outlook on that cooling opportunity remains robust for us at this time. However, we haven't quantified the way that I think you would be looking for in terms of market opportunity, target market share et cetera, which we would going ahead, be able to do it for you. But at this time, I think we have no numbers to [indiscernible] on that front. On the other part of the data center opportunities, the boiler side opportunity that has come by. So that's an interesting other solution opening for us in terms of revenues. So that's a good part that we see on that opportunity.

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

My first question is on the data center. What is the capacity of the data center for which you are supplying the -- your cooling solution is it possible to share that number?

Mohit, I think I can get back to you on that. I don't have a top line. We will share that with you separately.

Understood. My second one is on the green solution. In this quarter, I think we have the losses in the quarter. Can you just explain the -- what led to the losses and what is the megawatt which has got commissioned at the end of -- by the end of FY '26?

So I think we have 2 sets of businesses under green solutions that we are aware of. So one is Thermax Onsite Energy Solutions that we talk about, which is the biomass-based heating solutions that we provide to our customers on site. And other is the wind and solar energy hybrid solutions that we offer our customers, both on 2 bases. One is on a captive part that you're aware of. I think our challenge, I think our Thermax Onsite Energy session business has done very well. I think a stable set of numbers from that. The challenge has been on the first energy business of us. We've had one challenge on a project that we are executing down south, where one of the contractors has failed to perform after the contractual terms. And that has supported us to step in and complete the contract or any execution of that contract. And so there's been a cost overrun on that account, which we now some picking up some of the challenges, which are new to us and tech location. So I think it's incurring a bit more of the cost than we had planned originally for -- and that's the cost in additional incurrence [indiscernible] reflecting in the results for the period, which is the unexpected impact to our bottom line. From a capacity part of it, there are about of about 250-megawatt on ground, with 2, 3 large ones which have been commissioned as on 31st of March and took together large projects, one in Gujarat and the 2 more -- one more South that talked about earlier, which will be commissioned in the next 2, 3 quarters. So I think those would add up to this balance that I mentioned. And I think FY '27, we will close probably much better than this number.

The next question is from the line of Aditya Mongia from Kotak Securities.

Rajendran, the first question that I had was on margins in the top 2 segments. Could not see any impact of RM headwinds, whether you do call that out in your [indiscernible] just trying to get a sense whether the margins were affected by RM headwinds or something that can happen [indiscernible]?

[indiscernible] Haven't shown any large impact on the raw material cost for this quarter, for sure. because I think the impact came quite because of the war sometime in the month of March by which time, procurement for the quarter had all been completed and the execution within progress. So I think that the price increases that we are seeing in commodities across from steel to styrene to our copper, nickel, et cetera. I think all of them, I think we're seeing the price movement for sure, you are aware of them as well. That is a bit of a challenge for us in this quarter. Having said that, I think traditionally, I'm sure you have seen that the margin impact on our industrial infra, the project business is fairly controllable given that we end up tying up on a back-to-back basis on all bought out well on contractual cost for large orders. However, on the product business side, we would have typically a shorter range of visibility on the inventory front coverage that we will have. So we would be exposed to some of these changes that we are having going ahead on the industrial product side. Having said that, these increases have not been substantial as we will also notice, and we are handling the situation at this point of time. We would be able to -- and with some coverage available on the inventory front as on March, I think we'll be able to give you a more better understanding of the impact by quarter 1 numbers.

The next question is from the line of Pulkit Patni from Goldman Securities.

My first question is coal gasification. This is 1 opportunity where we are technology ready, but we've never had a chance given that the commercials have not worked now that this is a global problem in terms of post the West crisis, do you see any shift in government policy any viability gap funding, et cetera, that has been spoken about for the coal gasification opportunity? That would be question number one.

Thanks, Pulkit. I think overall, you're right in identifying the opportunity vis-a-vis the current energy prices. that many of our green we offer currently, I think, are bound for a brighter market going ahead. I think you talk about classifications, while we haven't won any in the recent past, but we're sure that in terms of government coming in to support some of this is something that we would definitely look forward to. But just to mention simultaneously in the BioCNG, where we see more of the state government policies coming in to support that [indiscernible] is a very singular way and better opportunity that is going to for BioCNG business. and similarly, for other solutions that we will have at this time. So yes, overall, I think the energy challenge for India and gotten the [indiscernible] side.

