Triveni Turbine Limited (533655) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Triveni Turbine Limited Q2 and H1 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.

Thank you. Good day, everyone, and a warm welcome to all of you participating in the Q2 and H1 FY '21 conference call for Triveni Turbine Limited. We have with us today on the call, Mr. Nikhil Sawhney, Vice Chairman and Managing Director; Mr. Arun Mote, Executive Director, along with other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussions may be forward-looking in nature, and a statement to this effect has been included in the invite, which was mailed to everybody earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will start this call with opening remarks from the management, following which we will have an interactive question-and-answer session. I now invite Mr. Nikhil Sawhney to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir.

Thank you very much, Rishab. A very good morning, a good afternoon to everyone on the call. I hope everyone is safe and well in these COVID times. I also do wish everyone a very happy Diwali, which is going to be upon us soon. Firstly, welcome to the Q2 H1 FY '21 conference call for Triveni Turbine. The overall performance of the business in terms of turnover, order booking and profitability has been lower in H1 FY '21 as compared to H1 FY '20, which has mainly been due to the impact of the pandemic in the first quarter of this financial year as well as to a limited extent in the second quarter as well. The net income from operations in the half year of FY '21 is at INR 3.51 billion, which is lower by 24% and EBITDA in H1 is at 7 -- is at INR 977 million, which is at a margin of 28%, which is only lower by 7%. PAT, after taking into account the exceptional items, which I will go into a little bit of detail, for the half year, is at 50 -- is at INR 516 million, which is lower by 36%. The outstanding carryforward order book as of the 30th of September 2020 is at INR 6.7 billion, which is lower by 3% when compared with the corresponding period of last year. Overall, the order intake in Q2 FY '21 is 22% higher than Q1 FY '21, even though it is lower by about 16% compared to Q2 of FY '20. The overall order booking for the current half year has been also severely impacted due to the pandemic. More so, in the export markets where restrictions on travel had -- have not allowed us to finalize and close orders and customers are waiting for us to travel to do that. There's been some movement on that front. And as to -- and within Q3, we've already seen a greater mobility of our personnel to the extent that over 25 teams are already internationally traveling. And so we believe that we should have better traction in the coming quarters. The turnover and profitability have increased by 12% and 29% this -- in the second quarter compared to the first quarter of this financial year. And in the quarter under review, the revenue from operations grew by 12% as compared to the last quarter mainly on account of significantly higher exports as a percentage of the entire product sales portfolio, even though that there has been a decline of 25% when compared with the corresponding period of the previous year. The mix of domestic and export sales was at 48 to 52 in Q2 FY '21, while the mix was 57-43 in Q2 FY '20. There has been a significant improvement in the EBITDA margin in Q2 FY '21 of 580 basis points in comparison with the corresponding quarter of the previous year, while the improvement in margin is over 300 basis points in comparison to the Q1 FY '21. The improvement in the EBITDA margin is driven by a combination of higher share of exports and sales, but also on account of lower raw material costs, which has consistently shown improvement over the previous many quarters. Further, there's been a significant reduction in overheads, especially in manpower and administrative overheads. While many of the cost reductions achieved are sustainable, the administrative cost reduction, especially on travel may gradually increase in the quarters to come as we necessitate a greater interaction with our international client base, but also in terms of fulfillment of the orders. The company undertook a major rationalization program of its manpower cost, which could be achieved due to a focus on higher automation and resulting in improved productivity and better outsourcing strategy, all of which enable the company to reduce its manpower strength. This has resulted in a onetime cost of INR 185 million, which has been accounted as an exceptional item during the second quarter results, which is in front of you. And the benefit of this will start accruing immediately. This specific initiative was done at the instance of the union. And I must say that this was an offer which was brought