WPIL Limited (505872) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call of WPIL Limited hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Devesh Kasliwal from Antique Stockbroking Limited. Thank you, and over to you, sir.

Thank you. Good evening, everyone. On behalf of Antique Stockbroking, I welcome you all to Q3 FY '25 Post Earnings Conference Call of WPIL Limited. To discuss the results, we have Mr. Prakash Agarwal, Managing Director and Promoter; and Mr. K.K. Ganeriwala, Executive Director. Without any further delay, I request Mr. Prakash Agarwal to start with his opening remarks. Thank you, and over to you, sir.

Thank you. It's a pleasure to welcome you all to our earnings conference call for the third quarter and 9 months of FY 2025. Let me first start by thanking our host, Antique Stockbroking for hosting today's earnings call. To take you through the financial performance of the company, followed by the operational highlights. For the quarter under review, consolidated revenue from operations reached INR 3,816 million. EBITDA was INR 481 million with EBITDA margins at 12.6%. Profit after tax amounted to INR 371 million with PAT margins at 9.72%. For the 9 months under review, consolidated revenue from operations reached INR 12,350 million, representing a growth of 15% year-on-year. EBITDA was INR 2,127 million with EBITDA margins at 17.22%. Profit after tax amounted to INR 1,503 million with PAT margins at 12.17%. On a stand-alone basis, quarterly revenues grew to -- sorry, were at INR 2,175 million with EBITDA increasing to INR 328 million and EBITDA margins at 15.08% Net profit was INR 203 million with PAT margins at 9.33%. For the 9 months under review, stand-alone revenues from operations reached INR 7,867 million, EBITDA at INR 1,364 million, and EBITDA margin stood at 17.34%. Net profit grew to INR 978 million with PAT margins at 12.43%. As of December 31, 2024, our international order book stood at INR 5,482 million, while the domestic order book for the project business was at INR 25,900 million and domestic products order book was INR 3,988 million. On the operational front, the pump division maintains a positive outlook supported by a robust inquiry pipeline, particularly for drainage pump orders from Thailand, which are in advanced stage. Meanwhile, the project division saw revenues rise to INR 5,720 million in 9 months FY '25 compared to INR 4,740 million in 9 months FY '24. Project execution momentum slowed down in the quarter as outstanding drastically increased. Despite these challenges, project construction remained on schedule with expectations of revenue in the next -- recovery in the next fiscal year, following key announcements in budget 2025. We also expect the pace of new tenders to pick up going forward, and we expect to see good growth in this segment next fiscal. On the international front, WPIL's revenues increased to INR 4,540 million in 9 months FY '25 compared to INR 4,310 million in 9 months FY '24. Gruppo Aturia is witnessing strong traction in the MENA region, driven by revival of postponed contracts following geopolitical stabilization. WPIL South Africa strengthened its market position, further benefiting from Eigenbau acquisition, which is set to execute large contract over the next 24 months. In a strategic move, WPIL has also entered into an agreement to acquire a 55% stake in Patterson Candy International Africa, further reinforcing its presence in Southern and Sub-Saharan Africa with combined revenues expected to exceed ZAR 1 billion. Additionally, Sterling Pumps and United Pumps continue to maintain strong order books, while WPIL Thailand is benefiting from significant investments in the country's water infrastructure. As part of our long-term growth strategy, WPIL has made three key strategic acquisitions in FY '25 to develop an international turnkey project division. These include Eigenbau in South Africa, which focuses on water and wastewater solutions with an estimated revenue of INR 700 million. MISA Srl in Italy, a provider of pumping solutions across Europe and MENA, specializing in irrigation and drainage sector with revenues of INR 900 million. And Patterson Candy International, which specializes in water and wastewater treatment solutions, positioning WPIL to benefit from South Africa's infrastructure expansion with revenues of INR 2,150 million. These acquisitions would contribute over INR 3,750 million in revenue and significantly enhance WPIL's turnkey project division, which recorded FY '24 revenues of INR 8,000 million. Now we can take the questions.

[Operator Instructions] First question is from the line of Saloni Modi from Finventure Growth Fund.

First of all, congratulations, sir. So, sir, I want to ask why the PAT growth is lesser than September 2024 quarter. What's the reason behind that?

One of the major reasons was the slowdown in project execution, which normally picks up in this last quarter. There was a big slowdown in funds disbursement for the Jal Jeevan Mission. which affected us as our outstandings grew drastically and we were not receiving payments. So we had a low execution quarter, and we hope this picks up in the next quarter and in the next fiscal.

Okay. One more question from my side, sir. I think major cash is blocked in receivables. So what is the reason?

