Triveni Turbine Limited (533655) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to FY '22 Earnings Conference Call of Triveni Turbine Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar of 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 Q3 and 9 months FY '22 Earnings Conference Call of Triveni Turbine Limited. We have with us today on the call, Mr. Nikhil Sawhney, Vice Chairman and Managing Director; Mr. Arun Mote, Executive Director; Mr. S. Prasad, President, Global Sales Product, Mr. Sachin Parab, President, Global Sales aftermarket; Ms. Surabhi Chandna, Investor Relations and Value Creation, along with other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion 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 formal 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 request 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. A very good afternoon to all of you, and welcome to the Q3, 9 months results for Triveni Turbine Limited. I trust that all of you are well and safe and that this current state of Omicron and this COVID pandemic has not impacted on you and your loved ones. To bring you to the performance of the company during the quarter, revenue for the company grew by 29.8% on a year-on-year basis to INR 2.25 billion. EBITDA increased by 33% year-on-year to INR 534 million, and the EBITDA margin improved by 63 basis points to 23.7%. And profit after tax grew 29.8% as well as the same turnover to INR 357 million. The higher turnover has led to a better operating leverage despite nearly 72% of turnover coming from the domestic sales as well as the aftermarket contributing at least 25.7%. This has been a true achievement by management to not only control costs, both from an administrative as well as selling expenses but also containing all other aspects of costs, including employee costs. Normally the prices have been high, as you can see, which is reflected in our raw materials percentage of sales at 55%. Typically, this is much lower in previous quarters and harbors around between 50% to 51% and attempts are that we will get it back to this level during the coming quarters. It is also a reflection of the sales mix where we had a higher percentage of domestic sales, which carry a lower margin. The balance sheet of the company continues to be extremely strong, and the cash balance is higher than it was in Q2. The net working capital of the company continues to remain negative, and this is backed by significant customer advances which is in excess of INR 244 crores in this -- of 9 months. But the biggest achievement of this quarter and something that I'd like to focus a lot of time on is our order booking. As you -- ladies and gentlemen, as you would understand, order booking for the company in the bank is what gives us visibility into sales in the coming quarters and coming years. The current increase in gross fixed capital formation globally is something that has contributed to our increase in sales. But more so has been our growth in our product profiles, both from the API market as well as other markets which we have grown but more significantly is the growth in directly attacking the 30- to 100-megawatt segment. On the order booking side, I'm very pleased to share with you that the company has again reported its highest order booking in the quarter of INR 3.21 billion. A key highlight of this order booking is winning 3 international orders in the over 30-megawatt segment from a very prestigious customer from South Korea actually, and this is for the steel segment. As you may recall, the company announced last quarter that we would be approaching the above 30 megawatts to 100-megawatt segment independently, following an amicable resolution of our joint venture with General Electric and data use. It is extremely commendable that we've been able to make such big strides in this segment in such a short period of time. We hope that these orders will be the first of many as the company has a renewed global focus and ambition in this segment. And these orders will further strengthen our credibility in this lucrative segment of 30 to 100 megawatts. It is important to highlight that on a 9-month basis, the company has achieved an order booking of over INR 9 billion, which is a 40% increase over the entire FY '21 order booking of INR 6.4 billion. This sets the tone and provides very good visibility for a robust top line and bottom line and overall financial growth for the financial year '23 and beyond. And with our healthy inquiry pipeline, the anticipated demand, we remain confident that the order booking momentum will continue in the coming quarters and will aid a sustained growth for the company beyond FY '23. As on the 31st of December 2020, the total consolidated outstanding order book stood at INR 9.25 billion, 42% higher than the previous year. And the company achieved a total order booking, as I already told you of INR 3.21 billion in the current quarter, which is the highest that we have seen as -- and this compares against INR 1.56 billion in Q3 of FY '21, an increase of over 105%. As you could tell from the investor brief, which has been mailed to all of you, the export order booking mainly contributed to this growth. Export product order bookings. The order booking in the 9 months stands at approximately INR 9 billion and this is a growth of over 89% on a year-on-year basis. The domestic order booking for the quarter was at INR 820 million, which is lower by 25% as compared to last year. However, in the 9-month period, this order booking stands at INR 5 billion, which is a 50% increase on a year-on-year basis. The domestic outstanding order book stands at INR 5.05 billion, which is 7% higher than the previous year. The export order booking during the quarter was at INR 2.39 billion, which is 415% higher than the 9-month period of export order booking and which is higher by 415% on a Q-on-Q -- on a year-on-year basis. And for the 9-month period, it stands at INR 3.94 billion, which is an increase of 184% compared to the 9-month period of the previous year. The Aftermarket segment has shown a growth in order booking of INR 500 million for the quarter, which is largely flat when compared with the corresponding period of the previous year. And Aftermarket turnover was INR 577 million and a growth of 2% over the previous year. The aftermarket, as I have totally contributed to 26% of the total turnover in Q3 FY '22, which is down from 33% in the previous year. And so therefore, it is even more commendable for us to maintain it. Order booking has improved significantly to INR 2.71 billion, which was higher by 155% when compared with the corresponding period of the previous year. And the product segment turnover was INR 1.67 billion during the quarter, an increase of 43% over the previous year. Ladies and gentleman, this growth has been possible due to a very active and very concerted efforts in marketing. We had been constrained -- we had not been constrained in the previous quarter to the extent that we may have been in this quarter with Omicron. But the inquiry generation that we have seen in this market has been quite commendable. In terms of the overall market update, we have seen a growth in a 9-month period in the domestic market, a growth of approximately 96% in the market below 30 megawatts and a fall of about 7% in the market above 30 megawatts. Overall, we have seen a growth in this market of about 25% in the 9-month period on a blended basis. The international market is also somewhat flat for the 9-month period. And therefore, our results for the 9-month period are extremely commendable given this backdrop. Inquiry generation though, for this current quarter for the domestic market has grown by 23% and in the international segment has grown by 68%. This all goes very well for our order booking in Q4 of this current financial year as well as for the periods of the next financial year. In this current year -- this current quarter, we were able to secure 27 orders in the export market, 4 from Indonesia, 4 South Korea, 3 from Central America, 2 from South America, 1 in Bangladesh, 1 in Nigeria, 1 in Austria, 1 in the United Kingdom, 1 in the Philippines, 1 in Thailand, 1 in South -- 4 in South Korea, 1 in Hong Kong and 1 in the CIS countries. This breadth gives you an idea of our reach, where we have an installed base in over 75 countries and active inquiries in over 110 countries. Other aspects of the company from design and development continue to perform exceedingly well, and it's only due to developments on our engineering side that we've been able to offer the products into the market that our customers require, be this in terms of high efficiency, blade part based solutions on steam turbines or API turbines a variety of different engineering solutions that we are providing to our rotating equipment customers, both from the product side as well as the aftermarket. Our R&D and new energy -- alternate energy solutions and technologies such as supercritical carbon dioxide continues to make progress, and we are on track with our commercialization and prototype time lines. The outlook for the company, given the growth that we've seen in the order booking is very robust. We have an outlook for Q4, which would be similar to an extent in the performance of Q3. But we believe this places us in a position to really target FY '23 with a very steady and sure footing of having a very robust order booking, very robust visibility in sales and future order booking book and bill in Q1 and Q2 of the next financial year. The Board in this current board meeting has approved a CapEx plan of INR 35 crores for us to expand 1 way at our Sompura facility, which will expand capacity to cater to this growth, which will be largely based on testing and assembly capacity that we need for the higher throughput, which we anticipate in the coming 2 years. This is backed by a significant growth in orders in terms of number of turbines that we will be dispatching as well as the megawatt capacities. The Board will also look proactively at partnerships with local service companies who already associated with us. So as we can improve our sales on a local basis and improve our presence and our visibility in front of our customers on a very proactive basis. With that, ladies and gentlemen, I'd like to open the floor for questions. So back to you, moderator.

