Ladies and gentlemen, good day, and welcome to the Hitachi Energy India Limited Q3 FY 2023 Analyst Conference Call. As a reminder, all participant 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 that this conference is being recorded. I now hand the conference over to Mr. N. Venu, MD and CEO. Thank you, and over to you, sir. Thank you, Aman. Good evening, ladies and gentlemen, thank you for joining us. I hope you're all keeping well. We have published our results, Q3 results on the stock exchange, we also uploaded the presentation, which we are going to use for this call. In the next 20, 25 minutes, together with our CFO, Ajay, we would like to take you through that. Thereafter, you know, we would like to take your questions in that. With me in this room today, I have our CFO, Ajay Singh, Company Secretary and Head of Legal, Poovanna, and Manashri, Head of Communications. They're here in back. I'm just referring to the slide numbers which I have uploaded in the, in the, stock exchange, as well as, I'm also sharing with this presentation. Go to the slide number three. In the quarter ending December 31, we received orders worth INR 1,221 crore, up 31.3% year-on-year. This was the second consecutive quarter of double-digit order growth led by some key wins. From transportation, infra, utilities, and industry, customers are understanding the urgency of the pace of change needed to reach net zero and carbon neutrality. During the quarter, we bagged a large order of supplying 500 MVA transformer and 110 MVA reactors for a bulk power transmission in the interstate green corridors that would support the renewable energy evacuation. We also received multiple orders for Air-insulated substations for wind and solar energy projects across the country. We continue to support the Indian Railways with our traction transformer and other offerings. During the quarter, we supplied transformers for the Vande Bharat initiative, Vande Bharat trains, and I'm glad to share that included our first order for a reconnected transformers. We continue gaining momentum in the data center and energy-intensive industries with customers seeking reliable power management and energy solutions. Commodity price increase, coupled with semiconductor shortage and rising interest expenses had this bearing on our profitability during this quarter. We will talk more during that section. Profit before tax was INR 13.4 crore, and profit after tax stood at INR 4.6 crore at the close of the quarter. In the following presentations, we will take you through our journey for achieving a sustainable growth in a challenging market. As you can see also, despite a high growth of orders, year-over-year 31%, we still have almost INR 385 crore orders where the VRL One had got delayed. We could not complete the paperwork, necessary paperwork for us to book in the last quarter. Moving to the slide number four, sustainability through collaboration. By now, most of you are familiar with our 2030 sustainable ambition. That is, we want to be carbon neutral in our own operations by 2030. In pursuit of our targets, we achieved 100% fossil free electricity consumption in our factories and offices in December 2021 itself. In the last few months, we extended rooftop solar electrification and off-grid solar power for our project site offices, cutting down on polluting diesel consumptions. We also switched over to environment-friendly piped natural gas as fuel, replacing diesel for certain energy-intensive processes in our factories, especially in the transformer factories. We believe that green infrastructure plays a key role in the development to support the growing urban population. To this end, we conducted renewable impact studies for over six industry players along with the National Load Despatch Centers for regulating usage patterns across different geographies. Such initiatives provide further encouragement for industries to use green energy for their power generation needs. Under our CSR strategy and initiatives, we provided electric vehicle infrastructure at NIT Warangal and conducted an urban afforestation drive in central parts of Gujarat as part of our CSR initiatives. Moving to the next slide number five, noteworthy steps across the spectrum. Hitachi Energy collaborates with customers, partners, policymakers, stakeholders to enable a sustainable energy future and have been progressing towards this commitment. In the last three months, among the several orders won, we also secured orders for integration of over 1 GW of solar generation capacity into the grid, and some key orders for digitalization of asset management. We also commissioned seven substation project encompassing AIS and GIS technologies, spanning utilities, industries, and also involving in one project, a remote commissioning. As the pace of industry and government events picked up, we returned to our traditional areas such as InnoRail. We were active contributors to policy discussion at forums such as Invest Karnataka and India-Sweden Green Transition Partnership for creating safer green future. The policy-driven support for increasing the power generation capacity for renewable energy is expected to further complemented by the transmission system, enabling higher rates of renewable adoption by 2030, which is encouraging for our business in the long term. Moving to the next slide, slide six. The Indian economy, though not immune to the effects of a global fluctuations and disruptions, has been resilient in the face of headwinds posed by the pandemic and the geopolitical events and war in Russia and Ukraine, et cetera. Demand constraints are a major challenge amidst the current environment. Semiconductor chips shortages have further compounded these issues as supply logistics take a hit, especially during a time when industrial activity is still low. If you see, generally discussed lead time for chips and electronics have been between the six to 12 months. We need to also be aware that deliveries are rarely guaranteed. Analysts anticipate some easing of shortage by the end of 2023, considering the workarounds for easing supply chain constraints would start moving in. Retail inflation or CPI-based inflation in India witnessed a decline, with various containment strategies implemented by the Reserve Bank of India to dampen it down further. Despite central banks