to us and which we, given our long-term planning and which I've already alluded to in the previous conference calls, in the move to allow Triveni Turbine to be more agile and dynamic in its employee base, in its employee cost to allow for a greater degree of multiskilling and work planning, which will allow us to really move forward in our business plan and our vision to be able -- to be a top-run global manufacturer in this digital Internet-of-Things age. We believe as this currently stands and this is something very important for all of you to recognize that Triveni Turbine now has no workers in its company. All people who will be operating at the shop floor will either be officers and at graduate level with a higher degree of productivity, a greater degree of automation in their process. And we believe that these productivity improvements have already started and will show results within this year. So therefore, the cost which we have incurred in terms of rationalization has been very fruitfully done. More than that, in this time of COVID, the 61-odd personnel, which has been -- which decided to take part in the VRS scheme had an average outgo of about INR 30.3 lakhs. We also, as a company, facilitated their movement into other occupations which they might find productive or of interest to them, multiskilling and other skilling were also offered. But more than that, in case they wish to continue, those offers were also left open to them. I'm happy to take more questions on this at a later point in time. On the steam turbine market in general, as per -- as you know, McCoy, which is an international market research-based outfit ranks Triveni as the second largest steam turbine manufacturer in the small steam turbine space. This is driven by our over 20% market share in the global market and a clear dominance in the thermal renewable segment. This, as you would imagine, is the only growing segment within the entire ambit of the steam turbine market. The above 100-megawatt market has continuously declined in terms of its output on basis of declining the demand for coal in the entire power basket, but more so, it's between the ranges of 30 to 100 and 0 to 30, the renewable energy space plays a much greater role. The domestic order booking in this previous quarter has increase of 19% when compared with Q1 FY '21. And the domestic order booking has been in some sectors such as process cogeneration, which is mainly distilleries, sugar, also cement waste heat recovery, chemicals, fertilizer and paper and pulp. The inquiry generation in the domestic market has surprisingly shown a very robust increase of over 30% in the first half of this year. The main segments were the tractions in order finalizations have been witnessing is in the sugar cogeneration, including distilleries, biomass IPP, food processing and the waste heat recovery sectors. These are expected to continue to be drivers of demand in the near economy going forward into the second half of this financial year. The export market. The overall order intake has been higher than last quarter at an increase of over 30% in comparison to Q1 FY '21. The order bookings in the export markets have been witnessed mainly from Europe, the Middle East, South and Central America. And the segments include waste -- solid municipal waste incineration based IPPs as well as biomass and sugar cogeneration. While the markets globally are yet to regain its level of previous years, we witnessed the overall export order intake, which has increased by 30% during the quarter under review when compared with the first quarter of this financial year. But in my expectation, and as I had said in the previous call, our expectation the export market has been more muted than what we had expected, which is largely driven by the lack of transportation and the lack of travel that our service engineers and marketing engineers have been allowed to do. We believe that with a greater mobility in the coming quarters, yes, there will be small shocks in between in terms of shutdowns and lockdowns, which will happen for months at a time or 1 month or 2 months. But in general, the ease of traveling will only increase in the coming quarters. And we believe that this will suit our strategy to be able to cater to our customers on a face-to-face basis while still utilizing the best of digital technologies. Towards the latter part of the quarter under review, we could already see physical movement in a limited manner, which has already gained us success in this current quarter. In the export market, inquiry generation, the renewable energy sector is driving demand specifically from the biomass and waste-to-energy projects. The company currently has orders and installations from over 70 countries and will be focusing on new markets in the coming years. Some of the