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

Congrats on a good inflow...

I'm sorry to interrupt Mr. Swaminathan, may I request you to come on the handset mode. The audio is not very clear.

Is it better now?

Yes, I can hear you.

Yes. So first of all, congrats on the robust business continued over the third quarter also. Can you talk more about the international markets how quickly are those markets expanding? Which geographies are seeing good growth? What is driving growth? What has changed this year vis-a-vis last year? And then on the domestic market also, if you can give some commentary. This year -- this quarter, it has been slightly soft in terms of order booking in the domestic market, but I recognize that the 9-month numbers are still up. So if you can give a commentary on the domestic market in terms of segment weight also will be great, both international and domestic.

Yes. I'm going to get in S. Prasad who can comment a little bit more in terms of where you're seeing visibility in the orders. But before I get him in, give you -- I'd like to say that the export market, like I told you earlier in the 9 months period has declined by about 7% on a year-on-year basis. Even though we may not -- but this is based on what we are seeing is coverage. We do not have full visibility in the export market. But despite that, we believe that we are increasing our market share as we move ahead. On the domestic side, we maintain our market share has historically doubled in excess of 50%. And so therefore, that is something that we aim to maintain. We'll continue to work towards. When we see demand from a segment basis is typically in the area that we've spoken about in previous quarters. One is, of course, the renewable energy demand from biomass-based IPPs or solid municipal waste incineration plants. And these largely, we see in countries of Europe, city states like Hong Kong and certain more developed countries where there's a focus on renewable energy. But we've also seen an uptick in gross fixed capital formation in industries such as cement, reseat recovery steel, especially. And this is similar, not only for India but international as well. So we are seeing similar -- and this is where you have international pricing of hard commodities, which are easily tradable. The capacity constraints are known globally. But I'll let Prasad to come in to give you a little bit more visibility because what's important is that we are seeing this continue. This is built up already within having seen 1 month of Q4. But the visibility that we had coming into order booking for FY '23 also is equally robust, and we believe that we should be able to sustain this level of performance of order booking on average in the next coming year as well.

Got it.

