Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Umesh Raut from Nomura India. Please go ahead.

And congratulations for all round performance in Q2 FY '25. Sir, my first question is pertaining to domestic ordering, which was very strong during the quarter, about 165% up year-on-year basis. So how one should look at now going forward? What kind of run rate we can assume on the domestic ordering side in terms of quarterly rate? And which are the areas where you are seeing a major uptick coming in?

Thanks for the question. In this quarter, on the domestic front we had 2 large orders which came from Power Grid and Grid Controller, which are on the digital side, which we have also declared, it is close to about INR 900 crores. I think apart from that, the market. if you look is pretty strong, and we are looking at a sustainable number. But this also depends upon a lot of other factors like the delivery requirements. The run rate will remain sustainable in terms of order intake, except for onetime orders like of digital and export which came from group entities. Otherwise, the number should be sustainable.

Got it Sir. So is it fair to assume that including both domestic and exports, our base orders run rate would be closer to about INR15 billion per quarter going forward?

We would not like to put a number now because the decision timelines keep on shifting. We would talk more on yearly basis. We should look at the run rate at a yearly basis because in our sector, the decision of orders from one quarter to the other quarter for many of the utilities, they keep on changing. Probably let's look at yearly number, not on quarterly basis.

Got it, sir. Sir, my next question is pertaining to HVDC projects. So when exactly we can expect first two packages, especially for Fatehpur Bhadla and Khavda-Nagpur getting finalized? Any tentative timeline here?

I think it should happen within the next 3 months.

Okay. Okay. Got it, sir. Sir, my question -- next question is pertaining to bookkeeping. I think if I look at our related party transaction or intercorporate deposit side, it was closer to about INR450 crores for the quarter. So what's the reason behind this? And can you please specify or give some insight about this, where exactly we are extending this corporate deposits to related party?

Umesh your question was not very clear. I'll just try to answer. And if there is anything left out, you can please ask again. We have taken approval from the shareholders to lend up to INR700 crores to the related parties in the cash pool arrangement. Similarly, we have about INR 300 crores of borrowing limit. So if we need the funds for operations, we can borrow from the Cash Pool. And we have, I think about a little less than INR600 crores invested in the cash pool at the end of the first half -- as of the end of the September. And that's all within the approval limit of the shareholder.

Okay. Got it, sir. And similarly, sir, if I look at your related party transactions approvals, which were taken at the start of the year, especially for orders, that is, again, I think, totally consumed now, considering that we have received close to INR2,200 crores of orders from parent entities. Is there any another proposal or any prospect pipeline that you are seeing from especially parent side at a global level in terms of newer orders?

So Umesh, the approval from the shareholders are required when the orders exceed the materiality limit, it is 10% of the turnover of entity in the last financial year. So in specific cases where we anticipated order from the related party in excess of INR300 crores, which was 10% of revenue of last financial year, the approvals from shareholders were taken. And fortunately, good thing for us, those orders materialized and we have booked the orders. Having said that, in many orders on a regular basis that we get from various related parties but they are less than materiality limit and Audit Committee approval is taken and we regularly get those orders. So as of now, we are getting every quarter new orders or regular orders from many related parties. So if anything comes up in future in terms of any significant material order, that would require shareholder approval, we'll notify to the stock exchange and launch a postal ballot for the same.

Got it, sir. Sir, my last question is on the gross margin. We have now made closer to 41% kind of a level at a gross level. And in the past calls, you have mentioned that sustainable level is closer to about 35% to 40%. So now we have crossed that upper threshold of gross margin as well. Any colour over here? Is this export orders are kind of giving you better margins, and that is what's contributing to the surprise on the gross level side?

So I still maintain that range of 35% to 40% as range on a quarter-to-quarter basis. But on the full year basis, we always said that we want to do better than what we did in the last year. Last year, I think we did about 35.6% if I'm not mistaken. And our endeavour is to do better than that. However, I would just like to clarify to the community on the overall profit number for the quarter. This quarter, we have all the, all operational items, there is no non-operational item in the financials. However, we executed some of the large contracts, a specific part of the contract, which is highly profitable. And at the same time, we have certain one-off operational items in the P&L on expense side. All together, we see overall gain of about INR400 million approximately, which is kind of non-repeat in nature. And that's a good positive contribution, but may not be repetitive in every quarter.

