Transformers and Rectifiers (India) Limited ($532928)

Ladies and gentlemen, good day, and welcome to Transformers and Rectifiers (India) Limited Q4 and FY '26 Conference Call hosted by Novama Wealth Management Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] I now hand the conference over to Mr. Vikram Datwani from Nuvama Wealth Management Limited. Thank you, and over to you.

Thank you. Good evening, everyone. On behalf of Nuvama Institutional Equities, I welcome you all to the Q4 FY '26 Results Conference Call of Transformers and Rectifiers (India) Limited. We are joined today by Mr. Satyen Mamtora, Managing Director and CEO; and Mr. Mehul Shah, CFO. I would now like to hand over the call to the management for the opening remarks. Thank you, and over to you, sir.

Good evening, ladies and gentlemen, I'm Satyen Mamtora, Managing Director and CEO of Transformers and Rectifiers (India) Limited. Thank you for joining us today for our FY '26 earnings call. We are pleased to connect with you as we closed another year with a remarkable performance in terms of all key parameters and happy to share our performance highlights, both for Q4 and full year. As you are aware that our Board of Directors has approved the audited financial results for the quarter, we have ended 31 2026, and the same has been approved on our website of stock exchanges, along with investor presentation. The financial year 2025 and '26 has further strengthened [indiscernible] position as a leader in the transformer industry, as the company achieved robust operational and financial performance through operational efficiency, process excellence, effective financial management, strategic growth initiatives and technological development and strong corporate governance has resulted into second successive year of giving record bringing revenue and profitability numbers. We have achieved highest a collection in to company's history, manufacturing 33,763, up from INR 29,118 in FY '26. This has directly translated into record high revenue growth, supported by strong execution and healthy diversified order book. This year, we have been intentionally selective in taking new orders as now the company has decided to take orders, which are more lucrative in terms of profitability, payment terms and flexibility in delivery types. We deliberately moderated fresh order input during the year to align with the extended deliveries capacity planning. Despite of that, our total order inflow in FY '26 stood at INR 2,374 crores. This robust inflow has resulted in an executed order book of INR 5,000-plus crores as of March 31, 2026, ensuring clear revenue visibility for the next 18 months. During the year, the company has received a DC transformer repair order from PGCL, which makes Darin the first Indian company to get an order of such nature. We are highly energized by this order which is -- it will pave the way forward for tariff rate into HVDC cyclical for successful completion of this order. Such type of always changes the company's position as industry leader and enhances customer trust. We are pleased to inform you that all our fully automated retail [indiscernible] facility has got approval from [indiscernible] Now we have initiated the process of getting our tag manufacturing facility approval from PGCL also. Apart from our capacity expansion in [indiscernible] we are also ramping up our testing facility to cohort with the higher number of [indiscernible] transformers at those plants. As you are well aware that we have tested a record number of transformers during FY '26 both in terms of MEA in total units, underscoring our internal capabilities of streamlined operations. The Blackwood integration journey is well on [indiscernible] site [indiscernible] is progressing well in the plant and machinery orders for the long-lived items have already been placed. This backward integration, along with technological tie-up with our -- will enhance our in-house capabilities, reduce our dependency on external process and improve our supply chain resins. We have already started getting CRG from our newly acquired CRO processing unit. So all in all, backward integration journey is well on track and to deliver its results in the very near future. This test will further increase our margin profile by 150 to 200 bps. Looking ahead, we -- as we transition into FY '27, our focus remains firmly on strong order book execution through continued operational efficiency, leveraging our expanded capacity, further consolidating our resources and sustainable improving margins. Our long-term vision to become a $1 billion revenue company within next few years, remains intact. And we are confident of achieving through consistent execution, customer-centric innovation and robust financial discipline. Our strategies include tendering backwards integration, investing in automation and digital transformation, focusing on clean sustainable energy solutions in line with India's power sector recognitions. With strong fundamentals, industry-leading capabilities and high-quality orders in pipeline we are well positioned to leverage the opportunities and challenges of the coming year on behalf of the entire leadership team, I extend my heartfelt gratitude to all our stakeholders, customers, employees, suppliers, board members and investors. Their continued trust and support remains the cornerstone of our journey. Together, we are building a future-ready organization that not only lease in the transformer industry but also contributes meaningfully to India's evolving energy landscape, and it is [indiscernible]. Thank you once again for joining us today. I now hand over the mic to our CFO, Mr. Mehul, to take you through the financial performance of the company in greater detail. Thank you.

