VA Tech Wabag Limited (WABAG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the VA Tech Wabag Limited Q4 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Mittal, Chairman, Managing Director and Group CEO. Thank you, and over to you, sir.

Thank you. Dear friends, good evening. Let me first welcome you all to the earnings call post announcement of Q4 FY '22 results of VA Tech Wabag Limited. Joining me today for this earnings call is Mr. Skandaprasad Seetharaman, our Group CFO. We hope you all had a chance to go through the results update. I'm also joined today on this call by Mr. Shailesh Kumar, our CEO, India cluster, who has joined our leadership team at Wabag as a part of succession plan. Shailesh comes from -- with an excellent experience in different sectors like power, oil and gas, fertilizers, cement and mining in both EPC and [ EPCM ] business in leadership positions. In his new role at Wabag, Shailesh will gradually take over the India cluster leadership from Pankaj by end of September '22. On the key order intake for this quarter, it's very heartening to note that in the concentrated effort by our capital projects team led by Mr. Varadarajan, we have signed a concession agreement through our wholly owned subsidiary, Ghaziabad Water Solutions Private Limited, with Ghaziabad Nagar Nigam for design, build and 15 years of operation and maintenance of 40 MLD recycled and reused TTRO plant at Ghaziabad. The plant will use membrane technology, both for the ultrafiltration, followed by reverse osmosis to further purify the treated sewage to an industrial usage quality. The 40 MLD TTRO plant once commissioned, shall be the largest TTRO plant under the HAM scheme in India and expected to provide sustainable solutions for water needs of the industries located in Sahiba Bagh industrial area. Wabag has been at the forefront of the water recycle and reuse initiatives globally. And this order is yet another milestone for Wabag towards contributing to manufacture water for industries in Ghaziabad through advanced technologies. We used to call it earlier as alternate sources of water. We thought we are manufacturing water from our waste water, so it's an appropriate word and that's the reason we are using manufactured water. Coming to some key business updates at our MARAFIQ project in Kingdom of Saudi Arabia to design and build a large-scale sewage treatment plant with a capacity of 120 MLD for Jubail Industrial City. Engineering, equipment delivery and installations are complete. Pre-commissioning and commissioning of the plant is underway, which we expect to be completed by end of H1 FY '23. At our 300 MLD independent sewage treatment plant at new Jeddah airport in Kingdom of Saudi Arabia, which is being built with the state-of-art technology, Nereda, equipment delivery is currently underway. Installation activities have commenced and plant is expected to start pre-commissioning activities towards end of FY '23. In our Zarat project seawater reverse osmosis plant of 50 MLD capacity, expandable to 100 MLD being executed for SONEDE in Tunisia, major equipment deliveries are complete, mechanical and piping installations is currently underway. The project is progressing towards the start of pre-commissioning by end of Q3 FY '23. As you are aware, we secured an engineering and procurement order worth USD 165 million, which is about INR 1,200 crores from Amur Gas Chemical Complex LLC. in Russia in H1 FY '22. AGCC is a joint venture of SIBUR Holding, Russia and China Petroleum and Chemical Corporation, which is also called as Sinopec China. Owning to the current geopolitical uncertainty in the region, customer has communicated a suspension of further activities of the project in April 2022. We are in regular discussion with the customer to periodically evaluate the situation and await resumption of work. Ordering activities started assuming pace, both in India and internationally. We will continue our focus on technology-levered international orders and enhancing our presence in the industry and water treatment space while continuing our delivery of best-in-class municipal water solutions. We are confident that Wabag will continue to remain a frontrunner in the oil and gas segment, recycle and reuse of water and desalination solution with our marquee references across the world. In our 187 MLD STP being built in Bally, Baranagar and Arupara at Kolkata for KMDA under the HAM model, we are halfway in the project execution phase, and the project is progressing well. Basic detailed engineering is complete and equipment deliveries have commenced. Focusing on completion of projects has been our priority. And in this line, in Q4 of FY '22, we have completed commissioning of 30 MLD desalination plant in Mangalore, built for MRPL; completed commissioning of Cuttack, 2 STP in Orissa, built for OWSSB; completed the raw water and RODM plant built for HMEL at Bathinda. In line with our safety focus across the group, I'm happy to inform you that in our EXIM-funded Polgahawela project in Sri Lanka, we have completed 5 million manhours -- safe manhours. The project has also partially commissioned and we are expecting to finish the full project within this fiscal year. ESG has been at the heart of our business and sustainability has been the theme. Wabag has been ensuring water security across the world, both for municipal and industrial clients with our reference plants for recycle and reuse of water, which has been helping reduce -- reduction of groundwater depletion; our desalination plant, which have provided water for portable and industrial use; our total resource recovery model plants, which ensure that no resource that comes into the plant is wasted and makes sewage as a resource rather than a liability; and green energy focus by using biogas generated in our plant to power the sewage treatment plant operation and also producing BioCNG, we have consistently demonstrated our commitment to sustainability and environment. At Wabag, as we informed earlier, we are progressing our ESG assessment and benchmarking process with the help of subject matter experts. Wabag with it commitment to technology and sustainability is well poised to continue growing profitably and [ enhancing ] the global leadership position. While Skanda will take you through the financial highlights in detail, I would like to highlight the performance metrics of the core business for FY '22. Core EBITDA for the year stood at 10.4% against the reported EBITDA of 8.3%. Our margins have improved year-over-year despite material price increase and cost headwinds. Core PAT for the year stood at 6% against a reported PAT of 4.4%. Return on capital employed of the core business stood at 21.5%. Net working capital days at the core business level stood at 56 days for the year. Our core business, which is the water business remains intact and continues to grow profitably. I'm extremely happy to inform you that in line with our commitments, Wabag continue to remain cash positive -- net cash positive and generated positive operational cash this year as well, reflecting our focus on cash. With high quality of order book of over INR 10,000 crores and a strong order pipeline visibility, we are confident of continuing to generate value for our stakeholders in our growth story in the years to come. I would like to express my sincere thanks to our direct and indirect employees and all the stakeholders, including the customers, suppliers, investors and banks for their continued support, especially during these pandemic times. Before we move into the financial highlights, I would now request Shailesh to say a few words. Over to you, Shailesh.

