Ladies and gentlemen, good day and welcome to Bharat Heavy Electricals Limited Q2 FY 2023 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi from ICICI Securities. Thank you and over to you, sir. Thank you, Aman. Good evening, everyone. On behalf of ICICI Securities, I would like to welcome you all to the Q2 FY23 earnings conference call of Bharat Heavy Electricals Limited, BHEL. Today we have with us from the company Dr. Nalin Singhal, Chairman and Managing Director, along with the senior management team. We will start the call with opening remarks on the results by Dr. Singhal, post which we will have a Q&A session. I would now like to now hand over the call to Dr. Singhal for his opening remarks. Thank you and over to you, sir. Thank you Rahul. Good evening, everyone. I am Nalin Singhal, CMD BHEL, and I have with me Srimati Renuka Gera, Director, Industrial Systems and Products, Shri Upinder Singh Matharu, Director, Power, with additional charge of Director, HR, and Shri Jai Prakash Srivastava, Director, Engineering and R&D. A very warm welcome to all of you. The Indian economy is expected to be among the fastest growing major world economies in the current year, despite impact of geopolitical conflict, increasing inflation and subsequent monetary tightening by central banks across the world. Ordering for thermal coal-based power plants is showing signs of revival after a gap of four years. With increased focus on energy security across the world, especially after the Ukraine war, the need for thermal power as a reliable and affordable source of power has become obvious. With the order for 2 x 600-MW NTPC Talcher, BHEL has asserted its market leadership position in the segment and is targeting the other upcoming opportunities which are now visible. BHEL is focusing on becoming the market leader for providing flexible operating solutions for thermal power plants, which is a key requirement for integrating renewable sources of power generation with the grid. We have achieved a significant milestone in this direction by successfully demonstrating the same at the 1 x 600-MW Raigarh thermal power plant and have already received two more orders in this area. Government thrust on CapEx is presenting opportunities across core sectors like transportation, steel, refineries, defense, et cetera, and BHEL is looking forward to capitalize on the same. In the transportation segment, we have received orders for 22 WAG-9H locomotives from Indian Railways, 90 sets of IGBT-based three-phase drive propulsion equipments for WAG-9 locomotives from CLW, and 35 sets of IGBT-based composite converters for three-phase WAP-5 locomotives from BLW, amongst other orders. In the transmission segment, we have won orders for execution of 400 kV Neemuch new substation and extension of 400 kV Chittorgarh substation and 400 kV Mandsaur substation from Neemuch Transmission Limited. Along with interconnecting transformers of various ratings from PGCIL. Similarly, various orders for compressors have also been received from both private and public sector customers from refinery segment. In this changing business landscape, BHEL has reviewed its corporate strategy and has identified cost competitiveness and timely and high quality delivery to be the cornerstone for BHEL in the short and medium term, with core engineering and technical prowess as a key element for long term sustainable growth. The recently developed corporate strategy plan 2022/2027 therefore focuses on turning around the company with initiatives focused on cost effectiveness and enhanced revenue from value-added services, as well as increased market share in conventional areas. Further, the company is targeting to diversify into multiple allied businesses and is building capabilities for the same through both in-house development as well as partnerships for sustained growth and profitability. BHEL being a pioneer for gasification of high ash Indian coals in the country, is now working towards developing new markets for coal to chemicals. We have entered into strategic MoUs with Coal India Limited and NLC India Limited for setting up coal and lignite based gasification plants. Under these MoUs, BHEL will jointly set up a coal to ammonium nitrate project with Coal India Limited based on gasification of high ash Indian coal and a lignite based gasification pilot plant with NLCIL for power generation, utilizing BHEL's indigenously developed pressurized fluidized bed gasification technology. This is a major step towards meeting the national coal gasification mission target of 100 million metric tons and provides the twin benefits of commercialization of indigenous technology as well as substituting high cost energy imports. Internally, the company is further streamlining its operations and improving systems and efficiencies to deliver quality products and projects within customer timelines. Amidst increased input costs, both material and manpower, the company is giving impetus to optimizing both fixed and variable costs through design optimization as well as budgetary control. As regards order booking performance during Q2, up to Q2 FY 2023, we have booked orders worth INR 14,511 crores, including taxes and duties, out of which the power segment is INR 11,174 crores, industry segment is INR 3,155 crores and the remaining is from exports. The total outstanding order book as on 30th September 2022 stands at INR 1,06,376 crores, out of which the power sector is INR 88,973 crores. Industry sector is INR 12,677 crores, and INR 4,726 crores is from international operations. In addition to the above, we are favorably placed in the 1x800 MW NTPC Vijayawada FGD order and a