So your line is actually not very clear, but yes, I did get what you said. My second question is on data centers. Since bulk of the data centers globally are not being put on captive power plants or thermal power plants in either grid or renewable -- is the opportunity size for us in terms of cooling towers is relatively small to the overall cooling tower or say, the Chiller opportunity? I'm just trying to understand even if you don't not talk about the numbers, but the area we can cater to within the data center opportunity is relatively limited given that we'll mostly be using term heat in order to convert into those chillers. Is that understand right in the first place?

So Pulkit, I would not be too much in detail to be able to answer that question a bit, but I will try and get back to you on this to help you in further understanding on the line.

Next question is from the line of Kartik Colin from Kotak Securities.

First of all, I wanted to understand where is the progress for us on the core gasification side. As far as I remember the has been progress in proven facilities where your technology has been broadly finalized. Is there progress on that front? Do you see incremental orders that you can do or partners with players who can utilize our technology. That's my first question.

Yes. Partly, I think your understanding is right. I think we have the technology solution tested fairly in place. But I think the technology solution and my understanding, I think, as well to become viable for the market players to progress on this brand. So this is the rate that they've been working on a bit interested sees would [indiscernible] solution. And having some earlier decision that we had this call, we are hoping the government would -- there would be some support and this [indiscernible] picture. So at this trend, there's nothing that out of front that I have an update for Q4, going like we're hopeful that teams would get better in this case.

And sir, your strategy here is broadly on the lines of that you will be only offering technology and doing technology partner, we not be taking on the risk of executing the full project. Is that understanding correct?

No. EPC capability we hold. So I think EPC would also be an opportunity for us on this.

But do you -- like is there a -- as far as I remember, there were some talks in the past that you've been limiting ourselves to smaller projects initially for...

That's for sure, I think we talked about on the EPC front, on the industrial into what we have been telling the market is that we have been cautious on the margin front. And that, I think, would apply here as well. Otherwise, I don't think we're shying away from orders. just that we would be cautious to make sure that our margins with our product that I think would be the criteria.

The next question is from the line of Atul Tiwari from JP Morgan.

Yes. Sir, what is the outlook for revenue growth next year, given that this year of consol revenue would suggest about 3%, 4%. And obviously, our order book has filled [indiscernible].

So yes, I can't -- while I can't give you a number per se, but I think Atul, yes, the order bands, which is about 27% better than the prior period closing, gives us better opportunity in terms of posting better good numbers on the revenue end. Having said that, I think we have to look forward to executing better and specifically some of the site challenges and the delays that we have seen across customer sites on civil and other places, I think those have been the disturbances in the past that we have seen in having a bit of cost for our revenue performance over the quarters. And I think also the Middle East related crisis while at this time, it has appeared to be something that we have to watch for. I think these are 1 or 2 things that I think we have to keep in mind with the good order balance that we have for the execution ahead. But we are confident that this will -- the execution plans that we have across various businesses of us. should come through. And I think the quarter 1 and quarter 2 with this water balance would tell us really as to how we are able to catch up. But yes, but overall, quite positive on our execution trend.

Okay. And sir, as of now, I mean I know it is still very early days and probably the impact of fuel prices and the shortage of gas and petrochemicals still ahead of -- but looking at your client base and across industries, what is your sense? Are we seeing a fair bit of disruption to business activity, especially for the small scale industries? And will it have some kind of adverse consequence for your order pace in Industrial Products segment?

Yes. So I think -- well, you picked up the Industrial Product segment, but in terms of disturbance as what you talked about, I think we've had some bit of challenge really on our Chemicals business, I think, which I haven't covered earlier, but I thought I'll speak about it now. I think our chemical business is having a challenge clearly on the raw material side, because many of the -- some of the key raw material expiring and some on the water treatment and construction have been disturbed in terms of supply as well as price increases. So availability and booking some of the raw material for our execution, I think at higher costs and correspondingly having to manage the prices with the customers to avoiding impact or contribution. I think that's been one reasonably challenge for our chemical business at this point of time. We're doing our best in that regard, and we are hopeful that we should be able to maintain our margin numbers and the volume that we have planned out for quarter 1. Yes, and extending the discussion to what you had talked about in terms of smaller litigate industrial product business is getting impacted. I think what we started seeing in the month of March was with regards to the the gas availability impacting fabrication, smaller units and that, of course, getting stabilized down the line. So yes, some bit of challenges around it and the raw material price increases on various commodities that we have talked about has definitely impacted operations for some of the smaller vendors. And that's why I think I talked about to you about the cost pressures for quarter 1.

