GE Vernova T&D India Limited analyst Q&A

Hi Sandeep, congratulations on a great quarter, si r. I think this is the third quarter of continuous turnaround for the company, and we have become net cash as well. My first question is on -- so we are being positively surprised by the related pa rty transaction order bookings going up and we had earlier with Grid Solution UK entities. So how do you see this related party transaction? I mean, do you think there is still a significant scope for next year order bookings from the group companies?

Thanks, Parikshit. So I think as you are aware, tha t energy transition is not only an Indian phenomena, but it's a global phenomenon. So I think one of the aspects, what we are seeing, there is a surge of demand which is coming from a l ot of geographies. So I think, this is where we are also supporting our group companies in acqui ring the orders and being a part of the energy transition globally.

But my question was, are you looking at such kind of opportunities? Do you think the volume of business increasing even from here on? I mean, for the next year?

Yes, definitely. That's the target to increase the volume of the business as well. And we are also -- this is something like the approval, what we are taking. The deliveries are not going to be like in a 12 months' time frame, but it's going to be a bit extended time frame.

Okay. So that was my second question. I mean, generally, the company -- your peers are talking about under-investment in capacity building globall y and as well as in India. So for your order book, we have been winning new orders, but I think INR1,000 crores we've been winning in this quarter, INR2,400 crores. But we have been lagging be hind in terms of execution ramp up. So has the lead time of deliveries increased significa ntly because of the shortage in the capacity? So if you can help us quantify, what is the current capacity utilization? And what would have been the elongation in the delivery lead time for the products?

So Parikshit, I will just say here that, okay, for example, today, when we're looking -- and then you're looking at about INR1,000 crores a quarter, you will see there's a substantial part which has been associated with transformers and reactors, and transformers and reactors have a slightly higher delivery in the market. Like the deliveries are starting from like 12 to 15 months to 18 to 24 months. And when we look at, for example, the HVDC transfor mers, what we have booked, the deliveries at 2 years-plus. So -- and we expect that maybe aft er a quarter or so, the ramp-up of execution will also start and the revenues will also start growing up. That is the expectation.

Okay. And just the last question on capacity expansion. I mean you've seen both export demand as well as demand from domestic market. So what will be the current capacity utilization? And any plans for further expansion in capacity? And what could be the capex outlay for that?

So capacity is, of course, for example, with our lean, we have ensured that the factories are like -- the days which were earlier used for kind of one voltage level are now used for multiple voltage level. So capacity-wise, we have made our f actories more flexible depending upon the load which was coming. And for many of the factorie s, we are -- I would still not say that we have meet kind of 100% capacity limit for looking for an expansion. So first, things would be that -- to reach that li mit. And then also, there would be other like lean projects, etc. that how could debottleneck capacities. And then capex also can be done like, for example, if there is a debottleneck in one process, we just debottleneck that process and then increase the capacity. So capacity expansion doesn' t mean that you have put up a new factory only. So, based on the requirement and based on thi s thing, we are constantly evaluating. And whenever there is something like that, definitely, we will be taking the call.

Okay. Okay, sir. Thank you and wish you the best.

Thanks, Parikshit.

Thank you. The next question is from the line of M ohit Kumar from ICICI Securities. Please go ahead.

Good Evening, Sir. Thanks for taking my question. So my first question is, sir, you have taken a substantial order flow inflow from U.K. subsidy -- U.K. company. Does it impact any way our ability to participate in upcoming domestic HVDC opportunity?

So this is something which is like…kind of -- but I don't think that it is going to impact our participation in the domestic HVDC.

Understood. So my second question is, of course, th e domestic tendering activity have picked up sharply. But I think it's not translated into order inflow in the particular quarter. Does it mean that the pickup which has happened, especially in t he Q3, will materialize into a much, much larger order inflow or makes…

Sorry to interrupt. Mr. Kumar, your line is breaking, so we are not able to catch your words. Can you please check the line and repeat your question?

Sure. Is it better now?