segments of focus are biomass paper, process and sugar cogeneration and other agro-based industries, including palm oil, et cetera. The aftermarket segment, during Q2 FY '21, the aftermarket order booking has increased by 77% at INR 710 million in comparison with Q1 FY '21 and a 41% in comparison with Q2 FY '20 on account of the increased volume of spares and refurbishment. On account of the substantial order books in Q2 FY '21, the half year order booking for the current year has reached almost at similar levels as the half year of FY '20, which under the current circumstances, is significant. The team has played a very important role in trying to build the order booking from the aftermarket segment, which, as you know, includes Triveni brand spares and the service of our own installed base, but also third-party offerings that we do through our refurbishment offering. Our proposition has been far more successful in the domestic market. And again, in the export market has been hampered due to a lack and a slowdown in terms of travel. We believe all of this will get eased in the coming quarters, and we are more optimistic in the order intake on both these fronts in the coming quarters. As regards the joint venture, GE Triveni Limited, which has already been communicated to you, Triveni has filed a petition in the National Company Law Tribunal and the matter is currently sub-judice. As with most things in the pandemic, these NCLT hearings have also been continuously postponed due to the pandemic reasons. More so about where the company is positioned right now, we believe at this point in time, Triveni Turbine is poised to transform itself into a truly world-class, efficient, productive outfit to manufacture at a quality level where there is a minimal amount of rejection, but more so which meets every standard globally applicable on a technological level, which is truly world class. We have been utilizing the best in digital technologies to ensure that information is seamlessly communicated through the entire value chain within the organization, from sales and marketing through to process planning, manufacturing, design, engineering, et cetera, without any human intervention, which allows for a seamless and error-free transmission of data. More so with a focus on cutting-edge digital technologies. We aim to be closer to our customers to be able to cater to their requirements from a more remote basis, but to do all of this with lower cost and with higher accuracy. This, coupled with our technological investments in R&D, which would continue to expand our product portfolio, but also expand it over to other rotating equipments, both from a product perspective as well as from the aftermarket and aftermarket capabilities will be significant. Already in this current quarter of Q3, we've had great success in the refurbishment market for utility ranged turbines. And we believe that this is an area where our offering of being able to offer world-class quality and a technological level, which is benchmark with the world's best, but at a price point, which is immensely affordable is a win-win situation for everyone. The outlook of the company, as we had spoken about in the previous quarters, this current year will be impacted with -- because of COVID. There will be a decline in turnover, which, as you can see, is already reflected partly in H1. Having said that, the margins by which the company is operating will continue to sustain to some extent. We may not be able to achieve and sustain the 26.8% PBT margins, which we've achieved in this current quarter. But definitely, we would be able to sustain a margin somewhere between 20% to 22% on a going-forward basis. We believe that this coupled with our long-term vision on expanding and growing our markets, both from a product perspective, technological perspective and a variety of different means is something that would allow us to grow quite significantly. We are very ambitious and aim to utilize some of our free cash reserves to aid this growth in the coming quarters. Currently, the board hasn't taken any decision in terms of utilization of its reserves, which are very healthy at this point in time. And as they do come about, we will definitely let you know. But having said that, for this year as a whole, PBT for this current year should be at the same level as of last year without including the performance of the joint venture as well as the onetime write-off. Having said that, in a year of pandemic, we think that these performances would be quite good, but it positions us extremely well for the year to come, where we are extremely ambitious to be able to further our growth in a very sustained manner, and I look forward to giving you some of that insight in the quarters to come. With that, I'd like to open the floor for questions.