And sir, finally, what is the planned CapEx for FY '27 consolidated?

So I think I think we will have a regular CapEx of about INR 100 crores, INR 150 crores of regular CapEx that we would be doing. Apart from this, I think we have a few CapEx that we have planned upon on some bit of capacity expansion. As well as in boiler facility as well as in our cooling facilities. They are more like not I think, I would say, some bit of a capacity line extensions kind of CapEx. I think put together, I think the number would roughly be about INR 250 crores.

The next question is from the line of Saif Sohrab Gujar from ICICI Prudential AMC.

First question is on the supercritical boiler order. If you can just elucidate more on this order in terms of the execution period? And specifically on supercritical boiler from, say, other is under a similar tenders on pipeline?

So super critical opportunities, I think would continue to be there. And I think we have, I think, clarified in the past with near and on public sector opportunities and the private sector opportunities. And you will note, of course, our preference on the private [indiscernible]. And I think this particular one is also on the private sector, as you can see. This order would get executed over a period of 40 to 45 months timeframe. And yes, I think the order value that we have disclosed about. And I think the year 1 would be more focused on design engineering and ordering. And I think it will take a [indiscernible] the coming periods.

Got it. And second question on the middle part, how much is the exposure in terms of sales for you and specifically each of these segments, maybe on industrial products and investors? On those exposure, are you seeing any execution challenges in terms of the supply chain or cost of in [indiscernible]?

Sorry, can you just repeat the first part of your question? I missed a bit of that.

On the Middle East exposure in terms of sales, which you would have on industrial products as well as investor [indiscernible], how much is that? And any cost or execution challenges when to latest supply chain or any payment release currently [indiscernible]?

Yes. So I think Middle East has been a good opportunity for us over the last 2 years. I think we've been mentioning that so the opportunity has some order balances for execution at this point of time for us. We haven't seen specifically any delays at this stage at this point and things are fine. Having said that, in terms of future opportunities, I think hopefully, there could be more given the damages that have been there on account of the war. We are hoping for some of the facilities coming around on account of that. But yes, price cost disturbances due to freight and other things was a reality when we were executing it in the month of much as well. And that's the space that we will have to be watching above. However, no executions have got delayed as at this point of time.

Can you quantify the exposure in percentage of order book or something like that?

I think we did disclose team that in quarter 3, we had booked quarter 2, we had booked a large -- INR 450 crore order on the Middle East [indiscernible] our Industrial Infra business. That's 1 among the large ones. The other one will be in our Industrial Products business, which will be of smaller values. So I don't have a consolidated number for Middle East on the order balance this thing, but we will see whether we'll be able to get together that other and disclose.

The next question is from the line of Amit Mahawar from UBS.

I think my question is on Segment 1, we can see a very strong momentum, and this is being there for driving compliance and maybe Package Boiler business. Can we grow at like 15%, 20%, 20% next year on segment 1 and because you also have some large wins impacting segment 1? And second question is on Segment 2, where in the Babcock segment beyond the utility supercritical order, you might have quite a few large boiler orders. So can we broadly there were 2 top line in '28, vis-a-vis what we did in '25, '26 on second segment? That's 2 questions.

Okay. Yes, I think on the Industrial Product bit, I think, well, yes, the Boiler business is one specific segment and the large segment -- the large segment -- largest business within that segment. I think we've been commenting over the last couple of quarters are probably more on the increasing mix change that's happening in terms of our growth in our pollution control and water treatment business is more significantly. So I think those growth of those businesses have been robust as well. So industrial boilers, I think the growth continues to be reasonably good. on your art as to whether they would see a 15%, 20% growth, I think I will get -- go back to my comments on that the reasonable working platform on the order book looking good for us on Q1, but I think we'll have to temper that with the war impact, of course, with industries and what decisions that could cause on the CapEx spread which we'll have to watch carefully. So at this time, I think reasonably optimistic, but I think cautious on that for the future. On the Industrial Infra side, yes, I think you have seen the recent trend of sales that we have been declaring on the [indiscernible] for the last the business in declared [indiscernible]

Sir, I think there's slight disturbance on the line. I'm sorry, if it's only...