number of spares and services orders. In captive segment, we are placed favorably in CPCL 4x34 MW GTG and 4x125 TPH HRSG and a 3x S-165 utility boiler. Currently, tendering is underway for 3x800 MW NLC Talabira thermal power project, 2x660 MW Neyveli Thermal Power Station Stage Two, 12x240 Dibang hydroelectric project, and tenders for FGDs of around 15 GW are in various stages of tendering. In the transportation segment, sizable orders for electric locomotives and train sets are under tendering. Coming to financial performance. Revenue from operations for second quarter 2023 is INR 5,203 crores as against INR 5,112 crores during second quarter 2021-22. The revenue numbers could have been better, but for the lower opening order book available for execution. Higher numbers stand at INR 9,875 crores versus INR 8,014 crores last year. The H1 numbers. This is H1 numbers, indicating a growth of about 23%. Loss before tax for the second quarter 2022-2023 is placed at INR 201 crores as against a loss of INR 88 crores in the corresponding period in the last year. Loss before tax for H1 stands at 456 crore as against loss of 681 crores last year. However, there is a positive profit after tax at INR 10 crore in Q2, 2022-2023, as against loss of INR 67 crore in the corresponding period last year. In Q2, 2022-2023, the company has a marginal negative EBITDA and a loss at PBT level. However, PAT is positive due to tax refunds during H1, 2022-2023. Interest income of INR 106 crore has been received on tax refunds, and the same is accounted as other income. The cost reduction drive continues and the manufacturing administrative and S&D expenses in H1 as a percentage of total revenues have come down to about 7.2% from about 7.8% last year. This saving of 60 basis points is coming on top of the 200 basis point reduction achieved in the previous financial year. The total receivables are at INR 33,718 crores, as against INR 33,168 crores at the end of March 2022, and INR 13,903 crores at the end of Q1 2022-23. The cash collection ratios have also shown an improvement with current year H1 billing liquidation at 73% vis-à-vis 68% in the corresponding period of the last year. Thank you all once again for joining this conference call. We will take questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Deepak Krishnan from Macquarie. Please go ahead. Thank you, sir, for the opportunity. I just wanted to check on the order inflow pipeline. While you indicated two projects are under tendering, do you kind of expect them to be bid out by FY 2023 full? Just maybe from a longer-term pipeline, one year out, how do you kind of see the tendering pipeline, especially for the power sector? The Talabira project we are expecting to be completed in the current FY. I am Upinder Singh Matharu, Director, Power, and this is Director SR. Talabira tender is already out, for which technical bid has been submitted by the bidders, including BHEL. A financial bid is yet to be invited, and we hope that within this financial year, financial bid submission will happen and it may reach a maturity. There is another tender of two into 660 lignite-based Neyveli, phase two. That tender is also out and its bid submission is due in a month. I don't think we should. That's- Will come in the current year. That may be in the first quarter of FY 2024. Any longer-term pipeline, say one or two year out that you'd- Longer-term pipeline because based on the certain state utilities have shown interest in setting up power plants where the older power plants are being abandoned, they'll be setting up new power plants. We are already in discussion with the Haryana, Gujarat and DVC. They're close to some 4.6 GW of tenders are expected to be there in the next year, next financial year. Sir, maybe just one follow-up question. I think on profitability, we still see that at EBITDA level, the company is still reporting losses. You had indicated a couple of quarters ago that probably you require INR 30,000 crore on an annual basis to break even. Are those two factors still there and do you kind of see some improvement in profitability with execution picking up? You see, what has happened is material costs have continued to rise. While a lot of efforts have gone in, but in the last year and post this, the change in the geopolitical situation. Steel prices, copper prices, they have all these various and fuel has all gone up. That is what has really affected us quite badly. With the turnovers going up, we are trying to with our efforts on cost optimization and improvement turnover, we are looking to attack that. Of course, the old orders being on a very competitive basis, that continues to be an issue for us. As the ordering picks up, I think this should. We should be able to, you know, look, do better on this. Sure. Maybe just one last question from my side. Any net provision created or withdrawn this quarter and any FX gain that was reported in this particular quarter, just through data one? Provisions. The net provisions in this, we have creation of INR 238 crores, withdrawal of INR 378 crores and net provision of INR 118 crores. Sure. Any FX gain in the quarter or the one month? Any, foreign exchange gain in one month? We see some in the cash flow. We have a gain of INR 20 crores in this quarter. Sure. Sure, sir. Those are all my questions. I'll get back to the question queue. Thank you. Thank you. Thank you. The next question is on the line of Mohit Kumar from DAM Capital. Please go ahead. Good afternoon, sir. Good afternoon. My first question is on the NTPC and Adani, you know, the EPC orders. I believe that NTPC is talking about more EPC orders, especially for Lara