Good evening to everyone who are present over this investor con call to discuss quarter 4 financial year '26 financial performance of the company. Thank you, Satin, sir, for your insight, for leadership remark and for setting the strategy context right for the current quarter. It gives me a great pleasure to discuss with you all our quarter 4 financial year '26 performance. A quarter that clearly reflects the strength of our execution capabilities, resilience of our business model and the benefits of strategic initiatives that we have been implementing over the past several quarters. I am pleased to report that quarter 4 has been a strong quarter for the company, which is showing consistent improvement across all the key financial parameters. Revenue on the stand-alone basis from the operations stood at INR 752 crores as compared to INR 740 crores of quarter 4, '25. The growth was driven by the higher capacity utilization, timely execution of order improvement in supply chain management. The momentum seen during the last couple of quarters will give us confidence for the next quarters of consistent improved performance. EBITDA for the quarter came to INR 117 crores with a margin of 15.1%. The margin is slightly down due to additional increase in the employee cost on account of ESOPs. Profit after tax stood at INR 77 crore, reflecting not only the strong operating performance, but also the disciplined financial management across the organization. Revenue on the stand-alone basis for the full financial year stands at INR 2,395 crores as compared to INR 1950 crores for the full financial year. EBITDA for the year come at around INR 370 crores with a margin of 15.1%. Profit after tax stood at around INR 225 crores with a margin of 9.2%. Further, on the consolidated basis, revenue for the quarter stood at INR 783 crores against INR 737 crores during quarter 4 financial year '25. EBITDA stood at INR 141 crores and [indiscernible] INR 91 crores. On the basis of full financial year, consolidated number, revenue is INR 2,509 crores, up from INR 2019 crores. EBITDA stood at INR 444 crores and PAT is around INR 272 crores. Importantly, quarter 4 also marks a turning point in terms of consistent growth with margin sustainability. We are very much confident of maintaining the improved margins due to our capacity expansion, backward integration plan in structure, marginal margin improvement. The backward integration facility and the developments are expected to further enhance the cost efficiency and reduce external dependency over the medium term. Looking forward, we enter the next financial year with strong visibility of our order books, new capacities coming on board, starting of our backward integration projects. Our order book remains robust execution pipelines are healthy and the plant utilization levels are expected to remain in the full financial year. Before I conclude, I would like to express my censure appreciation to our team across operations, finance, supply chain projects for the relentless focus and execution excellence. I would also like to thank our Board and investors for their continuous trust and support as we work towards building a strong, more resilient and a future-ready organization. With that, I conclude my remarks. Thank you once again for joining us today. We are now happy to take your questions.

[Operator Instructions] The first question comes from the line of Ashit Vijay from Global Continent Research.

When I was seeing the results, I can see that the cost of materials consumed has increased a bit disproportionate to the revenue and I'm guessing that this is because of the copper price surge due to the formal disruption. Could you throw some more light on what other raw materials is disrupted due to this [indiscernible] closure?

[indiscernible] , we see mainly copper is rightly lifted. Other than that, not because of Hormus issue, but because of overbooking for all other like ancillary parts and machines and stuff, there is quite disturbance plus the posing is made in gas-fired clean gas is also becoming slightly problem. So there is there are certain issues that we are facing because of Hormus but not very much.

Sure. And one more thing is that we are faring into HVDC and I wanted to understand the competitive landscape in HVDC or from you. I have seen that a lot of [indiscernible] are in the thing. What is the competitive advantage that we have.

So there are only 4 major players in HVDC. Hitachi, Siemens, GE and TBA. But ST is not able to compete with us in other tenders, only 3 major competitors are there. Other than that we are the only players who are -- who will be entering into HVDC.