The same reason, the Jal Jeevan Mission, where most of our projects are executing was the funds have been blocked for the last 6 months. And now in this budget, it has been cleared, and we hope our receivables will be cleared shortly.

Next question is from the line of Deepak Parswani from Swan Investments.

Sir, just wanted to check it out, as you mentioned about the project execution slowing down because of the receivable. Incrementally, what we are also noticing in the JJM scheme, most of the other players have also started receiving payment from the Jan onwards. And then there has been a pickup in the execution. So just wanted to check it out, how has been the status with us? How should -- have we seen any improvement in the payment? And what is the current outstanding in terms of the receivable?

No, actually, what was very clear from the budget, the budget allocation was about INR 70,000 crores from the Center and the revised estimate showed INR 20,000 crores. So there was a big gap in funding in last fiscal. So this has obviously affected the projects which are under the scheme. Some states have put in the state funds. So depending on which states have given state funds and how much fund was disbursed, some people have received payments, and we also have received payments from the state funds. But -- and now with the most important thing is that with the budget clarification and fresh allocation for this year, now these projects are expected to gain momentum. So we are expecting our receivables to come down rapidly and execution to pick up in similar fashion.

Sir, how much is the current outstanding receivable at the current juncture?

Receivable is close to about INR 400 crores, I think.

For the JJM scheme?

For the JJM scheme, yes.

Okay. And secondly, sir, on the budget front, there has been a lot of emphasis has been also put on the nuclear reactor side, right? And I think we earlier had some expertise on the nuclear pump side. So in that context, how should we see opportunities emerging for us in the Indian market?

We have divested out of the nuclear sector because we feel that it is the time frames of these nuclear projects and the cost/benefit analysis did not favor it. So we are happy to be outside this sector.

Okay. And sir, thirdly, on the international turnkey project, we mentioned that aggregate all these acquisitions will provide us a revenue to the extent of INR 370-odd crores. If you can also throw some light in terms of the -- how does that market operate in terms of the PG and LD conditions, how they are different from the Indian market, whether these are a little stringent than the Indian market or easy? And what are the margin profile for all these acquisitions at the current juncture? And how do we see this ramping up over a period of time?

So our focus in building the international business division is we, as a company, believe in offering flow solutions. So in the domestic market, we were offering products and turnkey solutions. And in all other markets, we wanted to offer the same. Therefore, we have a sizable -- we are presently operating in five major geographies. One is Europe, one is South Africa, India, Thailand and Australia. So in Thailand, we are already offering project services. And now in India, we were offering. Now we are offering in South Africa and we are offering in Italy. So this -- what it does is it creates both. It creates visibility for our products as well as gets us closer with the solution model to our clients.

Okay. And how does the margin profile looks like for the acquisitions at the current juncture.

It would not be fair. It is -- these are very strong companies with very strong margins going forward. So the presence of these companies, they are 100 years old. They have very close relations with the clients. So it should be better than Indian margins.

Okay. And sir, finally, on the execution part, I mean, should we expect improvement from the Q3 -- Q4 onwards with the receipt of better payment from the government agencies? Or how should we look into it? And how should we look from the order inflow perspective?

So you will see -- obviously, it will improve. It is -- we were doing very well in the second quarter. And in September, we were expecting funds. So our outstandings were rising, and we were expecting funds, but that has got postponed till this budget. So we got affected 1 quarter. I think we will be back to normal, if not, this quarter should be improved and next quarter onwards, it should be ramped up.

And sir, just continuing on that part, earlier, we were mentioning this year, we would be doing execution more than the last year. I mean, last year, we did INR 800-odd crores. This year, should we expect that we will do some kind of growth over there?

We are -- as you can see presently, our -- we are already -- in 9-month period, we had a very good first and second quarter. So third quarter was a bit subdued and fourth quarter should be better. So we should exceed last year.

[Operator Instructions] Next question is from the line of Saket Kapoor from Kapoor & Co.

Firstly, sir, as you mentioned that traditionally, sir, Q4 is among the largest of the quarter in terms of the pace of execution. But since the budget -- the budget has commenced and the disbursement and all the fillers will happen, I think so in the month of March. So how likely -- as you already mentioned that we will be above the last year number. But what is the current understanding as on January and February month in terms of the receivable amount moving in this direction? It was INR 400 crores receivable number, which you mentioned. How has that quantum moved in these 40 days of this quarter?

It will improve. You see we are not drastically concerned about this. It is -- we have the clear dues from the clients. The clients were affected by this budget allocation, which is now resolved. How soon it will be disbursed will maybe affect us in March. If we get disbursed this month, it will help us in March. But surely, in the -- as we go forward, things will improve and receivables will go down and execution will ramp up. It's a matter of time now.