and governments' effort, the impact of inflation remain to affect the commodity price. While India continues to be one of the fastest growing economies supported by domestic consumption, the potential conflicts taking place beyond our borders are causing significant economic repercussions worldwide, impacting how businesses operations proceed. As you can see from the slide, again, this backdrop, among the sectors most relevant to our business, such as utilities, transport, employ industries, metals, mining, hydrogen, there is a steady growth anticipated in the medium to long term. Despite all these developments impacting in the short term, the horizon looks, in our view, bright with a drive towards energy transition, creating various opportunities for our company portfolio, whether it's the product, systems, services, and software for us. Moving to the next slide number seven, focus on future energy networks. I'm sure you would have seen this particular information coming out of the Ministry of Power. Here energy projects are driving a new wave of growth across India. Among the several CapEx focusing initiatives, the government has prioritized the integration of transmission of 500 GW plus renewable energy in order to bring clean energy to every household. It is enabling the 2030 goal of achieving net zero with a comprehensive plan to strengthen the country's transmission system. This include an estimate of INR 2.4 lakh crore to expand its interstate transmission system, ISTS, across 26 states and union territories, with an additional INR 2.16 lakh crore needed to develop 268 GW onshore renewable energy capacity and INR 28,100 crore for 10 GW offshore wind energy capacity. Looking ahead towards 2030, when these projects are expected to come to full fruition, India is set to benefit from significant improvements in both its sustainability target and growing manufacturing muscle on the back of policies such as interstate transmission system, transmission plan, and also the newly announced National Green Hydrogen Policy commitment of close to INR 20,000 crore to boost the manufacturing of green hydrogen production capacity of at least 5 million tons per annum and the research and development in this area, which is also announced as part of the budget now. Ultimately, transitioning into a low carbon economy through increased penetration of renewables is opening up huge, in our view, potential opportunities for the country, which is encouraging for our business as well. Moving to the slide number eight, growth in renewables and associated transmission corridors. During the quarter ended 31st December, the order growth was driven by renewable and transmission data center and industry. As you can see here, it's a broad-based growth cutting across all the, you know, segments, majority of the segments, as we are also talking about in several calls now, high growth segments, which is yielding a very good result for us. Notably, we grabbed some remarkable orders in data center space, which grew more than 300% year-on-year during the quarter as we develop our relationship with some of the major players in the country on dealing with the data center markets. Steps towards ensuring data security and stability across all network. With data localization, regulations are supporting the data center operators to build and expand their footprint in the country. India launched 5G technology to further strengthen our digital infrastructure and capabilities. Energy efficiency and reliable power management for power-hungry data centers remain a concern. We are supporting our customers with industrial power and automation solutions. The renewables and transmission continue to be very important for us. With an estimated demand of 500 GW of in renewable source by 2030, India is quickly transforming into one of the world's leading clean energy producers. As I highlighted before, during the quarter, we received cumulative orders for over 1 GW of solar integration into the grid. In order to achieve a carbon-neutral future, governments and industries are looking at decarbonizing through electrification across sectors. Along with these initiatives, Indian Railways has committed itself to target net zero emission by 2030. It has also committed to modernizing its railway network with electrification projects such as 22 into 25 kV electrification of high-density corridors. Apart from the Indian Railways, looking ahead, eight to 10 metro projects are planned to be awarded over the next 12 months for supporting economic growth with sustainable mobility solution. Given our positioning in these sectors, we are confident to bring home some orders from these upcoming projects. With all these integrated efforts underway in various sectors towards digitalization, electrification and adoption of re-renewable energy as well as renewable integration, we are looking at some positive growth on the horizon, supporting clean energy systems for India and also the rest of the world with that. Moving to the slide, number nine. Growth drivers maintain momentum. We have been talking about the growth drivers of exports and service. Given the global supply chain constraints, India holds the key to supporting this network with local manufacturing, Make in India, et cetera. We have been sprucing up our manufacturing for meeting local and global needs. Our global feeder factories have been gaining ground around the world, helping us gradually expand our export markets. Export is an essential part with our target to contribute around a quarter of the total orders. The 11% year-on-year order growth for our products is a testament to that. Specifically, we have provided components of electric transformers for Chile's public utility, advanced industrial system for copper mines in Congo, substation equipment for Bhutan, as well as other goods throughout the world, including emerging markets such as Africa and Asia. These are a couple of examples to showcase that how our export strategy is working very well in these parts of the world. Last quarter, we augmented our manufacturing, and we continue to invest in people and technologies. Export has contributed to the growth of our engine with our product portfolio and customer service excellence. On the service side, orders were steady year-on-year as our lifecycle service partnerships continued