Ladies and gentlemen, good day. Welcome to the Bharat Heavy Electricals Limited Q4 FY 2023 earnings conference call, hosted by Antique Stock Broking. As a reminder, all participants' lines will be in a 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, this conference call is being recorded. I now hand the conference over to Mr. Dhirendra Tiwari from Antique Stock Broking. Thank you. Over to you, sir. Thank you very much. Good evening, ladies and gentlemen. On behalf of Antique Stock Broking Limited, I welcome you to Q4 FY 2023 Post Result conference call of BHEL. I'm very glad to have with us today, Dr. Nalin Shinghal, Chairman and Managing Director, and BHEL management team to discuss these results. We will start with opening remark from Dr. Shinghal, following which we will open the floor for Q&A. Over to you, sir. Thank you, Mr. Tiwari. Good evening, everyone. I am Nalin Shinghal, CMD, BHEL, and I have with me Srimati Renuka Gera, Director, Industrial Systems and Products, and Shri Jaiprakash Srivastava, Director, Engineering, R&D, with additional charge of Director, Finance. A very warm welcome to all of you, and to start with, my apologies for the delay due to the board meeting getting extended. As we are all aware, India is one of the fastest growing major economies in the world, with a growth rate of 7% in FY 2023, and the IIP showcasing an increase of 5.1% over the last financial year. Even in FY 2024, India's growth story is expected to remain resilient, with a forecasted growth of more than 6%. While the slowdown in the global economy and the geopolitical disturbances have had some impact on business, the continued expansion by domestic industry, as well as huge investment in infrastructure sector, will provide major growth opportunities for your company, especially in our core areas of business, thermal power. Demand for new power plants has picked up with new tenders on the anvil. Coming to BHEL's performance, the past financial year has been an eventful one for the company. After a gap of about three years, demand for coal-based thermal power plants has started picking up due to increase in industrial activity, leading to a huge demand for power. There has been a growth of 8.87% in the electricity generation in FY 2023, which is expected to grow by another almost 8% in the current financial year. With the order for the 2x660 MW NTPC Talcher Thermal Power Plant, BHEL has reasserted its market leadership position in the segment and is targeting other upcoming opportunities as well. Being a market leader in the power equipment segment, the company is continuously working to achieve India's commitment of greening its power grid. As a cost-effective and quick solution for integrating renewables to the power, to the grid, BHEL is ready with flexible operation solutions for existing coal-based power plants. The company has achieved a significant milestone by successfully demonstrating the flexible operations at the 1x600 MW Raigarh Thermal Power Plant and received four more orders in this area. In the hydro business, we have garnered orders of almost 1 GW. Nuclear business, being cyclical in nature, no major package has been ordered by NPCIL during FY 2023. However, the complete nuclear power generating segment may see some structural changes in coming times, which is likely to provide good business opportunities for BHEL. Expansion in core sectors like steel, refineries, and cement are resulting in demand for capital goods, especially industrial motors, compressors, and captive power. With BHEL's vast expertise in this segment, we are well-placed to capitalize on these emerging opportunities. In the transportation area, Indian Railways is pressing ahead with initiatives to upgrade, modernize, and decarbonize the railway operations. Both freight and passenger segments are attracting sizable investments, translating into demand for electric locomotives, semi-high-speed train sets of different configurations, etc. We have received orders for 22 WAG-9H locomotives, 90 sets of IGBT-based three-phase drive propulsion equipment for WAG-9, 16 sets of three-phase AC propulsion systems for Kolkata Metro, and propulsion equipment and other electrics for four Vande Bharat train, amongst others. I am happy to share that FY 2024 for the transportation segment of BHEL has commenced on a winning note with a landmark order for 80 Vande Bharat train sets. This is the company's largest-ever order of about INR 23,500 crore, excluding GST, and has been won in consortium with M/s. Titagarh Wagons Limited. During FY 2023, the company has booked the highest-ever orders in defense sector, which also includes the order for 20 upgraded SRGM from Indian Navy, which is the main gun on the Indian warships. Our relentless focus on improving our order booking in high-margin spares and services business resulted in BHEL booking its highest-ever orders of over INR 3,800 crore in this area. These short-duration orders are likely to assist in improving the bottom line of the company in the next couple of years. In line with BHEL's long-term focus on cleaner usage of coal, earlier, the company had developed and demonstrated the country's first indigenous coal to methanol plant, utilizing BHEL's in-house developed PSBG technology, the only proven technology for gasification of high-ash Indian coals. To commercialize this technology, BHEL has signed an MoU with Coal India Limited for a 2,000 ton per day coal to ammonium nitrate plant. Work on the joint venture with CIL is progressing well. These efforts by BHEL are aligned with the National Coal Gasification Mission's objective of gasification of 100 million metric tons of coal by 2030. By supporting this target, BHEL will not only be commercializing our indigenously developed technology, but will also be reducing the country's reliance on expensive hydrocarbon imports. BHEL is also exploring areas in the hydrogen value chain and is in discussions with various OEMs for partnerships. Coming to the order booking performance for FY 2023, we have booked orders worth INR 23,548 crores, excluding taxes, which is the highest in the last five years. Out of this, the power sector is INR 13,353 crores, the industry segment is INR 9,537 crores, the remaining is from exports. It is to be noted that these figures are net of GST. It is also pertinent to note that the company's efforts in the industry sector bore fruits, the order booking at INR 9,537 crores is the highest in 13 years. The share of industry sector is at its highest, at 40% in the order booking in the last year. Accordingly, the total outstanding order book as on March 31, 2023, stands at INR 91,336 crore, net of taxes. The reporting of order book is being done without taxes for better understanding of all stakeholders and is in line with the revenue numbers being reported. It is to be noted that BHEL was in discussions with Indian Railways for finalization of the prestigious Vande Bharat train set order, which could only be finalized after the closure of the financial year. I am happy to say that with this order, we have crossed the INR 1 lakh crore order book benchmark without taxes in the month of April 2023. Some of the significant order book, orders booked in FY 2023 are: 2x660 MW EPC order of NTPC Talcher Thermal Power Project, 850 MW Ratle Hydropower Project for supply of turbines, generators, and other auxiliaries. R&M of GSECL Ukai TPS Unit 3. 