Thank you, Mr. Mittal for this opportunity to speak to our stakeholders. Good evening, ladies and gentlemen. It's indeed a pleasure to introduce myself to all of you and be part of senior leadership at Wabag. First of all, my future thanks to the group management and Board of Directors for having reposed faith in me to deliver this important responsibility. In the last couple of months at Wabag, I have had the opportunity to meet our fellow WABAGites, and I have been enthused by their determination and purpose in pursuing organization's vision, sustainable solutions for a better life. I'm extremely happy to be working with the high octane team who are focused on making the world a better place to live. I have worked with Indian and Fortune 500 companies in CPC, EPCM and utility business space in diverse sectors like power, oil and gas, fertilizer, cement and mining for the last 29 years. In my earlier organizations, my span of control ranged across projects in India, Middle East, Sub-Saharan African area and Southeast Asian regions. Now I'm extremely related to the part of an Indian multinational organization, focused on sustainability with technology, with business operations that spread over 25 countries across 4 continents. At Wabag, I see passion for technology, focus on water security and vision for future of water. My priorities for Indian cluster would be to take forward the successes already achieved and build greater operational excellence into our processes to deliver projects on time, within cost and at optimal quality. Last but not the least, I take this opportunity to thank Mr. Pankaj Sachdeva for having led the Indian cluster extremely well over the last 5 years and building an efficient and motivated team. This is such a wonderful platform for me to grow the cluster to greater heights and successes. I will be taking over the responsibility from him over the next few months. Looking forward to more successes and celebrations at Wabag. Thank you all. Over to you, Mr. Mittal.

Thank you, Shailesh. I'm sure you will take the India cluster and Wabag to a greater height and successes. At this moment, I will also take the opportunity to express my sincere thanks and appreciation to Mr. Pankaj Sachdeva, who has over the last 5 years provided stellar leadership to the cluster and delivered successful order intake and projects. I will now request Mr. [ Skanda Kumar ] to take you through the financial highlights for the quarter and FY '22. Over to you Skanda.

