Ladies and gentlemen, good day, and welcome to Sterling and Wilson Renewable Energy Limited Q3 FY24 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on beliefs, opinions, and expectation of company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any 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. Sandeep Thomas Mathew, Head Investor Relations, for his opening comments. Thank you, and over to you, sir. Yeah, good afternoon, everyone. Welcome to our Q3 FY24 earnings call. Along with me, I have Mr. Amit Jain, our Global CEO, Mr. Bahadur Dastoor, our CFO, and SGA, IR advisors. We will start the call with the key operational highlights for the quarter and the industry outlook by Mr. Amit, followed by the financial highlights by Mr. Bahadur, post which we will open up for Q&A. Thank you, and over to you. Thanks, Sandeep, and a warm welcome to all the participants on this call. I would like to give a quick update on our business operations and outlook on the solar industry, and I will begin with our order book. The company announced new orders and LOIs totaling approximately INR 2,421 crore in Q3 FY 2024, aided by continued ordering momentum in India, and also the first large international EPC order in nearly three years. Coupled with our order inflow of INR 3,106 crore announced in first half, our total order inflow, including LOIs in first three quarters of 2024, FY 2024, has now touched approximately INR 5,527 crore. We are very excited to announce our first large international BOS order for a 221 MW DC project in Spain. Through this project, SWREL has achieved a key breakthrough in the European solar market. The scope of work includes design, engineering, supply, excluding PV modules and transformers, construction, erection, testing, and commissioning. The total contract value, including three years' operation and maintenance, is approximately EUR 112 million. The order was booked from Eni Plenitude, which is one of the major European utility giants with fast growing presence in the renewable segment. In the domestic market, we achieved another great breakthrough by winning a 220 MW DC floating solar project, which also happens to be one of the single largest floating solar blocks awarded to date in the country. The scope of the project includes module and EPC work, and the project is located in the state of Chhattisgarh. We have also been able to leverage the strength of our ongoing relationship by bagging another project from Serentica India subsidiary for a 520 MW DC project in Rajasthan. This also happens to be one of the largest projects of our customers in India. We are happy to be able to partner and provide customized solutions for our customers in their large projects being executed across the country. With these new orders, our unexecuted order book as on 31st December 2023, has increased to approximately INR 8,550 crore, with nearly 97% of the order book comprising domestic EPC projects, which are executable over the next 12-18 months. With the inclusion of the Nigeria MoU that was announced in September 2022, our order pipeline and anticipated to enhance significantly. We are working with various stakeholders to finalize the DE and EPC agreement for the project. In terms of outlook, our domestic order pipeline continues to grow very robustly, and we are expecting almost 40 GW of bid pipeline to be bid out in the domestic market alone by FY 2025, with a major chunk anticipated to come from CFAs. The international market is beginning to gather a lot of steam, with the EPC projects being bid across geographies as developers look to tap into significantly lower module prices environment. In the Middle East alone, we are seeing several gigawatt-scale projects taking shape across Saudi Arabia, UAE, Oman, et cetera, which should be bid out in next 12 months. We are hopeful of tapping into big opportunity of mega projects, subject to them matching our risk profile. In the international markets, while we have been adopting a more cautious approach with new orders, we are beginning to make headway with clients, as the first order win in Europe shows. Our business development teams are working very hard and remain focused to deliver the strong growth trajectory we are targeting in this year. As stated in earlier calls, we reiterate that lumpiness in order inflow is to be expected with EPC company like ours, and timeline for achieving project closure could vary depending on a host of factors, including finalization of contractual terms, financial closure, et cetera. Now, moving to industry outlook, we have witnessed a significant decline in the price of module in last 12 months, as per industry reports, with module price now falling to less than $0.13 per watt peak. With significant supply pressure due to emergence of new production capacities in China, industry analysts continue to anticipate module prices to remain depressed for some time. As stated in earlier calls this year, the time remains right for more projects to come up on stream, aided by lower LCOE, which should translate into more work for EPC players like us. With a strong balance sheet that has been achieved this quarter, we remain well positioned and are hopeful of achieving our targets set out earlier this year. With this, I will