Prasad, if you could come in and give some visibility please. Prasad are you on the line?

I would request members of the management on the landline to unmute your line please.

While I think that they come online, the market is very broad-based, Ravi from an international perspective. Like I told you, we received 27 orders this current quarter, which has -- and they do spend from steel, like I told you, this is very precious order for us because steel is a large capacity market, and something that's seeing growth not only in India, but in all markets where they do have capacity. So we see that as a positive for us, not only in terms of being able to provide high technology solutions. But as soon as we have a higher export epicenter sales, our margins on those products are significantly higher and in excess of double of domestic margins. And so we're very -- we're happy, but we're able to see good export offtake. This is also backed by good customer service order intake. And you see that not only do our spares in servicing of a good growth opportunity, but our refurbishment where we are providing solutions for rotating equipment on a broad basis as well as third-party aftermarket solutions continues to grow as we expand our position to local markets.

Got it, sir.

Prasad, are you there now?

Yes, sir. We are there now. We connected back.

Yes, please, can you can you answer Ravi's question on visibility.

Yes, sir, I missed the question.

The question is about how you see the visibility of orders both domestically and export?

Yes, sir. Yes. So the visibility from the inquiry pipeline wise on the domestic, we have a good traction. So especially from the industries like cement, the pharma, steel and the digital segments are dominating the inquiry pipeline. Even our order booking also, the spread is from similar segments, domestic like steel, pulp and paper, palm oil, waste to energy, is sort of hitting. Especially international inquiries, we have a good order booking as well as the inquiry pipeline from steel than wasted energy and wasted recovery-based cement applications and distilleries and food processing. So based on the inquiry pipeline, as we mentioned in investor brief about the increase in the inquiry pipeline. So we are quite bullish on that thing for the next year and next quarter also. And over and above the offering product basket is increased, means with up to 30 to 100 megawatts increase apart from the APA and quality pipeline. So with that, we are quite confident for the Q4 as well as FY '23.

Got it. My second question is with respect to the margins. You had already touched upon social that -- yes, so we have received orders, both in terms of exports and also in the higher ratings, the 30- to 100-megawatt. And historically, as we had mentioned, the margins in this are much, much higher than the regular margins. So at a blended basis at a company level, so what might be today as 20% EBITDA margins, can we see 300, 400 bps expansion over the next couple of years because of this high-margin orders?

So see Ravi track up. So it's difficult from a quarter-on-quarter basis. But if I look at a year-on-year basis and give you a little bit of a greater insight into that. Domestic margins are much lower than our export margins. And so therefore, the percentage of sales that we have from export will, of course, contribute more significantly towards margins. And equally is the contribution of aftermarket in general, be that domestic or international, it doesn't make a difference. That contributes more significantly towards margins. Also, there is a question about operating leverage and the fact that the higher actors, as you've seen this quarter, this is a very good quarter to analyze that where we have seen the impact of increased raw material pricing. For example, we've seen our high growing good pricing increased by over 50%, 55% in the last 6, 8 months. And so these are the impacts that we have to take. We work with our suppliers for long-term -- on long-term contracts. And we have to live with them. So it's not as if they be happy live with them when they have price increases. But when they have when prices fall, we have to take a benefit of that. But in this current quarter, where we did see price increases, that is limited to an extent of only 55% of turnover despite the fact that we had a product mix where you had a bit heavily skewed towards domestic sales. I don't more take and provide a little bit more insight into our initiatives to ensure that we at least maintain the margins that we have right now. Arun?

Yes. As you know, the margins at the sales level depends on the raw material and other expenses. The raw material -- our supply chain is a very well-oiled machinery. And we have suppliers who have been dedicated for years together. We have been working with them for the last 30, 35 years. Many of them are our employees. So we are continuing efforts with them and also independently to lower this material costs. We are sitting with them, helping them negotiate their raw material costs to ensure that the overall subcontract products which come to us are at a competitive rate. We are value engineering and some of their subassemblies. We are sharing with them the cost benefits that they get, and we get -- so all these exercises are going on. And our intention is to ensure that the input costs, not only the raw material, but the input costs for the final assembly comes down. And we have been pretty successful, as you know, from the past records. We expect that in FY '23 and '24, we will continue to do the same thing because we don't expect the raw material prices as such would come down so quickly. If at all, they come, there will be some kind of leveling off. Does that answer the question for you?

Got it. Yes. And my last question, sir. So I mean, our order book has grown year-on-year, almost like 40%. Next year, at least 20% kind of growth is something that we -- is there on the cards?

Actually, our ambition is for higher than that because we've seen good visibility in all our segments. So see what you've historically seen with Triveni Turbine has been the below 30-megawatt segment. And while that has seen some growth based on higher fixed capital formation, it is really the contribution of are other market segments, which is the API market segment, which we are -- which made a very small entry into and we -- it's a competitive market. It's a higher-margin market, but we believe that, that is a big growth market for Triveni Turbine as well as the 30- to 100-megawatt segment. So all of this leads us to have confidence that we should be able to maintain a good order booking runway, did it ultimately contribute to turn over.