My question was that, on the domestic pickup. Given the fact that a large amount of tendering has happened in Q3 FY'24, and there is a healthy pipeline of TBCB opportunities in the next 12 to 15 months. Does it mean that our -- the order in flow should see a substantial increase, especially in the next 12 months? How are you seeing the inquiry from the domestic side?

Yes, I think you are right, Mohit. The kind of trac tion, what we are seeing on TBCB market, definitely, we'll get the advantage of booking or t he increased market. As the pipeline in that time will be much better, I think, there will be an impact on the order book situation as well. But we have to also understand the fact that this numbe r contains a large order from U.K. Grid Solutions, which is like close to about INR800 crore s or INR8 billion. So that also you need to take into factor, while recognizing the number for this quarter of order intake.

And the last question, sir, why other income was negative during the quarter?

So in the first 6 months, there was a forex gain. A nd hence, it was recognized as other income in the quarter 1 and quarter 2. But on a YTD 9-month basis, there is a forex loss. And hence, to the extent of income recognized in the first 6 months, it has been reversed in the quarter YTD 9 months number as a net, forex loss, is recognized a s other expense. So, it's more an accounting of forex the way it works quarter-on-quarter.

Understood. Thank you and all the best.

Thank You . The next question is from the line of Abhijeet from YES Securities. Please go ahead.

Good Evening Sir, and congratulations on a very strong all-round performance. So my question is on the domestic execution front. What we have seen in the last 4 to 5 quarters is that the order inflow from domestic side has been strong relatively. But the revenue has declined, especially if you talk about Q3. We have seen a 10% revenue decli ne in the domestic business. So can you comment on the execution of the domestic business? What is impacting this kind of slowdown?

Abhijeet, it is about the phasing of the projects, the time line what the customers give us to execute the project. And whatever those projects' time line was there, we are executing on time. As Sandeep mentioned, with a strong order booking in the quarter and 9-month basis, hopefully, in the coming quarters to come, both domestic as well as export revenue should pick up.

Right. And sir, hopping a little bit more on the capacity addition front. So right now, there is no plan of any brownfield or greenfield addition in capacity. Is that the right assumption?

Yes.

All right. Because, I mean, in the event of -- or I mean we have this idea that the parent entity has a lot of HVDC orders. And going forward, would t here be capacity constraint in terms of order booking, even if -- in terms of the cost structure, in terms of the profitability of the project, the entity assumes that we are the one to deliver t he project. But if there's capacity constraints, will that be a concern for us in terms of order booking, particularly large orders like the one we booked recently.

No, I don't think that, as of today, capacity constraint has emerged in any way for us to build the new orders. So when that time will come, probably w e'll take a decision at that point of time. But like for example, a lot of geographies, the orde r booking conditions, they come with their own respective conditions as well. So for example, maybe in the Western world, if the order come with the rider that you need to create local capacities, then probably capacity get created according to the customer demand as well. So I'm just saying that basically, we'll have to see the capacity creation depending upon the need. And also, we are open to it. But today, we have no concrete plans of doing that.

Understood, sir. So just one last one. So what is that criteria that the parent will decide to give a particular order to any entity out of the number of entities it has globally? So what would be those variables that go into this kind of decision making?

So there are multiple variables, Abhijeet. For example, one, the first one which comes is which all factories or which all geographies are accepted with the customer? That is the first one. Second thing is also the capacity which is available which matches the time frame of the project execution as well. So these are the main considerations based -- and third, and sometimes when it is -- what is the technical experience of the re quired and the product portfolio, which is available within an individual factory. So these are the factors which decide from where to buy, globally these decisions are taken.

Right, sir. Thanks a lot for answering the questions.

Thank You Abhijeet.

Thank you. The next question is from the line of Umesh Raut fro m Nomura India. Please go ahead.

Hi Sir, Good Evening. Congratulations for the good set of numbers. So, my first question pertains to ordering from the power sector. Now that you have started material order inflow from power sector, especially from thermal power. And Go vernment of India is planning to add capacity close to about 80 gigawatt over the course of next few years. So what kind of addressable ordering opportunity for a player like GE T&D has from this particular sector?