ask Bahadur to take you through the consolidated financial highlights. Thank you very much. Thank you, Amit. I will start with an update on the key quarterly results. Revenue from operations for the quarter ended September was INR 583 crore. Revenue has improved significantly on a year-on-year basis, however, was lower sequentially due to the execution challenges we faced from tight working capital conditions seen during the course of the third quarter. The situation operationally has since improved, aided by three key factors: First, the QIP proceeds of approximately INR 1,500 crore in December. Second, the promoter indemnity inflows in end of November, and third, proceeds from settlement with a vendor, which was received in middle of December. The company has reported a consolidated gross margin of 11.2% in the third quarter, FY 2024. Domestic EPC margins in the third quarter were approximately 9.5% and stand at about 10.5% for nine months, FY 2024. Our unexecuted order book continues to comprise approximately 87% of domestic EPC business. International EPC margins improved in third quarter FY 2024, primarily due to exchange gains. O&M segment margins were approximately 15% for this quarter due to certain one-off expenditures incurred post-monsoon. The company reported a second consecutive quarter of positive consolidated EBITDA in the third quarter, FY 2024. PAT loss during the quarter was INR 62 crore. Now, coming to the balance sheet. As on December 31st, we had cash and cash equivalents of approximately INR 550 crores, and our net debt stood at INR 27 crores and our net worth at INR 982 crore. In fact, if we exclude suppliers' credit of approximately INR 49 crore, then we had a positive net cash balance. We have repaid a large portion of our debt, including all the overdue debt, from the QIP proceeds in December itself, and have earmarked deposits for upcoming debt payments. The total repayments as at date, including those with earmarked fixed deposits, is about INR 1,800 crore. Our working capital situation, which had tightened in Q3, has now started to improve, and our projects continue to operate in a negative working capital cycle. With this, we can now open the floor to questions and answers. Thank you very much. We will now begin question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. Should we start the Q&A? Yes, we can. First question is from the line of Dhawal Doshi from Dymon Asia. Please go ahead, sir. Hey, hi, sir. So just a few clarification, I, I missed the initial comments. You mentioned 40 GW of bid pipeline in the domestic, and in the international, what was the figure? International, let's say it's 15 GWp of pipeline there itself in Middle East and Africa for this year, and we have roughly eight GWp of pipeline in other geographies. But, as we have stated in all our investor calls and previous that we are being very cautious with respect to taking international projects. So we are evaluating risks and margin profile before bidding and concluding any project. Though pipeline continues to remain very, very robust, and which we see the pipeline, there is sudden spurt of projects and module prices coming down, we are hoping that in coming quarters and next fiscal year, we will be addressing, we'll be getting, receiving far more number of bids, which match our risk profile and margin profile, and we'll be able to bid out far more higher numbers than we have done this year. Okay. The order inflow number for this quarter, you said was INR 2,700 crores, right? Did I hear you correctly? This quarter is INR 2,421 crore is the order number. For the next quarter, there is a significant big bid pipeline of six GW, as we estimated that orders remains, order booking remains lumpy based on various quarters. Next quarter itself is a huge bid pipeline, which some of the tenders that have been already submitted, which we are awaiting for reverse auction, and lot of bids are yet to be submitted this quarter, which quite a few we are expecting them to conclude within this quarter. Okay, so Q4 could actually be quite a sizable number. And, It could be pretty sizable in terms of bidding, if the decision happen timely. So Q4 is, can be a very, very good quarter. Okay. Sir, in terms of the timelines for the Nigeria order, I, I'm assuming, sir, six GW is excluding the Nigeria project? Yeah. Uh. So all the numbers are excluding Nigeria and the Reliance project. These are pure play, like all other our third party clients, PSU and IT, private IPP. So with respect to Nigeria project, we are expecting it to get concluded soon. Discussions are at very high level, are still going on, and we expect to get it concluded soon. So do we expect something in this quarter itself, or you think this could further get delayed? We expect that to happen within this quarter. We expect that to happen, but we are again having the ministerial level discussion there. So we'll be able to update you after those discussions. So, what are the timelines we are looking at, but we are expecting it to happen very soon. What about Reliance, sir? When do you think the order inflows would start and any? So land allocation is happening now. The land allocation approval happened, now the land allocation process is taking place. As Reliance has