7 units of different ratings of STG packages for industrial customers, totaling to 383 MW. 22 numbers WAG-9H locomotives. Supply of 20 numbers upgraded SRGM. Supply of centrifugal compressors for refinery applications. Coming to the financial performance, revenue for operations for FY 2023 is at INR 23,365 crore, as against INR 21,211 crore for the previous year, an increase of 10%. Seen from the revenue mix perspective, another significant achievement is that the spares business has recorded a growth of 25% plus. Manpower productivity improved in the revenue per employee going up by 14% at INR 75 lakhs in FY23, as against INR 66 lakhs in the last year. EBITDA at INR 1,231 crore has increased by about 11%. This was aided by the higher operational income and continued stringent budgetary control on administrative expenses in the midst of higher inflation. During the year, the company also received tax refunds totaling to INR 266 crores, which have helped in the bottom line as well as the net cash generation. The PBT and PAT are also at stable levels, at INR 450 crores and INR 448 crores, respectively. As far as receivables and cash flows are concerned, the company's total receivables stand at INR 36,284 crores, as on March 31, 2023, as against INR 33,168 crores in the previous year. The trade receivables are at INR 6,544 crores, as against INR 6,229 crores last year, and the contract assets are at INR 29,740 crores, as against INR 26,940 crores last year. Higher milestone achievements are due in FY 2024 and FY 2025, which should lead to better liquidation of contract assets and cash realization. Trade receivables are at 102 days of revenue from operations, as against 107 days for FY 2022, though contract assets have seen an increase. However, overall receivables are at 567 days of revenue from operations, as against 751 days, as against 571 days in the last year. Due to higher investment in contract assets, the company's cash position was under pressure. However, the company retained its debt-free status with closing positive cash and bank balance and has enough leverage to invest in CapEx and diversification initiatives. Thank you, all once again for joining this conference call. We will take questions now. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on your touchtone 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. To ask a question, please press star followed by one on your touchtone phone now. We take our first question from the line of Mohit Kumar from ICICI Securities. Please go ahead. Good evening, sir. Thanks for the opportunity. Congratulations on winning the largest, one of the largest railway tender in our history. My first question is, sir, on the thermal pipeline. How does the thermal pipeline looking at? Can you just put the number in gigawatt terms, and what are the tenders which you expect to close in the, in this fiscal? Thank you, Mohit. if coming to the thermal pipeline, we are looking at almost 3,700 MW where we are favorably placed. another almost 6,000 MW is under bidding already. almost 9,000 MW to be bid out, which of course may go into the next year. Understood, sir. My second question, sir, on the railway tender: Can you please explain the scope of BHEL? The related question is, kind of, a basic question and basic concern, that how will you make money on the Vande Bharat tender, given that we have reduced our initial tender value by 12%? As far as the scope is concerned, you see, we are doing the electrics and the control systems and the bogies. The mechanical part and the interiors are being done by our partner. Coming to what you said is correct. It is a very challenging, you know, after the reduction that we have had to do in this, it is a challenge. I think we are confident that we will make it profitable. The supplies, of course, we will have to look at execution being, you know, a clockwork execution. Thereafter, I think the maintenance period will be where the 35 years maintenance period is where the profitability is expected to come in this order. Expect the profit, the during the supply, the margins will be very low. Is that a fair assumption? Most of the money will be made in the maintenance? I wouldn't say that. Yes, but it is challenging. You see, we are working on our supply chain, we are working on our digitalization. That is where we need to swing this whole, the supply bit also. Understood, sir. My last question is on the coal gasification. While there has been a, you know, talk of getting 3 trillion and 10 and 100 million ton, but the on the ground, there are hardly any tender which is out in the public domain. Do you expect the first tender from Coal India to happen in this fiscal? That is what we are targeting for. You see, there have been tenders earlier, the basic issue has arisen because, you know, the technology, all around the international technology is available, that is where we see a benefit in our technology. We are looking at the first, you know, tender, this are being done in the current fiscal, thereafter, the increase in subsequent ramp-up. Understood, sir. Thank you and all the best, sir. Thank you. Thank you. Thank you. Anyone who wishes to ask a question, may press star one on your touchtone phone now. Take our next question from the line of Amit Shah from Antique Stock Broking. Please go ahead. Yeah, hi, sir. Thanks for the opportunity, and congrats on a good set of numbers. Firstly, my question is on the order backlog side. You suggested we have an order backlog of INR 1 lakh crore. Any slow-moving orders in the order backlog at this point of time? Secondly, whether you would like to provide any guidance for FY 2024 with regards to what is the kind of revenue and execution that we are targeting, and what kind of margins that we'll be looking out for. Thirdly, on the, you suggested that, you know, the receivables and the contract assets on the books are somewhere around about 567 odd days. What is the target that we have in mind for FY 2024, at the end of FY 2024? Yeah, these are three questions from my side. Thank you. Thank you, Amit. I would first like to say that, you know, guidance, we don't give any revenue or profitability guidance, so I'm sorry I can't give that. The order backlog, if we come to the order backlog, we have almost... You see, I put it as non-executable. We are looking at almost INR 17,000 crore of power sector and another about INR 290 crore in the