Okay. And sir, if you could just give us some more color on this now the international business. I think so that part of the story should be insulated from what the Jal Jeevan Mission scheme and the receivables impact are. So when can we see the ramp-up from that part of the story and the bid pipeline, the opportunity which you are eyeing with the current acquisition? I think so, sir, earlier [Foreign Language] order book provided for international, it was only for the product business. But now going ahead, a good portion of it will be also in the project business. So if correct me there also, sir, if my understanding is correct. And if you could give us some more color on the bid pipeline, the opportunity there?

So as I tried in this presentation, I have shared one slide. Now in this -- to clarify, Eigenbau has already been sort of in our company, and we are already taking those -- recognizing the revenues from this quarter. And it will ramp up, and you will get -- I will be able to describe it more clearly from next presentation. And we will be giving a year-end presentation on that also. MISA was acquired in January, so we will have 1 quarter of performance. And PCI, the transaction will take, as I've said, till first quarter of FY '26. So I think surely, as these companies' transactions are completed, you will see them. And surely by middle of next year, you will have full color of all these transactions, their order books and how the revenues are looking.

Right, sir. And sir, when did you start feeling the stress in the system in terms of the receivables? You mentioned about quarter 2 being -- quarter 2 was a good quarter in terms of operations performance.

What you saw -- in quarter 2, we mentioned also this that we were concerned with this in quarter 2. And that quarter, we were concerned and we were hoping that things would improve in the second half. Now that was -- you see we had elections and we had an interim budget. So that interim budget, they didn't do anything about it, and that has shifted to the full budget this year. So this -- that we lost that period. It's a bit out of our hands. I mean, it got postponed. But we -- the good thing was it was well recognized in this budget and should be normalized soon.

Okay. One small point and I'll join the queue. Now, firstly, sir, the purpose of the presentation and all are always to give us an understanding. And I think so since our results, the time -- the lag time which it takes to upload your presentation and it hardly provides us with 20, 25 minutes of time to go through the entire presentation before the call commence. So I would request the team whoever looks after the preparation of the presentation to be slightly ahead of time, giving us at least an opportune time to go through the presentation. As you mentioned that going ahead, you will be giving us more information on the international business part and what things may look like. So requesting you to give us the presentation in time -- adequate time to us to go through it in details and then put forward the questions. That was a humble suggestion from my side. I hope you will, yes.

What happens is that the Board meeting length varies. So it's not the team, it's the Board meeting length. The discussions sometimes extend, and that affects the result publication. And post the results only, we can share this presentation. And those numbers need to be then filled up. So it's an administrative process. Only thing we could do is have it on next day, which we will review next time.

Okay. And the CapEx part, sir, how much have we built on building the capabilities for the 9 months? And for the next quarter, how much are we spending in building up our capabilities for better execution?

CapEx is not significant. So it's not a discussion very insignificant.

Okay. Because earlier you have put forward a message to us that we had sufficient orders and now we are beginning -- we are developing the...

Sorry, it is not through CapEx, capability. You project execution to -- as the volume grows, the number of personnel we have to recruit, train and develop and processes, that is a challenge. So that capability as a company, if you are operating at INR 200 crores, INR 500 crores, INR 800 crore level, you need more trained people. So that evolvement of competency has taken time, not capital expenditure, not CapEx.

Next question is from the line of Ravi Anand, an individual investor.

Sir, we are expanding in South Africa. Do we have any plans of expansion in other African countries as well?

Yes. This company, if you see in my report, through the PCI and Eigenbau, they cover most of Africa. And Africa, if you say sub-Saharan Africa is sort of Central, East, West and South. Northern Africa, we hope to cover from our Italian company called MISA, which is already having a strong presence there. So all of Africa should be reasonably covered.

Right, sir. Secondly, sir, how many domestic projects are expected to be commissioned in the next 3 to 4 months?

Five projects are in advanced stage in the next 3 months should be commissioned.

Right, sir. Sir, this Indian Navy project, have the trials been successfully completed or will it take time?

Majority has been 80%, 90% trials have been completed and most have gone into bulk production already. So the project is moving well and on schedule.

Right, sir. Last question, sir. This business that we had sold to Newcleo in December of '23. So there was some security money which was left, I think, about 10% or something. Have we got that back in our accounts.

That is put in escrow and that time frame was 3 years. So 1 year, I think more than 1 year is passed.

Next question is from the line of Devesh Kasliwal from Antique Stock Broking.

My first question was on the cash on books. So post the sale of the nuclear pumps facility that we had. So after that, we had a cash on books. And out of that, we have around utilized around INR 300-odd crores. So any additional acquisitions that you are looking for in these regions to expand internationally or this will be utilized more towards the India business?