The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.

Congratulations on a very great quarter. My question is on the other expenses. The other expenses in this quarter has seen an uptick. Would you like to call out something? Or this is linked to the revenues in general?

Thanks Mohit for your question. And I answered the overall impact of non-repeat items in the quarter. On an overall basis, some of the non-repeat items are a part of the gross margin, cost of goods sold. Some of these are part of the other expenses. But instead of talking about the other expenses on an absolute number, I would like to draw your attention to the other expenses as a percentage of revenue. See, our revenue has increased significantly. This quarter, revenue was 60% higher than what we did in the corresponding quarter of the last financial year. And with that 60% increase in the revenue, our increase in other expenses is still lesser than that rate. And as a percentage of revenue, other expense have come down rather from 13.7% to 11.9%. And this approximately 2% reduction in the other expense, is an operating leverage and an improvement in the overall profit before tax. So let's look at our expenses as a percentage of revenue rather than increase in the absolute number as most of the increase is related to absolute increase in revenue also.

Understood, sir. My second question is given the fact that a large part of transmission projects have been awarded to the players in this country. Last year was INR500 billion of ordering. And this year till date, we have seen INR700 billion of ordering awarded to most of the power grid and a few private players. Are you seeing that inquiry pipeline is inching up and is becoming -- can you give us some colour?

Yes, we are seeing a sustainable pipeline, I think we had some slowdown during the last quarter when elections were there. But apart from that, I think now we have seen that there is good traction which is happening in terms of pipeline for TBCB project. Definitely, Power Grid is winning a large chunk of that business. Apart from Power Grid, we are also seeing that the pipeline is getting generated from the private players also.

Understood. My last question, sir, what was the average life of the current order book?

So some of the orders have a time line of 3 to 5 years. And most of the orders, let's say, more than 60%- 70% of the orders have an execution timeline of 18 to 24 months.

The next question comes from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on the cash and cash equivalents, which you highlighted, INR670 crores. So does it include the deposits given to the team of INR450 crores?

Yes. So -- we have about INR6.7 billion of cash end of September. It has 2 parts: one is the cash and bank balances that we have. And the second part is the money that we have lend through the cash pool. The money that we have lend through the cash pool, if you look at the balance sheet, is a part of the loan line item. So we're combining the loan line item and the cash line item to arrive at the total cash and cash equivalent that we have at the end of the half year.

The question is for the cash, the other income during the quarter -- and so what kind of yields you're earning on the other income, which could be generated on this cash pool because INR4 crores of other income for the quarter looks to a very small number?

We disclosed that yield on the return on this cash pool investment in the shareholder notice when we took the approval. It's approximately 7%. I think we are doing a math on the total balance at the end of the quarter, but most of it would have got generated at that last leg of the quarter and may not have been fully eligible for the interest for the entire quarter. But yes, I can confirm that for whatever period we lend to the cash pool, we do get the approximately 7% interest during the tenure of deposit.

Yes. So other income has many components, including the cash pool income, we also have a forex loss of approximately INR55 million during the quarter, which is netted off against the other income.

Okay. My second question is on the export orders. So you've given the breakup of order inflows. But in the order backlog now, how much is the export component in the total close to INR10,000 crores order backlog? How much is the export component in there?

We typically don't share that breakup. But on a ballpark basis, it should be about roughly 40 % or so at a very high level.

The question is now what we are seeing as a trend that orders which you're announcing the automation portion is increasing, which should be directionally largely positive. And also the export share and mix in the order backlog is increasing. So directionally, is it right to project that the numbers on the margin side still have a headroom to expand from the current level?

Parikshit, your voice is very unclear. Can you repeat the question?