industries and INR 560 crore in the international, which are on hold. Again, you know, the receivable and the contract, say, obligation, I would not like to contract asset. I would not like to actually give any target figures as to where we would like to be. That is a very specific thing, that we have a dedicated team with the internal, you know, activity-wise target as to what they need to move on. Sir, rest of the order backlog, that we have, barring this, non-moving orders, by when do we expect the execution, or what is the execution timeline for these orders? You see, if you look at the orders at the moment on the, what we have on hand at the moment, the new orders, typically, you see, Talcher has come in, we are looking at almost, you know, about four years from that, for that. The Vande Bharat would be about 78 months from start. About six years+. The guns, again, is about, you know, about five to six years deliveries for the guns. If we look at the old orders, now, a lot of the old orders are now coming to closure. As far as the contract assets part is concerned, you see, as these orders, the thermal orders come to a closure. Those contract assets start getting realized. We are expecting in FY 2024 as well as FY 2025, a quite a good number of, you know, quite good numbers on the contract assets being realized. Lastly, sir, in this particular quarter, has there been any provision write back that we have done? Even for FY 2023, if you can suggest what is the amount of provision write back? provision write back, you see, we have, if you look at the current year, we have a creation of INR 1,371 crores and a withdrawal of INR 2,366 crores. This is as compared to, INR 1,249 crores creation and INR 3,125 crores withdrawal in the last year. Thanks a lot, sir. That's it from my side. Thanks for answering all the questions. Thank you. We take the next question from the line of Atul Tiwari from Citi. Please go ahead. Yes, sir. Thanks a lot. This 3,700 MW of thermal pipeline where you are available, please, which project will we be? We are looking at essentially. It is not actually, sorry, that is not thermal alone, that is thermal plus hydro. Thermal is the Singrauli order, the 800 MW Singrauli order, and 2,880 MW is Dibang Hydro. Of course, there are smaller R&M orders, which are smaller. Okay. 2,880 MW is Dibang hydro. Okay. 2,880 MW is Dibang. Yeah, sorry, that's what I mean. Okay. This 6,000 MW for which the bidding is going on, which are these projects? Do you have some broad list of them? Yeah, sure. Which are under bidding, tenders, their bidding is in progress. We are looking at Neyveli TPS two into 660, and Yamunanagar TPS, one into 800, Talabira three into 800. Then, Adani Bandhaura two into 800, which is a BTG. Then on the FGD side, we are looking at another almost, you know, we are looking at Korba, Uran, Wanakbori, a number of other FGDs. Total, almost 8,000 MW of FGDs, in progress, in process. Okay, sir. Thank you. Thanks a lot. Thank you, Atul. Thank you. We take the next question from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead. Thank you, sir. Thanks for the opportunity. You just mentioned of the Dibang order. What is the value of this order? Dibang, we are looking. Almost, all would be almost, about INR 2,600 crores plus is the sort of value that is being looked at. This is the ENM scope. Understood. I just wanted to ask, during, in our Talcher bid, if we compare it with Lara, our Talcher bid was somewhere around INR 65 million per MW, while the Lara was somewhere around INR 80 million per MW. What was the difference? Was there a huge difference in scope of the project and everything? Can you just explain on that? Hello? There are some differences in the scope, but I think the technology difference also accounts for this. I'm sorry, sir, I could not hear you in between. Can you please repeat? There are some differences in the scope. I wouldn't be able to tell you right now the difference in the scope, but there is a scope difference and the fact that that one is 800 and the other is 660. That is also, you know, there's a contribution on that as well. The two, you see the other point is that that's a two into 660. With two units, the BOP contribution also tends to go down. That's the other contribution which will come into contribution. Understood. Sir, largely, we have got only one competitor in the domestic market. For the projects that we have in 2024 coming out of it. How do you see the competition? How do you see the? Competition. I mean. Competition. Yes, you said yourself, we have only one bidder. We are going ahead, look, we are, you know, to quite aggressively. Okay. sir, I did not get your- Actually is winning them, but not compromising on the profitability. That also we have to keep that in mind. Understood. Just a final question on receipt... sorry, this number that I missed in the opening remarks, trade receivables and contract assets. Can you just give again? Trade receivables is INR 6,544 crores, and contract assets is INR 29,740 crores. Hello? Hello? Could you get that? Yeah, I got that, sir. I'm just wanted some more clarity on the industry segment opportunity, let's say, in the next two years. In the industry segment? Yeah. Industry segment, we are, you know, defense, we are looking at more in our SRGM, that we are upgrading SRGM. That is a major area going forward. For the indigenization initiative and MoD. Of course, of course, the MoD is focusing on indigenization in a very major way. We are looking, working with them for various projects, which we still have to understand what will actually, you know, a lot of effort is going in. Indigenization, as far as indigenization is concerned, you know, we are very well placed to handle that. Those would be the major ones. Of course, railways is again, an important one, going forward. Captive power plant for industry segment? CFBC and captive power plants is another area that we are looking to Which is going to grow in the coming years is what we expect. Okay, sir. That's all from my side. Thank you. Thank you, Nikhil. Thank you. We take the next question from the line of Rahul Modi from Nippon India Asset Management. Please go ahead. Good evening, sir. Thank you. One question which I had was, how do you see over the next two to three years, you know, the revenue breakup between thermal and non-thermal segments going forward? You know, in terms of percentage, do you see, you know, the non-thermal part getting bigger? That is one. I'll just, I'll come back for the second one. You see, as I already mentioned, in the last year, we were almost 40% industry segment. Current year, with the large number of thermal orders coming in, you would again expect thermal to be leading. Going forward, you see that this is a phenomena which will be, we expect to be there for the next maybe three, four, five years on the thermal side. Our ultimate objective is that the