So we are looking at more acquisitions in Europe. We are primarily looking to -- so these projects was one idea which we are doing. Similarly, we are looking at product expansion. And we are in advanced talks, and we will keep updating on that.

Okay. And another question on that front. So you mentioned in the presentation that these acquisitions will add around INR 400-odd crores of revenue to the turnkey project as well. So -- but from a longer-term perspective, like down the line 4, 5 years, do these geographies provide us enough opportunity to maintain our margins as well as grow like at a CAGR of around 20%, 25% at least?

So these are very, very promising geographies. As we have outlined in our business strategy, the three areas which have tremendous scope for water infrastructure growth were India, Africa and the MENA region, Middle East, North Africa. And now we are present in all 3. So we are moving as per our strategy. And these are the most prospective regions for water infrastructure growth.

And one last question on the domestic front. So this -- like we've seen, if you look at the last 2 years as well, March has been a very strong quarter for us in terms of revenue recognition, there have been delays from multiple states multiple times. And we've been very cautionary overall on which states are we executing projects in. So on the domestic front, are you looking to expand your geographies to more states in the Jal Jeevan Mission post this entire receivables issue is sorted out?

Of course, I think we see -- as I've mentioned in our thing, next year onwards, we see great traction because we have built up a lot of competencies. Our order books have come in control. These older projects are nearing completion, and we have built very good qualifications for future jobs. And I expect that next year, there will be, say, this financial year, as per the budget and the outlook, we see good investments in water infrastructure across the country.

So no compromise on the margins as well on both the sides, domestic as well as international.

I think it was -- this is a cash flow issue. We could keep executing and client is very happy, but we are reaching our end of fiscal tolerance.

Next question is from the line of Sonam H. Udasi from Tata AMC.

Just wanted to hear your thoughts because in the earlier cycles as well, we see sometimes governments not being able to pay up on time. What is your own -- you mentioned that you have reached your fiscal tolerance on that. So going forward, how do you want to sort of safeguard yourself from this? Because ultimately, a working capital issue means no profit at the end of the day if you get delayed money.

I suggest we don't read too much into this. I think it is very clear that this is a short-term problem brought about by the interim budget there. So the government did not address this issue in the interim budget when they came into power in July, and this has been addressed now. So I don't want to read more. However, I am confident that things will be normalized very shortly.

Next question is from the line of Agastya Dave from CAO Capital.

Sir, I have just two questions. One is on the nongovernment side domestic demand from the private sector. Is there any slowdown there? Or is there a pickup there? What are you seeing on that front?

Actually, we -- our product business as we are -- is doing exceedingly well this year as our numbers show, and the order book is also good. So it's a little bit of state elections and government budgets, which have a little bit affected these investments. But I don't see any effect even in government or nongovernment areas going forward. We see steady demand. I would not say it's accelerated or anything abnormal, but steady.

All right. Sir, I'm again sorry to repeat the question on the Jal Jeevan Mission. But let me -- I would just wanted to clarify certain things that I saw in the budget in the documents. So, one was last year, they actually -- even in the July budget, a provision for INR 70,000 crores was actually made. And the government only spent INR 22,000 crores. And this year, the provision that they have made is around INR 69,000 crores. My question is that if I look at the 2 years, there was a promise from the government, if I can use that word, that they would be slowly approaching INR 1 lakh crores because there is a lot of work that needs to be done, INR 1 lakh crores of annual allocations. But they have stopped at INR 70,000 crores. And if I look at the 2-year average number, instead of INR 70,000 crores average for every year, if I take INR 22,000 crores and INR 70,000 crores, it's substantially below that number, right?

Let me intervene here. You missed the critical part that the Jal Jeevan Mission had expired in 2024 as per the document. First thing was the finance minister this year extended it till 2028. So the allocation without the extension of the scheme was not possible. That was the hurdle.

Okay. So even if I take that...

Now it is extended till FY '28. And this year's allocation on FY '28 is about INR 67,000 crores. So now there is no ambiguity on that. That extension of the scheme, the even was supposed to finish in 2024. So the funds could not be disbursed. Now it is extended till 2028, which allows clarity there.

Okay. So sir, my question was that when the allocation for INR 70,000 crores was made, so let's keep it at INR 70,000 crores a wrong number. When the allocation for INR 70,000 crores was made by the government, projects were subsequently awarded by them. So the INR 70,000 crores number that we are seeing [Foreign Language] already order books have been -- like order books have been filled up, you already have outstanding orders, everyone does. But the payments have not come in. Now they have not increased the number taking into consideration future projects. [Foreign Language] short fall of...

See, they have -- out of the INR 67,000 crores, we do not know how much will go. Most of it will go to fill up the gap for last year and only a little bit.