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

Sir, my first question would be...

Sir, can you please come closer to the phone?

I can.

What will help in the market size in India for less than 15 megawatts in Turbine for the first 9 months of FY '22? And why do you see that going for the full year FY '22? That would be my question.

The market -- the market in 9 months has been approximately 800-odd megawatts. We anticipate that we will end the year with a proportionate growth as you see in the first 9 months. This is approximately like I said earlier, about 90%, 96% growth year-on-year. But the larger market size of 30 to 100 has seen a decline in India. So on a blended basis because now as a company to see market overall up to 100 megawatts, we've seen a growth in the market of about 25% only. And we believe that this will continue. This is something that the order booking -- the inquiry pipeline estimates has been quite robust. And so we think that this will continue. We see no reason for it to fall. There's ample liquidity good momentum in terms of people willing to place orders. There seems to be -- some pickups will happen with COVID here and there. But largely, I think that we're quite bullish.

Sir secondly, on our very strong order intake in the first 9 months. So how has the pricing move in domestic and the overseas market. So has the entire growth come from higher volumes only of pricing to would have played a part over?

No, it's been mainly a volume growth. Pricing plays a role, but you see it very difficult to say since we make an engine to order product, which not only changes in terms of configuration of the steam turbine itself, but our binaries and the balance of plants which go along with the steam turbine also change in terms of scope. So in general, pricing would depend on how the contract is same and what the customer wants to base the order for in terms of scope of supply. The margin is a better question to stick on because that is something that is predefined at the time of us closing the purchase order. And what we've seen there is that there has been some pressure from a raw material price perspective. In terms of order booking margins, but that is mitigated with a lot of the efforts that Arun had talked about in terms of being able to value engineer work with suppliers to reduce costs once orders are placed to ensure that we at least maintain our margins going forward, which is despite the fact that having a better product mix in terms of execution, which may happen in the coming year because of a higher percentage of exports as a percentage of sales will contribute also favorably towards our margins.

Right. And sir, lastly, out of the INR 9 billion order intake for the first 9 months how much would have come from APN in the 30 to 100-megawatt segment? And where do you see that going?

I don't think we're going to be giving those data points because it's competitive to a large extent. But suffice to say that we're seeing that the API segment is not large enough for it to be supported independently. 3 to 10 megawatts just because of the size and capacity of these turbines are larger, they would, of course, we have higher value. And so therefore, the player they will contribute more. In this current quarter, the 30- to 100-megawatt holders that we did talked about at the beginning of my introductory remarks, did play a disproportionate role in terms of the value. But we believe that this is a market segment that we're going to be approaching and trying to get orders on a every quarter basis. And so we need to start distinguishing between different market segments would be very difficult for us to do.

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

I'll break down my question into exports and domestic business. So sir, on the export side, there is pickup in the more than 30 megawatts segment and considering GE has exited, can you please give some light on what kind of challenges we are facing maybe on the technical side? And definitely, on the other side, there is a lot of help in terms of doing business with more independent. So in that context, can you help us gain -- help us gain an understanding on how we are gaining the traction so quickly in the 30- to 100-megawatt segment?

Okay. Let me answer that question in a different way because I really don't want to answer it based on GE because, very frankly, they are the higher -- I have no comments on that aspect. But suffice to say that when we were -- and you've been following the company, you know that the joint venture is in a certain way, and it has certain performance. We will always -- our expectations are that we can have done better. From a technology perspective, Triveni technology is world leading. We -- our efficiency levels, cost levels, supply chain, second to none. So very frankly, we have all confidence and the JV and its contribution is execution is executed 50% of its orders on Triveni technology. So very frankly, we've had confidence in our technology in a very long time. We have an installed base already in our technology. So it's not as if these orders can come based on anything which is not founded in practical installations. So that was your -- so from a perspective technology, we are extremely confident. But on a general market basis, we need to continue with our developments to ensure that we continue offering our customers the most efficient schemes, blade parts? And what about the configurations they may need in terms of injection of extraction for their applications. As you know, Triveni Turbine is a provider of both heat and power solutions. And so when it comes to those requirements, we are very happy placed to be able to provide solutions to both industrial as well as renewable energy plants, in all market segments, below 30 megawatts, above 30 megawatts. Your second question, can you repeat that?

This was the main question, really. The second part is, how will the margin profile of this business differ from our current business, 30 to 100 megawatts?

Margin is not different. It's a question of domestic versus international. International potent to give us forward double margins on the domestic margins.

And what has been the key reason why we have been able to gain the traction in this market so quickly? Like I think in last 3 to 6 months only, we have got this sudden traction. So what are the specific any reason or it is -- does that -- yes.

No, the reason is that the team is raring to go. So we have great confidence in our ability our sales network is very time to take these opportunities on. We have -- our performance in the below-30-megawatt space is last year -- last calendar year, we were #1 in this space in terms of number of installations. And so therefore, this could easily translate into confidence about 30 megawatts also. And we have the appropriate products and appropriate pricing. So there's no reason for us not to go in the investors in getting these orders.