I'm sorry, but I couldn't quite infer what the competitive advantage was.

HVDC is very highly technical product and because of the limited number of players in this HVDC side, the margins are also better in HVDC.

Okay. Sure. I was also reading Siemens con call that only about like 1 to 2 tenders are floated every year for HVDC. So what are our odds on getting that contract compared to these 4 players that you just mentioned?

So yes, currently, there are only about 1 to 2 tenders of HVDC, but going further, the number of tenders that are going to be in pipeline should be around 10% to 12%. Each tender should have about 3 units of HVDC. So there is a good scope in HVDC in the future, coming future. And by that time, we will also be successfully [indiscernible] in HVDC transformers.

Our next question comes from the line of Veb Mishra from [indiscernible]

Sir my question is regarding this West Asia conflict. I mean how can it affect or is it affecting us in any way like supply chain or from the delivery side. Are we affected in any way on this?

No. Basically, see, if you look at our export number, et cetera, there is very minimal exports that what we are currently doing. And from the West Asia region, there is a very minimal import that has been coming to India for us. So there is no major impact as far as this conflict is concerned.

So the only issue that we are looking at is availability of gas for which -- for our fabrication units and stuff like that. But we are mitigating those issues also.

All right, sir. And sir, regarding the guidance made actually in the last 3 quarters, I think this is the second quarter where we have made our guidance like the revenue guidance of it INR 2600 crores in Q3 call it [indiscernible] and also order book, it was really contrary said that the floating order book will be INR 8,000 crores. tertiles. So what is leading to this recently, I mean, a peril, I mean, has the history of not [indiscernible] what is happening, I mean, for the last 2, 3 quarters.

So see, we are deliberately not taking orders currently because we want -- as we have previously told we want to limit our exposure to not more than 18 to 24 months. And we want to be very selective in which orders we take in terms of delivery and in terms of the price that we got. So we are being extremely selective of what orders to take, and we do not want to take any order which is beyond 24 months of delivery. So that is where we stand at right now. As long as we do not -- we are not free for next 24 months, we don't want to take any further orders.

Okay. But [indiscernible]

We want to be extremely selective in for that.

All right. Look, sir, I think this trend was in the last call, it send that we were selected and are targeting. We are maintaining our stance that we do not want to take any orders that are beyond 24 months. Also, our record integration plans that we have for the ex side in Q1 to 3, 4 quarters. Are they on track? I mean is there any change in timelines of them.

So that is all -- is on track. We already started the site depletion plant machinery, which is having a higher lead time has already been ordered. So by, let's say, starting out next financial year, you will start the impact of this securitization advance that we have.

One last question, sir, regarding FY '27. So the revenue target that we have in mind for '27 or the mean consolidated margins that we are targeting for.

So I think as of now, we have not, say, finalized what we will be looking at. But we can -- what we can say is around INR 3,250 crores is what we are looking at currently.

Our next question comes from the line of BalaSubramanian from Arian Capital Markets.

I'm trying to understand the gross margin side. In FY '20, we have a gross margin of 51% [indiscernible]. We are trying to reach 35% by FY '28 and 40% [indiscernible]. So I'm trying to understand like how this gross margin improved in terms of RAP pushing and domination, CTC [indiscernible] and CRG sourcing efficiency and price increases. Which cell item comfort the most we take, if you could share some clarity on that.

Yes. So basically, currently, you are right, we are at 30%, 31% margin. And due to this capacity expansion that what we are doing at our Changodar and Maria project, plus the effort that has been done to do the operational efficiencies, et cetera. This will give us some margins in terms of for the next, say, 2 to 3 years, plus the backward integration plan, which will start from the next financial year, which will also give us some, say, 200 to 300 bps of additional margin. So that's how we are looking at around a 35% margin.

Yes, sir, I think in mentioned, we are on track for backward integrations. I'm trying to understand, I think we have a 60% increasing capacity of [indiscernible] . And how does -- I think the industry issues not remain a result in terms of our supply constraints. So whether we have other sourcing agreements or in already in place for the increase to CRG, pushing CTC volumes.