So that would be around INR 50,000 crores, sir, again using wrong numbers. So that only INR 17,000 crores for the next year. So is that math or understanding correct?

I think it's an evolving area. But yes, it is very clear that Jal Jeevan Mission is extended till 2028. So the number of awards will become reduced going forward.

Right, right, right. That is exactly what I wanted to understand.

Correct.

Okay. And sir, is there any other project which the state governments are taking up to substitute the supply of such projects? Because again, the water problem has not disappeared. I was surprised to see in the budget, they have mentioned that 80% of the country is getting water through pipes in their homes, which I completely disagree with. I can't see any data to support that part. But -- so the work needs to be done. Why is the government shifting the priorities? That is something that I'm unable to understand. And maybe it is -- semi government has also shifted a lot of infra projects on the state balance sheet. They are saying that we will support the states and the states have to do the CapEx. So is there any talk at the state government level that they will be taking up the shortfall for whatever center is leaving on the table, they will take it up?

Water is a state subject. Water supply, irrigation, drainage are state subjects. Now the Center has announced two schemes. One was Jal Jeevan Mission for rural water supply. And then there is AMRUT 2 scheme for urban water supply. So these 2 schemes are extra schemes by which the central government supports the state. The Jal Jeevan was a one-off, which was needed to support the rural water supply. For urban projects, you are having the AMRUT scheme. So these are further. Then you have development financing, then you have state financing. But primarily, this remains a state subject.

Sir, one last request. If you get some clarification from the government, it would be of great help to everyone if you can post the press release on the exchanges if there is some clarification on all of this because I'm not very sure how the orders from the government will grow over a period of time? Or will there be a sharp degrowth even though all the receivables may be settled, but what about new orders?

So can I give you my view that for our company, it will be well supported by the both fiscal -- we will get the payment receivables and we will have enough sufficient tenders to bid for in our size. We are about INR 800,000 crores revenues. So we have sufficient.

So a temporary hiccup is what we have seen in this quarter, sir.

Sorry?

This is a temporary hiccup. What we have seen this quarter...

That's what I reiterated that we are completely confident that it will be normalized shortly.

Next question is from the line of Vineeth Lambu from HSBC Asset Management.

I just want to know like already participants have asked just from my view. So what about the bid pipeline? Because like from last 3 quarters, our order book has been going down as we are executing the projects. So on that regard, I just want to have a clarity, like what is the visibility? What is the bid pipeline looking like? And how are the conversations going with the state agencies or central government agencies regarding.

So as we mentioned last quarter, we had expected a pickup in the new tenders in the third quarter. But now we expect it in this quarter and going forward, surely in next fiscal because there is a lot of pent-up work which has not been tendered, and we expect these to come to market very soon. So we are not concerned -- exceedingly concerned.

Okay. And about this INR 370 crores of INR 400 crores, which you have said that from the acquisitions, this is overall two, three acquisitions together or it was a recent acquisition, which will be contributing to INR 370 crores to INR 400 crores revenues in the projects business? And also, this would be our share on our books or it would be on the company level, PCI company level?

So these are three acquisitions, as explained in my sheet, three acquisitions which we made over the last 6, 7 months. And consolidated, they would turn out like this idea was to give a picture of what we are trying to do by these acquisitions. And all of these will be reflected next year. So, yes, you're right. PCI would be -- the revenues would be what I have indicated about INR 215 crores was the revenue INR 23 crores. And so I think we get -- we will consolidate the full amount, but we will share the profit in 55, 45.

Next question is from the line of Samir Palod from AUM Fund Advisors LLP. proceed.

Sir, we've got used to consistent performance from this company over the last few quarters. And obviously, this quarter, because of Jal Jeevan related issues and outstandings, we were sort of negatively -- we were sort of surprised by the numbers. But your business, sir, my point is your business is a little complicated to call, especially on the project side. Given whatever you are seeing and now dues being cleared up and possibly tenders coming up, what would be your best guess in terms of execution for FY '26 and maybe FY '27, if you have that visibility in terms of top line going forward? You mentioned to one of the earlier participants that you should achieve last year's FY '24 sales numbers likely by FY '25. But more FY '26 and '27, how are you seeing the growth in the projects business?

Just to clarify. The first is on the project business, we have done about INR 575 crores in 9 months roughly. And last year, we did INR 800 crores. So -- and the fourth quarter is quite good. As I said, things are improving on the cash flow. But we have always maintained our fact that our business is not quarter-to-quarter. Earlier, we used to have very good last quarter. And last time, we had a very good second quarter. So it is dependent on various factors and especially in -- because we are linked with government, so budgets and elections, we are linked to that. Again, in the Middle East, North Africa region, we are affected by walls there. So our business is -- the thing is it can be postponed. It does not get canceled. So the opportunities exist, but the scheduling obviously shifts in our business model. And secondly, to further do this, we are -- we are in the process of building our international project business to balance this, diversify the risk like we have done our product business. If you see in our product business, there is no question because it has been consistent throughout -- because it is well diversified. Similarly, we expect our project business to be diversified.