non-thermal business has to be built up. The target is 50%, and then we have to move beyond that. Long term, we have to be looking at non-thermal. I think that is something which is very clear about, and that is why we have seen the sort of, you know, the diversification that we have worked with. Hydro nuclear also. You see, again, hydro and nuclear will be from the power sector perspective, these will be two very major areas for the future, given the net zero and sustainability targets that we have set for ourselves. For that, we are, as I mentioned, we are also looking at the hydrogen value chain. Right. In the nuclear, you know, today that you mentioned, you have signed a MoU with NPCIL. Now, you know, the next two, three projects which they are looking to develop, which they are doing it in the JV with NPCIL. Do you see that to be mostly on nomination basis to you for the reactors? No, there is no such provision in the MoU that we have signed. We are initially, you see, there's been a major issue on the, on the nuclear side has been the time that the projects have been taken. You know, it's all, it's been under development and, it's a developmental area. The focus is on, you know, reducing the gestation period, getting those projects on track, because that is something which is essential for the growth of nuclear, the way we need it to grow. I think the first focus is there, We'll move forward with our relationship to see where else we can, we can expand on that relationship. Geographically, functionally, there's a lot of, you know, in terms of scope, there's a lot of things that we can do. In terms of defense, as you mentioned, that, you know, we are looking to, you know, grow bigger in terms of RFI. Any global technology tie-ups that you're looking at, you know, which will help us give that boost in the medium term? We already have one technology tie-up with the Leonardo System, which is one of the leading- Yes. ....player in the international arena, in the, for guns also, and for other areas also, we are trying to tie up with them. Indigenization, the major impetus from the government is on indigenization of the technologies. I think we are focusing, putting our main focus on indigenizing the components. Already, government is coming out with many positive lists for indigenization we are trying to attempt. Also, I think going forward, we'll be looking at the tie-ups, which we need not disclose now. That was at IS, Ms. Gera is giving the answer. For opportunities which are coming, we are still sure to participate in this with partnership under discussions. Yes. Like defense guns. At the moment, we cannot really, you know, give you any names, but there are a number of discussions which are on for partnerships, and we are also in some areas looking at our own development. Both things are in progress. Right, sir. Perfect. Thank you so much. Thank you. Thank you, Rahul. Thank you. We take the next question from the line of Girish Achhipalia from Morgan Stanley. Please go ahead. Hi, sir. Thanks for the opportunity. I have a few questions on power side. Contract assets, you said you expect to reduce for fiscal 2024, 2025. I wanted to understand which plants are these, and currently, as we speak on 31st March, the breakup between center, state, private for that at a total receivable level, contract asset plus, trade receivables? If you look at the total debtors break up between central and state and private on March 31st, it's 39% central, 41% state, 14% private, and 6% international customers. Sorry, what was the second part of your question? Which are the plants which you expect to see a reduction on contract assets on, based on the execution profile that you have for the next two years? You see, one of the very major ones has been, you know, Patratu has been a very major one, where our, the contract assets, you know, that's in fact, a plant which has very adverse payment terms, so that there we are going to get a major chunk coming in. North Karanpura, Telangana, Bhusawal, Khurja, these are the major plants that we are looking at. Of course, Yadadri, which is the biggest thermal, you know, it's a five into 800, so it's our biggest project. These are all coming online in the next couple of years. Okay. in terms of provisions that you have made for, you know, revenue which is already recognized and receivable sitting, like, what is the provision for doubtful debts at this stage? How much was booked in March 31, 2023, this year ending? New provisions are made. Provision creation, I have already given a figure of INR 1,371 crores, and there has been a write-off of INR 148 crores. Okay. These are provisions of all kinds, right? Not only towards receivables. These would be towards liquid damages and other things as well. Yes, yes, this is complete. Okay. Sir, you mentioned that there are slow-moving orders worth INR 17,000 crore. Just wanted to understand, which are these plants, and what is the discussion right now with the about what is the status here? If you look at the projects on hold, we are looking, for example. One major project, the biggest one, which is on hold at the moment, you see, is the Uppur, the Tangedco Uppur, which is the 2x800, where there was an NGT order, which is then stayed by Supreme Court, and discussions are still on as to what is going to happen. Ramgarh, stage four, there we are looking at a revival with the discussions are on. The, if we, if you look at... If you're looking at the hydro side, we have the Palamuru Ranga Reddy project, which is where we are expecting the hold to be lifted towards the end of this current year. That is, there are four different packages in that. All of them, we are expecting this to be lifted. That's almost 2,000 MW. Okay. This 9 GW, which you expect to probably be ordered out in FY 2026. Give us some color on? Just, sorry, just to complete that, Raghunathpur, the revival is already completed. Okay. Yeah, please go on. Yeah. I was just asking this 9 GW that you said that you expect to get ordered out in FY 2026. Can you provide us some details around what these plans are, and when do you expect the tenders to come out? Okay, I've already mentioned about the ones where the bidding is in progress. Great. If you're looking at the ones which are looking at, which are the forthcoming tenders, we are looking at Singrauli, NTPC Singrauli, 2x800. MSPGCL Koradi, 2x660. GSECL Ukai, 1x800. DVC Kodarma, 2x800. MPPGCL Satpura, 1x660. DVC Durgapur, 1x800. NTPC Darlipali, second stage, 1x800. APGENCO Vijayawada, FGD, 1x800. Santaldih, FGD, 2x250. These are which have been, you know, the dates are given for the current year, we have seen in the past, though, that those dates are not so sacrosanct, unfortunately. Fair enough. Sir, in terms of just trying to understand Patratu, you know, the things were very different in terms of payment terms. How's the new tender payment terms looking like for