Is it better number?

Yes, yes, yes. Okay.

And the critical order in quarter 4 that we talked about -- and I just [indiscernible] talked about an opportunity on its [indiscernible]

Sorry to interrupt, sir. So the voice is breaking a lot. Just give me a moment. [Technical Difficulty] You have the management line reconnected. Yes, sir, you can go ahead.

Yes. So yes, so I was talking to you about the strong momentum on the large orders that we are booking apart from the regular 1 that we have a pipeline of -- so yes, I think we're bullish and is confident of that business doing well. This is the pipeline that we are seeing. So I'll limit my comments to that, and I hope I answer to some extent.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on the boiler opportunity, which you spoke on the data center side. So model opportunity much bigger in the global markets or the cooling opportunity? So how does one look at this?

So I think honestly, I think erection, I think this would be a difficult one to compare at this stage. These are opening up for us. I think we've been making a similar commentary on the cooling front as well. We've seen these opportunities. I think we won the first set of ones. I think you'll have to give us some time to be able to assess this and let you know on both on the energy side as well as on the cooling side. So give us some time on this one.

But the data center one is on the large boiler. I mean, will it be done through the [indiscernible] or can directly do that?

[indiscernible]

And the second question on the CapEx, I think CapEx and [indiscernible] last time, I think it was mentioned by the management team that given how this order performance is the market is quite big and competition and pricing not that of a bigger concern. So how are you planning to building capacity and the CapEx from the data center business side? So if you can help us.

So we have a reasonable facility to be able to handle this demand requirement at our [indiscernible] site for our Cooling business. And I think I earlier mentioned that there isn't CapEx on a line building debt it could and lending that we would be an expansion that we are doing that, this financial year, and that would come in to support the growth and the demand -- additional demand that we can expect on this particular one.

The next question is from the line of Priyankar Biswas from JP Financial -- JM Financial.

My first question is, sir, I see that compared to FY '25, it seems there has been a substantial working capital build vis-a-vis the last year. Can you please provide the -- what are the causes for it? And is there some way that we should look at a reversal of this working capital in the next year? How should we see it?

Yes, I think this well observed. You're right. I think we've had a bit of working capital increase in this particular quarter. This has been caused by some project delays and hence, the relate collection delays on some of our receivables as well as the retention have happened across a few large orders as well as overall and some portion of our Industrial Product and Industrial Infra business. We're conscious of this fact, and we are focusing on this in the coming quarters to back on better numbers for working capital and would remain a focus. So yes, thanks for supporting that.

So should we see like this coming up, let's say, if not, let's say, next couple of quarters, but maybe over a period in FY '27, is that right?

Yes, it's not going to -- well, I'll be hopeful that we should resolve all the overdues in one quarter. But yes, the business reality is, I'm sure that we would be able to work it over the next couple of quarters.

Sir, the second question is that we had on this contracting Dangote, if I remember, in third quarter. Now usually, what we have seen from Amex and also other companies involved in [indiscernible] this country, like in cases of when hard currency that [indiscernible] is your availability is kind of a express and when those countries go into sort of this prospect. The execution difficulties tends to naturally crop up. So given that has happened in the past to say, what are the risk mitigation measures that we are taking specifically for [indiscernible]?

Yes. So see, I think -- while I think this has been in the past, we've experienced it as well, though not specifically in the large order that we executed in the past. Which was backed up by letter of credit and which will be the case quite a bit. The currently -- I think the currency, if I not been closely following it, but if I know what we have seen in the recent past those issues are fairly stabilized for Nigeria. And with the oil prices where they are, I think things are fairly stable is what my last understanding of that matter was. But yes, we're conscious of that, and so we do take care of our payment terms to be secured and so that we are not unduly exposed on the credit risk side, and that would be the case for this as well. So meaning, I think we'll be cautious on this front for sure.