to gain traction from providing first factory repairs of traction transformers to making successful GCBs overhauling, et cetera, replacing third-party SCADA and controls to rendering lifecycle services orders for grid automation from heavy industry and utility customers. We have effectively provided comprehensive services in various segments. All this will help us contribute to the bottom line as well as build a strong market position for us in going forward in that. With this, I hand over the next two slides to take us through our financial performance to Ajay Singh, who's the CFO. I change also to slide number 10, Ajay. Over to you. Thank you, Venu, good evening to all our participants. If you see slide number 10, if you see during the quarter, the company booked orders worth INR 1,222 crore, up 31.3% in comparison to the same quarter last year. The revenues were INR 1,041 crore. The profit before tax in the quarter stood at INR 13.4 crore, profit after tax was INR 4.6 crore. Operational EBITDA stood INR 29.9 crore in this quarter. We continue to face chips and electronic shortages, commodity and freight price increases, forex volatility. However, with the consistent order growth, the order backlog stood to INR 7,231 crore, providing us a visibility of roughly 20 months of revenue. If you come to the next slide number 11, here you see this year, while we were emerging out of the pandemic after close to two years, we were confronted with a myriad of interlinked challenges. As I quote the UN Chief from his speech at the World Economic Forum, that the world is in a very sorry state. Over the last few quarters, we have been talking about the persistent challenges on the macroeconomic situation. Let me take you, run through this particular slide little bit in detail. If you see the particular, you know, slide, the chart, you see the margins are fairly consistent. The material cost quarter-on-quarter is hovering around, let's say, 60%- 62%- 63% revenue mark. The personal cost also I will say is more or less steady. If you see the chart that is a bridge, Y-on-Y bridge on the right-hand side, it provides a true story of a credible performance in a very, I will say, a highly volatile market. Chips and electronics were leading factors impacting our profitability. Despite our reported lead times, six to 12 months of delivery of chips and electronics, deliveries remained uncertain, and we took tough decisions on price versus faster delivery. Further to this, the commodity price, the Forex, and the interest expenses, you know, basically pulled us in this particular quarter as far as the bottom line is concerned. With a strong cash focus, we are making strategic investments in high-growth segments, which we expect to help us strengthen our bottom line and cement our market positioning in the long run. With this, I hand over to Venu for the closing slide. Thank you, Ajay. Moving to the slide number 12. Priorities for purposeful driven growth in financial year 2023. The world economy is facing, as Ajay was talking about, tumultuous time navigating through the current chips and electronics crunch and lockdown disruption poses a difficulty. However, exports and services can still provide good growth opportunities in addition to the domestic market. We see a good opportunity in the horizon in our high-growth segments that remain central when it comes to sustainable energy recovery from the impact of market disruption. We have been working on a strategy to address the imminent commodity price increases by making sure their supply chains are flexible and adaptable enough to handle changes quickly. Additionally, we continue to remain cash focused with the aim of building our people and capacities for a greater future successes. We would like to close this presentation and open for questions. However, before we start the Q&A, I would like to take a few minutes, on the next slide number 13. You remember last quarter we were talking about hosting a physical analyst meet in one of the largest world-class manufacturing facility in Baroda on 3rd March, 2023, between 10:00 A.M. to 3:00 P.M. This location is home to our transformers and high voltage factories, as well as our world-class customer experience center, energy, technology experience center, and training center. Along with our management team, I saw our global CTO also is joining this, and we will soon open for registration for you to plan your visit. We look forward to hosting you and meeting you all in person. I would now like to open the channel for questions. Thank you. Thank you very much. Yes. Thank you. Ladies and gentlemen, 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 your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is on the line of Renu Bhardwaj from IIFL Securities. Please go ahead. Yeah. Hi. good evening. Am I audible? Yes, please go ahead. Sure. Thank you. Good evening, sir. I have a couple of questions. Starting first, if you look at as you have clearly elaborated the impact of almost 500 basis points on operating margins. Can you speak close to the mic, Renu, because you are breaking in. Am I better now? Yeah, now it's better. My question was, if you see in the presentation, you clearly highlighted 500 basis points- It's breaking in. One second. Let me try again. Is this better now? Yeah, this is better. You have highlighted 500 basis point impact on the EBITDA margin coming in from commodities, semiconductor chip shortages and logistics cost impact. Broadly, if you look at the remaining backlog that we have of INR 7,000+ crore what could be the share of those loss-making or low-margin fixed price projects which may continue in the Q4 or in the Q1 of the next year, which carry lower margins? By when do you expect the impact of these chip shortages to recede in your operating performance? When are we expecting operating margins to be back in 8%-10% EBITDA levels? Yeah. Thank you, Renu. I think, you know, we, you know, as a company policy, we don't give exactly, you know, our forward-looking statements in that. I, all I can say is that when it comes to the, if you really look at our bridge in the slide number 11, the bulk of that is, you know, almost INR 30 crore is basically on the chips and electronics shortage, right? Because we have a policy of recognizing the revenue only when the revenue happens. While, lot