And just one question on the domestic side. When we say we cater to the Steel segment, so is it sponge how -- which part of steel sector do we cater to?

Prasad, can you answer that question, please?

Yes, we cater to both and pig iron as well as the integrated steel plant. So in that also, again, killing gases, blast-furnace gases as a waste recovery. So across we cover the complete integrated steel plant segment.

For majority of these applications are waste recovery from the steel segment, much like it is happening in the cement segment as well, where we're seeing more growth on brownfield expansions and greenfield expansion to lower cost of production.

Next question is from the line of Ankit Babel from Shukan Managers.

Yes. Good afternoon, sir. Sir, you did mention about the fact that the current momentum mainly from the order inflow side can continue in the coming quarters and even in FY '23. So sir, just could you just give us some more idea about -- so I suppose if you end the current year at around INR 1,200 crores of order inflows if you -- if Q4 is similar to Q3, so if you end up somewhere around INR 1,200 crores order inflow. So on that base also, can you grow at 20%, 30% in terms of inflows in the coming year is what you're trying to say?

Well, our attempt is that. We have to wait and see the factors we are setting up our capabilities and capacities. I think Arun, maybe you could talk a little bit more in terms of what the plans are for the company in terms of recruitment and capacity expansion, et cetera. So that gets more visibility into how it cater into these market segments.

Yes. One is about plant capacity, which Mr. Nikhil Sawhney has already explained, we are going for additional day that would substantially augment our capacity, and we should be able to meet much higher levels of numbers as well as megawatt production. That's already on the way, and you would see it soon completing. As far as HR is concerned, due to COVID, we missed 1 batch of graduate trainees and the initial hires, for which we have already done now and those people will be available. This year, again, we'll be running the back of graduate engineers and diplomatic so that they would be added. That would be at the initial starting level. Then we are looking at some senior persons joining us from -- within as well as from other engineering industries. And we are looking at the sales people who are across industries. Some of them have joined and some would be joining, including different nationalities as and when the time comes. So the HR...

The point is that we have a very aggressive HR plan to be able to add capacity so that we indicated to this growth. This is something that we have to invest into the sales don't come the side themselves.

So just a ballpark idea again, sir. So are you looking at somewhere around INR 1,400 crores, INR 1,500 crores of revenue by FY '24, given the current momentum in inflows and execution?

We don't ring visibility like that, but I think the numbers are something that we believe are achievable.

Okay. And sir, my second question is what is preventing you to get good orders from the API segment since you already have all the building blocks ready from the product approval to the infra and everything. So what is preventing the scalability and order inflows in the API segment?

It's -- nothing preventing. It's just a question of those orders coming up for execution. There's a degree of fare from customers about making India. We -- and so that is an indirect we have to overcome, which we tried to do it steatite power generating side, PT side, for quite a period of time. But we are confident that we will overcome this over story. We have a small market share right now in a very large market, and we think that it continued to grow in that. But Prasad, would you like to provide visibility as to how we are taking API?

Yes, sir. Yes. So API wise, yes, we have a strong inquiry pipeline and our acceptability is there by all international consultant, EPCs and voice. And by seeing the inquiry pipeline built up and our acceptance across the globe, we are quite bullish on API segment. But the API segment order finalization time cycles are quite large because even though the end customer like the refinery finalizes, so we get the order from EPCs or OEs. So there is a little time lag there. That's the only time lag issue. But next quarter or coming years, we will see API a good contribution in the overall order bookings there.

And the margins in that segment is, again, in line with your export margins.

Yes, yes.

Yes. So it's a lucrative segment for us. But we also what will contribute to our growth as we move forward is also aftermarket. And Sachin, maybe you could add a little bit about how you're seeing the growth in the coming years in terms of order booking and vital market segments.

We are seeing very good traction on inquiry generation in both domestic and export markets for customer care. The aftermarket business, we are hopeful of substantially increasing our order booking in the coming quarters, including next year. There are many efforts we are making in this regard. We are adding our resources on the ground. We are increasing our presence overseas. And we believe that closer collaboration with our execution partners overseas will create more value for this business.

Okay. Okay. And sir, my last question is that the cash balance has been increasing continuously in your balance sheet. And in last quarter, you had mentioned that you look into either utilizing that cash internally? And if you don't find any such utilization, you'll pay it off so that the return ratios and all those are not impacted?

I don't think we said that because what we did say is that the Board hasn't taken any decision. And unfortunately, it's still a tad position where the board hasn't taken any decision on capital allocation.

Sorry to interrupt you, Mr. Babel. I would request you...

No let the question continue.

So is there any inorganic opportunity, I mean, possible in your segment?

Well, to answer that I mean, of course, there are opportunities, but is it something that we would consider as a different matter. We believe that we are at the technological level where no inorganic opportunity is going to help supplement our technical capability. So really, we don't think that, that is a direct route for us to grow in a big way. smaller opportunities that may add capabilities, which may not be very expensive. It's something that we may look at. But I think we bought as a considered anything concrete right now.

The next question is from the line of [indiscernible] from SBI Mutual Fund.