stated, they have very ambitious plan, and we should see the rollout on ground in coming months. Okay. But this year's orders seems difficult. Probably Q1 is what? No, we are not saying that looks difficult, but I don't want to put definite timeline there. But we may—we are expecting orders this month, but or this quarter, but I'm not putting any timeline to it. But I'm saying in coming months we can see a rollout on the ground. Okay. Thank you, sir. I have more questions. I'll fall back in the queue. Thank you. Thank you. Next question is from the line of Rahul Kothari from Grit Equities. Please go ahead. Yeah, hi. Hi, sir, this is Rahul Kothari. Can you help us understand more on individually on the sectors like wind, where lots of traction is appearing, and also into the hybrid and battery energy storage? How Sterling is looking into it? So we are, as you know, we are already working on some hybrid projects involving battery. So in various geographies, we are bidding for those projects and in-house capability exist for standalone battery projects or battery projects coupled with solar. So we are, like, fully capable of delivering those projects. So that capability exists within the organization. Now, as we have stated in our earlier investor calls, we are actively considering, we are looking at wind, what formats we can participate in wind BOS projects. So still strategic discussions are going on, how to address that particular segment of market, both with respect to EPC as well as O&M. Okay. Sir, what about green hydrogen? Green hydrogen, see, major projects are yet to take off the ground. Major action, whatever is happening right now is electrolyzer manufacturing space. So whenever the substantial projects start hitting the market, so we will address that accordingly. Okay. Sir, just one thing more, regarding on the Australia front. Can we expect some traction in the Australia, since we are one of the largest player over there as well? Yes, yes. So there, there we are, like, already received a letter for early works in one of the projects. So we are actively engaged with some of the clients, and we, we can expect traction with respect to standalone battery projects and, the, pure solar projects both in Australia and New Zealand markets. Okay, okay. That's it. I'll come back in the future. Thank you. Thank you. Thank you. Next question is from the line of Aejas Lakhani from Unifi Capital Private Ltd. Please go ahead. Yeah, hi, team. Congratulations on the results! Two questions here, point number one is in the new orders that you have taken, could you guide what is the gross margin range that you have taken in domestic orders? And, for the unexecuted order book, that you have, what is the gross margin range that we are thinking about? That's question one. So, for the gross margins that we have taken in this quarter, it continues to fall within our, our domestic range of between 9%-10%. In the case of the international project, it is, this project is a slightly higher one. It is, lower double digits. As far as our unexecuted order value is concerned, most of it being from the domestic front, continues to remain in that same range, which I have said earlier. Got it. Point number two is that now, since the bulk of our debt is either repaid or is in the process of getting repaid, will the reduction in interest costs be visible from the fourth quarter, or will the full effects be visible in the first quarter? We had roughly INR 2,178 crores of debt as on September end. By end of December, we had paid out INR 1,600 crores out of that, and we had prepaid another INR 125 crores in January. ... Which means that our debt is roughly INR 450 crore, of which 75 is protected by fixed deposits earmarked for that. So we have a net debt of about INR 377 crore, which is a substantial reduction as compared to the INR 2,178 crore. Since all of this has already been accomplished by end December, early January, we will definitely be seeing the effects of a reduction of interest in this quarter. Perfect. Could you also talk about, you know, the two events of last quarter, which we had seen in your notes to accounts on the, you know, the customer with which we had a surety bond assurance, and, you know, what is the situation on that? Because we could enforce that surety bond, but I, my understanding is it was delayed for some reason. So could you comment about that issue specifically? So in that regard, litigation is already in process. To give you a brief, so both of with that particular subcontractor, where the surety bond was enforced, so already. There are two separate legal matters going on. One against the subcontractor which defaulted, and second with the surety company. So both of the, there was no delay from our end. It was a delay from the end of the surety company, the company which issued the bond, so and we are in litigation with that. Some of the favorable decisions have come, and it is proceeding in the courts in USA, and there is an arbitration which is separately proceeding, for which the arbitration hearing will start in Q3 FY 2025. Okay. Okay. The other matter was where, you know, two customers had invoked bank guarantees. Yeah. I mean, as mentioned- So that was our customer in USA. So it was one customer for