So I was saying that directionally, the export is now 40% of the backlog. And in the orders which we have announced, the automation component is increasing, the Power Grid orders and other orders which we have been announcing. So -- which would be, again, margin-accretive to both the share of automation orders and high-margin export orders. So directionally, is it right to assume that the margins which we are reporting still have more tailwinds that they can improve from here on?

Yes, over the last 2-year period, the margin on backlog has improved. Various factors, first, there is also an improvement in the pricing in the domestic market. Export orders are also accretive and some of the business lines have better profitability. And our endeavour is to work more on those business lines to grow orders there. Having said that, we don't give guidance on the future profitability in terms of how much accretive margin it will contribute. But you can see the past trend, we have been making good improvements, and you can then make your own extrapolation on the numbers as per your own estimates.

Okay. And sir, on the HVDC side, so how serious we are about winning these orders because you already have huge volumes of order coming in. And then on the other side, now we have INR10,000 crores of backlog. So at what point of time do you would see the order backlog balloons up. And if you get some HVDC orders, then we need to expand and announce capex. I mean ballpark, how are you linking the 2 things now given there is a strong visibility in domestic ordering, exports as well as large chunky HVDC ordering? So how do you link it with the capex? So at what point do you see -- on capex?

Parikshit, you need to understand is that for HVDC orders that we are talking about, when we look at our factories, one of the most important aspect would be the transformer deliveries. The capex for transformers requirement for HVDC orders is already planned. I think apart from that, when we look at an HVDC order, it is mostly the technology side, which we are going to play. And then we have our global partners as well who will be supporting us in the execution of those HVDC orders. So I don't see that taking 1 HVDC order is going to require any additional specific large capex for delivery of that product.

And the transformer capex, you spoke about you have planned. So if you can quantify what is the capex and what capacity you're looking to increase?

So that would always be very difficult to quantify because ultimately, today, we're looking into the market. The capex that we are doing in the plant will not only help us even suppose if don't win an HVDC, but it would also help us in the AC market. I've always said in the past that MVA is a mix because an MVA of HVDC and a MVA of AC transformer practically same, but the realizable value of HVDC transformer might be 3-4 times of the same MVA of an AC transformer. So MVA is normally for a very high-level benchmarking, but not an accurate methodology to track the capacities

But in terms of value of capex, how are you budgeting the value of the capex? I mean, let's forget the MVA part, but how much do you intend to incur in this year or the next 2-3 years?

Depending upon the need of the plant, it will be somewhere between $5 million to $10 million.

Okay. And just the last question, sir, you spoke about the sustainability on the ordering side, order inflow side. So that will sustain. So when we were saying that, so you're benchmarking on H1 numbers of INR5,700 crores or like -- when you're talking about the annual inflows? So is it the H1 number which is relevant? Or like how do we read into it?

H1 numbers have two exception. So, one is the export order, which we got, where we have a delivery timeline of about 5 years. For the Eastern region, Northern region, digital orders, which, of course, the upgrade comes every 7 years. So that is not something like, the INR900 crores of order, this is something which you get every year. The balance part of the order is a sustainable volume. This is what we will be targeting every quarter. But we would be working more, measuring ourselves in terms of yearly numbers rather than quarterly numbers.

So yearly, it's about INR7,000 crores, INR8,000 crores would be what is a sustainable number as of now on the current run rate?

So for the current financial year, Parikshit, if we take out these 2 large orders, those are about INR30 billion. Sandeep is trying to say that excluding these 2 large orders on an H1 basis, we have routine orders of INR27-28 billion. If we extrapolate, that becomes like INR55 billion to INR58 billion on a regular run rate other than the large 2 deals. And if we add another 30 billion of these large orders, we can be in range of INR78 billion to INR82 billion. I mean that's the mathematics. It's not a guidance, but a mathematical representation of yearly numbers..

Got it. And HVDC will be on top of it, if at all something materializes. So HVDC will add on it.

The next question is from the line of Mohit Kumar from ICICI Securities.

Sir, from STATCOM, I just wanted to check whether there is any requirement of indigenous -- either an indigenous clause in that? Is there some kind of other additions required in this country?

For Power Grid tender, yes, there is an indigenous clause.