And congratulations to the management for a very good performance. And my question, Nikhil, is that last 2 years have being very difficult for most companies. And for a company like us, which has a larger share of exports business, do you believe that there is a requirement of additional feet on ground, both in terms of sales and in terms of installation, I think Sachin did speak about hiring additional resources, but not sure whether it was international or domestic?

Sorry, can you -- the question is, do we need to -- what does it mean for adding resources and capacity, is that the question? Sorry to follow...

No, in terms of more feet on ground for sales and installation in the international geographies because travel more sections have been very...

Most definitely. Most definitely. The fact is that we need to hire people who not only have a greater local connect who have relationships that they come within existing geographies and industries. And so therefore, that is very much part of our very immediate plan. It is not a way to derisk, it's more of a way to actually expand growth opportunities. And we had some success with this. And we think that, that is a good way for us to grow both from a product sale perspective as well as from an aftermarket capability to be closer to customers. So both will be required. But to that extent, we have budgeted all of these as costs. And we still assume that our margin expectations will be consistent.

Okay. So on a year-on-year comparison, we see that your raw material sales have risen to 55.3% from share so what percentage of this, in your view, has contributed due to a mix change, more domestic less of an aftermarket? And what percentage is actually impact of the input cost inflation? And are you actually seeing that in the orders that you are getting you are able to mitigate this and go back to the raw material to sales level of 50% that we were seeing in the previous years?

That's a very difficult question that you've asked. Because again, as I think another one of your colleagues already asked, our sales depend on order intake and which because it's because of the increase of the market, you don't know if it's an international domestic also when in which quarter, things are going to be dispatched. But in general, when we are accepting orders, we have a good idea as to the cost that will be incurred on executing that job because of either long-term contracts that we have for certain supplies long lead on such as key things and castings and the forgings or certain balance plant equipment that we routinely buy. And so we have a good idea when we get to the negotiating table where prices lie. As you would imagine, the number of components that go into [indiscernible] in terms of the [indiscernible], [indiscernible] as well as the [indiscernible], which includes the generators, gearboxes, panels, electrical system, lube systems, et cetera, will all get impacted by higher commodity prices, especially steel and copper. And so to that extent, there is most definitely going to be an impact in terms of the cost that we have incurred. I think what Arun alluded to earlier also is that while these prices may soften a little bit, it's difficult to imagine that they will -- or we're not budgeting as such, any steep increase from going forward. But neither are we wanting any steep fall from here going forward. So I just currently stands when we are negotiating for orders, depending on the competitive intensity of that order itself, but we try to maintain the margin levels and the strategy that we have in terms of market share and market dominance within different segments. But as we currently stand, the order book that we have is consistent with our historical margin profile, which gives us visibility in terms of once we execute these orders we will be in a good space in the coming quarters and years.

Sure. Just last -- third and the last question from my side. We have seen about 90% increase in the order flows in the 9 months. And with the lag, we will see that translate into revenues. Could you speak about your supply chain because globally, all across industrial companies have been talking about supply chain bottlenecks and especially on the electronics and the semiconductor side. And are we seeing that our supply chain is geared to ramp up so quickly?

Okay. I'll just ask Arun to comment on that, but our supply chain base is broken up into 2, 3 components. One is subcontractors, which would do part work and machining, et cetera, which allows us to have less capital employed on our balance sheet and get them to do dedicated work. The de staff, vendors who may actually do on more value-added work and the other will be suppliers who end up supplying their product directly to customer sites. So Arun, could you give an idea in terms of how much are locals and how much do you depend on foreign supply chain for this growth?

Yes. Yes. Our foreign supplies are always less than 5%. And the semiconductors and printed circuit boards and other circuitry that electronic service that you're talking of doesn't affect us much. because that percentage is lower, and that is taken care by the equipment supplier like the one -- like other control instruments. So they are the people who have to manage it. In the last 1.5 years, we haven't faced much difficulty from any of them. And as far as the domestic supply is concerned, it's perfect, more or less perfect. We haven't had any issues. Whenever we had up-downs, and all -- of course, there have been logistic issues and supply chain issues. But we are all overcome them, and our production is absolutely normal.

Actually, the question is the 90% growth we have seen in the orders, we might see 30%, 40% growth in the revenues or execution in the coming quarters. So is the supply chain okay to ramp up at such a fast pace?

It's already done because we have been seeing this trend for the last 6 to 8 months. So adequate steps have been taken. We are already on the expansion mode as far as various capacities are concerned, and it will be an ongoing exercise for next 3 to 6 months. So it hasn't happened suddenly. We have been foreseeing it.

The next question is from the line of [indiscernible] from BOI AXA Mutual Fund.

Congratulations on a great set of numbers. So my first question was on this 30- to 100-megawatt category. So a few questions on this side. So which are the industries we cater to in this segment? And what gives you confidence that going ahead, the growth in this segment will be way higher versus what we had seen earlier during the GE area? And third on this part itself, how aggressive is the Siemens or any other large player in this segment? And what would be their market share? And what we envision to capture in the coming years?