So Umesh, basically, we are a company which is dedi cated to the transmission side, and the transmission is generation-agnostic. Means, if it i s a renewable generation and requires a transmission, we are there. If it is a thermal gene ration requires a transmission, we are there. If it is wind, if it is hydro. So, we are the common f actor between the various generations which are there. So for us, for example, we are manufacturing the p roducts. The source of generation doesn't matter so much for the hardware products, what we h ave. So for us, if it comes from thermal generation also, we have absolutely no problem in addressing that market.

Okay. But specifically talking about these GIS orders from BHEL. So how much of a total, say, capital outlay this could be in terms of percentage of say total cost for the power plant? How much of opportunity that you can cater in terms of addressable market?

So, if I really look at, for example, it would not be so big. Probably the requirement of transmission in a thermal power plant will be like close to about 10%. So whatever is the capex, about 10% is going to form a part of the transmission which is associated with the power plant. So that is -- whatever power plant is being put up, there's a substation associated with that, so that is there. But what happens is that, in order to evacuate that power, then there are multiple substations which are built. So if you include those substations as well, then it depends upon the transmission planning and the voltage and number of substations. So that is difficult to predict just off-hand. But dedicated as a part of the project, it's close to about 10% of the thermal cost.

Got it, sir. Sir, my second question is more of in the power sector ordering. So how much market share you have across the sector, especially from the private sector? And how is your positioning as per the other competitors?

So, you know…When we look at our competition and all, it is very difficult to predict. I will say that, okay, of course, we have a prediction mechani sm but -- or the tracking mechanism. But when we really look at competition, it is very difficult to find players who are identical to us in the domain. For example, there are people who are t here into transmission projects, but they don't manufacture. But people who are into manufacturing, but they are not into projects. So in some sectors, for example, or in some produc t lines, we have like the best market share, the highest or the second-highest market share. But in some, where we have a conscious decision not to grow too much of a business because of the r isk associated, we have taken a position, which is like to do business only with very selected clients and could be a very nominal amount of business. So I would not track it through my market share, b ut I would be more interested in tracking my profitability and also -- my profitability and cash . So that would be the two metrics which I would like to be tracked rather than market share.

Got it, sir. My third question is related to these related party transactions which are kind of under approval from the shareholders. I think if I'm correct, now that has kind of increased to close to about INR3,000 crores for FY '24. And if I look at e xport ordering, so how much of that could have been realized in the first nine months of FY '24?

So Umesh, your question is not very clear. If you can probably elaborate a bit, it will be helpful.

Yes. So basically, earlier, we were kind of under process for getting approval from shareholders for about closer to INR1,800 crores of related party transactions. But now that there is one new fresh entity, which is from Middle East. And there is also additional approval from existing entity, which is worth is about INR600 crores more. So basically, total related party transaction appr oval has now kind of increased about close to INR3,000 crores. And as a part of that, you must hav e received some of the ordering as well in first nine months. So basically, in third quarter, you have received closer to INR800 crores of large orders from UK grid solution. So basically, on this particular line, how much of total ordering you have received out of, say, closer to INR3,000 crores, which is kind of under approval for FY '24?

So the approval that we are further seeking is for about INR10 billion for the orders from the related party customers. That is a INR6.5 billion fr om Grid Solution SAS and INR3.5 million from Middle East entity. These INR10 billion are exp ected to come, as I mentioned, the time line is from March to August, before the AGM. And most likely that we anticipate if we are able t o win this deal, it will be the quarter one or quarter two of the next financial year. It will not fall in the current financial year. In the current financial year, we have booked total orders of INR4 4.5 billion. And let me just recollect how much is the export percentage there. Just give me a sec. Maybe we park this question and I'll come back to you in a minute about the total export order and how much of those are related to the group companies.