Yes, we already have agreements in place.

Okay, sir. Okay. Sir, my last question, if you could help us understand on for strengthens renewals being to under or less transformer side, we have seen only markets like INR 220 crores to INR 300 crores, despite having high typical barriers and low competition, while the addressable market we [indiscernible] and like whether we can expect substantial growth in those areas? And secondly, renewable side, the margins are, I think, at a lower level. for the renewable transforms and solar transformers typically lower margins. better we can be able to see margin improvement or bonding improvement in those areas and [indiscernible]

I will go on with your question.

Yes, sir. Green hydrogen side, I think we have not started any projects or any supply trying to understand whether -- when we can expect demand for even side, especially like in [indiscernible] project store or any tender awards or any sales pipeline approvals are in place?

So as far as renewable transforms renewable energies is concerned, with our backward integration and with our manufacturing with 75,000 manufacturing capacity or purchasing power become significantly high. So the margin improvement there are going to be very high. I publicly understand that right now that there is not much margin improvement. There is not much much margin improvement there. But with the backward integration and we purchasing power of 75,000 MVA, there should be a substantial decrease in our purchasing price. So this is going to affect our margins effectively. Green hydrogen, the projects are still not coming up live -- we are also working at a few prototype transformers, which need to short-circuit tested and sort sanitation testing -- so as soon as the projects come up live, we will start getting some feedback on the green hydrogen transformers.

So on the Farmers transform side, sir?

Farmers transform will see some improvement as the steel industry in India starts moving at a faster pace.

[Operator Instructions] Our next question comes from the line of Deepak Poddar from Sapphire Capital.

I will ask 2 questions, very quick questions. So sir, our capacity got delayed, right? This Changodar plant. Now it's slated to start by second quarter, right?

So extended monsoon was one of the biggest reasons in terms of delays in the usefulness of the plant.

Okay. Okay. Okay. Understood. And when is the Maria plant expected to come on stream?

Maria plant, we are planning after this year's monsoon.

So by FY '27.

Yes, yes.

So ideally then your first half growth would be quite muted, right, because already you...

See, Maria, we still have -- we have plant is working at about 75% plant utilization. So we are working on maximizing that client utilization before we started [indiscernible]

Okay. Understood. And what's the CapEx in...

I'm sorry to interrupt you, sir, but please rejoin the queue for more question. Our next question comes from the line of Ashish from Leo Capital.

Yes. So I had a question regarding how the industry works. So how fungible is installed MBA capacities across voltage pluses can capacity allocated to, let's say, 220 kV reapplied to higher KV or rises? Or are they largely dedicated voltage specific lines?

So see, basically, the capacity there are 3 things that could from INR 400, we can go down to INR 220. From 2020, we will be able to go up to 400 if the plant is not designed for 400. So let's say, testing facility, can capacity, winding machines capacity. We have 4, 5 items because of which from 220 going up to 400 is going to be a challenge, but coming down from INR 400 to INR 220 -- so it's not my era, but from 400 to 220 came from from 200 to 400 as long as plant is not designed for 400, it will not happen.

Okay so to summarize, let's say, someone has the distribution transformer capacity in MBA that can't be scaled to a EHV 220, and what are the limitations exactly?

Crane capacity, let's say, the building the height of the building, testing facilities, there are many factors, winning machine capabilities. There are many factors that will affect it.

Our next question comes from the line of [indiscernible] as Sharma from Equinix Capital Venture.

Yes, sir, my question is on an industry side like due to the extended monsoon does an approval in the overall industry transmission in the industry. So are we seeing any slowdown in the CapEx? Or is it temporary like quarter execution in met?

No, no, there won't be any delay as far as CapEx plan is concerned.

And then not in any detail especially in the order current order book and on [indiscernible]

No.

Our next question comes from the line of Vinit from Toro Wealth Managers.