So if you were to take a guess, what would FY '26 look like, do you think?

We cannot take a guess now. We will keep updating you how things go. This budget has been announced. We have written -- said the same thing if you see my second quarter presentation. I had mentioned that these concerns lie, and we hope they will be resolved in the third quarter. Now we hope they will be resolved in this quarter and next fiscal as per the official announcement in the budget. And we should see improvement, which we will update you in the first quarter.

And sir, my second question is Jal Jeevan Mission has now been extended, but we've been discussing stuff like a lot of the -- the incremental project ordering will not be as heavy as it was in the last 2, 3 years. So do you see Jal Jeevan Mission in the next 2, 3 years getting -- making -- transforming itself at some other kind of project or a state level? Or do you see a sharp reduction in the Indian projects business that we have?

We are working in the water infrastructure project. There are urban water, rural water, drainage, there is irrigation, there is industrial water also there. Now here, there was an interim scheme where there was a big shortfall in rural water supply. So the government came out with Jal Jeevan. Jal Jeevan, please understand, is a temporary accelerated effect for rural water supply improvement. Now even if that is done, there is a huge requirement for water infrastructure continuing in the country. And we will be having sufficient work. And I mentioned this before that the opportunity in water projects is more than INR 1 lakh of crores, INR 1.5 lakh crores. So we are booking or executing INR 800,000 crores with very strong qualification. So I think there is sufficient business going forward.

And sir, in your international project business, now that you've acquired a very good position in South Africa, et cetera, and you mentioned about INR 300 crores, INR 350 crores of consol project-related revenues from your acquisitions. Is that -- how is that business likely to grow? And can you shed some light on what are the growth dynamics for those businesses? And what margins do they operate? And is there room for margin expansion given your involvement now?

So we have -- we see very positive, as I said, that our target areas from -- when building our business plan has been to work in India, Africa and Middle East, North Africa regions. Now we are present in all the regions, which are very high growth. I think Middle East, North Africa and Southern Africa are even higher growth than India right now because they need tremendous need for water infrastructure there. So we are there. I think we will update you soon as the transactions continue because this is going to be completed in the first quarter. So as it evolves, we will keep you updated.

Next question is from the line of Janeet Shah, who is an individual investor.

Just to get some understanding on the product business. Basically, for the 9 months, it has grown by around like 7%. And with all the traction which you talk about in the international market, could we just get some sense as to how this business is going to shape up in next 12 months to 18 months. That is one part. And I think you also mentioned about the project -- international project business currently having a revenue of close to INR 70-odd crores and it has a better margins than what we have in India. And if you can give that what kind of opportunity size or these acquisitions can deliver over the next 2 to 3 years, that would be helpful.

So regarding this international project division, the idea in this presentation was to explain our rationale and give a picture -- a small picture about how it is playing out. Some of the main transaction of PCI will be completed in the first quarter. And we will be sharing numbers for the Eigenbau and MISA transaction in the year-end numbers. So I think we should -- this is an evolving story, but I can say that the opportunity is very large. And once we share order book details and numbers of these companies, you will see. And so I think we should be a bit patient until this transaction is completed. Secondly, so I think the product business is doing very well, robust, incrementally growing across globally. India, we made a big jump, and we see very positive feedback here.

Yes, but it is going to -- yes, like I think after we sold off Rutschi last year the nuclear business. I think the product business generally was under a consolidation and now it looks like that this year we end up with a growth. So are we aim for a sustain kind of a high double digit rate of the growth in this business. You also seeing margins in the business more towards -- more leaning towards 23%, 24%. And do you see that, I mean that sustaining as a higher growth trajectory in terms of the overall for next 2, 2 years or so. That is the right way.

Our focus is on building our -- one area was, as we have said and demonstrated is the international project business. Now we are also highly focused on growing the product business. We are looking at multiple transactions because we -- after selling the business, we are trying to grow in different geographies and product lines, and those discussions are active. And hopefully, we should have some more feedback on that soon. Organically, all our businesses are doing well, as we have mentioned in -- be it in Australia, be it in India, be it in South Africa, Thailand. So the only one which was affected a bit was Aturia because a lot of projects were held up, which are now cleared. This Gaza strip was creating a lot of instability in the region. That is sorted out. So hopefully, all of them are progressing well. And inorganically, we are looking at a few discussions and hope to come back with some news.