Sure, sir. Sir, my last question is pertaining to localization. So can you please throw some light on key products, like GIS substation or maybe switc hgear, what kind of localization you have currently? And as compared to other group companies of GE located across the globe, how Indian arm is kind of comparatively placed as compared to -- on the lines of the localization?

So I think, Umesh, basically, localization is a process. So it's not something that like you reach it, one point, and then you stop it. So for example , when for the products which we offer, for example, I'm looking at circuit breakers and instrument transformers, where the localization will be in excess of like 80%, 85%. So that is the thing. Other things, for example, GIS and all, we have a pretty high -- because GIS also, what happens is, it depends on the different voltages, the diffe rent localizations come into play. But because we were the first to put in the GIS factory, we are kind of leading the localization in India. And it's a constant effort to keep on developing sources, but I can say that for GIS, also various ratings, it would be in the north of like 60%, 65%, something like that.

T to answer to your question on the order booking s ide, the total nine months, we have booked about INR44.5 billion of orders. About 32% of these orders are from the export segment, which takes the total orders between from the export market to around INR16 billion roughly. And out of that INR16 billion, INR12 billion orders are from group party, including the INR8 billion of the UK HVDC transformer order. So these are the numbers for nine months. And for the financial -- if you want to see the financial year, we'll have further order booking from the rel ated party as well as third parties in terms of export segment for the quarter four.

Got it, Sir. Thank You so much. All the very best.

Thank You Umesh

Thank You. The next question is from the line of Subhadip Mitra from Nuvama. Please go ahead. Subhadip Mitra: Good Evening and Thank You for the opportunity. So my question is on the export front. If I have to kind of break down the market sizing of bot h, let's say, the export market that you're looking at, let's say, over the next one to two yea rs, and the domestic market. Would it be possible for you to give us some colour on that?

No, Subhadip. It is very difficult to give a number for the export market and all because that's a very large -- that's like a global market we are talking about. Subhadip Mitra: I understand. So let me ask this in another fashion. So if I were to gain some colour from you in terms of how much of export order inflow or sales, would you be targeting, let's say, over the next two to three years?

I think let's look at it differently. For us, whether order is from the domestic market or from the export market, we choose the one which is giving us a better profitability and a faster cash generation. We have been talking about selectivity in the last couple of years, and that strategy has played off. We have seen improvement in the financial numbers. We have seen improvement in the order booking numbers, both from the domesti c as well as export segment. So, wherever we get the right opportunity to increase our profitability and cash, we choose that order. Subhadip Mitra: Understood. Understood. So on your current capacity base, your current capacity can support how -- higher turnover? Would that be another way of looking at it?

So, Subhadip, you know...it is.. it will also depend upon product mix, voltage mix, business line mix. So this is not kind of a direct answer to it, that okay, this is the kind of turnover that we can submit. Or again –

I'll give you a different explanation on this one. See the peak revenue that we generated, I think th e year '17-'18 and '18-'19 was to the range of INR42 billion to INR44 billion. At present, we are ru nning at a rate of, say, INR30 billion. So capacity is the -- or the volume is coming not only from factories, but the turnkey business. Suppose we win an HVDC project, that just mean to ad d more people, more engineers, so we can get to additional revenue. So it's difficult to give one short answer, but ye s, we have the past experience and ability to grow our revenue significantly from here. Subhadip Mitra: Understood. Secondly, sir, on the margins. Clearly, this has been a spectacular quarter in terms of margins. Do you see these kind of margin levels sustainable? Or were there any one-offs in this particular quarter, whether with regard to inventory or otherwise?

There is no specific one-off. I think we have a higher confidence in terms of margin as compared to past, and our endeavour is to maintain or improve these numbers. Subhadip Mitra: So similar numbers in the double-digit range is something that you feel is sustainable?

That's our endeavour. Yes, for sure. It all depends on the mix of projects in a particular quarter and so on. But over a, let's say, long term in terms of few quarters, that's where the company is working towards. Subhadip Mitra: Perfect. Lastly, if you could also tell us, what is the 9-month forex loss number that you have booked?