which we were executing two projects, and there also matter is proceeding in the local courts. One is in, that is Washington and Oregon. So we have filed liens on the project and filed separate complaints in the local court, and both the matters are under litigation. Okay. So basically, any resolution from that will help in incremental cash flow to the company in FY 2025. Is that understanding correct? Absolutely, because absolutely, we have been cashed out on all those, accounts. So any, any gain from those, resolution of these issues will further add to cash flow of the company. Perfect. And, just, if you could speak, you know, you know, with regards to the O&M business and how that is scaling up. You know, what was the one-off that took place in because we understood that margins are 25%-30%. So could you call out what was that one-off, and how do you see the O&M trends? The one-offs were essentially, a high cost of cleaning, grass cutting, et cetera, post-monsoon, which always happens. Plus, there were other CIEG and, other one-off expenses, which had to be incurred as part of the compliance, which went to depress the margin. If those one-offs were excluded, the margins would have been upwards of 20%. And that is the reason for this suppression in this particular quarter. Got it. Could you just call out how the India market is evolving today, if there is any qualitative aspect that you can call out of how the market is shaping up, what speed it is picking up? Anything on that front. Excuse me. Could you repeat your question, please? Yeah, I just wanted to understand: How is the India domestic market shaping up? Is there any qualitative comments you have on the shape-up of the India market? Absolutely. So Indian market is, I think, there is an extremely robust growth, and we see, like this year, we have addressable market of 15 GW. With the projects which come and which we are in our range, which we are going to address and bid for, that will increase from 15 GW in FY 2024 to 24 GW in FY 2025. So the total bid pipeline we expect in next five quarters is more than 40 GW. So market is going to be extremely exciting and our addressable market size is also increasing substantially. So it's 15-24, so there is a huge growth of 60%, which is jump in addressable market as well. So we are very excited about Indian market going forward. Got it. And anything on, you know, the pledge for the principal shareholders coming down? Is there any scope for that in this year? The pledge by the shareholders, which is essentially Shapoorji Pallonji, is for loans which they have taken, against which those shares have been pledged. We have no information as to whether those pledges will get reduced, because those are long-term loans. While the expectation is they will continue to remain pledged, we do not have any definitive answer on this question. Noted. Thanks for that. Thank you. Next question is from the line of Darshil Jhaveri from Crown Capital. Please go ahead. Hi, good evening. So hope I'm audible. Yes, you are audible. Hi. Hi, sir. Thank you so much for taking my question. And, you know, it was just a wonderful commentary. So from what I could understand, the next five quarters we are going to be a lot better position in terms of our undertaking. So just wanted to know, next year you would be able to break even, because you would also have substantially reduced our interest cost and you would be on track, right? So I will start off by saying that things that are being planned right now, we do believe that this quarter itself will be a profitable one. Once this quarter is a profitable one, I think it is fair to say what will happen in the next financial year. Oh, okay. Perfect. So that's great to hear, sir. And so, so our current, you know, unexecuted pipeline of around INR 8,700 crore, that would—what would be the timeline to execute that, sir? That will be next 12-18 months, the entire this order book, plus whatever we book this quarter. That will be executed in next 12-18 months. Oh, oh, okay. So that, so that's great to hear. So, just wanted to ask a question. Sir, in terms of our revenue recognition, we would be recognizing revenue as we complete the project or in terms of percentage completion, sir? That's percentage completion only. So the standard way to recognize revenue for an EPC contract is percentage completion as the project progresses. So, so we would be able to see uptick in terms of revenue as the quarters go by, sir, if that would be an... That and what kind, what kind of OPM margins could we expect? Because if our gross margins are around 10%, what kind of operating profits, you know, margins could we, you know, expect going forward? You mean EBITDA? Yeah, EBITDA. So it's a function of turnover. I'll just give you an example. So right now, our overheads, which were about INR 360 crore, are expected to come down significantly this year. Let's say it is somewhere between INR 300 crore-INR 320 crore. If you have, in the next year, a INR 10,000 crore top line, just giving an example, you will have a 10% gross margin, but only 3% overhead. So that will give you 7% EBITDA. So our overheads don't increase in line with the revenue increase, and therefore, as revenue increases in the next year, as it is expected