So that was out if you can just answer just a bookkeeping question because a lot of the order wins that has happened in this year and hopefully, the next year is TBWES. Can you provide, let's say, a broad ballpark number that what would be the order book of TBWES and [indiscernible] maybe its revenues and margin for FY '26?

For FY '26, I think you'll like to wait for it that you know that this is a separate subsidiary and the [indiscernible] subsidiary full financials will be available in the public space, and I think you should wait for yes.

The next question is from the line of Shirom Kapur from Jefferies.

Just want to ask you a little bit more on the large boiler order that you received in March. So what would be your capacity on these boilers -- like how much could you execute? How many more orders could you take on in this field?

So I think we have 3 facilities for this particular overall for the Boiler business. And I think we would be able to execute this particular one. And while I think, yes, to the extent that there has been other demands as well. I think we talked about it on the order flow side, as the regular business that we would have. I think, yes, our ability to service would be constrained to that extent of capacity becoming available and I talk to you about expansion that we are doing to debottleneck the facility to a certain extent. So that would keep us ready for any opportunities that might come in the future. But I think -- and we also have ability to develop and execute some of them through outsourced facilities on the fabrication front. So I think fairly confident of what we have won and what we will be able to execute. I think the supercritical on opportunities if they were to come, we would obviously be looking at it closely on our abilities to pick them at the right price and being able to execute. So I don't think I answered you fully on the capacity front, but I think that's something that we look -- we review that closely in terms of the abilities to execute [indiscernible]

Understood, sir. And would you be able to give some sort of quantification of the pipeline for these kinds of boiler orders, specifically these these large boilers? Like what is the bid pipeline? And what is the outlook for the next 2 to 3 years or in more near term, 1 to 2 years?

I don't have that number, sorry. This particular one, I don't have at this time to share.

The next question is from the line of Teena Virmani from Motilal Oswal Financial Services.

Sir, I have 2 questions. One on the legacy orders, which were pending earlier to an extent of around INR 500 crores to INR 600 crores in the books of the company. So what would be the status of those legacy orders? And my second question is regarding the margin profile for the large orders that you have booked both on the data center side and even on the boiler side. So, is the margin profile on orders much better than the margin profile that you are currently having in your current set of business? And ultimately, how do you the margin profile for the upcoming orders also on these 2 areas?

Okay. I think -- yes, I think we probably failed to put an update in the investor presentation that we were planning to. I think on the low-margin orders that we had specifically in bioCNG business as well as our FGD business as well as some bit on our Power and Energy Solutions business. I think we almost executed them the at least the bioCNG 1, I think very clearly that. But I think the large project NRL that we have talked about on the energy solutions and the 2 large FGD projects that we are currently executing on the balance closer completion. NRL 1, I think we've talked about the cost overruns and the thing. We are hopeful we are keeping an eye on it, and I think it would take the entire year and it to get that order to its closure. We're hopeful that we have the right cost estimates at this time for its closures. However, the FGD orders that we are executing at this time are better off for us and the margins are stable there. On the bioCNG side, I think we have -- we are in the performance completion, performance trial stage for most of ours and I think the quarter 1 and 2 of those [indiscernible] year we should be able to complete them, and that should settle them. So -- yes, and all the new setup orders that we have booked across in the [indiscernible]. I think the every other cases, I think they have been with better margin target profile that we have internally. Talking of this cooling as well as the soporitical order that you talked about. The margins from the cooling one as a good. And I think on the supercritical one, we have been conscious on the margin front when we booked this and I think they are stable. And as per our target, the margin profile for the [indiscernible] I wouldn't be able to obviously talk about the margins specifically because it's a single order, and I'm sure we initiated.

Yes, sure. But there is sufficient buffer that you would have booked taking into account the higher odinprices which are [indiscernible] right now?

So the order was finalized in the month of March. The prevalent situation, obviously, would have been factored in. yes, but we have to manage that with the developing situation, and that would have to be handled over a period of time as well because it's a long term -- it will be executed over the next 3 to 4 years.

The next question is from the line of Amit Anwani from PM Capital.

First question on -- if you could give some color in terms of the heating, cooling, electric boiler how that has performed in industrial products. And there was a kind of double-digit margin, which we have been doing last year, we did good EBIT margin there. This is also -- the margin came off by more than 100 bps, but still we are in double digits. So just wanted to understand what 1 should take it as a sustainable margin for F '27? And how has been the performance of each of the subverticals in the Industry Products business?