of our manufacturing has completed in these panels, but because of the some relays not there, so we are unable to dispatch those things, unable to revenue this. While the cost has come in already, we were not able to revenue those kind of things in that. When it comes to this particular thing, as you know, it's a global challenge of semiconductors, which is very focused to the, you know, energy sector, especially on that. Even though semiconductors for some other sectors has really improved, but in our things we are taking a, you know, second phase. We see a improvement on those things, but it'll be at least in a couple of quarters before it'll come back to the normal level, what we used to see in that. That's what is the thing in that. When it comes to the, you know, it's a low margin. I won't call any low margin or high margin. It's always a mix. Once we have this revenued out, then I'm sure we should be in a position to come back to, you know, where we are planning to. By when are we expecting the completion of execution of these, of this unfavorable mix? No, we don't have any unfavorable mix in our, in our portfolio as such. Okay? There are a couple of projects where we had, you know, we have taken the orders on a fixed term basis and those execution happened. One or two projects remaining, I think the execution is ongoing on that. Bulk of our, if you really look at our order backlog, bulk of, you know, our order backlog has variable contracts, et cetera, part of that. Sure. Secondly, you did highlight quite a bit in terms of railway transportation orders coming through. I think that has been a high growth market for us. Right. Now there are large Vande Bharat projects coming up for awarding in the coming quarter. So from this segment of the market, how is Hitachi positioned to garner a reasonable share of their pie? And do you think the capacity expansion which we had done for traction transformer and similar portfolio would be for this domestic market opportunity and for exports as well, or it's largely domestic centric? On the, on the railway, as we have been talking about, is one of our growth segment. We have been continuously looking at opportunities and also looking at inside to expand our factories and which we have been continuously expanding our thing. Today, we have a quite a, you know, major market share in local transformer, EMU transformers or, you know, dedicated street corridor transformers, et cetera, in there. The railways have announced a major tenders like a 9,000 horsepower tender which and 12,000 horsepower and Vande Bharat trains, EMU trains, and we have a quite a big offerings in that. Each project has a quite a, quite a large portion of our offerings going to that. This is the one aspect of that. In addition to that, we also, you know, work very closely with all the metro projects. Metro projects, both we do the trackside solutions like a grid integration, et cetera, or the wayside transformers and as well as the SCADA systems. There are very, very big opportunities are there. As the railways have announced a large number of loco trains, we are now also looking at further expanding our transformer capacity. Thank you. Ms. please. The requester to join the question queue for any follow-up. Also, before we take the next question, I'd like to remind our participants to limit their question to two per participant. If time permits, you may join the queue for any follow-ups. Thank you. The next question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead. Hi, sir. Thank you so much for the opportunity. Sir, I mean, what we have indicated is that there was a production loss because of the lack of availability of the chips and other parts. What was actually a production loss that took place at a sales level? Yeah. These things had not come, then what would have been impact on the, on the delivery side? Yeah. You can see that in our this thing. We have a revenue loss up to the extent of INR 100 crore. So- Yeah. Ajay. Yeah. Fine, sir. Thank you for the question. In this particular quarter, the impact basically on account of chip shortage is roughly across INR 100 crore that got impacted. Because of, if you see in the page, roughly INR 31 crore is the impact on the bottom line. Bottom line. If you had, if you would have not had this, probably, there would be roughly in the range of 2%- 3%, you know, margin, would be on the upside compared to what we are having right now. At the PBT level? Yeah, PBT level. Sure. Sir, second thing is that, I mean, the logistic cost is also you mentioned one of the reason why our profits have gone down. What we have observed typically now is that most of the companies that are declaring the results, they are actually benefiting because of the logistic price have actually gone down on a year-on-year basis. Yeah. Just trying to find-. Yeah. Here is what we are talking about is the logistics cost is basically we are talking about the export logistics cost, especially as we have, you see, as part of our strategy, we have increased our exports over a period of time. The export freight cost has really gone up substantially in many parts. You know, some of the things we are time-bound, you know, we have to, you know, ship those things in a time-bound manner. That is, that's where is our logistic cost is coming. You are true that domestic transportation cost is in the same level or slightly lower than the last year levels. No, I mean, on export side, we are hearing this from companies. They're benefiting and they're showing that the export cost is actually, I mean, transporting the exporting international cargo has become cheaper compared to last year. There is a drop of many companies are reporting in the logistic costs. We are, I mean, exactly opposite to that. We can't comment about others, but we have been also using our many of these logistics with our global contracts, so we have a very effective system. We have. Yeah. One thing, basically, you know, what you are telling is correct. If you see a y-o-y basis, this way it is quite visible. You are right. If I go quarter- on- quarter, probably, you know, the impact has come down. If you see from y-o-y, the things you're talking about is y-o-y, they're still, you know, what Venu is telling is. Yeah. Talking to, on those lines, actually. This bridge, what you see in the, in