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

First question is with respect to the aftermarket. So basically, we have seen very good growth in this quarter. Do you think that 40% kind of year-on-year growth that we have seen this quarter, at least to that extent, is it sustainable? Or is it like these orders were supposed to come in 1Q and they got spilled over in the second quarter? And when -- if aftermarket grows at such pace, and we see the EBITDA margin also seeing an expansion, can you see a structural expansion by 100, 200 bps?

Yes. Ravi, you've been following the company for a while. So you know 2 years ago what our EBITDA margins were. We had certain cost increases, which we had to get out of the system, which took 3, 4 quarters. And following that, you will see our material cost had sustained -- had reduced from about 56-odd percent to a sustained level of about 50-odd percent. 46% as of this current quarter may not be the most a realistic number for us for you to assume going forward. But I would imagine that we have a sustained increase in our material cost. This is supported by 2 factors. One is the product mix, the fact that you rightly say the higher degree of export gives us higher margins, but also a higher amount of aftermarket and percentage that the order book also gives you greater comfort in terms of margins. More than that it is our internal strategy of standardization, which you've seen through our balance sheet, being able to actually reduce inventory. I haven't talked about how we've managed our trade receivables, et cetera, we're happy to do that as well. But when we get more operationally efficient, this all translates into higher productivity. With the move that we've done in terms of employee rationalization will further lead to a sustained higher margin. We'll give you better clarity in the coming quarters as to what our sustained margin would be, but I'll give you an indication as to where it stands. From the aftermarket order book, as you rightly pointed out, we were a little disappointed in the export order book for the aftermarket coming in, in the previous 2 quarters. We had a higher expectation. And we think in the coming quarters, we will be able to get some of that back into our order book. We think that currently, as you said, the 40% increase is something that the team has worked very hard to get. But this has been focused on, as you know, we have 3 different distinct -- 3 distinct segments of our aftermarket, which is Triveni branded spares, the service of our own installed base and the service and part for third-party turbines. And each of these has distinct growth. The growth within our own installed base will be somewhat linear to the extent that we are able to drive the confidence within our existing customer base to upgrade or to buy spares on a sustained basis from us. The real growth in the market comes from the refurbishment market, and I already gave you an indication of some wins that we've had in this current quarter, which is Q3. And we believe that we should be able to expand this part of the business quite significantly and into areas into aligned rotating equipment, which gives us not only a competency to be -- to approach a broader market, but also improves our own technological levels as we cater to those. So in a roundabout manner, the growth that we've seen in the market has disappointed from the export market, which we hope to bridge in the coming quarters. But in an overall sense, we aim -- we are very ambitious on this particular business line, as you have pointed out, because not only is there a gap in the market for a service provider like Triveni globally. But that this is a very high-margin business as well, which requires lower capital.

Got it, sir. And with respect to the domestic market in the last quarter, you had mentioned that steel and such kind of sectors are seeing some traction. Are you seeing that kind of sustainability in traction from these core industries which were not there for quite some time?

We spoke in the last conference call as well, and our expectation was that domestic order booking would be slower. As it has turned out, this quarter, we've seen a much higher degree of domestic order booking. So we are very pleased by that. Also, the inquiry book has grown quite rapidly. So we are quite enthused by what seems to be at least an appetite for growth in the Indian market. I have our President Mr. S.N. Prasad on the line, maybe he can add in a little bit as to how we feels which sectors in the market is picking up. Prasad?

Yes, yes. As we have seen this quarter domestic order book as well as inquiry book is quite strong because we are seeing like a process cogeneration industry, waste-to-energy, especially into cement plants and all these things. Because there their final product will be competitive only after adding the sort of effect on buying because everybody is looking for a cost reduction in their final product, we are seeing efficiency improvement in the system. Those sort of the inquiry bases increase is substantially. So what we've seen that as going forward, this will continue because a competitiveness of their final product is decided by these products, by equipments getting added into their CapEx and reducing the OpEx. So we are quite bullish on this domestic market as well. And of course, international market once travel opens up, we'll be able to get back because all the inquiry pipeline, nothing we lost because these all delayed finalizations are getting delayed because there is no travel from the team.

Got it.

I must point out that in this previous quarter, we had a near 81% market share in the domestic market, but on a reduced market. So very frankly, we didn't wish to highlight it. But we are even more competitive than we've ever been. And so, we continue to maintain our dominance in the small stream turbine market for India and maintain our global second position.

Okay. Okay. Got it. And last question is with respect to working capital. Working capital improved significantly Y-o-Y. And obviously, the cash flow from operations have also increased significantly. How much of this is sustainable? That's my question.

Mostly, it is. Mostly it is. You see when -- again, when I take you back a couple of years, when we talked about the fact that there were some cost increases that happened with Triveni, this had -- this was due to an extreme degree of customization that we were doing with our turbines. And as we move to a more standardized platform, not only does this actually reduce our raw material cost, but also our inventory and other working capital needs. And so therefore, the degree of standardization has allowed us to streamline our balance sheet to a much greater extent. This, coupled with good customer advances has allowed us to be extremely comfortable on the working capital space. So that is not a matter of concern. And so, we don't see this -- of course, given turnover, our inventory will move a little bit here and there, but mostly it's sustainable.

Got it. And the INR 300 crores of cash, I mean, can there be an increase in dividend or buyback or any thought that it can happen, given that like -- most like 13%, 20% of market cap?