Singrauli and Talabira and Talipalli. Are you hearing something on the same? Secondly, on the Adani order, Adani also has 1.6 GW. Are we bidding for it? Regarding NTPC, the tenders for Singrauli and Lara, which were there earlier and were annulled, but we are hopeful that these tenders are being chased again in the market and maybe in the first quarter of FY 2024, these tenders should be out. Regarding Adani Mundra, because there were certain change in the parameters. Due to this, I think the implication is there and we are waiting for the next decision from Adani in this regard. The tender is already out. Understood, sir. Secondly, sir, given that there is a lack of competition now, are we expecting better pricing? Given the last cycle, I think you have suffered from higher competition, especially in FGD. Are you expecting better pricing in the coming orders for the power plant and FGD now? FGD, if you look at the pricing which, comparing with the earlier set of orders, lot one, lot two orders of NTPC, the pricing is better now and it is significantly better than the ones which were a bit earlier. But this level, but still it will be very competitive at this stage also, though the price level has increased significantly from the earlier levels. Also I think we are moving towards more favorable payment terms as well. How is the tender term changed, sir, for the EPC contract? Is it better now for FGD and the? In the interim period, you see, we had shifted to fairly adverse set of payment terms. If you look at Talcher, the terms have more or less come back to our earlier terms. If you look at something like a Patratu or the BTG orders, the terms had become quite adverse at that stage, which had caused a huge stress on our liquidity as well. Understood, sir. Thank you. Best of luck, sir. Thank you. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Atul Tiwari from Citi. Please go ahead. Yes, sir. Thanks a lot. Just INR 14,500 crore of order inflow was for the first half, right? Or was it for the second quarter? This is the first half. This is the first half. Okay. How much of it was in the second quarter? The second quarter is INR 12,004 crore, which is the Talcher one is a very major contributor in the second quarter. Okay. How much of this is Talcher in this INR 12,000 crore? INR 7,407 crore is Talcher. Excluding taxes. It's excluding taxes. Sorry, this is excluding taxes. Okay. Yes. Sorry. Including the 874. Yeah, sorry. This is INR 8,740 crores including taxes. It's INR 8,740 crores. Oh, okay. In INR 12,000, INR 8,740 is included or INR 7,400 crore is included? No, 8740. In 12,000, it's 8740. INR 8,740 including taxes. Sir, what are the execution timeline as per the EPC contract for this order? For Talcher, the execution timeline is 48 months. For unit one and for unit two, there is another additional six months. 48 months and 54 months. Okay. Then my second question is on the cash flows and the balance sheet. In the first half, operating cash flows have been negative against the positive cash flow in the last year first half. Do we expect ultimately to break even on the cash flow basis, on operating cash flow basis this year or... We are making all efforts in that direction, but we have faced problems on certain states delaying the payment. A lot of effort has gone into that direction. That entire effort is there that we should improve the cash flow in the second half. How much is the net debt as of the quarter end? Net debt at the end of the quarter will be INR 5,680 crores. INR 5,680 crore. Okay. Just, I mean, just broadly speaking, I mean, say, for example, in this Talcher bid, how many bidders participated? If you could kind of share what was the difference between your bid and the next higher bid. There were two bidders, BHEL and L&T. The difference, Including the loading, it was around INR 1,000 crore. Including the technical loading, it would come to almost INR 1,000 crore. Okay, sir. Thank you. Thanks a lot. That was very helpful. Thank you. Thank you. Our next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead. Thanks a lot, sir, for the opportunity. First, the CapEx plan and the railways is around INR 3.1 trillion investments. Your voice is breaking. Sorry to interrupt you. We are unable to hear you. Am I audible now? Hello? Yes. Can you go ahead, please? If there will be a break. The CapEx plan by the railway is till FY 2060 around INR 3.1 trillion only for the rolling stock. What kind of outlook do we have for the railway orders in the medium term? Can you throw some light on the defense orders as well, as there is more focus on indigenous equipment and everything from the government? Railway is a very serious segment for us. You are aware earlier that we had got a first order for the train sets, Vande Bharat train sets, for the four train sets. Going ahead, there are three more tenders in the pipeline. One is opening very shortly. We are working with the collaboration with the other players to bid for these orders. We are very seriously making an effort to, you know, get into this business in a full-fledged way. Any estimates as to what is the target for this? Sorry? Any estimate as to the targeted, order inflow for it, for railway segment? I don't think I'd be in a position to give you any estimates on the same, because we are seriously bidding for all the three train set orders as well as the loco orders. We are going for that. I don't think we can give you a number as to what we would be able to get into that. Outlook on defense, sir? You are aware we have been a major supplier for the SRGM, the Super Rapid Gun Mount, which is the main gun on the ships. We are now going