to, we will be seeing a lot of operating leverage, moving gross margin to EBITDA. Oh, okay. Great, great. So that's, great to know, sir. I think that answers most of my questions, sir. So So all the best, sir. Thank you so much. Thank you. Next question is from the line of Danesh Mistry from Investor First Advisors. Please go ahead. Hello, and thank you for taking the time out to talk to us, and congratulations on a successful QIP. I just had one question, which is that, you know, as Bahadur, as you mentioned, clearly, you know, we are net worth positive now with roughly INR 900 crore of shareholder fund size. You know, our balance sheet is far lighter than maybe what it was even in March 2019. So, you know, in terms of our balance sheet now, how much revenue do you think we can do on a simple pro rata basis? Because if I cycle back to March 2019, we've done about INR 8,000 crore of top line with about 8% margin. Back then, the borrowing was far higher than what it is today. Just trying to understand here, basis our balance sheet. No guidance expected, of course, but in terms of a balance sheet, how much do you think we can do on an annual basis in terms of revenues? That's it from my end. The essential part is, what kind of non-fund limits would you have to execute the projects that you want to do? Mm-hmm. After a lot of pressure, we are seeing normalcy returning on that front- Mm. and the company continues to work to enhance. Mm. - its non-fund limits. So with this present balance sheet and the non-fund limits that we have, it's safe to say what we have on hand plus some, is what we can easily execute. Net worth is not really a criterion as far as getting jobs are concerned- Mm. except for bankability purposes outside India. Yeah. Mm. Mm. In India, our net worth is sufficient to meet all the project requirements and prerequisites. Amit can add if I have missed anything, but it is not the net worth, but the requirement of limits, which is now seeing a massive improvement compared to what we had in the last quarter. Got it. And, and just to understand... Sorry. Sorry, Amit, please go on. Sorry. No, no, I think Bahadur has covered whatever had to be covered. Oh. - for your question. And also in terms of, so right now we are in the midst of paying back our loans, but do we plan to also, you know, because take some working capital financing, et cetera, or just limit it to non-fund based even in the future? The company does have sanctioned working capital limits, which are presently nil. Mm. It will all depend on what is the drawing power availability and whether the company needs to take anything. Mm. See, right now we have paid off all our loans- Correct. - or have fixed deposits such that the earliest loan repayment will start only in December 2024. Mm. And that too in installments, which will spread over almost two years. Mm. There is no requirement that we see to borrow, because we are negative working capital. All our existing projects are cash flow positive. Mm-hmm. We do not foresee any need to do any kind of incremental borrowing at this stage. However, there is working capital sanction limits available. If drawing power permits and there is a need, which we don't foresee, though, there is a possibility we can borrow. Okay. All right, all right. But will it be to the extent or- There's no requirement to borrow at this stage. We do not foresee it happening. You do not foresee it. No, no. Got it. And last question from my end. You know, you've talked about loans due for the next 12 months have been paid off or, funds earmarked against them... So you mentioned that we paid off roughly INR 1,400 crore, if I'm not mistaken, on the call. Out of that, how—Sorry, INR 1,800 crore. Yeah, except till January, I think. So, so for the next year, and I'm assuming, next 12 months, how much is left, to be repaid to just, to clear it all out? We have, in terms of term debt, we have INR 328 crore of term debt. Okay. Which is required to be paid post November, December 2024. Okay. So December 2024, we would have something like INR 29 crore, then in the next quarter, we would have another fifty crores, and that means the entire next financial year, you don't have a number greater than INR 75 crore to be paid out in installments. Got it. So that's a tranched out payment over two years that you're talking about? Yes. INR 320 crore term loan. Yes. Okay, okay. This term loan was, again, some equipment we had bought or some. No, no, it was, it was an unsecured working capital term loan- Okay -which was taken. Got it. Got it. Great. Thank you so much, Madhu. Thank you, and wish you and Amit the very best of luck in the coming quarter. Thank you very much. Thank you. Thank you. Thank you. Thank you. Next question is from the line of Iqbal Khan from Nuvama. Please go ahead. Yeah. Yeah, hi, so congratulations for the very good set of numbers. Just one question I have, like you mentioned, that, you know, your order book execution timeline is 12-18 months. So is it possible for you to provide some kind of, you know, revenue guidance for, say, Q4, Q4 itself? I mean, the near-term guidance I have, I'm talking about. I think, for the nine months, you've already done around INR 1,700 crore of revenue, right? So, what kind of guidance would