the, in the slide number 11 is basically y-o-y. Thank you. The next question is on the line of Varun. Hello? Yes, sir. Can you hear me? The next question. Yes, sir. Yeah. Now, the Mahesh has listened to us, I'm not sure. Sir, I want to ask something. Yeah, sure. Go ahead, Mahesh. Sir, when do you think then the situation will normalize now? I mean, when chips available and the execution will pick up? This is the same question the previous, previous person also, Renu, was asking about it, you know. While all the actions are there to see that, you know, the situation improves, we have taken several actions just to narrate, you know, not only talking to the existing manufacturers, but also, you know, looking at an alternative suppliers. At the same time, we are also looking at, you know, slightly modifying the design of our products so that, you know, the existing available chips can do that. It's not that all the chips are not available, you know. There are, if you look at, give example, we need thousands of components to make one particular relay, which is a very heart of the power system, right? In that it goes hundreds of components, chips required in that. We may be, you know, getting 80%, 90% of that, but in the last 10%, 15%, you know, we're having a problems. That's the reason all the actions are there. We see definitely signs of improvement. Okay? Earlier the lead time was six to 12 months and also not guaranteed that, you know, those lead times that we are able to get those things. Today the lead times are becoming slightly better, I would say. We are having a direct contact with not only our suppliers, but also the end chip manufacturers as well in that. At the global level, we are taking all the actions to see that, you know, whatever, we plan, On top of that, we are placing advance orders at least one year ahead of the curve. All these things, in our view, should help us to normalize in couple of quarters, you know, progressively. Thank you. The next question is from the line of Varun Basrur from Julius Baer. Please go ahead. Good evening, sir. Am I audible? Yes, Varun. Very good evening. Yeah. Yeah, thanks. You know, first thing is, has there been any penalty that's been imposed for short delivery or, you know, for short execution? I don't see anything in that CBT bridge on the slide 11. [crosstalk] cost- If you're talking about the LDs, huh? Yes. Any penalty or any LD, liquidated damage, anything that has been imposed in the current quarter? No. Not any of the LDs are not there. As you know, we have been very proactive with our customers, engaging with them, ensuring that, you know, they understand the situation. We are notifying them well in advance. We are very close to them to see that, you know, we find a workaround solution wherever, you know, customers are urgently commissioning something like that. You know, taking their existing installations to do that. All those actions are enabling us to be close to the customers and not to levy any penalties at this point in time. This is a force majeure, you know. This is a force majeure. It's not of a delay of any organization or something like that. Customers do recognize, w e have notified all the customers saying that this is a force majeure, and they need to realize and recognize as per the conditions of the contract. Okay, thanks for that. Second question is, if I see the cost, the interest position, it has also increased, you know, whether it's year-over-year or quarter-over-quarter. I'm assuming that part of this is higher inventory. Has there been any other increase in either working capital or debt? Can you say what is the net debt positions? Yeah. Ajay? Yeah. The, the increase in the interest expenses is primarily on these bank loans, you know, that we have taken during the particular quarter. As you know, the interest rates now, it has increased. Right now, it is hovering around 7% per se. That is one of the major, you know, reason where we see there is increase in the interest rates. Other than that, I think, it's more or less streamlined. The debt level. The debt level, if you see the currency, the debt level of our company has come down. Last quarter, we had closed at INR 315 crore, now we are at INR 275 crore. That way it has come down. During the quarter, because of the movement of the working capital requirement, that is what is basically, there is increase in the interest expense. Sir, this, INR 315 crore is net debt or it is gross debt? Is basically the net. If you talk about the net, it's INR 150 crore is the balance. If you're talking about net debt, INR 150 crore is the net balance we are having. We are having a balance of INR 150 crore and our debt is around INR 275 crore. You can say the net is around, hovering around INR 150 crore. Okay. Thank you. Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead. Hi, sir. Congratulations on a decent quarter. My first question is on the railways segment. Besides, beyond this traditional railway segment, the new segment which is coming up in 9,000 and 12,000 HP and the Vande Bharat. How big a market it opens for us, if we can quantify in terms of prospects there, and what will be the products and services which you will be bringing in? Yes. I think if we are talking about around five projects of recently, the Indian Railways have announced 8,000 horsepower, 12,000 horsepowers, Vande Bharat EMU train sets. All put together, our accessible market is anywhere between INR 4,000 crore-INR 4,500 crore. What we are supplying basically in this is we're talking about a loco transformer, and that's our major play in that. This is about. Okay. Out of the INR 100,000 crore of order which is expected, about INR 4,500 crore to INR 5,000 crore will be our addressable market, right? Yeah. I'm not sure about INR 1 lakh crore. I'm talking about the five projects, which basically includes 9,000 horsepower, 10,000, 12,000 horsepower, EMU trains, et cetera. This does not include high speed. What I told you does not include high speed rail, does not include metro stations, does not include, you know, cross-country, yeah, those kind of projects in that. This will get finalized in the next one year, sir? Is it? This is progressively, I think, the OEMs are bidding for it. It'll get finalized in the next one year or so. Will you be providing the support bid to the OEMs? You commit