you? Just a qualitative assessment, when you're bidding, executing the project, which is a 800 unit versus a 660 unit, what is a typical completion time frame? Is it like 48 months for both or 60 months for one and 48 for the other? As far as the payment condition terms are concerned, after Patratu, they have reverted to the normal payment terms. For the execution timelines, we are looking at almost 48-52 months for both for the 660 as well as the 800. Can you just remind us what are the normal payment terms, right? I mean, if you can just give any ballpark example for like, how does it really play through in terms of execution versus cash flows? A normal payment term would be about 10% advance. Mm-hmm. Between 50%-60% on on the supply dispatch. Another 20% on the material receipt certificate being issued, and milestone based about 15%-20%. About 10%-20%. Okay, now. Last question was on industrial part of the business. We've done, you know, a lot of areas that we are working on. I wanted to understand defense, like, what's the opportunity here in terms of pipeline for the next one to two years? What are the bids that you are, you would be interested in, and if you have favored placed in any of them? Mr. Ms. Gera will give you the answer directly. Industries will give you the answer. We are mainly going to focus on the guns, a business which we have been doing for almost three decades for Indian Navy. We already received a major order in the year 2022, 2023. Going forward in 2023, 2024 also, we see almost 20 more guns materializing, which will give us a business equivalent of three and a half to INR 4,000 crores. Apart from that, we are trying to address opportunities for air defense guns, which is already RFP is out. We are trying to venture into other areas, which I already said earlier, for indigenization. In many indigenization efforts, for example, marine gear, turbines, etc. I think we are trying our best to get into even the tanks, the overall business of tanks, for that matter. Electric propulsion. Electric propulsion, we already have a tie-up. As soon as we get a chance, we'll be putting our bid for that as well. It's GPP, CPCL is there? No, no, he's only talking about defense. Okay. I hope I have answered your query. Yeah. Just last bit on Vande Bharat. When does the execution start? I think, how would you be accounting for this project? Would it be like a JV, or would you be accounting, I mean, would be accounting like a normal thing, but only your share of the business? Yes. When does the execution revenue? Yeah. It is a JV consortium. It's a consortium, you see. Not a JV. It's a JV consortium. It's a consortium where, basis on which we are going, and the first train is to be supplied in 24 months. Second prototype in 26 months. The second prototype in 26 months. Okay? After that it's complete within- This year... Yeah. Can you break us the contract in terms of how much is the service portion? I believe you guys are 50% on the supply side and service side. Is it similar or is it different in terms of economic interest? More on the- Slightly higher on the services side. It's almost equal on the, on the supply and slightly higher on the services side. Yeah. Revenue recognition will start only in FY 2026. Not so much in FY 2024 and 2025. Is that the way? That's right. Yes, that's right. Yes. Okay. Perfect, sir. Thank you so much. Thank you. Thank you, Girish. Thank you. We take the next question from the line of Dhruv Muchhal from HDFC AMC. Please go ahead. Yes, sir. Thank you so much. In the opening remarks, you mentioned about flexibilization of coal. You have done some pilots and they have been successful. If you can probably give some more details, what have you achieved here in terms of, say, probably, I mean, can we go now to 40% in terms of, 40% PLF in terms of coal? How is the ramp up, ramp down, you know, parameters changed? And also some sense on, if, for example, a typical coal plant, a 1,000 MW coal plant has to go for your package, what would be the approximate cost to change the setup? If you are looking at the ramp up and the ramp down, the you see up to 50%. 50%. It's the parameter, technical parameter given is 3% up to 50% capacity, and after that, 1% up to 40%. This is something we have achieved already, and we have already demonstrated. Okay. Hello? If you're looking at the cost, you see, per set, the cost per set is roughly in the range of about INR 3 crores for that. INR 3 crores for a. Per unit. Per unit. Typically a 600 MW unit or any kind of unit, any size unit? Uh, typic, typic- Up to INR 600. Yeah, up to INR 600. That is what. Okay. Typic. Got it. Yeah. Sure, sir. Sir, the second thing is, in the power sector right now, we are seeing some tightness in terms of supply. The government is also probably encouraging a few new plants. I'm just wondering, is there also a revival in the old plants? I mean, the old under-construction assets that probably are half constructed or, you know, not seeing some success, were not seeing some success, and now seeing probably marginal incremental revival. You know, there is incremental more money to be made in the thermal sector, I think, right now. I'm just wondering, is there some incremental or marginal interest that you're seeing, probably some early signs, to revive some of these plants which are probably not getting up? Under arbitration and hold, yes, there is an effort in some of these areas, you know, to get those units functioning. That process is on. If you look at, you know, the big ones, like, and of course, like for example, Raghunathpur has already come back. If you're looking at, you know, then the other example, of course, is Ukai, which is the biggest one, which is still not seeing the light of the day, which where despite so much, you know, money having gone in, it's still stuck. It's happening both ways. Okay. nothing meaningful, which is changing in terms of the. I wouldn't say that. You see, things have started moving because there was some for Raghunathpur, there was no movement for years. This movement we have, this has happened, others also we are seeing movement. That certainly is movement is certainly there. I would say movement is certainly there. Also, sir, there's a lot of focus on pumped hydro now. The government has come out with large targets. I'm just wondering, what is our opportunity size here, and, I mean, do we have a play here, sir? Are you seeing some initial talks with some of the players who are probably trying to enter the segment? We are looking at that area, and we have been in discussions and a number of discussions are on, but as yet, we are not in a position to, you know, report any success in that. Okay. The tech that you supply for hydro in terms of the turbines and others will be similar, that would be in pumped hydro, because I believe it's just a reversible pump that you have to, or it's very different? Yes, you are right