Thank you, Mr. Mittal. Good evening, friends. Trust you had an opportunity to look at the results update presentation as circulated and uploaded on our website. Let me take you through the key financial highlights for the quarter and year ended 31st March 2022. Our consolidated total income stood at INR 3,012 crores up by 6% year-over-year. On stand-alone basis, total income was INR 2,171 crores, up by 17% year-over-year. The consolidated EBITDA for the period stood at INR 248 crores, which was up by about 14% year-over-year and the stand-alone EBITDA for the period stood at INR 192 crores, which was up by about 13% year-over-year. We have delivered another year of profitable growth, which is our PAT growing faster than the top line. The profit after tax attributable to [ owners ] stands at INR 132 crores on consolidated basis, up by about 20% year-over-year. On a stand-alone basis, the profit after tax stood at INR 92 crores, up by about 26% year-over-year. As already highlighted by Mr. Mittal, on the core metrics, core EBITDA stood at 10.4%, double-digit EBITDA margins as we have been indicating over our interactions earlier. Core PAT stood at 6%, demonstrating our control over finance cost through constant cash and debt management focus. Core return on capital employed, that is ROCE, was 21.5%, in line with our asset-light model, and technology-focused approach. Core net working capital days stood at 56 days as a result of effective and expedited project execution. With our continued cash management focus, we exhibited a turnaround to net cash position in the last year. We are happy to inform that we continue this trend into FY '22 as well with a net cash position of INR 10 crores as of the end of this year. Also, our operational cash flow generation for the year ended 31st March 2022 stands at INR 12 crores positive. Our investing activities have primarily been on funding the contributions of equity through our HAM SPV established for the KMDA Howrah project. On the balance sheet side, our net working capital has improved from INR 742 crores as of the end of FY '21 to INR 713 crores as at the end of FY '22 in absolute terms. While we have reduced the working capital base, we have also reduced the working capital days from 97 days as of March 2021 to 88 days as of March 2022. Our trade receivables have also reduced year-over-year despite growth in top line, signifying better [ involving ] and collection turnover. Our trade payable days reduced year-over-year owing to deployment of resources to expedite project execution, which is reflecting in the margins and top line improvement in an environment of cost headwinds. Efficient execution and deployment of resources have helped us improve and maintain our key business parameters this year as well. We express our heartfelt thanks to our bankers, vendors, investors, fellow WABAGites and all other stakeholders from the continued support extended to us. With this, we open the floor for question and answers.

[Operator Instructions] We have the first question from the line of Priyankar Biswas from Nomura.

My first question is, like for the second half of this financial year, we have seen that our sales have declined Y-o-Y. Any reason, I mean, especially, I'm seeing that the overseas sales are declining in particular. So what are the issues or any particular headwinds that we are facing?

Excuse me, this is the operator. Mr. Mittal, just wanted to check...

Yes. Sorry. We were on mute. Thanks. I think -- regarding this top line, we have seen some slowdown towards the second half in some of the projects, which we were executing. One we said was Russia, where we saw from February onwards, because of these geopolitical things, the things have slowed down, but also some of the other projects in the Gulf region, we have seen some of them have slowed down in the progress because of -- not our issues, but on the client side, and we had to little ramp down our speed. So -- but you have seen that we have grown on a year-on-year basis. And we see that with the order backlog we have, we have a growth. It shows in the coming year also. And this is also in our direction where we want to reduce our dependence on Q4. But every year, we have a huge Q4. So in fact, the first half, we had put in a lot more effort to see that we achieve a substantial progress in the first half and not only depend on the Q4. So that was also in the direction of our strategy to reduce our dependence on Q4.

Sir, following on that same question. So now for a -- let's say, for a color into FY '23. So I understood that Russia, we may be facing some issues as of today. But you were saying that there was some slowdown in the Gulf countries. So are these behind us? And at least excluding the Russian project, should we see an accelerated or a step-up in execution, I mean on a Y-o-Y basis, let's say, 1H FY '22 versus 1H FY '23? Can you give us a sense on that?