the support bid or once they get the tender and then they'll call directly the OEMs will award it to you on a competitive basis? No, we are, as we speak, we are providing our offers to the OEMs because they need to take our offer as part of the design parameters. Okay. Recently Siemens went, are we part of the Siemens win? Like, Siemens got this 9,000 HP. Have we given any support bid to them? We don't comment on a specific project. You know, for all the OEMs, we have been actively in discussion. Okay. Great, sir. My second question on this Kudus-Mumbai Corridor project. Any update on the execution? Where are we? I think last time you were on the design stage. When do we see the revenue start kicking in? We can get some sense on that one. As I told you, these are the large projects. normally the deliveries are in the range of 40-45 months. The first 15 months or so, it will be, you know, used for the design and doing the studies, et cetera, power system studies, and then lot of approvals, engineering and simulations, et cetera, will take place. Then, you know, the construction will start now soon. Thereafter, you know, we see that, you know, by end of middle of next financial year is what we start seeing the revenues kicking in. Thank you. A reminder to our participants, please press star and one to ask a question. Next question is from the line of Venkatesh Subramanian from LogicTree Investment Advisors. Please go ahead. Good evening, sir. My question is about the next three to five years. [crosstalk] ... your handset, please? Sure. Sorry? My question is, in terms of the opportunities, if I go run through the presentation and when we look at what you kinda emphasize on in terms of 2030 vision of India renewable energy. Broadly, if I take a five year view on Hitachi Energy, what is the kind of broad growth rate that we can look at? Some sort of a guidance. How much of that would be service revenues as a percentage? I lost you in between, Venkatesh. Yeah. You know, you were breaking it. My question is, I broadly understand the vision of where Hitachi Energy India is going over the next 10 years, sir. It's a decadal long call. In which if I split it into five years and five years, over the next five years, what kind of growth in terms of top line can we expect approximately over the next 5-year period? What percentage of that would be service revenues, sir? I think, Venkatesh, very good question. Let me just put it, instead of top line, let me just decode your questions in a twofold. One is at orders. If you really look at our orders, what we are talking about, the market is growing at x%. We said we'll grow half in the market. This has been our strategy. If you really look at our nine Months cumulatively orders, we have been at least more than 100%. More than 100%, we are growing on the orders. You know we are in a long cycle of converting orders into the revenue. Revenues will follow after some time, right, in that. That's exactly one thing. Our strategy on the securing the order pipeline is we want to grow faster than the market. If the market is growing X, we want to grow higher than X. That has been consistently we are demonstrating for last several quarters in that. So that's number one. What are the other growth areas? One, you talked of the service, we also said exports. Export is one quarter of our orders will come from the export. Which is also orders are, we are able to demonstrate that, almost in the range of 20%- 25% orders for each quarter we are getting from the exports. In the couple of quarters down, which is also reflected in our revenue mix on that. The third one is the service. We also said in one of the calls that service order potential what we have is a INR 2,000 crore in that. Right now we have a high single digit as part of our service. Our plan is to take it to the double digit over a period of time. This is how the broad growth strategy, which is a broad-based and taking care of our both domestic market, international market, and our huge install base of service, which we would like to leverage in that. Thanks, I understand. I think, is it fair to assume that if the size of the opportunity is gonna be, fairly high over the next five to 10 years, our growth rate top line should broadly be in double digits somewhere? Sorry, again, I missed you. I lost you in between. No, I'm trying to figure out that if the market is growing at x%, so if we believe that the market is growing a double-digit growth rate over the next five to 10 years, we want to exceed that. That would be the right assumption, right? Absolutely. You are absolutely right. Okay, sir. Thank you. I'll come back. Thank you. Thank you. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead. Yeah, good evening, sir. Good evening. Congratulations on a very good set of order inflow. My first question is, you spoke about making strategic investments. What are the kind of investments you are making over the next three to four years to grow the business, and which products and which segment? The CapEx expenditure, if you can put a number to that over the next over the medium term. Yeah. Thank you. Thank you for your question. I think, we have been consistently saying that, you know, Hitachi Energy India is one of a key market, not only for the market, but also using our existing, you know, manufacturing base to not only cater to the domestic market, but also the export market and rest of the other things like that. This has been our consistent strategy. We are also living up to the strategy. If you really look at in the last three years, including COVID year, we continue to expand. We built up a new factory for power quality in a Greenfield factory in power quality in Bangalore, and we also set up a dry-type bushing factory in Baroda, and we expanded our feeder factories, and we continue to expand those kind of things. Today, more than 80% of our portfolio, global portfolio, we manufacture here local. The reason for that is that we want to be competitive here, we want to localize the products here, and we want to increase our skill set, not only for the domestic market, but increase the market. Over the last three years on average, you know, the last three years we spent around close to INR 300 crore in the CapEx, and we believe that will continue to be there in the coming quarters. We are looking