That's a good question, Ravi. The fact is that the board hasn't considered any of these proposals at this point in time, so it'll -- won't be correct for me to actually talk about this. But the thought of the board at this point in time is focused more on growth. We need to show a higher top line growth. And I think that what investments are needed internally to be able to drive that growth is something which will be a matter of priority. And as we are able to discover what those avenues of growth would be, the other strategies will become a lot clearer.

The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

Yes. My first question is on the competitive landscape. We've seen in the last quarter, a couple of your large competitors announcing that they are exiting from the steam business. So are you actually seeing them exiting from the smaller turbines that you are addressing or they are more on the larger turbines?

That's a very good question, and I'm going to answer it in a sort of roundabout manner. This has been a phenomenon that we have seen for the last, I'm going to say, 10 years, which is that the percentage of coal in thermal power generation in terms of new orders has been continuously declining, continuously. And it's a steep slope, downward slope. And so therefore, large utility-based turbines are really not getting sold, especially into the thermal power generation sector. So the entire market size for large utility turbines has disappeared. At the same time, the market for small steam turbines has radically changed from it being based off of a fuel source of coal to more renewable-based measures. And so, therefore, what you've seen over the last 3 or 4 years is that the small steam turbine market, both from a megawatt as well as the number of units ordered has remained largely the same, if not increased by maybe 2%, 3%, 4% annually. But the larger market of above 100 megawatts has fallen by, I would say, over 70%, 75%. And so, therefore, when you -- when our larger competitors, which is the people who have a lot of money to invest both in technology and marketing in the space, see that the entire market shrink. I don't know if it suits them from an entire -- from a perspective of being able to address the market. So it's -- the fact is I don't think it is lucrative enough for then. Secondly, given competition like us, who are more nimble, who are more agile, who have a much lower overhead cost as well as structurally manufacturing cost who have aligned their technology to be cheaper, I think that larger competitors find it very difficult to compete with us also. So what we've seen is that actually globally, we benchmark our competition versus Siemens who is by far the most dynamic company in this space. And really, apart from them, we think that the other competition is something that is very manageable. So if you look at it in terms of people who are exiting this market has been happening continuously over the course of the last 7, 8, 10 years, the larger competitors, and I think you're talking about certain press releases that came about in the last several weeks. Those will have further impact in terms of the number of participants in this market. So we are enthused by the fact that other people do not find it as lucrative market. We, as we've always said, are one of the few companies that makes a margin on the product. Most people in this capital goods space and specifically in steam turbines or turbines in general end up making their margin only on the aftermarket. And so they drive their sales just so that we have an installed base. So we believe that we are positioned well. We're happy about the fact other people don't find it lucrative, and it is primarily driven by their cost base as well as the size of the market.

A couple of updates from the previous quarters. So 1 is that we -- our endeavor to actually get into the refurbishment market for third-party turbines. Where are we in that? I do understand you did mention about travel restrictions impacting but more structurally, how have you progressed on that? The efforts taken by us? Second is the efforts that we have been taking to enter the drive turbine markets in the oil and gas base? So that will be useful.

No, no you brought up 2 very good points, and I'm going to get the heads of these businesses to actually answer both of these questions for you. I -- it was my omission that I did not talk more about our drive turbines, API market offering, and our plans for order booking in this current and coming year. But first maybe I'll ask Sachin Parab, our President, Aftermarkets to talk a little bit about how he sees refurbishment. Sachin, can you give a little bit of insight as to where Triveni Turbine is placed in terms of getting orders on the refurbished bucket in the short term?

As far as refurbishment business, which is our multi-brand service business is concerned, we have seen a steady progress in the inquiry generation over the last couple of years. And as our Vice Chairman has mentioned, I will refer to the short term. As you are all aware, because of the pandemic situation and the travel limitations, the international order booking has not been up to our expectation. But on the domestic front, we have done considerably well, and there is a remarkable improvement in our performance, both for inquiry generation and order booking on the domestic front. So going forward, as travel eases further, we are looking at better order booking and inquiry generation from international for the refurbishment business. As far as the sectorial performance is concerned, glad to say that our constant efforts towards expanding footprint have helped Triveni get into new markets for the refurbishment business and not just new geographies, but also new segment as an end-use applications driver from what we had done in the past. Thank you.