to upgraded SRGM. We have already got the order for the first two. This entire order over the next four or five years is expected to be almost 50 guns. That process is still on, and we are the sole supplier there. We are also looking at a number of other areas in the defense. We are working on the marine gas turbine. We are looking at certain some of the development and some of the strategic projects. There are a number of other projects that we are looking at on the defense front, on the developmental aspect. Air defense guns. That is another major segment for us for the future. The order, the INR 14,500 crore, which you announced, it is the orders that we have already received. Can you give us a value of all the tenders that you are L1 right now? All the tenders we are L1 right now? The major one, of course, you already aware the major one which has already come through, which was Talcher. As of now, what are all there in the pipeline is the Vijayawada 800-MW FGD and Ukai unit 3 and unit 5. This is the R&Ms. In addition to that, of course, in CPCL, as I've already mentioned, we are favorably placed in the 4 x 34-MW GTG and the 4 x 125 TPH HRSG and the 3 x 165 TPH utility boiler. Okay. Sir, the value of it, can I get? Value, I don't have at the moment. Vijayawada and Ukai, it will be close to INR 300 crore. It's about for Vijayawada, Ukai, it's about INR 300 crore. For the captive power, we don't have the item. We have the figure, but total overall industry sector, about INR 5,000 crore we can say we have. Line one. The question is line one. Around 1,000. About INR 1,000 crore is the figure in the where we are L one. Understood. Just a final question, sir. What is the executable order book right now, say in H2 2023 and FY 2024? Our executable order book is INR 80,426 crores, including taxes. Understood. That's all from my side. I will get back in the queue. Thank you. Thank you. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Thanks for taking my question. Just one question, you know, in line with the executable order book question that somebody asked previously. Sir, currently the impact of COVID on execution is gone. We are sitting with almost INR 1 lakh crore of order book, 80,000 executable. Why the top line is still not where it can be? I mean, doing INR 5,000 crore of top line on a 80,000 crore order book still seems quite low. Are you facing any challenges still in terms of execution? How should we look at the ramp up of this now that you've got one large order? If you could highlight, you know, a little bit on that. Pulkit Patni, if you look at the opening order books, in fact, and the percentage execution during the year, the execution during the year as a percentage of the opening order book, I think we are almost at a record level in the last year. In the current year, again, the Q1, that entire COVID effect which was there in Q1 last year went away in the current year, which resulted in a substantial improvement in execution on the execution front. I don't think that is correct. If you look at the way the order book has panned out over the years, I think the percentage execution is actually going up. We also had mentioned in the last con call when we were doing the previous year, our execution in the past year has been at almost record levels, if you look at the physical execution. Yes, sir. Basically what I'm coming to is that for us to get to INR 30,000 crore kind of a top line back on, you know, back, with this rate of execution, I don't know how do we get there. Just trying to understand, you know, what is like the even with the new orders that you've won, what is the kind of best case top line we are looking at, say in FY 2024, if we were to look at that? I would not be in a position to give any revenue guidance, that also for the year ahead, for the next year or. Let me say that the new orders that we are getting, you see the orders we are receiving this year. Almost year and a half, 18-24 months is the time when the actual execution and turnovers will start coming, substantial execution and turnovers will start coming from those orders. These would start panning out towards the second part of 2024. Then whatever orders, other orders you see, we are looking at a strong. Today the numbers in even though the orders in the pipeline or the tenders in the pipeline are not that much as compared to what is required. You see, if you look at the $5 trillion economy, and if you look at what projections are coming under the draft NEP. From that perspective, I think we should be expecting almost 4,000-5,000 megawatt of ordering in the next four to five years. That you see the discussions are on a lot of those orders that are likely to start becoming visible in the coming year. Those tenders, as Mr. Madhav had already mentioned. Fair point, sir. 4-5 GW each year is what we can build in for the industry. We should be looking over the next four to five years, because if you're looking at our total energy requirements. From that perspective, there's a total of almost 15-16 GW that would be required over the next almost four to five years. I'd like to add on this. Actually, the CA projection has been 28 GWs. No projection with that and there is this. Many of them are around 28 GW plants that are above 30 years of age and need to be retired, for which some plan has already been given by CEA. Tendering is not happening at that pace. We expect that situation to change in the coming year, you see, as you've already seen in the current year, the shortages and the issues which have come up, so that is gradually picking up pace. Got it. Thank you for that. Thank you. Thank you. The next question is