Okay. Thanks, Amit, for that question. I think we broadly talk about the industrial product business of the multiple businesses that are under them, but we haven't disclosed specifically any margin profiles for each one of them. Having said that, I think there have been in the past, I think the -- I think I can see that your question is around the margin drop over the last year on Industrial Products business. So the prior period had a set of good projects where were good savings opportunities for us. having those projects having been picked up during a certain cycle of commodity costs being higher and being executed at a time when the commodity costs it cooled off. So we had good savings opportunity in some of them. In a couple of businesses we missed -- in one of the businesses, we've missed a bit of export opportunity, which had better margin profile. So that's been one. The other one has been on one, which I can talk about more clearly on the Danstoker business that we have in the euro. I think we have a mix of oil and gas as well as biomass-based boilers. And I think the margin mix on the biomass [indiscernible] are better off than the oil and gas boilers. And in the last -- last year cycle, the oil and gas boilers were much more executed than the biomass one. But we see the mix changing for the year ahead. So I think that was also a cause of the change in the margin that you saw in that segment. So a couple of reasons for this thing. Broadly, I think the mix change on the individual businesses, I think was the main cause for the margin dip. But yes, we would, I think, look forward to some improvements going ahead, subject to, of course, commodity cost impacts.

Right. In the Infra business, does this boiler order, I'm just again asking for better understanding, has the price variation closed? And second, is that the correct understanding that at least this is the margin accretive margin relative to the overall home level margins. If you could give some color for this utility boiler order, which you have taken, that would be helpful.

Is, I think -- I mean, I'll reiterate what I think I told earlier that I would not be able to talk specifically about this job margin because it's a specific order. And yes, I can't also discuss any bilateral clauses that we have in the contract. Having said that, I think we -- and firm level, segment level target margins we have kept in mind at the time of finalizing this order. And I think that's the confidence that I can have at this time.

Right. So with this order and as you explained already about the legacy other data debt orders, -- can we see meaningful improvement further for the Industrial Infra business? We had a good improvement this year in terms of margin. So is that on the card? Or this should stabilize at the current level?

I think the current levels are at good levels. I think you have seen them or increasing over the last 3 years, but I will just draw your attention to a specific state incentives that we have been receiving and which we have been disclosing in our quarterly and in our annual results as well. That's a accretion to that business, which has happened over the last 2, 3 years, but that's available. I think we have disclosed it, it will be for '27/'28 cycle. So I think that is one lease margin, meaning months of profit that I think is for a limited cycle. Otherwise, yes, I think with the flow of orders and certain operating leverage, I think we should definitely be having confidence on our margins going.

Right. Sir, lastly, on the data center, is there any lead time or you have to get on some approval process, which takes some time. So I just wanted to understand when did you started applying for these orders? And when did they convert it for you? Is there -- if you could let us understand time lines or process to get these orders? And are you in touch with multiple OEMs in U.S. to get further business for pulling towers or at least where we got the order with that? Are we looking for orders from the same manner or you're talking to more OEMs there some color on that, please?

Yes. Yes, Amit. I think the color is going to be limited. I'm not obviously going to discuss on at, et cetera. I think as we think earlier commented, we are confident of the order pipeline and the discussions that we are having. -- but this is something that we will continue to comment in the coming quarters, and I have nothing more to add than what I've told earlier.

The next question is from the line of Renu Baid, from IIFL Capital.

Just one follow-up question, more on the keeping side. Sir, can you help us give what is the broad order book split between fixed price and variable price projects, projects and orders?

So I think you can assume that all our orders are fixed price orders. There would be a few which, if at all, and large ones, if any, that we would have price variation clauses, but I think they would be fairly few and far. I think to by and larger all our orders are fixed orders.

Because it doesn't work pertinent with respect to large orders, the 2 of the large orders that we recently won in the last 2 quarters. If there are price edition cost that it changes the mix merely -- so this is the reason why. So should we assume broadly 90% is a fixed price or in value terms, how would this be?

I think you should assume fixed price order because that's primarily the nature of all our businesses and orders.