Bhavin, before I ask Prasad to answer on the API market, we are currently in the process of doing a 5-year strategic plan for both the product business as well as aftermarket. And I have to say the ambition level that we are putting are quite tough to achieve because we believe that we have been growing at a level, which allows us to compound. So this will need all our market segments to perform, and we will have to have the correct ecosystem and culture within the company. And so therefore, the rationalization that also took place allows us to be -- to align all employees of the company. Prasad, can you talk a little bit about what your ambition levels are for the API market and abroad?

Yes. Coming to API market, as we mentioned in the last investor call also, So as an approved vendor list, to become a part of the approved vendor list is one of the major challenge, where the last 2, 3 years, our efforts in this have given a very positive result. Today, globally, 75% of the requirement Triveni is approved as an approved vendor. And 1 more important point I would like to mention that even domestic market as per -- in recent the Prime Minister's announcement, there's a huge investment getting planned for next 10 years into hydrocarbon sector, where Triveni is approved by EIL, PDIL, all these reputed consultants and EPC players in the state. Globally, what we are seeing, the size of the market totally when we back this thing towards INR 2 billion is the size of the market, which will be opening to us the next 5 to 7 years sort of a thing as we start building the references. We are quite optimistic in Middle East region and especially in South American region, there is Europe and Southeast Asian region, apart from domestic region. So since the product is proven and running references are established, and we, at Triveni, approved in over 75% of refineries and hydrocarbon companies and consultants an EPC-approved today Triveni. So we are quite bullish on this, and we may be able to really drive this segment to a great extent.

[Operator Instructions] The next question is from the line of Harshit Patel from Equirus Securities.

Sir, I had a couple of questions. So the first 1 was that a couple of quarters ago, you were planning to develop a strong value proposition for the super critical CO2 turbine. So have we made any progress on this front? And when do you think we'll be able to commercialize this technology? That would be my first question.

No, that's a very, very good question. We are extremely bullish on this technology being the disruptor of our own markets -- for our own market. So we thought that it is worthwhile for us to invest at the point in time that global investment is going in, in the same space. The research has progressed substantially. Unfortunately, I'm not able to get into detail as to where we currently stand both from a perspective of our academic collaborations as well as industry partnerships because they're subject to certain degrees of confidentiality. But suffice to say that this market will develop over the medium term. This is not a short-term product, and I think that If you look at it over the next 5, 7 years, this market will develop quite substantially and possibly oppose that it will replace the steam turbine market.

Sure, sir. That was helpful. Sir, secondly, you have earlier indicated that the domestic 0 to 30 megawatts steam turbine market was around 1,000 megawatts in FY '20. So then what do you expect the size to be in '21?

That was the 0 to 100-megawatt segment was about 1,000 megawatts. We believe in this current year, it would be -- well, in the first half year it's declined by 50%. So going forward, I would say that we anticipate some growth, so maybe 25% to 30% down year-on-year.

So sir, that 1,000 megawatt, as you said, was for 0 to 100. So sir, what would be 0 to 30 out of that?

I think it was really 2/3 of it, or maybe more, 75% of it.

Sure. And sir, just lastly, on the bookkeeping front. Sir, could you tell us the share of exports in our aftermarket order book and similarly on the order booking front as well? That would be all from my side.

I'll get Narayanan to get those informations to you, but suffice to say, I think you heard what Sachin had to say also that we were slightly disappointed on the order intake on the export front for aftermarket. But we believe that given the fact that travel will be allowed and we already have people out traveling that this should get made up in the second half of the year.

The next question is from the line of Kaushal Shah from Dhanki Securities.