from the line of Lavina Quadros from Jefferies. Please go ahead. Thank you. Just wanted to understand outside of the core BTG business, right? You explained the orders in the trains, you explained the orders in the defense part of it. Any other areas or on the MOU side or let's say, strategic use of your facilities or something else that is looking very optimistic according to you, that could fructify over the next 12-18 months? One major area which I mentioned, you know, also is the coal gasification. Under this, the National Mission on Coal Gasification, we are looking, the target is 100 million tons per annum by 2030. The fact that we have indigenous technology, which is a commercially proved technology for gasification of the high ash Indian coals, I think that puts us in a fairly good position on the gasification front. We are targeting that. We have a team in mission mode working on the technical side, looking at the development, the detailed, you know, development of the commercial plant. That is one major thing we expect to come through in the near future. Going ahead, of course, nuclear is going to be another major area on the energy front, because as we look at our net zero targets, we'll have to look at that in the longer term. Another area of course would be carbon capture. That is another upcoming area because now we see that coal is an imperative. So mitigation will have to be done through carbon capture. This would be the next area that we would need to look at. On that front, of course, you are aware of the AUSC development that we have made. We are now looking at our first technology demonstration plant for the AUSC. You see, if you look at it from the perspective of replacement of the Mr. Upinder Singh Matharu mentioned almost 28,000 megawatts of plants are over 30 years old, which are sub-critical. Replacement of those with AUSC would make a significant impact on our emissions front also. These are the sort of things that we expect to become visible in the near future. Coal gasification, any quantification of the overall opportunity? Overall. BHEL is one part of it, but let's say what could be- As I said, it's 100 million tons. The coal gasification mission talks of 100 million tons over the okay, by 2030. You know, that is the numbers are quite substantial there. Understood. Thank you. Thank you. Thank you. The next question is from the line of Abhineet Anand from Emkay Global. Please go ahead. Yes, sir. Thanks. From the 81,000 executable order book, based on, you know, clients' schedule, what could be a broad number for the execution this year, sir? I don't think we'll give a specific number on that. I think just a color at least, you know, may not be an exact number, but maybe something will help us because, you know, execution is something very difficult to predict. Was hoping some broader, you know, numbers from you guys would be very helpful. Abhineet, I don't think we'll give any specific numbers on that. Okay. No issues. Secondly, on the payment terms, you know, can you know, restate what's the exact payment terms of, let's say, Talcher bid EPC contract that we have had? Sorry, can you repeat that, please? Payment terms for Talcher. I'll try to respond to this. Payment terms for Talcher, exact payment terms hard to state right now. These are more or less similar to the payment terms that we used to have earlier for most of the power plant orders that we had. Like, there was certain change in case of Patratu or some FGD orders where payments, majority of the payments were backloaded and they were pegged with the milestones. We can realize them only once those milestones are achieved. For Talcher, payment terms are almost restored to the earlier pattern that a significant payment is received upon the dispatch of materials close to 60%-65%, around 60%. That way it has come back to the previous kind of payment regime. Okay. At the end, but we'll still have, you know, for performance guaranteed, so we'll still have the 10% left, right? Those will continue. The payments related to the completion of performance guarantee tests and trial operations, those will continue to remain on the same pattern. Okay. Secondly, I think, you know, sir mentioned about interest income on the tax refund as part of other income. What is that amount? There is INR 160 crores tax refund and INR 106 crores interest. That number is 160. I think the tax part, negative tax was an individual part of P&L that is being shown. Lastly from me, you know, this, you told about the 15 GW FGD opportunity. Can you just give some timeline to it? Mr. Upinder Singh Matharu will answer that. Actually, the timeline which CEA has given a document in which they are mentioning about 28 GW projects to be set up in a timeline of 2022-2027. Further beyond that also they've given a plan of around 30 GW. It's totaling to 45 GW in total. The tenders that we are seeing visible in the coming years is close to some 4.5-4.6 GW. Based on the indication that we get from different utilities as well as some utility like NTPC. In a timeline of two to three years, close to some 16 GW tenders should be there in the market. Okay, sir. I'll just repeat what I understood because there was some, you know, not so clear noise. 