If you can just give me a seccond-- it's about, I think, INR105 million. Subhadip Mitra: INR105 million. Okay, understood. I think there was also an earlier question with regard to how much of your current order inflow in the 9 months i s exports? I don't know if you already answered that.

I answered in the last question that, out of INR44.5 billion, 33% or about INR16 billion are from the export segment. Subhadip Mitra: Perfect sir. That answers all my questions. Thank you so much.

Thank you Subhadip.

Thank you. The next question is from the line of Ren u Baid from IIFL Securities. Please go ahead.

Yes. Hi sir Congratulations for strong results. And good to see Basu sir back as the Chairperson of the company now. So thus, I have 2 small basic questions. One, while you started seeing large -- I mean, typ ically from an export perspective, we had various -- we were also exporting earlier, solution s and projects also. But in terms of large product exports, apart from HVDC transformers, where we see large orders coming from the parent. Do you think there could be some scope for switchgears, AIS, GIS, also along with some large system projects? Or probably the global capacities or the local capacities for such projects are sufficient to take care of the requirements?

Renu, we are looking at an uptick there as well in AIS, GIS. For example, this year, we have got an order from Senegal for a GIS project, like more than INR100 crores. So we are looking at a good traction there as well on AIS, GIS also.

Right. And because traditionally, if you see, as in compared to the other T&D players, GE has been a project company. So it was only during the d own cycle where, because orders were not there, it hit us on the negative side. And now when the growth is back, both products and projects should help drive that extra beta in terms of growth rate for us. So the second question is, just from an academic u nderstanding perspective on the transformer part of the business, if you can just help us under stand two small things. Currently, what is the rated transformer capacity that we have? And are you operating on two shifts, three shift basis? And YTD at the end of December for 12 months on a T TM basis,etc, what is the approximate utilization level based on the two shift or three shift that you're running a transformer capacity?

I will not put it as an MVA capacity kind of thing for transformer, Renu, primarily because if you -- for example, if you manufacture -- I'm just saying a HVDC transformer. So HVDC transformer offers 300 MVA, might be more complex a nd would be equivalent for maybe like the 700 MVA type of a normal transformer. So it's very difficult to actually put because a lot of things play in there, but whether it's a 765-kV sin gle-phase, 400-kV three-phase, there are multiple factor which play into it...

That I totally appreciate because the volume and th e mix will anyway bring in 20% kind of volume differential from the same capacity, depending on the time of order...

So it's pretty difficult. And then reactor capacity different and then transformer capacity different. So that's why it's very difficult to pre dict kind of a capacity for a transformer plant. That is one thing. Second thing is, we are operating kind of two-plus shift today for transformer. And what was the third question?

The same only, are we working on two shift to three shift basis? And I was just trying to look at some industry, just trying to compare or prepare some industry data point, which is where I was asking for rated installed capacity. So actual prod uction would be 20% higher than that based on the mix of that. Doesn't matter. Just looking at -- because after many consolidation, it would be close to 28,000 MVA or would be 32,000 types?

I will not put a number there, Renu, whether it's 28,000 or 32,000.

No problem. I think that is understandable. That is it. No other questions from my side. I think strong performance and best wishes going ahead as well.

Thank you, Renu

Thank you. The next question is from the line of Amit Anvani from PL Capital. Please go ahead.

Hi, sir. Thanks for taking my question. My first question pertains to, again, the related p arty transactions, which you mentioned 10 billion under approval. This was -- you said that these orders are -- hello? Am I audible?

Yes, you're audible, Amit.

These orders are extended with extended timeline. So just wanted to understand the timeline for these orders. And are the margins for these others similar to the base business margins?

And in fact, they are also further participating in the bid with the third-party customers to win these orders. The timeline for those entities will be decided is most likely from March to August of this year. March is less likely, while the quart er 1 and quarter 2 of next financial year, when we expect to have a final outcome of these bids, wh ether they are either in favour of GE T&D and then whether we get it or not.