in that. We are working on it. Okay. That's right. The opportunity remains for us, how it evolves, we'll have to see. We are in a number of discussions, that will be said. Going forward, we are looking this, you see, because storage is a very major area, when you are looking at renewable integration with the grid. Storage becomes a very important area, and pump storage certainly has a very distinct advantage there. Okay. The last thing. We've already in our hydro turbines, we have been supplying reversible turbines, which are going in for pump storage sort of systems. Mm-hmm. That's a, that's a major area going ahead. This last thing on contract assets. You mentioned, the contract assets are large only primarily for the old orders. Most of these plants that you mentioned, probably North Karanpura, Telangana, Yadadri, all these will probably be commissioned, say, in FY 2025, 2026 last. Probably Patratu will go for 2026, 2027. They would be commissioned. How should we look at the absolute amount of contract assets then? I mean, should we see a meaningful reduction from this INR 26,000- INR 29,000 odd crores? Because I also understand there will be new orders, there will be some, I mean, something will go, something will come. I'm just trying to understand where would this settle once, assuming, hypothetical assuming, this, all these four, five orders are executed, where will this contract asset settle at then? Approximate, some broad range. You see, Patratu, we are expecting, we are targeting 2024, 2025 for the complete commissioning of Patratu. Okay. Karanpura, again, within the next year is getting commissioned. Unit 1 is already commissioned, Unit 2 is going to get commissioned in this year, and Unit 3 early in the next year. Most of these plants are in very advanced stages. Okay. So the ones- That's the point. How does the contract assets do settle then? I mean, where does the number settle? I'm not able to give a specific number at this stage, but I think that'll make a fairly significant dent in this number. Can we see more than half reduction? I mean, to just have. I wouldn't like to give any guidance on that. I'm sorry for that. Sure, sir. Thank you. Thank you so much, sir. Thank you. Thank you, Dhruv. Thank you. Thank you. We take the next question from the line of Rahul Modi from Nippon Life India Asset Management. Please go ahead. Thank you once again. One question which I had was, some directional thoughts on the, you know, BHEL's role in the green hydrogen system, which you know, mentioned that you would evaluate and foray into. Which part of the ecosystem do you want to be there, and then what can be the possible timing if green hydrogen becomes viable and, you know, there in the system? You see, we are looking at two major elements. One is the electrolyzer, and second is the storage. You know, the category four cylinders, which are required for the hydrogen storage. These are two very major ones. In addition to that, there are requirements in the railways for fuel cell-based trains, as for the smaller trains and things like that. Those are the other areas we are exploring. Sure. I see. When do you see some kind of, you know, directional movement towards, you know, starting work on this? We have recently signed an MoU with IGL also on, you know, which starts with the cylinders. That's an area where we expect, you know, we are still in the planning stage, but I think that's an area we would look to stay ahead, because that's a very fast-moving area. Hydrogen is going to be, world over, a very fast-moving area, and we understand that, and we are working accordingly to stay ahead in this area. Mm-hmm. Sure, sir. Thank you. Thank you. Thank you, Rahul. Thanks once again. Thank you. We take the next question from the line of Subhadip Mitra from Nuvama. Please go ahead. Good evening. Thank you for the opportunity. Sir, my question was with regard to your raw material cost as a percentage of sales. Where do you see that settling down at a normalized level? You know, as you are already aware, we have gone up, you know, substantially. We are today at almost 72% as material costs as a percentage of sales. Which has two elements to it, you know. One is the escalation, which has happened in the commodity rates, and the other is the competitiveness of the rates at which the order has been procured, have been taken. Going forward, you see this, when in our new bids, the revised commodity rates have been taken in. We are working to make sure that whatever we get, can be done profitably. A lot of initiatives, you know, we mentioned that earlier about our cost optimization group, our procurement side, our reengineering certain things to bring down our costs. That's a very major initiative. I expect that in the coming year, these initiatives will kick in along with the, you know, as the new orders come into play, these initiatives will also support us. I think that's going to be both those things will come together to help us. Can one, generally, you know, estimate that maybe that number from a 72% odd can come down to probably somewhere around 65%-67%? Would that be Quite interesting. One can think about? You see, those would all be guesses, so it's no point, you know, giving doing guesswork. You know, 65% is almost where we started from. Our objective would be to come back or to exceed, but then that's again, a guess, you know, where we can. There's a lot of effort on these fronts. Understood. Understood. Secondly, on similar lines, you know, is there like, I mean, since now you are bidding, you know, and there are large orders on the anvil, which, you know, as they come on stream in terms of revenues, would lead to operating leverage. Would you hazard a guess or a target as to where would you see your normalized EBITDA margins going to? Is there some target number in mind? No, again, you see, sorry, you know, we don't give any guidance on that front. I'm sorry for that. Understood. Lastly, you know, when we look at the CEA's, you know, draft NEP and the kind of thermal plans of additions that are talked about over there, I believe the number is anywhere between 70 GW-20 GW. Now, out of that, you know, some of the numbers we've already talked about. Those in totality, you know, would still probably be somewhere around maybe 12 GW or 13 GW, if I'm not mistaken. The rest of those projects, which are probably being planned off, are those a little remote in terms of are they still on the drawing board, or do you feel that a lot of acceleration can happen in terms of ordering for those rest of the projects? You see, as just today, we have seen the CEA coming out with the, with the thing on, you know, the need to urgency to get this bring in capacity, generation capacity. MOP is working, Ministry of Power, has taken a lot of steps in that. I think this is something which is going to, you know, speed up only. It cannot be slowed down. It is going