Of course, because these are all funded projects, and we will have to catch up. In fact, our clients who are investing money will have to catch up to make sure that they meet the project schedule. So one would expect that they will not only push us, but push themselves to catch up with the momentum which was lost in the Q3. So we would expect that things will catch up, and you will see this effect in the H1 of FY '23.

Okay. Sir, adding on to that, so can you give us a status on some large-scale ordering opportunities that are available? So maybe like, let's say, on the Chennai desal or any other big orders that you see? And if you can give us some sense of what sort of revenue or order inflow growth we can expect in FY '23? A ballpark range would be okay.

I think we definitely see a growth year in the coming year with the kind of order backlog we have, and also the order pipeline we have, we are definitely seeing a good order intake for FY '23 also. This will be mainly international driven, which is in line with our strategy and also towards the industrial sector. We are already well placed in few of the orders. We expect in next few weeks or a month, we should be able to announce a few orders already. And this will give us enough order backlog to churn a good growth in the top line also. Now most of these orders are in Middle East and in the CIS countries. We see a big opportunity in CIS countries, especially in the sanctions and all. A lot of U.S. companies and Europe companies will not like to go there. And this is a big opportunity for us to increase our market share. And our focus will remain, obviously, on the recycle and desal where we have a technology edge.

Sir, can you give us a sense of the Chennai desal? So what's the status now?

I think it's very close to submitting the bids. We have got a couple of extensions. I believe the last extension came a week -- 10 days back. This definitely will get submitted next month, in a couple of weeks. And after that, we have to wait for the evaluation to be completed. I think this is definitely -- will be decided in FY '23.

We have the next question from the line of Kaushik Poddar from KB Capital Markets.

Can you give a sense of the growth you're expecting? Of course, you are saying that there'll be growth, but can you give a number as to what the growth will be?

If you see our past, we have always grown in the double digit. And going forward also, we assume we'll continue to grow in that with a good order intake and a corresponding top line growth. And you've always seen, we call it, profitable growth where our profits are higher than the top line growth. So this is something which we will continue for the years to come. That's the direction which the team has and everybody is working towards that.

Okay. And just now you said that you are going for contracts in the CIS countries and all those things. Will that be -- will that come in the way of sanction and all those things? I mean -- or is it only for the Russian contract?

Not at all. I think even the Russian contracts, only some sectors are under sanctions. And this water sector is not under sanctions.

Even in Russia, even if you get a contract in Russia, that's not under sanctions, right? That's what you're saying?

Correct. But there are some European and U.S. companies, they have taken a view that they will not work in Russia. But that is not under the sanction list.

Okay. That's more for ethical reason or whatever?

Correct.

Okay. And what about the raw materials and all these things. Recently, we see some softening in the prices. Does that help you in ratcheting up your margin?

See when the prices are going up for the last 1 year and not up, abnormally up, we have still been able to grow the margins. If the raw material prices have started coming down, definitely, it will help the margin improvement.

And is it part of the contract, the raw material price, at least to some extent, say, 50%, 60% or 60%, 70%?

Yes. We have -- most of our Indian contracts, we have an escalation formula. As you rightly said, at least 60%, 70% of our cost is covered by this, but the balance, we have to take the hit.

And what about international contract? Does it have this raw material contract pass on -- raw material prices pass on?

No, we don't, but we are lucky with the exchange rate being very favorable towards Indian rupee. So this has helped. Because see nowadays, and you must have noticed, we don't go for EPC jobs. We try to consciously reduce the construction portion. We focus on our technology, engineering and procurement of key components. So this is also helping to improve the cash flow and margins.

But doesn't the procurement part has some material elements, I mean?

Yes, yes, definitely, it has. But because it's a specialized procurement material, so it does not have a direct impact. If the steel goes up by 30%, our material price goes up by 5%, 7%. So the steel in that component is much less. Rest is all about technology, fabrication, labor component, which is not going up in the same ratio.

[Operator Instructions] We have the next question from the line of Yogesh Patel from [indiscernible].

Hello?

Please go ahead, Mr. Patel.

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This is the operator. Mr. Patel, you'll have to come back in the queue.

[Foreign Language] EPS 21 [Foreign Language].