So after these acquisitions, I mean, whatever is being acquired and in the pipeline, how will be the cash balances will remain with the company, can you give us some understanding? And as you mentioned that there are some outstanding which are there with the government on the project side in India, how are the working capital looking like at this point in time? And maybe over the next 6 months, how do you see the working capital shaping up? Is it going to get you already mentioned about the fiscal, but then if you can just explain a bit more with the numbers concrete numbers that...

I said that this outstanding should come down very soon, and that should normalize the Indian cash flows. And our international cash reserves are still very strong. And we are very well funded with our cash reserves and cash generation for normalized for these acquisitions. So only if you have a very large acquisition, we have to review where we stand on the cash position.

Next question is from the line of Mr. Devesh Kasliwal from Antique Stock Broking.

So sir, in our products business, the domestic products business, which contributes around 20-odd percent to the consol revenues. So we have seen quite a good traction. And you have mentioned in the PPT that the order pipeline is also healthy in this segment. So I wanted to know your approach on this, one, with regards to private and public companies that you're dealing with. So as in -- are you trying to shift a little bit of a focus from the public sector to the private sector? And second, is there overall CapEx, which sectors are seeing traction as in? So if you look at energy, oil and gas pumps, like given the entire Russia-Ukraine problem, so we are trying to -- like downstream pumps are a requirement currently. So are you looking at acquisitions in this space or like product pipeline vertically integrating and adding more products? Or is it more towards focus on the project side in terms of cash deployment going forward?

Number one, our product cycle is linked between international -- most of our international business presently, which is to the tune of in 9 months, approximately INR 453 crores and INR 215 crores is the domestic revenues. So about INR 660 crores is product. And we've already got a good balance there between domestic and international, which allows us to diversify. Further, in the Indian market itself, we are quite diversified, be it in power sector, be it in oil and gas, be it in water, drainage, irrigation. So well insulated and we are not concerned by any sector, and we see consistent growth going forward. And as the product lines are coming up, for example, the Navy product line was added. Swage drainage product lines have been added. So those product lines are giving us growth. But yes, I would highlight that one of the sector which is improving now is the thermal power sector. So we are seeing good demand for pumps in the thermal power sector, which is new.

More towards the engineered side or just the generic products?

Yes, engineered, is more engineered pumps, large pumps. So we are seeing that sector getting traction. And internationally, we are looking at acquisitions to keep building on competencies and geographies. More important geographies. We are wanting to add more geographies.

Okay. So domestically, we are trying to add more products in the pipeline and internationally, more geographies in our...

Domestically, we are all well geared up and we are seeing the growth in inquiries itself. So the products are already there, both internationally and India. Now it's more geography where we can grow internationally. And in India, it is -- the growth of India will take care of it.

And one last question. Cash on the books currently after this third quarter? And any -- like are we deploying any cash going ahead in the next 2, 3 quarters? Or are we going to wait a little bit because receivables are also going to come. If this is a 1 quarter blip that you're talking about. So we'll be sitting on a good amount of cash. So that is why I want to...

So we're looking at opportunities both. In India, we are not -- we don't find much. But internationally, first, these transactions have to be completed and then more transactions we are looking at to deploy the cash there. So if we come across good opportunities yet, we are very conservative there in that respect.

Next question is from the line of Aven Gupta, an individual investor.

I just had one question. Are we any project in river interlinking announced in the budget?

Yes, we are one of the capable parties to supply these large pumps. We have supplied them in Telangana in the Kaleshwaram project. We have been successfully commissioned, which places us well placed for projects which are coming in river linking in various states.

[Operator Instructions] Next question is from the line of Abhishek Wani, who is a retail investor.

My question is that in this quarter, we have seen a substantial rise in material cost. So can you just highlight any key supply side concerns.

I don't see any such increase in material costs. Actually, material costs have gone down, steel prices have gone down. So we are getting benefits in that at this point.

Okay. And sir, in case of river interlinking projects, can you just give a brief idea about the particular states where you are looking for project opportunities like Maharashtra or Andhra Pradesh, Telangana?

Rajasthan, we are exploring some projects, some more projects in Telangana and Andhra. So MP, I understand they are also coming up with these large projects. So we expect Madhya Pradesh, Rajasthan, Telangana and Andhra to have these projects.

Next question is from the line of Deepak Parswani from Swan Investments.

Sir, on the international turnkey project, as you mentioned that strategically now we are placed in all three regions. So just wanted to get a sense, I mean, over the next 3 to 5 years, what is the kind of scale which we are looking out to achieve in these kind of business? And how should we see this business growing over a period of time? As you mentioned, there are a lot of opportunities in these regions and even growing faster than the Indian market?