Sir, my question is around the supply enhancement that has been going around the entire power value chain, right? Like most of our vendors as well in the transformation enhancing the capacities -- so I just noted to you if -- like Versar -- what's your view on that if we can negotiate with our suppliers when they have increased capacity Sorry, we didn't understand your question. So, I mean, I'm asking this phase the capacity in [indiscernible] vendors what negotiating on the riders [indiscernible]

There is still hand-to-mouth in terms of most of the items that as manufacturing is concerned. So we can always negotiate in terms of delivery time for each equipment -- each product that we need. That is 1 of the basic negotiations that can happen currently.

So demand is so strong that only we can negotiate on the delivery timeline more or less the same.

Yes.

Our next question comes from the line of [indiscernible] from Ashit Kotecha Family Office.

So my first question is on the capacity. Could you please help us understanding the trajectory of our upcoming capacity addition? Is it are you able to expect that around 50% of the utilization will come by H2 FY '27. And how should we think about capacity expansion plan over the next 2 to 3 years and how cash flow will be placed from it?

Yes. See, basically, from Changodar facility will be up and running from this quarter 2. And after that, we will take up the -- this model plant expansion. So after these 2 plants, the capacity would be safe from INR 40,000, it will go up to 75,000. And how our utilization will be for the second half of FY '27 and '28. It would be an upcoming capacity. Yes, upcoming capacity, [indiscernible] will start from the -- but initially, it would be low since it is a new plant, et cetera. But from, let's say, next financial year, it would be running at around 75%, 80% capacity.

So I think by end of quarter 3, we should be almost at 80% capacity in [indiscernible] plant.

But do you think it will impact our EBITDA margin in the first half and maybe Q3.

No. Because our orders are already in the pipeline, and we are working on that. So there won't be any impact. It will, in fact, definitely the quarter 3 numbers would be on a higher side because of this new capacity, but this, say, first half, the numbers will not be impacted by this -- and yes, like we said before, we are very selective in what orders we want to take right now. We are not taking any orders that are beyond 24 months. So being selective on the number -- the type of orders that we are taking there is not going to be any effect on the EBITDA of the company.

So sir, higher in Q3 in terms of higher margin or in the amount you are talking about?

Both, not margin, but in terms of revenue, revenue. So margin will be this 16.5% to 17%.

Yes, yes, margins will remain at 16.5% to 17%.

Our next question comes from the line [indiscernible] from Mangal Cash Service.

Congratulations on good set of numbers. I wondered -- sure, we are going back or integration on the CTC plant itself. So just wanted to understand, would that also require additional PGCR approval if we are using that for the capital purposes into our 465 and moving forward, when we get HVDC approval as well, you will be using our CPC for the capital purposes. So how the PTC approval would look like?

So PGCL approval will definitely be needed. And the plan that we are putting up for CTC and the plant that we will be putting up for [indiscernible] both these plants are world-class plants. So we've already taken into account what all PGCL requires for the approval of the plant. And since it is our own captive consumption, the approval becomes very easy in terms of -- from GTCR. Can we just get some time line on the -- and also the getting approval from GCL?

Yes.

I think within the month of starting the production capacity, we should get the approval. See, as it is PGCI, PGCI and we are also facing some issues regarding the deliveries of CTC conductors, so it is of utmost importance of PGCI and also to make sure that they have 1 more made in India, which delivers CT production. Okay. And just 1 more thing on the CTC front itself. So it won't cater to our whole production for the transformers. So how much you would still look to outsource or it would be enough to -- for our annual transform manufacturing capabilities. So the current plan is to cater to 100% need of [indiscernible] and going forward, with certain more expansion, we will be also looking at selling in the market, third-party selling also we will be doing. So we will basically be also if suppliers to other platform manufacturers.

Our next question comes from the line of Shubham Ramson from [indiscernible]

Yes, Sir, any update on the World Bank issue?

We have given our -- never will give you a reply.

Yes. So -- as for the time lines, et cetera, we have filed the reply to the World Bank, and we are awaiting the -- any response also. And recently also, we have filed that before taking any decision, et cetera, we should be given an opportunity to be heard in person. So we are awaiting the feedback from the World Bank on this.

Okay. So then can we expect to [indiscernible]

I think it should be close in 45 days. That's what our belief is.