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We will move to the next question from the line of Dhananjay Mishra from Sunidhi Securities. Mr. Dhananjay Mishra, your line has been unmuted. Please proceed.

Hello?

Now we can hear you.

Yes, yes. So congrats on strong set of numbers. And I hope next year's cash flow, it will also reflect in little cash flow. Just wanted to know the status of GENCO in terms of what kind of provision we have done in this year, [indiscernible] project? And also, what is the actual money received from APGENCO, if at all you have received any money from APGENCO?

Yes, towards the end of the year in the H2, they have given us a limited notice to restart the project and we have restarted the project. So about to INR 25 crores, INR 30 crores of invoicing, we have done; INR 15 crores, INR 20 crores of money we have received in the last few months. And the work is progressing. I think the first part, which they have given us a clearance, in next 3 months we'll complete that and they are paying us regularly for whatever work we are doing. And regarding your question on provision, you know as a company, we have an ECL policy where we provide for delay and default. We have provided INR 60 crores of delay and default on APGENCO.

APGENCO plus TSGENCO put together?

Put together. Exactly. Correct.

Okay. Okay. And with respect to Russia project, what is -- in which currency we are billing to the other?

U.S. dollar. But it would have been good if we would be billing in rubles because today, ruble is the strongest currency in this world.

And since when it is on hold, this project?

April. April.

April. And before that, whatever billing we have done, we have received the money? Or...

Yes, 100%. Not a single rupee is outstanding.

Okay. And second question with respect to -- if you can give some color on key states from where we can expect good orders like UP, MP or -- in next year?

I think you know and we have discussed this every time. Our focus is on multilaterally funded projects or central government funded projects in India. So we are not so much focused on states. We focus on projects which have a very firm funding commitment. And that -- for that, we do multilaterally funded projects and central government-funded projects like Namami Gange and our Swachh Bharat Mission and all these projects. And that is the reason we are very focused on desalination. We use recycled, river, rejuvenation and Namami Gange. These are the areas which we will remain focused for the years to come.

Okay. And in terms of HAM equity contribution, what is the total commitment of equity contribution we have and what is the amount already invested? And are we expecting any [indiscernible] partner as well in these HAM projects?

So Dhananjay, right now, we have one HAM project, which is effective and running, which is what Mr. Mittal mentioned during his speech. The KMDA Howrah project. And we have a partner there, which is Qatari Water, and this is a wholly owned subsidiary of Green Growth Equity Fund, which is a sovereign fund of the Indian government and the U.K. government. It is funded by debt from IFC Washington and Tata Cleantech. So the equity partner is Qatari Water, and we have invested INR 18 crores as of date, which is our equity commitment for this project. When the next project start, accordingly, we will commit equity to those projects.

And what is there the equity commitment in next project, the second project?

The second project would be somewhere around INR 7 crores to INR 10 crores range.

Okay, sir.

[indiscernible] We will remain asset-light, so our commitment will never be more. We'll always scout for equity partners who will invest majority equity. We will remain a minority equity partner.

Yes -- I hope next year cash flow will be much better. That's what my assumption is.

Yes, we'll keep our fingers crossed.

We have the next question from the line of Hiten Boricha from JOINDRE CAPITAL.

My most of the questions have been answered. I just missed one of your opening remarks. You just gave the revenue growth guidance. So can you please repeat it, sir?

Sorry, it was not a guidance. Somebody was asking what is it you can give. I said in the past, we have always grown in kind of double-digit growth as you have seen. We will definitely expect to grow in that range in the future also, unless there is some mishap happens like COVID or other things. But this company has always aimed to getting to a double-digit growth, and we will continue to endeavor towards this.

Okay. Okay. With similar 8% kind of margin, right, sir?

Yes. I think aim will be to improve the margin, as we said, because of industrial business, international business and recently, we have gone for EP business rather than EPC business, we should all see improvement in margins going forward.

We have the next question from the line of Aditya Yadav from Transient Capital.

Sir, if you could give us a broad qualitative insights to what we need to do as a company to improve our margins, return ratios and eventually cash flows? What's like your 2-, 3-year vision to improve our company's performance on these parameters?