Sure. And given the way the execution has panned out of the overall backlog, while we have the 3, 4 large orders or which we can count on, what percentage of the backlog has [indiscernible] cycle beyond 12 months?

So I think some of the large jobs that naturally, the execution cycles are more than this thing. I think the super critical one I commented earlier as well. I think -- So with all clearly 12 months, they would more be [indiscernible] ranges for execution.

The next question is from the line of Aditya Mongia from Kotak Securities.

Few questions. As in the context of the first question is that you had solutions, a partner that did not do the work and then the company had to [indiscernible] it up then in the same year earlier, there was an issue on the design [indiscernible] parts in the certain partner as well. I'm just trying to get a sense of this is becoming an issue that the company would want to kind of see through and address and what steps have been taken in this election [indiscernible], the partner network is this better of the margin?

I agree with the question, Aditya. And unfortunately, the issue has been with the same partner that we've had. And so it's not across multiple partners who would want to give you some color around that. And yes, the impact, I think we will explain that. So yes, we are facing this across our projects or across vendors. So, and we are conscious of this and for future orders as well.

So the second question that I had was more linked up to the order inflows that have happened in the year on the domestic side inside Industrial Infra -- [indiscernible] with only be flat Y-o-Y, if I take away the thermal order. I think expectations would have been better for the year? So just trying to get a sense across customer sets, there have the disappointments coming and if in those segments, everything is using for the better as we [indiscernible].

Yes. I think our Industrial Infra business, I think the 2 other parts, I think, apart from what we have talked about, I think GDI thing or a warehouse, we've been speaking about it or the last 1 or 2, 1 year or more. I think on the dry orders on that front. BioCNG business, I think, has also been less on orders. But I think in the recent past, we won some change orders in the existing -- with our existing clients. But otherwise, I think it's been -- there's been a change in the market, and I think there's some bit of slowdown. And I think BioCNG business order book has also been not as a expectations. So that's another area that I think is part of Industrial Infra, which is not picked up Yes. So I think those would be the concern for us at this time. But I think, as I said earlier, BioCNG is a business that we're looking forward to better opportunities and better market down the line.

Can you comment on the clean metal endeavor of the company [indiscernible] smaller quantum of capacity being set up, but how does the company think [indiscernible] any investment targets that you would want to share?

I don't have a current update, but I think Aditya, maybe I might be able to get back to you on this if there's any further development, but nothing at this time that I have to share.

The next question is from the line of Nikhil Shadri from Toro Wealth Management.

I had 2 questions. So I wanted to understand, following on to the deal participants with respect to the data center we say that we have less competition in the North American coding solution and value add is higher. So I wanted to get a sense around when the qualifications are done with probably, say, the hyperscale [indiscernible] orders. Do we get a higher chance with the same perkier or movie? Is it like a -- Each project is a fresh fight? Like I wanted to understand that. Second thing is we've been very vocal in our earlier calls that we'll be staying away from very heavy projects citing probably the FCD as a one of our lessons then this recent INR 1,600 crores of order and that probably we have taken. It is not very long delivery time lines. So I wanted to understand what was our thought process in -- and if you may allow add one more question? Yes.

Yes. So Nikhil, I think the data center piece, I think, has taken enough. There's been multiple questions. I think I clarified as much as we can. I don't have anything to add beyond that. Nothing specific on the parts that you had to ask on that one. But however, we'll add on the heavy projects or the [indiscernible] and the supercritical orders that this thing. I think supercritical, we have been earlier clarifying that we are staying away from possible possible challenges in our abilities to execute any any sort of critical orders on the public sector side and have shown our preference and inclination to execute on the private sector side. And I think you will see that this one is on the private sector side. And so yes, the margin concern that we had, I think, is something that we have commented earlier on the call already. Yes, it's a slightly long cycle order. But I think this is a sort of a breakthrough as well for us in terms of the supercritical business and set up our capability to execute more on this particular space. And I think, yes, we are seeing this more -- this opportunity as a relative to get into the space as well as execute it profitably. So I'll stop there.

That was the last question for the day. I now hand the conference over to the management for closing comments.

Yes. Thanks. I think nothing more to add. I think I hope I have been able to answer the questions today on the call. Thank you, and we'll look forward to seeing you again in the quarter 1 call. Thanks.

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