And do we qualify for that?

When we look at IGBT or the thyristors, it's not a very difficult technology to assemble and test it. It's not something which is very difficult to meet those requirements from India. In fact, if you look at Champa-Kurukshetra, the Phase 2 which we did, the thyristors were assembled and tested in our plant in India only.

But that will take some time, sir, right, sir? Will that -- so if you want to qualify with the clause, can you bid right now? Or will it take some time?

We can bid right now, but that's a commercial decision which bid to participate or not. But there is no problem in bidding right now.

Understood, sir. Sir, last question on this -- on the HVDC Leh Ladhakh. Have you seen any development, sir? I think this is up for tender. Has the tender happened? Or is it still delayed?

No, see the tender has already floated. But it's going to take time for submission.

The next question is from the line of Sagar Gandhi from Invesco Mutual Fund.

Yes. Sir, my question pertains to order inflow of INR5,700 crores that we see for H1 FY '25. So sir, how much has the export part grown for us on a Y-o-Y basis? And how much is the domestic part growing on a Y-o-Y basis?

In this first half, we had an order book of INR46 billion, of which approximately INR25 billion is the export order for this quarter. And if I look at the last financial year, we had about 24% of the orders that are coming from the export market. So 24% of roughly INR10 billion was hardly INR2.5 billion.

INR2.5 billion goes to INR 25 billion on a quarterly basis, Q2 of this FY '25 over Q2 FY '24?

Yes, you're right because this time, we declared a very large a material order of approximately INR22 billion from Grid Solutions SAS and Grid Middle East FZE, and those are the orders for which we have taken the related party approval and those orders materialized. In fact, these are declared to the stock exchange in the month of August and September.

Okay. Sir, like you, what you shared for Q2, can you share for half year?

It's already part of the presentation. If you look at the Page 9 of the presentation, out of INR58 billion, we have export orders of approximately INR27 billion. This represents 47%. And in the last financial year, the ratio of export order was approximately 23-24%. So we had about INR5 billion of export orders in the first half of the last financial year, which has now grown up to INR27 billion in this financial year.

So INR5 billion going to INR27 billion, so that is slightly over 5x?

Yes.

The next question comes from the line of Shrinidhi Karlekar from HSBC.

Congratulations on stellar set of results. Sir, may I ask how much of your domestic backlogs actually come from the utility segment and how much is from the industry segment?

So, Mr. Shrinidhi, we don't have that breakup immediately. And in fact, we don't share that much of breakup in the public forum. But we have already disclosed in the Page 9 the breakup of the total orders. So, in the total orders that we look at the INR98 billion breakup, INR61 billion is from the private segment, INR31 billion from central utilities and PSUs and about INR5 billion from the state utilities, which represents 6%. So on the overall business, we have already disclosed. Breaking it further into export and domestic is not something that we share.

Private will include the related party order as well as the TBCB from the private sector, right?

Yes.

Okay. Okay. Sir, and the second question I wanted to understand is the pipeline on transmission side is undoubtedly quite strong. I was wondering, would it be possible to share some light on the -- how the industry segment pipeline looking like?

I ndustry segment pipeline on the data center side is pretty good. There are multiple opportunities which we are discussing with either the EPCs or alternatively directly with the data center players. And also, there are a few opportunities on the steel side, etc. But because we operate mostly into 220, 400 and 765. There are various opportunities which come on medium voltage now, but those we don't participate

The next question is from the line of Indrajit Chakravarty, an individual investor.

I congratulate you for the excellent set of numbers. I just want some details about this HVDC tender, which has been floated and about -- I think you said about something like 3 months from now. Within 3 months from now, something will come out of it. So can I just know that how much this is tender value, the HVDC scope? What is our total value of HVDC scope that we have?

So this value will be somewhere between $1 billion to $2 billion.

No, what we said, these tenders, the 2 HVDC tenders, which are in the finalization process at the developer level will get decided. We are participating. Whether we win or not is an outcome that we'll have to see.

And the outcome will be within 3 months? Or after 6 months, we will get to know?