It looks like a strategy rundown, we'll have to give you...

Briefly. Sir, briefly would suffice.

We'll do that. I have no problem. In fact, I've been telling it not only in this call, but in the previous calls also. We had in November 2020, a strategy workshop, and we came up with a strategy, which was approved by our Board. And the strategy consisted of that we have to improve the margin, we have to improve the valuation of the company. And for that, we decided to go for technology-based jobs rather than clear run-of-the-mill EPC jobs. We said we should go more for industrial jobs, more for service O&M jobs, more for international projects and EP projects. So these are the ones which we decided that we should go for. And Board was very clear that it's okay if we miss out on a few projects, but we will not compromise on payment security. From there, it got derived that we'll have to go for multilaterally funded projects and central government funded projects or internationally projects which are backed up by letters of credit. That has been our way forward for the last 1.5 years. It's working well. If you see the quality of our order book today, it will more or less meet all this, what I've told you Aditya. And this will help us to grow whatever you said, EBITDA, margins, cash flow and the valuation.

And what do you feel -- so like in the projects we are participating, you said now you have further streamlined your -- the kind of projects we are participating in like you said, centrally funded and bagged in a proper way where you have a clear-cut technology advantage and those things like you mentioned. What do you feel about the pricing scenario? Can we -- is that improving? Is that bad? Or how do you see the pricing scenario for our company?

It's as bad it was always. I don't see it improving. It's getting only worse. That is the reason we don't compete in projects which are run-of-the-mill projects. We complete in higher-end technology where the competition is limited and only a few companies who have technology will compete. So it's fine with us if we cannot grow the top line, but we have to grow the bottom line.

[Operator Instructions] We have the next question from the line of [ Omkar ] an investor.

And congratulations for good quarter 4 results. I have two questions. Quick update on [ TSGENCO ] and Tecpro because Tecpro -- regarding Tecpro project, the company and [ TSGENCO ] has challenged the same in the Supreme Court. So what is the current status for that INR 138 crores? And what is your status on Tecpro, where the -- you are expecting to recover due through national NCLT? So what is the status on two projects, [ TSGENCO ] and Tecpro?

So Omkar, we have been disclosing this in our notes to the results. And I will just elaborate on it. As far as [ TSGENCO ] is concerned, we have completed a job in all respects. The commissioning is done. The plant is generating power. The PGTR is complete. So we have to just receive the money. And this is what is under a single person arbitration appointed by Supreme Court, and we are expecting that this arbitration should get over the legal timelines. It should get over, whatever, as soon as possible in 6 months, 1 year, and we will be able to receive the money. And we are confident that our case is strong here. And at the end of arbitration, we should be able to receive the money. The second is about INR 69 crores, which is receivable from Tecpro, which is in the nature of a daily money that is tax deducted by Tecpro, not either remitted to the government, neither did they pay it to us. So this is in the nature of statutory dues, which has to come to us. Here, we challenged the NCLT's resolution in NCLAT, which has been referred back to NCLT. And currently, this is under hearing and at any point in time, we expect maybe in next couple of hearings, we expect a favorable judgment here. So in both these cases, we are confident of recovering the money, and it is subject to legal finance.

Understood, sir. And second question regarding JICA project, as JICA project may awarded or announced by end of this financial year. So are we expecting this order in H1, as to when the project reward and announcement will take this for the JICA project?

Which -- you're talking about the JICA project?

JICA, 400 MLD project. As of now still, that...

Yes. Yes. I think, Omkar, this, as I said, next month, the bids will be submitted. And then we'll have to wait for 3 to 6 months of revaluation. And I still expect that in this financial year, FY '23, this project will be awarded.

Understood. So it will -- the award for this project may take place in H2 of this financial year, right, sir?

Yes. Yes.

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

Having a look at companies in the lower...

We are unable to hear you clearly, ma'am. If you could just increase the volume or...

Can you hear me now?

Please use your Handset.

So I was having look at companies in the lower run, like around INR 100 to INR 300 crore companies. And one thing I noticed that their EBITDA margins are to the tune of around 12% to 15%. At the same time, when we look at our company, it has been usually around 8%. So can you throw some light on this, despite being the industry leader why the margins are lower?