you like to provide, or is it possible for you to provide for Q4 near-term? FY25, we all see that, you know, with the steady order books, there is high possibility for you to turn around both at EBITDA and PAT. But can you guide us for the Q4 revenue guidance? I would not want to give a guidance as such, but all I can say is we will be catching up on whatever we lost in Q3. Okay. It should be the best quarter that we will have in the year. Oh, okay. Understood. Understood. Thank you so much. Thank you. The next question is from the line of Mr. V.P. Rajesh from Banyan Capital Advisors. Please go ahead. Hi, thanks for the opportunity, and congratulations on the successful QIP. Most of my questions have been answered, but just wanted to get clarification on a couple of things. So the true-up that you did in September 2023 with the promoters in terms of indemnification proceeds has all that money come in, or is something still outstanding? Everything has come in by the due date of it having to come in. Okay, wonderful. And, I know in the past you have given some guidance about what you expect in September 2024. So if you can just update on that front, that would be helpful. So in terms of indemnity, as things stand now, the company is still cash out somewhere between INR 850-INR 875 crores. Some of which might get crystallized in this coming September, and the balance may be in the September thereafter. If I were to hazard a guess, I would say somewhere around 400, max 450 crores is something that could crystallize by this September. But this is a very preliminary statement from my side, but that's, that's more or less what it would be. Got it. So, if this number holds- Sorry to interrupt. Then what I'm hearing is... Sorry, is it better now? No. Can you come a little closer? Yeah, I am very close to the phone now. Better, sir. Thank you. So my other question is, so what you, what I'm hearing is that given the debt position you've talked about, you'll be essentially a net cash company by, let's say, December quarter next year. Is that a fair way to think about this? So if I leave out my suppliers' credit, which is, you know, a recurring thing, you will see that we are already net cash in this quarter itself. It is only because we have a suppliers' credit balance of about INR 49 crore, that is why we became a net debt of about INR 27 crore. Otherwise, we were already net cash here itself. But if we get, if we get our indemnity monies, if we get our inflows from the projects, there is no reason why this loan should not be repaid. The first priority will obviously be to ensure that all project flows go to meet the requirements of the projects. If there is a surplus, which we believe is there in the long term, yes, we would definitely take care and become debt-free. Net debt-free, we are almost there. Understood. Then on the order book, you talked about INR 8,000 crore plus INR 8,500 crore, I think you said. My question is, are all the projects negative working capital, meaning you are not going to have to put any money upfront into any of these projects? Is that the way to understand it? All of these projects are negative working capital. They are all cash positive. Okay. So then you'll be generating a lot of free cash, next year, if that is the situation, right? I mean, is that sort of a logical conclusion here? Yes, your conclusion is correct. ... Okay. All right. And then on the Nigeria side, if you can just elaborate, because this has been stuck for last several quarters. So what exactly is the issue that is preventing the government to, you know, move forward over there with this project? So as we explained on the call, there is no issue which is, like, leaving the project. The power minister has himself tweeted about the project, which you all would have seen. So its project value is so high, and multiple ministries are involved, so we are just giving the final touches to the contract with the DE and EPC agreement, which is to be signed, and we expect it to get signed soon. So we are involved at the ministerial level, discussions are going on, and we expect it to be concluded soon. Great! Wonderful. Thank you, and all the best. Thank you. Next question is from the line of Mayank Chaturvedi from HSBC Mutual Fund. Please go ahead. Yeah, hi, thank you for the opportunity, sir. Just one question from my end. I joined the call a little late, so I missed your comments on the revenue execution. We, we are not able to hear you clearly. Please, please come closer to the mic. Hello, is this better? Yeah. Yeah. I think I joined the call a little late, so I probably missed your comments on the revenue execution for this quarter. So if you could maybe just re-elaborate. I think it was expected that the EPC, or the execution, will pick up from the third quarter, and the revenue was expected to be much higher. So any particular reason for revenue being lower than the earlier quarter? The revenue was lower than the earlier quarter, primarily because of the difficulties which we faced when there was a rating downgrade caused by missing of an installment of loan. That created a lot of flutter. Banks had clamped down on certain amount of limits, which made it difficult to meet the execution targets that we have. Having now done the