Our next question comes from the line of Ajit Singh from Systematics.

What is the scope of our offering in the HDC scope overall. For example, the OEM typically has about 45% to 50% of the overall project cost. So you mentioned that you will be able to supply 34 units in a substation prices. So what is the scope in percentage of the overall project cost for C for us?

We didn't understand your question please, can you come back again?

Yes, sir. I mean out of the total project cost for HVDC. What is our thought? So let's say, we are supplying to transform, right, 3 to 4 projects -- so what is that as a percentage of overall CapEx on the project?

That should be around 40% of overall CapEx of the project.

Right, sir.

Because transformer is going to be the largest equipment and the most expensive equipment in the project. So around 40% should be our cost.

And sir, when do we expect the approval from PDL on this particular product.

So once we've successfully repaired this transformer and giving back to PGCIL after 6 months of working in satisfactory condition if you start the process of approving us as one of the HVDC manufacturers in the country.

Sorry, but please rejoin the queue for more questions. Our next question comes from the line of Kate Salunke from PL Capital.

Sir, my question is again on the HBDC piece. I just wanted to understand now that we are -- now that we plan to supply only the equipment, the HVDC transformers in the projects and it may take some time for the approvals to come in. And at the same time, I recall in the last few calls, management had mentioned that we are not really doing LCC or VAC. We are trying to come up with our own technology. So for next 2, 3 years, all the projects that are in the pipe plan have already been established, whether as an LCC or VSC project. So how will Tara will be able to compete for these projects against the established M&C? What is LCC project? Sir, technology of the HVDC, LCT and VAT. So we are coming up with our own process of HVDC. Yes. So sir, my question was the same since major there are 2, 3 projects in the pipeline, right, for next 2 to 3 years? So all those 2 or 3 projects have already been decided whether they are coming with LCC technology or VSC technology. So if the projects are coming in LCC and VSP and we are not supplying either of these technologies. How will are will be able to participate in these tenders. So basically, we will have to wait for a project in -- for the next 4, 5 years before we can participate. Is that the right understanding?

So that is not the right [indiscernible] there are other projects that are coming up with EPC contractors also where we will be participating.

Okay. So these projects will -- the EPC contractors, these projects will not primarily come from a player like PTCL. Is that right?

Yes, yes, yes.

Our next question comes from the line of Raj Sara from [indiscernible]

Sir, I'm tracking and we invest in the company since last 2.5 years. I appreciate the general so from last quarter, what I'm seeing that there is a delay in some projects if I compare the supplementation of FY '20 than in on the Chairman's comment. So what you can see that the CapEx -- all CapEx have been delayed by at least 1 year. And although that would all the integrations are also delayed with the same timeline. Other than the guidance of the way. And when we watch into which is given by tenancies. So that key guides on Terreson and what we come to the conference call, there is a very significant difference in these 2 outcomes. So I want your take on that.

So what are you exactly referring to, if I may ask, are you talking about the order input?

Is there any concern like order inflow? What we are mentioning that we are very concerned about the margins and the quality of the order we are taking, despite question on the sale to [indiscernible]. He then is confidently on TV interviews, putting the number of INR 8,000 and INR 500 crore other bit closer by effect of processing. The second thing the proven or CapEx we have point now a new JV. The timing of the project is the right now deliver at least 1 year old for the change or -- and the third thing is on the margin front. Okay. What we are expecting as an investor for the last 1 year that all the projects which are right now being done will increase the margin, whereas what we are going to either last August is Q4, the recent at Q2 in site that we are having a greater number on the top line the margin is still consistent, we would have liked at colono the best margin of the year.

So as long as the outlook on the margin, we have always maintained that the margins will remain at 15% to 16%. We have never seen that. In terms of the order book, Yes, we have miscalculated the orders that are supposed to be coming to us. And like we say, we are careful in selecting which police really want to execute because right now, the market is such where we can be slightly choosy about what orders to take -- as far as the new projects that are concerned, there was a delay because of extended monsoon, which has delayed the project by 1 quarter.