So Sonali, I think this is where we wanted to properly contextualize the EBITDA margins because we have a core business, which is purely the water business. And here, you would have seen over the last few years, we have been in the -- closer to the double digit and this year, we have, as promised, delivered a 10.5% EBITDA. Number two, we have EP projects. We have EPC projects. And as you know, because of our asset-light approach and value-additive approach, we are focused on the technology part. So the construction part is basically a pass-through. So we have it in the top line. We have it in the cost. There is no margin built on that. So the percentage margin that you see as EBITDA is not a real reflection of where we deliver the value add on. And this is because of the nature of the business where it has to be a lump-sum turnkey kind of contract in few regions that we have to take. And this is where we moved our strategy to more focus on technology-focused orders, international orders, industrial orders and the EP segment to have better margins reflected, better cash flows reflected and that is what, over the last 2, 3 years, you would have seen, our margins have been reflective of this. We have been consistently on a net cash positive, and we have also been generating positive operational cash flow.

Okay. Just one last thing. So is there any target or margin that you would foresee in coming 2, 3 years?

See, we have always promised a double-digit EBITDA margin, and that is what we are working on. And this double-digit EBITDA will keep improving as we move up, and you very well know the economies of scale will kick in as we keep growing. And our endeavor will be to be on a double-digit EBITDA margin. And cost headwinds will also reduce as we move forward, and that will also help improving the margins.

[Operator Instructions] We have the next question from the line of [ Manish Jain ] an investor. As there is no response, we will move to the next question. The next question is from the line of [ Puneet Agrawal ] an investor.

Sir, my question is like, are you impacted in any way by the situation in Sri Lanka as well? Is there any financial risk involved or the chances of bad debt increasing?

No, it's not at all because that's the reason whole -- this project is under buyer's credit, where our money comes from EXIM Bank of India. The work done is only certified by the local authorities and the bill is sent to EXIM Bank of India in Mumbai, and we received our direct U.S. dollar payment from EXIM Bank of India.

Okay. And how does the Russia project- did you invest -- did you have any bank guarantees or anything invested or it was just on paper? Have you started the project execution or no?

No, we have executed -- we were executing it for the last 9 months, and we have received a good amount of money.

So you have received all the receivables on time and you expect that...

They have been very good paymasters. Excellent paymasters, I must say.

We have the next question from the line of [ Harshit Kothi ], a retailer.

What I would just want to understand sir, is the time Wabag took over the parent. The journey so far, with all its ups and downs. Do you see the prime coming very fast or it's still a long way off?

See, I think water industry is always a sunrise industry. That's how we treat this in our company. The growth of water industry will grow for decades to come. If you are talking about a prime time for it, I think every year will be better than the previous year. So I think still the peak of water industry, at least for decades to come, we'll see it coming all the time. So I would say there's a long way to go. The prime time is yet to come, and growth is going to be continuous as we go along. Water is a precious resource, let's understand, especially countries like us, which are developing countries, we have not given enough importance to water. We still do not consider that as an economic resource. So once we start considering this as an economic resource where the things have started and people have started using this, you will see a tremendous investment going into the water sector. So short answer is prime time is yet to come.

And the purpose with which the parent was acquired, that has already been achieved?

We cannot say achieved. I said this is something we are achieving and will continue to achieve. See, what we acquired parent for. We acquired parent for the geographies. We acquired parent for the patents. We acquired parent for the references. We acquired parent for the experienced, knowledgeable people. We acquired parent of technology expertise of the people. So this is not having any deadline. This will continue to fuel our growth. So this is, I would say, have served that purpose till date, and it will continue to serve the purpose in the years to come.

When do you see the international business surpassing the Indian business?

Already. Already. I'm just seeing the numbers. That's my feeling. Our -- rest of the world, you see our results. 65% of our top line comes from the rest of the world. 35% comes from India. You see our segmental revenues, INR 1,116 crores comes from India and rest of the world comes INR 1,964 crores. So it's already surpassed.

And do we plan to kind of, towards working capital, be dependent on the outside capital or would raise capital?