to speed up. That imperative of, you know, the economic growth targets will make sure that this has to speed up. Understood. Understood. Thank you so much for answer. Thank you. Thank you. Thank you. We take the next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Sir, thank you for taking my questions. My first question is in line with what Dhruv had also asked. For the last two years, we've been seeing that our provision write back is more than the provision that we are making. Historically, if you look at the last 10 years before that, as the top line grows, we make more provisions. How should we look at this number going forward? As your top line grows, is it fair to assume that we'll be making more provision than we'll be writing back, or is that going to be different? That would be my question number one. You see, this is a recent phenomenon because we've actually worked with a very focused, you know, teams which are working on provision clearance, and a lot of cases, you know, punch points, a lot of deliverables which were pending, as well as settlements, various ways to achieve commercial settlements. A lot of effort has gone into that. I think in the next few years, that effort sure would taper off. Where the rate two will go, because, you know, we along with that, we are looking at much greater operational, you know, ensuring the time, the delivery, project delivery in time. I think, ultimately, we, our, objective as a commercial organization has to be that there will be no net creation of provisions. I mean, that's the way we have to, we have to go forth. Okay. Let me say that. Should we assume more write backs? Even I understand what you mean. Is there more scope of write back in the future, in the near term, based on all provisions that you have? There is still work to be done. There is, as I mentioned to you, we have dedicated teams working on this very area, you know, to understand what, where we can the revenue that we have. You see, the provision creation is done as per the policies already there. That job is done. We have to ensure that wherever possible, we can get that money back. That effort is still on, and it will continue for at least the next few years. I think I would expect that to continue. Understood. Understood, sir. My second question is, as I look at our employee costs, again, for a decade, we've been in the same range. Now as we are looking at diversifying, wanting to do more in railways, in other segments, how should we look at this number in terms of capability building? Parallelly, is there a CapEx number that you want to guide for the same capability building in segments other than power? You see, what's happened is that the employee cost, while the cost itself had been going up, at the same time, we have had a huge, you know, the attrition in terms of natural attrition, which is, which is happening in natural wastage, retirements. Even the last year, we had almost 1,000+. That and you see, the recruitment was done at a stage where we were targeting some very major. There were huge forecasts for the sort of where the thermal was going to go and accordingly, where we would be going. That was, you know, that's, that was one trend. As you rightfully said, going forward, we are changing. We are going to new technology areas. We are looking at skilling. I would say that the objective has to be to improve our turnover per employee, and with that, we should be able to retain, or even, you know, reduce the cost. Our recruitments are, you know, we are at the very minimum that we require. Some lateral induction will be there, but at the bottom level, ET, that sort of recruitment will be there. Focus will be on reskilling. That's a very major area because all our people have to contribute, and as the industry changes, that becomes a very important area for us. When you talked of the capital part of it, we are, you know, identifying across the company, we are taking up the initiative to look at where we need machines to be replaced, old machines, which are, you know, where performance has gone down, tolerances have gone down, but which are required for the future. Accordingly, a CapEx strategy is being put into place. That is one part of it. The second part of the CapEx is when we are looking at these JVs, you know, when we are looking at, as we mentioned, about the coal gasification, that sort of CapEx is the second part that we will have to be doing. Both areas, specifics, if you look at, for example, defense, if you're looking at the guns, the upgraded SRGM. We already have a major CapEx in progress there, which has to deal with the new sort of technologies that we are going to have to do there. Any CapEx numbers that you'd want to guide on? No, I wouldn't be giving any numbers at this stage. Okay, thank you, sir. That's it from my side. Thank you. Thank you, Pulkit. Thank you. We take the next question from the line of Girish Achhipalia from Morgan Stanley. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, on industrial orders for fiscal 2024, which segments, are you looking at from a new order perspective? You closed this year at, I think, close to 9,500 crores. In FY 2024, is there any specific segments you expect the bids to get concluded? Director IAS has already mentioned, you know, that the guns, for example, that's one major chunk that is specifically being looked at for the current year. We have started, kick-started this year with Vande Bharat order. Vande Bharat, of course, is a major one, which has already come. More than INR 15,000 crores for us. Yeah, sure. If I directionally look at industrial margins at the segment level versus power, industrial margins obviously have been lower. I wanted to understand, you know, how is the mix likely to impact these margins going forward, given the different sectors that you're targeting within industrials? Qualitatively, you know, would it be right to assume a lower margin next year as you ramp up some of these initiatives? Or qualitatively, would you say that some of the new orders that have come through are actually higher margin? I'm not referring to Vande Bharat alone. I'm just referring to the entire thing. How the mix would play out in FY 2024, 2025 on margins versus FY 2023 for industrial margins? If you look at, you know, FY 2023, the power sector, the margin was 8%, while industry sector was 9%. Sure. Industry sector actually has been higher. We actually have to see as we go ahead, you know, depending on what sort of competition is there in each of the segments that we are, we are working on. That will, and how effectively, you know, the, the cost cutting that we are looking at, both these things will come together to determine the terms of margins. We are certainly looking at higher margins in the coming year than we have had in the, in the recent two years. Just a clarification. Amongst the different set of orders that you have are bidding