4.5 GW is something which can be near-term and over the next two, three years, 16 GW can be expected. Is that right? That's right. These may be the tenders that will be out in the market. Sure, sir. Thanks a lot. Those were my questions. Thank you. Thank you. The next question is from the line of Aashna Manaktala from ICICI Securities. Please go ahead. Go ahead. Yeah. Hi. Good evening, sir. Thank you for the opportunity. Sir, I wanted to ask you about what is the proportion of our top line coming from spares and service? Maybe you can give the Q2 number or one for H1 as well. Just one moment, Archana. We'll just give you the numbers. Roughly about 12% or so. We are looking at 1,100 out of 9,300, 9,400. That's roughly about 12%. Sir, how are we looking at the spares and service number to grow forward in the coming years? This is an area where we are actually trying to you know ramp up this number because we have now taken up entering into long-term spares and service agreements with various customers. Which would speed up the ordering cycle and would also give us a bigger share the complete you know ordering for the those units would come to us. With that we are of course this other the AM we have you know to speed up we have also started a process of advanced manufacturing action to reduce our cycle time. That along with the flexibilization order I think that should help us ramp up this number in the coming years. Okay, sir. Lastly, we won a large order from nuclear side. Going forward, what is the opportunity that we are looking for, and how often can we expect a similar large order like the TG Islands which we had won in FY 2022? Nuclear has been quite cyclic. As of now, we don't have any projections on that. There is, you see, from an imperative of the net zero, I think this is something which will go up. There is now a focus on SMR, small modular reactors, also to replace the old thermal sets also. That's another five, you know, another direction which it is taking. Nuclear should be going up. Okay. Sir, any opportunity size or size of the order that you want to mention about? No. At this stage it'll be too premature to actually talk of any numbers. That's an area that the growth that is becoming visible. Sir, now coming to the overall fixed cost, as you mentioned, our other expenses have come down to around 7.2% of the revenue. Even our employee cost has been quite stable over the past couple of years. Going forward, what are the cost measures that we are taking to control our expenses and how further you know we can control the fixed expenses going forward? In fact, you know, there is a huge effort which has already gone over the last few years in this area. I think we are reaching almost an optimal level as far as the fixed cost part is concerned. While we are still making efforts, but I think the major efforts now will go into areas of cost optimization, our material costs and review of the design to cost sort of initiative. That is the way we will need to go ahead. Okay. Thank you, sir. Sir, one last question on our diversification strategies. Are you also looking at electrolyzer manufacturing? Had set up a hydrogen business group which is looking at fuel cells and electrolyzers. We are not in a stage to actually, you know, say anything very firm on that yet. Okay. Got it. Sir. Sir, I have a follow-up question, but I'll get back later. Thank you. Thank you, Archana. Thank you. The next question is from the line of Harsha from Jefferies. Please go ahead. Hi. Thank you for the opportunity. Can you just provide the split of the receivables for the quarter? We have a total outstanding of INR 33,718 crores, with contract assets at INR 27,094 crores and our trade receivables at INR 6,624 crores. Breakup between the central and state. Central would be 37%, state 42%, private 14%, and international 7%. Lastly, on the 2Q order book number, it would be great if you could just repeat the number. I just missed it. The Q2 order book? Yeah. If you look at the order booking for Q2, the total is INR 12,004 crores, of which power sector is INR 9,600 crores, industry sector is INR 2,286 crores, and international operations is INR 118 crores. Okay, thank you so much. Thank you, Harsha. Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead. Sumit Kishore, your line is unmuted. Please unmute yourself and go ahead. Hello, am I audible? Yeah. You are. Hi. Good evening. My question is that, you know, with the increase in raw material costs that we have seen, what is the new capital cost for a fully built thermal power plant today, including the emission reduction CapEx in INR crore per megawatt? If you could give us some sense. It will vary on the configuration. If it is a single unit, it may be varying between INR 7-8 crores per megawatt. If it is a multiple unit configuration where the BOPs can have a common setup for two units, then it may be ranging between INR 6-7 crores. Of course, it'll depend upon the kind of scope that is built in the EPC contract. Specifically, if you look at the Talcher order, it comes to almost INR 6.6 crores per megawatt. Yeah. I think, you know, that could be a figure to look at. Yes. Yeah. At INR 6.6 crore, you know, we know that BHEL in the past has made a 40%+ gross margin, you know, which is now hovering around 30%. I'm just trying to also get a sense from you that this particular bid that you have made would be, you know, sort of helping you get your gross margins back to earlier levels or because of competitive pressures and the new realities where orders are limited, you know, you have to sacrifice pricing also to some extent, given the difference between L&T and you was only INR 1,000-odd crores for this contract. You see, we would be looking at a mix of specifically with for Talcher, of course, we are looking at improved margins over what we have had in the previous years. As the ordering picks up, those margins should then stabilize. At the moment, you see, even though a lot is visible, but the real orders have not yet happened. Though that's the only one which has happened after