at expanding in our traction transformer facilities to cater to the new demand coming out of that. Those things will be as part of our strategy going forward. We continue to expand the new growth opportunities arising out of the transmission system DC, et cetera. Yes, sir. Second question on slide number six, you are talking of 40% increase in production. Is that pertaining to electronic supply? Which one? Which slide you are talking about? Slide number six, 40% increase in production. What does this signify? Slide number six, I'm not sure. Semiconductor. Semiconductor, right? Yeah. Yeah. Understood. The last question, sir. Do you see inter-state- No, on the slide number six, just want to clarify that 2023 sees a more than 40% increase in the production of semiconductor, not our production. It is what we are talking about is the industry there. Understood. Semiconductor. How we are going to come out of this is we also got the feedback from the industry that they're also increasing the production of that particular areas. Understood. Yes. Sir, last question, sir. Of course, we have spoke about interstate transmission, the CapEx going up to INR 2.4 trillion crore. Do you see intrastate transmission picking up? What are the kind of offerings, we have in the segment? Is that offering different from the interstate CapEx? Yeah. We, we have, yeah, absolutely. This is very important and this is our core of it. Interstate transmission things includes HVDC, includes FACTS, includes STATCOMs, and includes, you know, 760 KV transformer, includes, you know, 760 KV transformers and reactors, 76 KV AC transmission. All these things is part of our offerings over there. What is intrastate, sir? Intrastate CapEx? Sorry. Intrastate. Intrastate. Within the state CapEx, intrastate CapEx. Within the state, as you know, some states are going up for the expansion of, 400 KV substations, 200 KV substations. That is also part of that. The like HVDC projects, what you are talking about, that is primarily for, you know, ISDS. Thank you. The next question is from the line of Priyank Chheda from Vallum Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. My question is regarding the transmission project of Leh Ladakh. Is at what stage and in case Hitachi goes for it, what can be the opportunity for the Hitachi? That's first question, sir. Yeah. Thank you for a very interesting question. In fact, I was expecting this question. As you have rightly said, this is a very important thing, and if you have gone through the recent budget announcement. The budget has provided INR 1,300 crore grant for this particular project. Okay, this was actually the whole thing was waiting for this particular thing. We believe that this will help us to, you know, accelerate this project for both HVDC and all of the things. It's quite a big opportunities for us. Right now, we are working on this to look at, you know, various things including, you know, manufacturing, those kind of things. It's quite a big project. Sir, the bids are out for this project and... Not yet. Bids are basically there's a consultancy bids have been asked for it, which we have submitted. The main bids in our view is that now that budget has given the grant, and after that it will accelerate now. You mean that this project should be fructified in the current year? Coming year. Coming year. Yeah. Yeah. So on overall HVDC order pipeline, if you can brief us on that, because we had envisaged of winning at least one HVDC project every year. How do you see this adding up? Yeah. Absolutely. We have been talking about previously that, you know, if you really look at previously, India used to have 1 HVDC project for every five or six years. We said that, you know, we envisage one year per year, which is in line with our envisaging. With line with our thought process is coming out. We see that one project is already awarded last year. In addition to the Leh Ladakh project, we also see a project of Khavda is coming up, and then another project is also coming very clearly. Three projects as we speak is in a very active stage of, a bout to come for a bidding, yeah. Okay. Okay. Last question. In the last call you had alluded about the royalties fees coming down from the current levels of around 3.5%. If you can help us, what, where are we in that process, and what can be the percentage royalty, that we should be paying over the coming years? I'm afraid I don't think we have said that it will be coming down. Let me just give you an overview and then Ajay will talk about the percentage. You know, as you know, the whole ecosystem of energy transition is really shaping in a very big way. That's exactly the reason why we organized this analyst meet in our factory on 3rd of March. If you could take some time to attend it, you'll understand how this is transforming in a big way. This needs lot of investments in the technology standpoint. This needs lot of, you know, investment in R&D, innovation, et cetera, to bring those technology latest up-to-date in that. It needs investment, and we believe that by paying the royalty, we are accessible to this latest state-of-the-art technology to be able to support our customers in India in there. Over to you, Ajay, on the percentages. Yeah. On the percentage side, currently if you see our royalty expenses has been hovering between a range of 3.5%- 4%. As we speak today, currently we are at that level of 3.5%. Thank you. The next question is from the line of Anish Jobalia from Girik Capital. Please go ahead. Hi, sir. Good evening. Thanks for the opportunity- Anish, your voice is breaking. May I request you use the handset? Yeah. Am I audible now? Slightly better. Yeah. Thanks for the opportunity. Good evening, and thanks for the opportunity to speak to you. Sir, my question is, you know, you mentioned about INR 100 crore of revenue, you know... Anish, your voice is not very clear. Please use the handset if possible. Yeah. Yeah. Is it better now? Hello? Sir, go ahead. Go ahead. My question is, sir, we spoke about INR 100 crore of revenue which we are not able to book in this quarter. You know, if I were to add that INR 100 odd crore, we are still flat versus the last quarter, which is Q2 FY2023, as well as Q3 FY2022. What I'm understanding is that typically... We're not able to hear you properly. Anish. Yeah. Anish, please use the