Actually sir, wanted to understand the duration of the delivery of these orders?

It is about 12 to 18 months. And again, I think differs with different products. In some cases, 12 to 18 months; and in some cases, 18 to 24 months.

Right. And next question on -- you mentioned that le ad time has gone up and you're seeing a huge surge in the export power products market. And domestically also, we are looking for the surge in the ordering from HVDC. So what is your thought -- will the lead time further increase? Or this is the scenario, you're looking that this w ill stabilize at the current demand level? Just what is your perspective for next one to two years on the overall market scenario?

Listen, Amit, I think the lead times are normally -- of course, there are other factors also for the lead time, like, for example, the availability of t he raw material and all as well. Because with today's growth happened globally, even there is som e stretch of capacities on the raw material side as well. But I think that the lead times, what we have today should be maintainable. That's what we feel. But it will also depend upon how the market and the projects evolve in the short term as well. Like in a year, what kind of orders get decided, that will also have impact on lead times as well.

Sure, sir. And lastly, I wanted to understand from you the status on the HVDC ordering and domestic market, which we used to highlight. Like F atehgarh -- I just wanted to understand, what is the near-term pipeline in domestic market f rom HVDC side and overall addressable market here?

So there are three projects which are there, which have been floated by the -- for TBCB as a developer. So one is [Fatehgarh to Badhla] and two projects are from Khavda. The company is actively working with customers on the projects.

Are we expecting in FY'/35

'35?

'25.

I think, yes, it should get decided in the next year -- next financial year.

Sure, sir. Thanks for taking my question.

Thank you. The next question is from the line of Dh ruv Aggarwal from Niveshaay Investment Advisors. Please go ahead.

Hi Sir, Good Evening Sir. Congratulations on good set of numbers, sir. Sir, basically, what had led to like you jump up in order intake of around 1 19% on a quarter-on-quarter basis, sir? Like from which sector has these major orders came from? And like going ahead, from where do you see the major traction coming from sir?

So, the orders are mainly coming because of the gro wth which is happening in the energy transition, like the renewable projects which are c oming up and the transmission capacities which are getting built. So going forward also, tha t's going to -- that will remain as the main domain from where the orders will come up. And of course, now the Government of India has come up with another plan of 80 gigawatts for thermal and all. So it's basically the increase of generation capacity, associated transmission network, is the order work that we are getting.

Okay. Like, sir, one more question related to that only, as the government has increased the investment outlay plan of like INR2.44 lakh crores to INR2.75 lakh crores for integration of over 500 gigawatt renewable energy capacity. So what kind of demand we can expect the transformer will contribute? And out of the state transformer demand, what share would the company would be able to cater to sir?

So, it is a bit difficult to quantify the numbers in that value because that's a complete transmission plan that requires right of way, transmission line cost, installation cost, transformer costs, voltages, HVDC. So there are a lot of combinations w hich are there. It's difficult to predict the transformer market out of that.

Sir, market share, can you please quantify? Like if you can give some colour?

No. Market share, we will not quantify, Dhruv.

Okay. right, sir. And sir, like what kind of EBITDA margins we can expect in coming years, let's say, like in '24-'25? And the revenue guidance, sir, as well?

Generally Dhruv we don't give revenue guidance or margin guidance as a specific number. But as we mentioned in the call, we have a significant uptick in the order backlog. Now the order backlog is about INR58 billion-plus. So this should give us an increase in the revenue in the quarters to come. And in terms of EBITDA margin, as I mentioned in the earlier question, that on a nine-month basis, we have been generating an E BITDA of 10%, and our endeavour is to maintain and try to improve this further.

Okay. Fair enough, sir. And like my last one question. If you compare the sales growth on year- on-year basis, it has increased by 8%. And the EBITDA numbers, if you compare on a year-on- year basis, it has increased by 110%. But sir, why i t is so like is there? Any increase in fixed prices or reduction in the raw material prices? Can you please specify that?