four years. You can well appreciate that, it has been a competitive order. Coming after four years, the first order has to be a competitive order. That situation should change over a period. Okay. Given the opportunities that you're looking in coal gasification, carbon capture, is there any CapEx that you would need to do to sort of, you know, bring your manufacturing capacities, or recondition them to the new growth areas? What would be your CapEx, say, for FY 2023, FY 2024? The 2023/2024 CapEx is still to be worked out, but we are now looking at, you know, significant manufacturing CapEx because we have to, we are essentially a manufacturing company, and going ahead, we have to stay in the field with modern facilities. That is going to result in higher CapEx in the coming years. You have some budgeted plan, right? For this. Not yet. We haven't. This is in the process. Once our budget is complete, those figures will get frozen. Okay. Just to understand for coal gasification, what is the thumb rule on, you know, CapEx for, say, 1 million ton of coal to be gasified, and what is the CapEx for the plant that needs to be set up? It's a little early for that, you know, because the first plant we are still the engineering is going on. Now, that first plant will be at a certain level where we are also looking at some sort of a PLI or a viability gap sort of funding to be there. As the numbers pick up, it'll become. It'll stabilize. I think it's a little bit early to give a specific figure. Got it. Thank you, Dr. Nalin Singhal. Thank you. Thank you. Thank you. Next question is from the line of Deepak Krishnan from Macquarie. Please go ahead. Thank you for the follow-up opportunity. I just want to understand in your current order book, how is it split between fixed and variable price contracts? Fixed and variable. Sorry, can you repeat that? How much of your order book is fixed-price contracts where you cannot pass the cost through, and how much of it is variable where you are linked to a WPI index? I think almost 50/50 sort of a breakup is there. I think going ahead, the PVC will be, we expect PVCs to become more of a norm. Talcher also has a PVC built in. Going ahead, I think ordering will largely, I think that era of fixed price contracts, people have understood the repercussions of fixed price contracts on the execution. I think that is changing. Sure. Maybe just one follow-up question. If you look at the draft CEA, it says that the total power plants go from about 236 GW to 274 GW. That's roughly about close to the 43 GW of gross addition. But if you take the 25 GW that's under construction, that just implies about 17 GW incremental capacity over next 10 years. Just wanted to reconcile this, CEA number with your number of about 4-5 GW incremental capacity addition. Just wanted your views over there. You see, this is the total increase that you're looking at. At the same time, what we had mentioned was, you know, about 28 GW of plants over 30 years old, which are lower efficiency, higher pollution. They will need to be replaced, so that number will add on. Sure, sir. Okay. Maybe just on payment conditions, how are we? We still have about 42% of receivables coming from state to state. Essentially now I understand it's largely Andhra, Telangana and Tamil Nadu. Have you seen any improvement in payment dispatches from those states? Or how comfortable are we in FGD as well as, you know, conventional power or, you know, participating in state-based orders and their payment terms? Over the longer term, we are actually looking at improvement. However, as you've seen further when we told you the Q2 figures, there has been a fallback because there are some specific issues which have arisen over some funding issues to a couple of states. I think over the longer period that the issues, a lot of the issues have got sorted out, TANGEDCO and TSGENCO and those places, you know. I think we expect this phase to stabilize. Sure, sir. Those were my questions, and all the best. Thank you. Thank you. Thank you, Deepak. The next question is from the line of Nilesh Parwani from Omkara Capital. Please go ahead. Yeah. Thank you for taking my question and giving me the opportunity. There are two specific questions. I want to understand first that, in terms of the EBITDA level, when we are going to see the stability in the upcoming years or in the upcoming time where, you know, BHEL sees that, you know, from, you know, this time we are going to have a stable EBITDA, at least in a, in a, you know, positive side. Secondly, when I see the BHEL, you know, now you are, you know, coming into the new, businesses. So next couple of years, where the BHEL sees itself in terms of the business segment also? Because it's a long time, you know, our financials are extremely volatile, and we are not able to generate the very strong margin. What's the, you know, what's the focus of the management of the BHEL going forward? If you can at least share with the people on the call, and these are very normal questions to answer. Yeah. Thank you. I think, you know, if you look at from the top line perspective and the business perspective, we are, as you already mentioned, we are looking at diversification and some very strong area that we are looking at are the coal gasification, AUSC, nuclear, and then of course defense and railways. If you're looking at the bottom line and the EBITDA perspective, you see today there is a lag typically between when the order is, when we are, you know, making an effort in the technology development, getting the order and actual turnovers happening against those orders. As I mentioned earlier, in the current year as well