These large opportunities has been going on for last more than a year, so we expect now to get decided within 3 months, but if it shifts beyond 3 months, it is beyond our control, actually

We have the next question from the line of Parikshit Kandpal from HDFC Securities.

Just on the employee cost, this quarter has been a little high. So is it because of the volume growing? Or is it because of hikes getting affected during this quarter?

Both, Parikshit. And again, as I mentioned for the other expenses, I think instead of looking at the absolute number, let's start looking at the percentage. And as you see on Page 8, as a percentage of revenue, both employee expense as well as other expenses have come down compared to the corresponding quarter in the last year as well as in the half year basis.

The next question comes from the line of Akhilesh Bhandari from Millennium Capital.

So just a small clarification. Out of the total order values in HVDC project, what would be an addressable component in terms of proportion of the overall value of the HVDC order of the project?

So when I said that between INR1 billion to 2 billion, that is the addressable portion by us. The overall project value will be in few billions of dollars.

Okay. But roughly, it would be 40% to 50% what would be an addressable component?

S ome HVDC projects will have longer lines, some will have shorter line. There are multiple factors into that. So it's very difficult to put a percentage of component in the total HVDC. It's a very flexible thing. There are a lot of variables in it.

Okay. Okay. And sir, for the Leh-Ladakh project, there has been some discussions that Power Grid might want a more localized supply chain closer to the area of where the project is going to be because of supply chain issues. But all of the major players don't have any capacity in this area. So any sense of the discussions, which you can give me whether some capacities being sort of -- some make shift capacities being thought of the supply chain or a different solution for supply chain is being considered?

So Akhilesh, these are all commercial matters, it cannot be disclosed so openly in a call. We'll not be able to answer this.

The next question is from the line of Umesh Raut from Nomura. India.

Sir, my question is pertaining to an addressable opportunity in domestic especially for digital solutions and one which you have also received during the quarter in terms of new orders. And on the similar line, we are also hearing that now there is a next phase for wide-area monitoring system, which can come up. Earlier, I think you have executed certain portion of it. So any colour over here? What kind of opportunities do you see maybe in the medium term for all these solutions in the domestic market?

You are right, Umesh that we have executed the phase One of Wide Area Monitoring Project. There are a lot of discussions which are going on at Power Grid and at ministry level. After this scope finalization and what technology will be used, it will be possible to put a value to the opportunity. Today, it is too premature to even put a value to it.

Got it, sir. And apart from this WAMS, are there any new technologies where you will not able to participate because of technology? Or you can easily kind of get it from parent in a more of an immediate basis whenever that opportunities kinds of coming up for the tendering?

So I don't think that there is any limitation for us to get any technology from the parent if it is available and the need is there in the country. So if there any technology requirement which is there, we'll definitely be getting the support of the parent and we will be participating

Okay. And in accessing those newer technologies from parent, what could be the arrangement between GE Vernova T&D India and its parent in terms of royalty or other fees?

We have a royalty technical fees agreement, which is there in place for the last many years. It has a certain percentage of revenue that is paid as a royalty to the parent. The rates and the methodology has been consistent for last many years. Overall last financial year, I think royalty was approximately 1% of the total company's revenue.

The next question comes from the line of Parikshit Kandpal from HDFC Securities.

Sir, this HVDC orders which we are evaluating, so is it in consortium with the parent company?

We will not be able to disclose this thing, Parikshit. I think that's a commercial strategy and it’s not possible to disclose.

Okay. And sir, just 1 clarification. When you spoke about the capex for transformer, it was about $8 million to $10 million you said, right?

It was total

Total

Yes, it was approximately $8 million to $10 million, but total, not just for the transformer.

And in this year or next year?

We have no further questions. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Over to you, sir. Sir, you may proceed with closing comments, sir.

Thank you all for joining us today. We hope the insights provided by our speakers have been informative and valuable to you. We value the trust and support of our investors and 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 communications leader.

Ladies and gentlemen, we will end our conference here. On behalf of GE Vernova T&D India Ltd, that concludes this conference. Thank you for joining us. You may now disconnect your lines.