And sir, on the guidance side also, sir, initially, when once again, iterate -- that orders input will be very selective, and we will make sure that we do not take orders that are beyond 24 months. Sir, in the pipeline not on the order bit, now Top [indiscernible] will give you an answer.

Yes. So the top line, which was guided in the commencement of was INR 3,500, which was reduced [indiscernible] after the adult, that was again told to INR 2,500 to INR 3,600 crore. And even on the 4 months and Director Finance on Lean -- and he read the guides that we are very sure that we will be closing about INR 3,500. So the INR 100 crore guidance is okay. But the continent which have been sold initially in the year, and right on the tone of the management in this Q4 conference call is not matching. Yes, that's true that initially, we have targeted that number. But that has been later on realized and we have category come up and revise that guidance during the quarter 2 conference call.

So my point is that we are doing very phenomenally well. Let us be which we use conservation even more other than we would have realized it. And that is why we see we have given an outlook of INR 3,250 crores or beyond that. Yes, this thank you very much, and I'm confident the company because I'm invested from last 2.5 years.

Our next question comes from the line of Karan Gupta from ACMIL.

So my question is more on the margin side constrain the competitive bidding in the industry, what will be the margin on EBITDA were consolidated over 2 to 3 years. So the 1 thing is the competitive bidding in the industry? And the second thing is that you are doing [indiscernible] you're seeing 2% to 3% kind of all in the margin you can get -- so my point is, in the next 2 to 3 years, what will be the margin side, it will be compensated by the baccalaions we are doing or improve further from the mark of 16%, 17%.

Yes. As we are saying that the margins will remain in the range of, say, 15% to 17% currently. And through this second integration coming up, you may see some increase in that number. About 200 to 300 [indiscernible].

Okay. And what about the cash flow front, the working capital compared to '26 testable receivables and part inventory side in -- so what we are doing for this working capital power getting mitigated.

0 Yes, compared to some financial year '25 numbers is definitely the receivable number and inventory numbers are high. On the receivables side, I think due to this last minute, say, March numbers, we have missed certain collections. So in the first day last 15 to 16 days' time, you almost collected around INR 200-odd crores. So -- there are some delays as far as the utilities is concerned because their budgets, et cetera, has by March. So they have released payments in the new financial year. Soteica payment is got delayed.

Our next question comes from the line of Vik Shant from DB Wealth.

You mentioned that we are looking at alternative sources for our gas, which will help us continue our production. What is it that we are going to mitigate this risk write down so that our production can ramp up?

So we had invested a few years back in some laser cutting technology. We have also invested in plasma cutting technology. So all that is coming online and the big gas cases has helped us improve our efficiency on those cutting CNC machines.

So instead of using gas as a power source, we will be using electricity as a power source.

Yes. Yes, that is current.

Is there any other way that we can make sure that we don't head into any problems for expanding our capacity because now that we are going to a new phase of expansion, you see risk that seems to be very likely. What is the risk we are talking about?

The gas signed are you talking about?

I mean anything that is going to make our production capacity go down or ability to deliver go down. Gas is 1 of it, right?

No, no, no. There is no issue as such for the utilization of the capacities. We don't see any utilization of the capacity.

Next question comes from the line of Aditya from Soho.

I had a question on margins. You alluded to the fact that I think 15%, 16% is a good number to look at currently. Structurally, I just wanted to understand that most of our peers in spite of being in low KV class, are doing superior margins to us and also that they are not backward integrated. So what is the reason for our margins to be at 15%, 16% where majority of the peers our 18%, 19% and even 20% to some extent. So that was the understanding, which I wanted. And also at a time when the transformer industry is at an explosive growth shouldn't we be getting better margins and faster growth? 2

This backward integration margins is yet to come into the picture. So this -- we are talking these margins, say, 15%, 17% is without any margin improvement in terms of backward integration.