I'll start from the reversal to give you a better idea. I think the market is dominated by large multinational manufacturing vaccines in this segment. The market segment, both domestically and internationally, is a little bit higher in the 30- to 100-megawatt segment. In India, it's slightly lower in the 30- to 100-megawatt segment and below 30 megawatts. And this is really the profile of the customers and the industry that we cater to. The larger the industries are the higher the capacity of the requirement for both steam and power will be. The largest requirements, of course, comes from metal and steel, which is for the pain power consumption. But when we look at it from a perspective of all the gases that M&A from a waste recovery perspective, that is a market segment that definitely is about 30 megawatts. We see very consistent demand in chemicals, both in India where we have orders also Chemical segment for higher than that capacity. We have paper and pulp, which require high extraction and large paper companies also have place orders on us in this market segment. You would not see large food processing distilleries, et cetera, in the space. You would see waste to energy as well as biomass-based IPPs in the at segment. And so this is similar to the market segment that we cater to below 30 megawatts. And we believe that our sales network, et cetera, is something that is capable to go out and leverage this lesser manner. So we will be aggressive here to gain some market share. But our cost levels also are quite robust so that we think that we'd be able to maintain margins despite the fact that we would be excessive. And I don't want to go back into the performance of the joint venture, as something that's over now. We believe that we should -- our ambition is to outperform whatever we did perform under the joint venture.

Okay. Okay.

Does that answer your question or would you like more clarity on certain things?

Sir, I would like to have more clarity on -- so one is the addition of sales force, et cetera, to drive that 30-to 100-megawatt. But the piece was there with us earlier. We had confidence of international business being coming to us via tie-up. So everything was always there on the plate. And I guess the sales were flat for quite some time over there. It could be the market not growing or whatever the reasons to be. So now going ahead, apart from Salesforce, what is the 1 or 2 things which you would like to highlight where okay, now I can see a 20% or 30% growth on year or whatever number it is, but what gives you that confidence you will grow at a higher pace versus the last 3 years or 5 years?

Well, the main thing that you start from a low base, but besides that is the fact that possibly to go back to stay how a joint venture work was that international sales were handled by our partner. And we handle domestic sales as well as certain sugar orders internationally. What we find is that the focus that we have in the market and given our structure of sales, which is aided by an agent network, which has a deep-rooted connect and relationships with customers aimed quite considerably in being able to not only firstly get visibility into the market in terms of where the orders are but then to be able to go and have aggressively close 1 of those. So the structure is different also, not only the number of people and also the focus the focus is the most important thing because it wasn't like -- as it earlier, we were losing -- we didn't have visibility to orders, then we want to those dollars.

Okay. Okay. Got it, sir. That's helpful. And second question was, say, today, we do capacity of, say, around 700, 800-megawatt and say, FY '23, '24 considering the growth in the market and we have demand for 1.3, 1.4 gigawatts. The current capacity are we in a position to cater to that demand or we'll have to do incremental CapEx?

Arun, can you answer this question?

Yes, we have built in flexibility to expand our works quickly and augment the supply chain. So we will always be making efforts to see that we have at least 10% to 20% of the excess capacity because this capacity doesn't cost extra. So we will have some breathing time in case there is a certain sort of order, and we should be able to take on more orders in the future. We are pretty flexible on it. I don't expect much of capacity issues if the market suddenly goes up.

I think another thing that you should keep in mind is the 2 capacities that we have to talk about, 1 is the capacity that we have in-house. And as you can see from our balance sheet, that's clearly what Triveni Turbine does is it manufactures the high-value IP sensitive components in-house. And then it does a lot of assembly and testing and quality control. And so the capacity that we have internally is for quality control testing assembly, et cetera, is what we will be adding on at this point in time through our CapEx proposal. But equally from the manufacturing side, we need to ensure that our vendors have contracted, et cetera, has capacity as well and that we monitor to ensure that they have at least 50% extra capacity from what we -- our requirement is.

The next question is from the line of [indiscernible] from Siemens.

Hello. Sir, my question is then on the capacity addition, which you highlighted earlier. So just wanted to understand, can you throw some more color like what is our current utilization and by how much we are looking to expand our capacity?

See, again, like I said, we will be expanding the capacity in terms of volume monthly volume output by about 33%. But this is more from a testing assembly and testing perspective. what we believe is that this affords us ample growth to growth in capacity to deal with the agrees that we may require in terms of our customer expectations of dispatch in any particular month. So we will -- so very frankly, our capacity utilization is if you take in the number of machines, but a number of machines very drastically in terms of value. So it's difficult to put value to capacity as a metric. But number of machines wise, we have the capacity now to do, I would say, I don't -- can you give an idea of how many machines could we do and how many have we taken it up to.

Machines per year or you can say per month, we have a capacity to make 15 machines a month. And it is flexible about 5, 6 machines can be added easily. But with this expansion, we will be closer to about 20 to 25 machines. That's what we are looking at.

Okay. Okay. So what kind of CapEx we need to spend on this?

We already said...