It's a combination of many factors. And the first a nd foremost, we have taken many-many internal actions to expand the margins. The first t heme that we talked in the last two years was the selectivity. And we have been very selective in choosing the deals with less risk, better profitability and faster cash generation. The second is internal productivity that Sandeep t alked about. Third factor is to control of workforce. And the fourth is the mix of the business. We are doing less of the turnkey business, which has, let's say, higher risk and low margin. And we are doing higher on the product business and also on the export side. The export business is better profitability. So, all these different combinations have worked well for us to improve profit significantly.

Okay. Right, Okay Sir. Fair Enough. All the best for the future.. Thank You

Thank You

Thank You . The next question is from the line of Jonas Bhutta from Birla Mutual Funds. Please go ahead.

Thank You Sir for the opportunity and congratulations on a good set of numbers. Two questions, sir. Firstly on the gross margin. So if I go back i n time around FY20 and right through FY24, our commentary on gross margins was that we are operating at sub-30% gross margins, and our target was to take it at a steady state level of 32%, which was always been our long-term average. Now for the past two quarters, we've sort of clock ed about 36 odd Percent, and which you sort of alluded to, this is a factor of mix, etc. Howeve r, given the current order backlog of INR58 billion, do you believe that the mix is such that t hese levels of margins -- so these are the new normal margins at least in the current backlog? Because most of these orders, ever since we've chang ed our strategy, these orders would have come in the last four, five quarters, and they are all reflective of a substantially higher gross margin than our long-term average.

Yes. So as I mentioned earlier as well, and we have been commenting for a couple of years about focus on profitability and cash generation. So you're right, that we were booking orders that sub- 30, and our endeavour was to take it to the range o f 30% to 32%, making, improvement in execution over the order booking volumes. But along that side, the actions we're trying to ta ke, finding which areas to target, which customers to target more, we have been able to improve our pricing and improve our mix of the project, which has helped us to generate about 35% of gross margin on a nine-month basis. As I said, our endeavour is going to continue to focus on these directions to have better profitability and focus, profitability and as well as the cash generation. So if you also see the cash number, we have generated INR3.3 billion of cash in the nine months, which is again a result of all the actions we've been communicating in the last 2 years or so.

Sure. Could you highlight what is the broad mix between projects and products in our backlog? And what was it maybe 2 years ago?

Sure, that will be helpful. My second question was on the HVDC orders, particularly that from the group. Is it so that as the -- if the same sort of orders were executed for a domestic client and the kind of imports that were required, has there been a material change? So point being, just an example. So even if you we re executing in domestic HVDC order, at least previously, thyristor valves, etc, were impor ted. Is that going to be the case even in this export order from the group entity? Or we've intern ally developed manufacturing capabilities there?

So just one clarification here. This is basically t he order only to supplier transformers or the HVDC..

So this not the terminal bit?

Not the terminal. We are just supplying part of transformers for HVDC project, which has been executed by UK Grid Solutions.

Understood. And the last bit question that I had an d I want to squeeze in is the pace of growth in our other expenses, if I see in the last 3 years , has outpaced sales growth. And even in this quarter, while we've done a phenomenal job on gross margin. A lot of what flew through or could have flown through to EBITDA was taken away from the higher growth in other expenses. Your sales grew at 8%, our other expenses grew by almost 14%. This was the case in Q2 FY '24 also. So what seems to be leading to this kind of growth in other expenses?

So as I mentioned for the quarter, we have about IN R100 million of FX in FX loss, mark-to- market on the hedge contracts for the quarter, whic h is more notional in nature and more an accounting, the way we have book losses in the forward contract. So if we exclude that, then the increase is more in line with revenue in terms of t he expenses that grow with revenue. For example, travel or trade expense and basically the repair maintenance, etc...

Wasn't that reflected in the negative other income number? Sorry, the INR10 crores FX loss?