No, not required. As you would know, your company, Wabag, which you are a shareholder, I'm sure you will see this company even from its inception in '96, '97, then our listing in 2010, we have not gone to the market to raise capital. Whatever we have generated in our business, we have plowed back. It's the only one time we raised capital was a couple of years back where Rakesh Jhunjhunwala and team brought in some INR 120 crores only. Even when we did IPO, the company took only INR 120 crores, INR 125 crores because as per the SEBI we had to take a minimum. Rest all we gave exit to the private equity companies. But we have never raised capital, and I don't think we have an intent to raise too much capital unless it is in the benefit of the shareholders. We don't want to dilute our shareholders. And whatever we have earned, that's the money we have plowed back into the business and grown the business over the last 25 years.

[Operator Instructions] We have the next question from the line of Manoj from [ Geometric ].

Congratulations on good sets of number in this challenging environment. I have two questions...

We are unable to hear you clearly, if you could switch to your handset.

Sir, congratulations on good set of numbers in this challenging environment. I have two questions. I'm putting that together -- can you throw some on the...

Your line is not so good, Manoj.

Can you throw some light on the green hydro opportunities?

Fantastic. See as a green company into sustainability, we talked about ESG, this is right in our domain area. We have started some work but for it to mature and take some shape and we will have some information to share, it will take maybe a few years. But I can tell you, your company is very much focused on it, and we are keeping our eye on the development in the global market.

Okay. Second, you know that water has a great longevity as a sector and -- but we have some strict criteria in which areas we will bid the project. With this criteria, can we grow 20%, 25% over a period of time? Or it will be around 10%, 12%, 15%?

As of now, if we grow, you are talking about top line. As I told one of our friends earlier on, I don't mind if I grow 10%, 12% on the top line. But I will definitely grow much more than in the bottom line. And that is what we are endeavoring to do. Our bottom line and cash flows are under focus and that we will grow definitely.

We have the next question from the line of [ Khadija Mantri ] from Sharekhan.

Am I audible?

Sorry, we can't hear you.

Yes. Yes. Let me just -- am I audible now? Hello?

Far better.

Okay. So sir, I may sound repetitive, actually, there was some problem with the network at my end. So I just wanted to know if you have provided any guidance for order inflow for FY '23?

See, we -- as we are growing, our top line is growing, and we have a target of achieving at least 3x of our revenue in our order book. And that, we are sure we can maintain that or as surpass that. But at least, we should have a 3x of our revenue as our order book.

Okay. So in FY '22, we had an order inflow of about INR 3,600 crores. So on a ballpark basis, we should be able to achieve that at least?

Yes. I'm sure your prediction is going to be better than my prediction.

Okay. Just wanted to understand more about this key framework contract. So there are two contracts under this. Key framework contract, that the way you have classified your order book...

Yes, go ahead.

Yes. So in key framework contracts, these are the two orders from Libya, right?

Right.

Yes. So I just wanted to know the status of these orders and the receivables from...

So [ Pradisha ], this has been the way we report. Wherever we have signed contracts and where it is not yet effective because of LCs not being opened, especially in geographies like Libya, we work only on payment security. We classify them as [indiscernible] of contracts. So the contracts are signed, but they are not yet effective. . Bomba is a recent contract, which we signed. We are awaiting the LC to be opened. Once that is opened, this will move into the order intake and into execution. Libya STP is a little older. So that will happen after the Bomba intake is done. So as this -- because it is a water plant. So at this point in time, neither of these contracts have started executing. So there are no receivables as such on this project.

Ladies and gentlemen, due to time constraints, that was the last question. I would like to hand the floor back to Mr. Mittal for closing comments. Please go ahead, sir.

Thank you, everyone, for your participation in our Q4 FY '22 earnings call. We have uploaded the analyst presentation in our website. In case you have any further queries, you can get in touch with Stellar IR Advisors, our Investor Relations adviser based in Mumbai, or you can feel free to get in touch with us directly. Thank you so much.

Thank you, members of the management. Ladies and gentlemen, on behalf of VA Tech Wabag Limited, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines. Thank you.