as the short term, we are facing challenges on account of the competitiveness of the previous orders. As the new order execution picks up, I think that should reduce, you know, and we should be able to improve on both the top line and the bottom line. Can you give some timeline in that, at least tentative one because FY 2023 I understand, you know, we are just six months to over. Next six months we will, you know, complete with FY 2023. With these new orders, at least by FY 2024, mid of FY 2024, mid of FY 2025. Because, you know, every PSU vertical is doing good, means in your thing. I just want to understand, I mean, means in terms of value, why we are, you know, there's something that, you know, one should be at a very firefighting side that, you know, from this year onwards we are going to improve this. But we are not coming up to that level, to be very honest. You know, other PSU players are extremely doing good. Though I can understand, you know, comparison is not possible. You know, where the, you know, at least tentative timeline you can share with the people on the call because it's a very, you know, confident move you have to give to the investors that, you know, from this time, from this timeline we are going to be there. Something like that, if you can share. You see, I'm not sharing any specific timelines with, you know, specific targets and timeline in that sense. I would repeat a couple of things which I have, you know, said earlier. On the one you see, the entire issue on execution front, which was, you know, our shift over from turnover centric to a project centric operation. Now, that has stabilized, and which is why I said, you know, in the last year we mentioned earlier our execution has been on a record front. If you look at the percentage of the order book on hand, again, that has been on a record front. That is one sort of, you know, data point. The second, as I said again, was, you know, the old orders are competitive. They will take another year, two years to complete, and we have to complete. We cannot, you know, afford to sort of even if there are losses, whatever is there, we have to complete those orders. The new orders are coming in, and as I've already said, they would take a year, 12 months to 18 months to 24 months for that execution to come in and, you know, start contributing to the top and the bottom lines. I think between those parameters you can see what's happening. I wouldn't, you know, go beyond that to give a specific timeline when top line would stabilize or when EBITDA would stabilize. I think those are the parameters we are working with. Let me assure you, though we may not be giving you specific numbers and this thing, but the figures you are seeing, and especially the execution figures you are seeing and the order booking figures you are seeing and the diversification you are seeing is an outcome of a very serious effort on all these fronts. Thank you. The next question is from the line of Abhineet Anand from Emkay Global. Please go ahead. Thank you. Yeah, thanks for the opportunity again. This unexecutable order book stands around INR 25,000 crore, right? Because 1 lakh 6 and 81 is the difference. What are these projects and why is it still in the book? I want to understand that. I'll request Mr. Upinder Singh Matharu to take that. Yeah. In terms of megawatts, the figure is around 19,000 megawatts. The project is a long list. I can mention a few that there have been some orders which have already some project sites which have gone NCLT like RattanIndia Power, Visa Power Limited - Sorry to interrupt, sir. Can you know, speak near to the mic? Not able to hear. Close to some 19,000 megawatts. Sir, sorry to interrupt. You're still not audible. Am I audible now? Yes. This is better. If you look at the projects which are under hold, close to some 19,000 megawatts of orders are under hold. Some of the projects which don't have any hope of revival, which are under liquidation or are under NCLT like RattanIndia Power, Visa Power Limited. Besides that, we have hope of revival of some projects like Uppur of TANGEDCO, two units of 1,000 megawatts and Damodar Valley Corporation, Raghunathpur also. These are expected to be revived. Besides, there's a long list. I may not be able to take all the names. This figure in terms of megawatts is coming close to 19,000 megawatts. Just to understand if the, you know, contract is under liquidation or NCLT, has that been removed from the book? No, it has not been removed because we have launched. See, basically the issue is that commercial settlements are pending in a lot of these cases. Once those settlements are done, then there'll be the time. There'll be two types of things here, you see. One is where we are expecting revivals and the other is where NCLT cases are going on or other proceedings are there, where arbitrations are on, where settlement is pending. You see, we'll close when this item finishes really. Is it possible to just bifurcate the amount in the two buckets that you have said? Because expected, you know, expectation revival part is something which is crucial, right, which can add to our order book in coming years. We can share that separately. We can, you know, that information we are happy to share. We'll share that separately. Sure, sir. Thanks a lot. Thank you, Abhineet. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you and over to you. Patient hearing and an interactive question and answer session. Thank you very much for your interest in BHEL and goodbye. Thank you very much. Ladies and gentlemen, on behalf of ICICI Securities, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines. Thank you.