So for the quarter, we had about INR15 crores of for ex loss. But for the first 6 months, we had recognized INR5 crores of income in the other incom e. The way accounting treatment or the representation happened in the financial statement, that out of quarter loss of INR15 crores, the first INR5 crores is offset against the other income because it was taken as gain taken in the first 6 months. For the 9 months basis, there is no other income. And the balance, INR10 crores, is booked as a forex loss in the other expenses. So on a 9-month b asis, there INR10 crores loss represented in the other expense..

Got It. Thank You and all the very best.

Thank You

Yes. Thank You, Sir, most of the questions are answered. Basically, I want to understand, do we qualify for all the tenders as far as indigenous va lue addition is concerned for HVDC and STATCOMs?

So just one -- I'd like to answer that way, that ev en in Champa-Kurukshetra, a large part of the HVDC, which is included thyristor valves and transfo rmers, was delivered by other local factories. So we are qualified actually for these bids.

Okay. And sir, is there any addressable market for RDSS scheme opportunities?

Yes, we have an addressable market for RDSS scheme. And in fact in this 9 months, we have booked a few projects, which are not of a big value because RDSS scheme had multiple scope with it. So normally, our digital business is supporting. So in RDSS project, our digital offering is close to about somewhere in the range of close to about between 10% to 15% of the overall project cost. So those orders have been booked by us during the first 9 months.

Okay. Those are orders. And what is -- what is the execution time of these orders?

I think because we are doing the software piece of it, so I think it should be somewhere between 12 to 15 months.

Okay. Understood. And sir, sequentially, earlier in the call, you mentioned margin is a function of mix and operating leverage. So sequentially, our EBITDA margin has improved to 80 bps. So will you attribute it to better product mix or higher utilization?

Both actually, as well as mix of projects, mix of different product lines, and as well as execution of projects with better margin.

Okay, sir. Understood. That's all from my side. Thank you.

Thank You, Nikhil

Thank you. The next question is from the line of Inderjeet Singh Bhatia from HDFC Securities. Please go ahead.

Hello Gentlemen. Thanks for the opportunity. Just a couple of questions. First is, a couple of quarters, it was mentioned that we are still working through some of the legacy contracts which were lower margin. Are we done with those contracts ? Was there any contribution of those projects in quarter 3? That's one. Second is based on existing order book, would you give us a number as to what could be the blended timeline of execution 15 months, 18 months, whatever you can share?

In terms of the projects with lower margin or let's say the projects where we had taken some cost overrun in the past, the quantum is reduced but sti ll we may have some of those projects in the backlog. Over a period of next two to three quarter s, we expect those projects to be fully executed.

Would it be -- would you want to hazard -- give us a number as to 10%, 20%? Is it meaningful contribution?

I think that's very specific information we would not like to share at this moment.

Got it. And on the second question?

Yes. The timeline of execution, again, it depends o n the product line. As Sandeep mentioned, some of the projects have timeline of 12 to 18 months,

Are these blended numbers for the existing order book?

Difficult to say the blended timeline for the entir e backlog. As we said that our run rate is like INR3,000 crores of revenue, roughly INR800 crores per quarter. we should see an uptick in terms of revenue in the next financial year.

Got it. Okay. Last question is in terms of pricing, some of the larger projects -- products like transformers, has there been any serious uptick in pricing or what you are seeing from the competition, given that capacity is limited and you've seen a lot of orders being given out?

Yes, I would say that the pricing has increased. That's what I will say.

Got it. Thank you.

Thank you, Inderjeet.

Thank you. As there are no further questions from t he participants, I now hand the conference over to Ms. Megha Gupta for closing comments.

Thank you all for joining us today for GE T&D India Limited Earnings Call. We hope the insights provided by our speakers have been informative and valuable to you. We value the trust and support of our investors an d analysts and ensure to remain committed to maintain transparent communication and fostering strong relationships. If you have any further questions or require additional information, please do not hesitate to reach out to me or our Communication Leader, Ms. Kanika Arora. Once again, thank you so much for your participati on. We look forward for your continued support as we embark on an exciting journey ahead. Thank you.

Thank you. On behalf of GE T&D India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.