We will elaborate on this in the -- I think, by the first half of next year because the PCI transaction will be completed by the first half. first quarter. So we will be sharing more and more details, and then we will go into. So let us complete this transaction first.

Sure, sure. And sir, on the river linking front, I mean, if you can also give a broader sense, what is the quantum of the size which are coming up for the bidding over the next 6 to 12 months kind of thing? And what are the size of opportunity we are looking at?

I think it's not such a big area. It is part of the irrigation projects. So you will have these, but these are very large projects, which take a longer gestation period. So it is -- the good thing is that these projects were long pending, and they are now taking shape. But it's not that they will come in one shot. There are lots of clearances, a lot of environmental clearances, civil works, et cetera. The good thing is the government is proceeding on these with a focused approach.

Okay. Sir, finally, on the product division, I mean, one, on the domestic side, it is growing at a better pace. And in the international market, it is at a steady pace. And just wanted to get the sense on the margin profile of the product business, if you can share your thoughts because there is a lot of volatility in the margin if I were to look on the broader business, I mean, this time, again, this has come down to the 15%. How should we look into this business over a period of time? From a margin perspective.

Our margins -- we are having roughly -- if you take 9 months last year, we had 17% consolidated margins. This year, we have 17% consolidated margins. So I think we have lots of different parts of our business. So to look in -- we should look at the overall figure, where our target has always been between 15% and 20%.

Next question is from the line of Ravi Anand, an individual investor.

Sir, two follow-on questions. So one is this liquefied natural gas infra is being expanded by the government going to double or triple shortly. So are we seeing any traction in this sector? LNG?

So LNG transportation, which I think will be done in India, that is not a sector we are in. In Australia, we find LNG projects where LNG generation is done. Generation and compression is done. So those terminals have our pumps.

Right, sir. Second question is, sir, now we are expanding in newer geographies and also in Australia and Africa. So do we have competition from Chinese companies? Or do we have barriers to entry there?

In our business, we don't see much Chinese presence.

Next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, when we look at the order book position for the product business, domestic is closer to INR 400 crores and the international is closer to INR 550 crores. So what should be the execution rate going ahead for the product business, sir, both domestic and international, the pace?

I think the order book is not so critical in the product division, both international and domestic because they are short duration, they are -- you can suddenly get a project and execute in the next 4 months, 5 months. So it's indicative that the businesses are strong and in line the order books, but they are not -- it's very difficult to say. But generally, we execute orders anywhere between 3 months to a year.

Okay. So this product also will have a part of a portion of the order book, which is executable over a period of 1 year?

Yes. Some large engineered pumps are over a year. Most of it is shorter. So spares are shorter duration like that. I don't think you should read into this about time frames and execution. Projects is more relevant.

Earlier [Foreign Language] 3 to 6 months it used to deplete. So whatever closing order book, which used to present in the presentation that used to deplete in the 3 to 6 months execution period. So there is a difference now taking into account.

Understanding, it has always been the same. There will be different products with different cycles. But the product cycles are shorter, what I want to say. That means the project cycle is more relevant because those are -- so if you don't have the order, it is very difficult to do. But the products are fluctuating between this period but shorter cycles.

Sir, the cash balance you did not alluded to, what is the cash on books on a consolidated level?

On a consolidated level, the cash is approximately INR 550 crores.

INR 55 crores, and wherein receivables are INR 400 crores from the project business, domestic.

You said consolidated basis, our cash is INR 550 crores. A lot of moving parts, so don't try to -- yes. I mean projects in India, yes, we have it, but there are different figures.

Okay. And sir, lastly, sir, we have this last year, 1:1 mix in terms of the revenue profile between the pumps and the project business and taking into account wherein you also said that we will be closer to last year top line. So this year also somewhat we will be closer to this mix or this mix will be more inclined towards the pump -- the product side rather than the project side for the year as a whole?

I think it will be more the year as a whole more on the product a bit.

Thank you, sir, for all the reply and we hope that our issues are being addressed at the earliest and investors have a better sense of understanding when we meet the next time in the conference call, and we hope for better, more value added in the presentation, sir, going ahead as been alluded by you. And all the best to the team, sir, [Foreign Language].

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Devesh Kasliwal from Antique Stock Broking for the closing comments.

Thank you so much, sir, and team for allowing us to host the conference call. I would like to wish you a very good luck for the fourth quarter and the financial year '26 coming ahead. If you would like to give any closing remarks or should I just -- should we just end the call?

Thank you all for participating in this earnings con call. I hope we were able to answer your questions satisfactorily and at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations managers at Valorem Advisors. Thank you. Good evening.

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