in industrial, what kind of subcontracting are you looking at? Are there any specific orders that you would definitely subcontract and take help from the private sector vendors, or is it going to be all in-house? Can you help us some qualitative comments around how much of it is in-house, which type of contracts? Like, guns and all, you've been doing for long. Other than guns, you know, other areas that you're looking at, and maybe some of the upcoming, like coal gasification is also an in-house technology. I wanted to understand the element of subcontracting that can come through going forward in the industrial part. You see, we always have to do a lot of procurement from vendors. That will continue to happen, and we have a laid down policy for buy versus make decision. Whatever we can make ourselves at a, you know, and is financially viable in the commercial interest of the company, we will make ourselves. Anything which is where we can buy cheaper or faster to meet the customer requirement, we'll do that. I think that's the broad parameter within which we function. Going forward, I think we should stay at almost the same sort of thing with, of course, Make in India, we are doing them. You see, as even as you go into Make in India now, there are a lot of MSMEs which do a lot of work for us. Our subcontracting ecosystem, we have a very major subcontracting ecosystem, and we have to leverage both of them. I mean, there are jobs, if we do them in-house, we'll be totally economically unviable. There are those things will have to be done through, have to be outsourced, will have to be done through our partners, through other MSMEs. Particularly the services, the civil works, the erection, commissioning. Civil works, project sites, that all will continue to get outsourced, you know? Yeah. Okay. My last question was on your hesitance to give guidance for revenues. I understand during COVID, it was impossible, and even last year, you didn't. What's stopping you back now for fiscal 2024? Like, you know, a specific reason that you don't want to give a guidance? Just wanted to understand that. I think, you know, actually, it's not a reluctance in that sense. You need to understand basically, that a lot of that becomes speculative. I would be giving you something which is hard fact, hard thing, which is on paper. If I would certainly not like to give something which becomes, which can become speculative, because then what I say and what happens, you know, that. As a company, that's the policy that we have really taken, that we will not give revenue guidance. Earlier, we were having these MoUs, right, with the ministry. Is that a practice which has already stopped by the ministry also? No, that continues. That is done every year. We could say that number, right? Because that would be any ways that you would have committed to the government. Not yet done. That is actually not yet signed. Okay. Also, you see, that figure is a figure which is worked on. This is based on execution across contracts, right, sir? I just wanted to understand if you have a, you know, any ways, an MoU with the government, we could use that number to at least know what direction we are heading in. You know, the MoU to the government, yeah, certainly we can give you that number, but you can make that number out yourself because we know the, it, you know, it's parameterized. It's a certain percentage of your highest ever revenue or your highest ever figure. There is a parameter to that, you know? You can actually get the policy circular and get those to work out the figures yourself, even if we don't give those to you. Yeah, absolutely. I I mean, that's why I wanted to understand why you would not give. Okay. Anyways, I'll take it offline. you know, so the point really is that while you can you can take those parameters and say, "This is the target you have," if we commit something, that's a different situation. That's really what it is all about. Okay, thanks. Thank you. Thank you, Girish. Thank you. I'll take the next question from the line of Abhineet Anand from Emkay Global Financial Services. Please go ahead. Yes, I just wanted to know whether this Raghunathpur has, you know, been added in your order. You said that the slow-moving order has already been revived. Has it come back in our order, or it is still there? No, it was already there, so it was a on-hold project, which is now a live project. Your INR 17,000 crore of power slow-moving doesn't include that, right? No, that doesn't include it. The whole project doesn't include that. Okay. Second is that on, in case of Uppur, which is another long one, Let's assume when, you know, the customer, this project, let's assume, goes live sometime in future, how does the contract that you signed with the customer negotiate, again, or how is it? How does it work? We will need to renegotiate. Once it comes, if it comes to that stage, because, you know, the cost would have changed, a lot of parameters would have changed. That, the renegotiation will certainly be required. What happened in Raghunathpur, can you let us know? That is some example which has reverted back, right? yeah, Raghunathpur got revived as per the contract terms. There were some bits built in there which we were able to use, and we get it revived. That revival has already happened. No, sir, I just wanted to know, is it at the earlier price, or is it an increased price? If it is an increase, what, I mean, what is that number? Any flavor on that? No, it is as per the contractual provisions. There are already some escalation factors based on the contract, and accordingly, it has been done. Okay. Lastly, this tax refund of INR 266 crore, that's for the quarter? No, that is for the year. In the quarter, we haven't had any refunds. Where does that reside? In the tax part only or other income? Out of INR 266, INR 106 is the interest, which is part of the other income, and INR 160 goes into the tax reversal. Okay. Okay, okay. Thanks a lot, sir. That was my question. Thank you, Abhineet. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to hand the conference over to Mr. Dhirendra Tiwari from Antique Stock Broking for closing comments. Over to you, sir. Thank you very much. On behalf of Antique, I thank Dr. Shinghal and management team of BHEL for giving us the opportunity to host the call. Thank you, sir, very much. I also thank all the participants before for participating in the call. Before I close, may I request Dr. Shinghal to give any closing remarks, sir? Thank you. Thank you, Mr. Tiwari. Thank you, ladies and gentlemen, for your patient hearing and an interactive question and answer session. Thank you very much for your interest in BHEL. Goodbye. Thank you. Thank you, sir. Thank you very much. Now we can close the call. Thank you very much. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. Thank you for joining with us. You will now disconnect your lines.