Yes. Congratulations on a fairly decent set of numbers. Sir, I had 2 questions. One was the execution. As you spoke about in your opening remarks also has been a little weak. So if you can just share your thoughts on how we expect the execution to kind of progress over the next few quarters? And also the key sectors, which can drive better execution both in the domestic and in the export market? And the second question was on the employee front. We've done a very remarkable rationalization. So what could be a sustained number in terms of the employee expenses that we can kind of build in going forward?

Okay. From an output perspective in the next several quarters, of course, it will improve because we already have an order backlog which is sufficient enough for us to take forward for the full year, of course. The issue is the order -- the customer acceptability of the turbines. So we have been prudent in terms of actually working with our customers because not all customers are able to accept because of various problems that they may have. And so therefore, while we had said that turnover for this year may be down compared to the previous year, between 10% to 15%, I think that is still reasonable for us to assume at this point in time. This is also compounded by what we have in any given year, which is the book and bill within a current -- within a specific fiscal. Given that pretty much Q1 was because of COVID and part of Q2 as well, the amount of book and bill has also been limited. But having said that, we think that we're being realistic in terms of the output that is necessary for the -- for where our customers can accept. Of course, if there is a greater opening up of the market. We will have -- we'll be able to push out more products. I have to tell you from a output -- from a productivity perspective of labor. We have 2 units. One is in Sompura, one is in Peenya. And they have the same degree of output, which is a number of turbines that they will produce, et cetera. And the number of people involved with the same degree of productivity in 1 factory versus the other was 20% of the other. And so therefore, the rationalization aims to move us to a unified productivity level throughout the -- throughout our manufacturing base. So therefore, from an employee cost perspective, while I think this INR 20-odd crores that we have at this current point in time per quarter, is slightly lower because there are certain further other rationalizations which are included in there and also given the fact that we are going to be hiring across the breadth of the higher value-added services, I think that maybe INR 22 crores, INR 23 crores is a sustainable number perhaps you're taking a short term for employee cost per quarter.

Sure, sir. Sir, just 1 last thing. You had alluded during the first quarter that for the full year, the revenue number could be down by about 15-odd percent. And just now also you've kind of given the similar range. The first half has been a little weaker. So does that mean that in the second half, we're expecting significantly better traction across segments? And just 1 additional point on the execution part. If you can just also share, which are the sectors which are kind of slow moving and which are the sectors which are kind of ready to take delivery?

I think it's not a sector, it's customer to customer. There's nothing -- the sectors which are placing orders you know, which are largely sectors of food, pharma, certain degrees of distillery and agro, but -- and cement from a waste heat perspective. It depends on unique customer to customer in terms of their balance sheet really in terms of how they have been able to put the rest of their plant up together. So I think that is very difficult to say which sectors are volatile.

The next question is from the line of Anand Bhavnani from Unifi Capital.

Yes. So sir, with regards to order book, I see that about 22% of our order book is now aftermarket. And it has increased steadily over last 15-odd quarters from like 10%. So part of it would be because we haven't got [Technical Difficulty] but even on the absolute level, this has done very well. So do you anticipate this trajectory of improvement in aftermarket to kind of continue and let's say, in 3, 5 years, we get to like a 40%, 35% kind of a number? Is that kind of a realistic expectation?

I think your expectation should be that we should continue with the same growth trajectory of our aftermarket. As far as the percentage share in our turnover, we are equally optimistic that our products would grow in the newer market segments as well as capture greater market share in the existing market segment. The previous question had alluded to our turnover mix. And I think the fact is that while we're cognizant of where we sit on turnover because there's a great degree of overhead cost absorption through that, our margins and profitability is something that I think will be sustained going forward. So while we may see a decline in turnover for the current year, at a PBT basis, we would be at the same level as last year on absolute level.

Yes. And sir, just on aftermarket breakup, you mentioned you have seen areas. Just wanted to double check. One is the spares, second is services. What is the third?

Third is for -- we offer the same offerings to third parties. So it will be to third-party spares and services. But you see for third parties there the offering is a little bit more diverse because we would be -- the offering could be anything from balancing to complete revamp and upgradation of efficiency. So the value addition is different across the entire chain so it's very difficult to place it under any other buckets in this generic name of refurbishment.