But No, I understand what we're trying to say, but the peers also don't have backward integration. That is one. And secondly, what I'm trying to highlight is that peers are in a relatively lower margin, lower CV class, while you are predominantly in 220 and above. So 220 and 400 is what you are targeting, while -- if I look at majority of our peers, we are getting to 220 or 400. In fact, if you look at the Atlanta basically cut into 400 [indiscernible] others are stating there. So really, our margins structurally should be much higher than them. And I'm assuming even beer backward integration, giving a set the Atlanta, the acid innovation is the same as us. So I don't know why our margins are at only 15% structurally?

So that's the reason why we have stopped and we are very selective in terms of taking orders, et cetera, going forward. As you must have seen that these orders we must be executing, which we have taken, say, 12 months, 15 months back. And that is the major reason why we have decided that, yes, we will not take any orders which is coming our way. And we will be very selective in terms of margins, et cetera, as well as the delivery schedules, et cetera, matching with our production line. So that is the reason why we would be selective and our margins will improve.

Okay, sure. And just punting on your guidance going forward, would you like to give any guidance for FY '27 in terms of growth percentage, if not the absolute number?

It would be roughly around, say, 35%, 40% growth in terms of revenue.

Okay. And order book, any sense on that, considering your curtailing incremental order inflow to focus on the quality of order.

I think if you do INR 2,250 crores, we will be -- let's say, I don't know -- so rather than putting these numbers, we would be like to restrict ourselves to we will take the order, say, up to 24 months.

Okay. Okay. And 35% to 40% is the revenue growth, what you're talking for FY '20?

Yes.

Our next question comes from the line of Sagar Gandhi from Invesco Mutual Fund.

Yes. Sir, my question is on the inquiries under go our presentation, that is INR 23,000 crores that you mentioned. Now you highlighted you are looking at only 24 months. So of this INR 200 crores, INR 3,000 crores, how much is to 24 months?

Our third quarter 1, there should be around 18,000 inquiry that will be in 24 months.

And sir, you confirm that the receivables that have gone up by around INR 410 crores of INR 200 crores of this INR 410 crores that come in the first 15 days of April.

Yes, yes. .

That has happened, right?

And that is it from to we would like to take last few questions, please?

Our next question comes from the line of Neil [indiscernible] and individual investor, please go ahead.

My question would be on the order book mix. So recently, we've seen a good amount of orders coming from -- from the government utilities. So could you tell us that out of the outstanding order book of INR 5,000 crores, how much percentage consist of this usually big years and how much is the private portion.

So let's say, around 55% will be utilities, 20% will be EPC contractors and remaining all private customers. Okay. So got it. And Anawabackward integration facilities in place, which will be coming into effect from the first half of FY '27 by a -- so we -- that would lead to shorter lease tenant and also give us some cost advantages. So would we really approaching more private players who still prefer change suppliers for an format? Or we stick to this mix? No, we would be approaching many private customers, but provided we are getting deliveries and order inflow is going to be quality of the order inflow is going to be the key area of focus in the next year.

So we'll be taking the last question from Sashi Ranjan from Arden Capital.

We have order book of around INR 35,000 crores approach. So in previous discussion, we also learned that we were not able to pass on to the rising cost because the orders that was there were older one. So we collect guys upon the increased tariff. So how many is that order book that we have, which are not giving us more margin out of the INR 5,000 crores order book?

I think everything that has been there, we have already executed -- so now we are -- since last 6 months, we have been very critically analyzing every order that we want to take. -- and we are very selective in taking orders. So none of the orders that are in this INR 5,500 crores, I have any issues in terms of our margins or cost. And last one, sir, if you may allow. What is the current capacity that we are running at? And how far do you intend to pull this capacity utilization in the next 2 quarters? So we are currently earning at around 75% capacity, which should go -- this year, we should go at around 95% capacity.

Ladies and gentlemen, due to time constraint, that was the last question. Any pending question may be sent to the Transformers and Rectifiers (India) Limited Investor Relations team, and they will get back to you. With that, I'll hand the conference over to the management for the closing remarks. Thank you, and over to you, Tim.

Thank you, once again for joining us today. The I extend my heartfelt gratia to all our stakeholders, customers, employees and Board members and investors and all of you who was at end of this investor call. Thank you very much, everybody.

Thank you, so much sir. Ladies and gentlemen, on behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.