handset. Yeah. No, I understand if 100 crore. I haven't understand you what are you saying, sir? Yeah. Am I audible now better? Now it's better. Okay. My question, sir, is that you mentioned about INR 100 crore of revenues being lost in this quarter. Yeah. If I were to add that back, you know, to Q3 numbers, we are still flat versus the last quarter, which is Q2 of FY2023, as well as, Q3 FY2022. My understanding and as I see from the numbers, like typically, you know, in H2 our execution is better than H1. Yeah. How should we think about, you know, what could be the other factors which have led to the revenue being, you know, much more benign than as compared to the order inflow growth that we have already seen in this first nine months? Yeah. Yeah. I think, I think Ajay will also add to this. As you can see, if you add under close, we would have been INR 1,141 crore, which compared to the, you know, we are in the range of, you know, 4%-5% growth. Okay? But that's not the only one, you know. There are also other constraints, et cetera. We have also very robust, you know, revenue recognition policies, especially on our imported items. All those things have contributed, you know, a thing in that. Project specific, for example, in those kind of things. All these things, you know, view in that. As you say, if you really take a nine months, nine months to nine months, and then you can see our revenue, we have a growth of 13%. Okay? It is definitely not at the same level of order growth, but as I told you previously, so there is always a lag from our conversioning order into the revenue. That is a couple of quarters over there in that. Okay. My second question, sir, is that, you know, we have been continuously now seeing employee benefit expense of INR 100 odd crore, there is other expenses of INR 230 odd crore. Is it possible for you to define, I mean, quantify how much of this, say, INR 330 crore is fixed in nature and how much would be variable? Like, I'm not talking of the other charges which are subcontract and the cost of raw material because they are obviously variable. Within this it will be great if you could quantify between the fixed and the variable expenses. Here, basically, as you rightly put, employees cost, mostly this is in fixed in nature, that we can say. Other than that, I will say royalty and the group charges, that is more fixed in nature. Only variable portion will be basically the freight and the power and fuel that is totally dependent on the volume that we do. To some extent now that we have increased in the traveling and services from a third party is one that is basically there. On top of it, you know, the exchange rate fluctuations also is which I will say a variable. Other than that, more or less I think it is consistent. Okay, sir. If I can just squeeze in one last question. I think we are looking to develop, you know, we pay some infrastructure fees, IT infrastructure fees to our, you know, ex-parent, which is ABB India. I think we are developing our own, you know, technology, and reduce our dependence on ABB India for, you know, and not pay that particular IT fee. Where are we in the journey for, you know, that particular expenses actually trickling down to our profitability levels? Yeah, let me take this question. Here on this IT part, yes, we are running a transformation project that is currently running, and we are working on the S/4HANA, we call it, upgradation of the SAP system. Right now we are in the mid of this journey. For some of the IT, you know, services which are taking from ABB, we are having this PSA, we call it, transactional services agreement. Which we can think, you know, that it will continue till this year end. Our target was to close this as early as possible, maybe in this particular year only we are trying. 2023 should be the year where we should come out of this, as we are progressively building our own infrastructure and we are quite ahead in that particular direction. Thank you. Maybe Operator, you take one last question. Sure, sir. Thank you. The next question is from the line of Renu Bhardwaj from IIFL Securities. Please go ahead. Yeah. Hi. Thanks, sir for the opportunity. Just wanted your perspective on developments, on the penetration of the industrial automation solutions and that we were doing through Lumada platform. Any developments or numbers to share in terms of penetration with the existing installed base that we have in this segment of the business? Yeah. Renu, thank you for the question. As you know, ever since we become part of the Hitachi, we are looking at synergies between Hitachi Energy and Hitachi. You know that, you know, I think on the Lumada platforms, Lumada one of the leading IoT platforms. We started offering our, you know, enterprise software solutions on the Lumada platforms in that. We also have been talking about, we are doing a lot of pilots in the major industrial customers as we speak. We are, you know, getting a what you call, you know, couple of wins on every quarter. As I talked about in the, my highlights, you can see some of them we got it. At this point of time, as we speak, our digital offerings are, you know, high single-digit at this point in time. Okay, it is taken off, even though it's a low base. It's a single-digit offerings at that. We see a lot of opportunities, lot of synergies with the various customers. Several pilots we are running with them, co-creating the various opportunities in that. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. N. Venu for closing comments. Thank you and over to you, sir. Thank you, Aman. Ladies and gentlemen, thank you for your keen interest and taking your time from your busy schedule and attending this call and asking those questions. As I told you that, you know, we are really looking forward to host you on 3rd March in our state-of-the-art manufacturing facility to take you through. Primarily, this call is to take you through how this, you know, power systems and the various elements of the systems are evolving it, and how Hitachi Energy is, you know, getting ready in this big transition phase in that, especially on the technology standpoint of that. With that, thank you and take care and have a nice weekend. Thank you very much. Ladies and gentlemen, on behalf of Hitachi Energy India Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.