IINR 35 crores is what the board has approved.

Okay. Okay.. And sir, one last question. what CapEx we have occurred in FY -- 9 months FY '22?

The CapEx for 9 months is INR 12 crores.

The next question is from the line of Vimal Sampath, an individual investor.

Most of the questions have been answered. One is just 1 or 2 small things. One is on the cash side. So now when do we expect in next year FY '23, some action? Do we expect something in '23? And second is on this 30- to 100-megawatt capacity turbines, I mean, how is -- I mean, total market size compared to our 0 to 30, is it double? What is this thing, size of that market opportunity?

So the opportunity from macro data sets that we see is approximately 1.2x internationally than the below 30 megawatts, Megawatt segment. This is a general trend. The first half visibility into the international market is not fully there. And so we don't participate in that full market but our attempt is to get there consistently. On the cash question, like I had mentioned to another one of the league is that the board hasn't taken any decision to cognizant to the fact that this dampens our return metrics, but the board hasn't taken any decision as soon as they take a decision we will inform you.

Yes. And just one last. What we see with a INR 35 crore CapEx, we will be able to expand our capacity by 33%. So the way we are growing, I think in next we will be at least 3, 4 times in size. What is your perception, sir?

No, I think we let's speak away from those type of injectors. Our attempt is to grow consistently and to ensure that...

No, because we'll have 30 to 100. Earlier, we had only 0 to 30. Now we'll have 30 to 100, then API and then the super critical, et cetera, et cetera. So the addressable market will -- yes. But I'm talking of 4, 5 years down the line, our addressable market will shoot up.

So I mean I think the fact is regardless order book visibility that we have coming into FY '23 and for FY '23 itself also it's quite robust. And I think you gave an indication as to how we look at that looking more forward from there depending on so many other factors that may form maybe a little bit of conjecture. Our efforts are on strategically to aim to grow this market and have greater participation. So I think I wouldn't like to answer the question.

The next question is from the line of Ankit Babel from Shubkam Ventures.

Sir, just a follow-up. Given the large opportunities which are now present in the overseas market, where do you see the share of exports revenues in your total revenue in the next 2, 3 years' time frame?

First is up in terms of order book, we aim in FY '23 to take it back up to 50%. So that will then reflect on to sales.

Okay. But do you feel that structurally the share of export will only increase given the opportunity sizes available in the overseas market? And once the order inflow traction also comes in the API segment?

Yes. India is a large economy for this for -- in terms of fixed capital formation on. So we can't disregard that back from a global perspective. But the global market is larger than Justina. And so we have always been very optimistic in terms of growing our residents in capacity. We did have some pickups a couple of years ago in terms of hitting a ceiling. But we think that by adding human resources and other means by which we can get closer to customers as well as expanding the addressable market that this percentage should go up.

Okay. And sir, lastly, Ceteris paribus, assuming the raw material prices, I mean, move in a range bound manner in the coming years. And assuming that your share of exports is at around 50%, which you are targeting. So in that scenario, considering the operating leverage, which you would be having with the kind of growth which you are advising. So in that scenario, where do you see your operating margins to satellite? I mean would it be like in the 23%, 24% range, 25, 22, where you see that in that scenario?

No, you see some things that our aftermarket is also growing quite consistently. And so that has a good contribution to us. We will incur more overhead to have an increased order book -- so that will then be compensated by higher turnover. And so this operating leverage will also get utilized to an extent. We think that from a product side, getting an order and then having the life cycle value of that customer is it really beneficial to us. We get spares orders from customers over a period of the life of our which as long as we can to 40 years. So this is something that, very frankly, our competitors who have lower cost of capital ended up using quite strategically to be able to just acquire customers. We, of course, look at them in distinct P&L. We have a higher cost of capital in India. And so we need to make margins on these sales, and we've been quite consistent in showing these margins. What the end result is in terms of EBITDA margins, we try to maximize that to the extent possible. the competitive intensity changes quarter-to-quarter. But having said that, our cost structure is very good. So overall, if happy a general outlook, we think that we are comfortable at these margin levels that we're at right now. We think that given the sales mix that we may have next year with higher export as a percentage of sales than this current year. some of the pressures that we may have had in terms of raw material increases or higher overhead will be there also. And with higher turnover, we're quite optimistic. I think that without giving -- I'm very round about the answer, but I think that's all I can give at this point.

Okay. That's helpful, sir. And sir, just 1 more small question. So the growth in aftermarket in the coming years would be in line with your -- I mean, growth in order inflows in the aftermarket segment will be in line with the overall order inflow growth, I mean the share will maintain?

I think we're quite -- we're more optimistic on the order flow increasing in the coming year from the aftermarket in till FY '23.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you very much, ladies and gentlemen, for joining this call. Sorry for running over a little bit. I'd like to just leave you with the fact that we are estimating turbines have weathered this Omicron pandemic quite well. on lock down. Everyone on this call has actually, I think, already had it, and we're quite confident in terms of being able to show the results for this current year and the coming years.

Thank you. On behalf of Triveni Turbine Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.