QIP, paid off all the overdue debt, in fact paid off all debt such that you have nothing to pay till almost December of this year, we are seeing that there is a change. Discussions are on with banks to work out enhanced limits to meet the requirements of the revenue and cost for this quarter and the coming quarters. As I have mentioned, while we are not giving a guidance, we will be catching up on the revenue loss of the previous quarter in the current one, plus whatever we had anticipated to do in this current quarter. Okay. Oh, great. So I think this lower fund-based limits would have also affected your execution up until now in January, right? And that will pick up in the rest of the months, maybe. And that. Is that conclusion correct? Yes, there was a bit of stress in some of the projects, but it was being managed. However, we have utilized all the cash flows, not only to pay off debt, but even if there were any, vendors and subcontractors, which could have been paid out to, increase the pace of execution of the projects. Okay. Sure. So that's been solved for now. Thank you. Thank you. Next question is from the line of Rahul Jain from JM Financial PMS. Please go ahead. Yeah. Hi, sir. I am audible? Yes. little muted. Maybe if you could come a little closer, that would be helpful, Rahul. Now, this is fine? Perfect. Yeah. So, sir, thank you for the opportunity. I just wanted to understand that if not for the working capital challenges which we faced on the execution front in Q3, wanted to understand how much of the execution did we miss? If you can share some numbers on that side. Let's say, I'm giving a ballpark number, we would have achieved roughly 2/3 of what we would have wanted to achieve. Oh, okay. And sir, some bookkeeping question, which I had: So in the segmental result, what is the analytical expenditure versus off, if you can share some things on that side? There, on the first page, Rahul, it is your employee benefit expense, finance cost, depreciation, and other expenses. I think INR 253 crore. Essentially, the overheads plus interest and depreciation. Okay. This will significantly come down with interest expenses coming down. Okay. Yes. Yeah. Sir, thanks for the clarification. That's it from my side. And all the best. Thank you. Thank you. Next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead. Thank you, sir. Thanks for the opportunity. So the module prices in the international markets have fallen to $0.13-$0.14 per watt. Is it also what are the domestic prices for domestically sourced modules? So, domestic prices right now in the range of $0.20-$0.22, but with the more capacity additions happening in India, there will be a movement towards like to cover the bridge between international pricing and domestic pricing. So we have to see whether we expect that module prices in India also will be competitive in coming quarters. Understood. So, sir, basically 90% of our order book is domestic as so we have to source those modules domestically. Is that the case? Yeah, absolutely, for projects with modules, which is in India, we'll be sourcing modules from India. ... Okay. So and, because of the lower interest- Let me add to what Amit has said. As of right now, we have only two projects where there is modules. One is what we have won last with NTPC, and the other one is what we are the L1 for in a floating solar job. So what is the total order value for these two orders? Around 2,000 total order value will be close to INR 2,000 crore. INR 2,000 crore. Okay. And sir, regarding Nigeria orders, since the module prices have fallen internationally, should we expect that $1.5 billion order to reduce in size? Right now, the agreement is getting concluded, but we have no such indications from the client side. Okay. Just going back to your initial remarks, sir, you mentioned that Reliance is in the process of finalizing their plans. Can you just throw some light on that and quantify what kind of plans these are, and what is the quantum of orders? I would not like to... See, I would not like to indicate, because Reliance plans are in public domain. We expect the rollout to start in coming months, but I would not like to specifically state anything on behalf of Reliance. Okay. I will limit my statement to that. Okay. So any quantum of orders that you are expecting? The rollout is huge. Yeah, everybody is expecting the rollout. The plan is in public domain. The rollout is going to be huge. Investment plans are huge. Of course, the order rollout or the orders which we will receive will come in related to that. Okay. Just a final question: The other expenses have increased sequentially, so can we expect that purely because of QIP expenses? No, no, it's not because of QIP expenses. The other expenses were there in the region of between INR 25 crore-INR 30 crore. Sometimes there is a Forex gain element in that, sometimes there is a Forex loss element in that. There were certain reversals which we had to do in the previous quarter, and hence it is not completely comparable with the INR 8.42 crore in the previous quarter. The other expense trend will be anywhere between INR 25 crore-INR 30 crore per quarter. Okay, sir. Understood. Thank you, and all the best. Thank you. Next question is from the line of Mr. Hiren Ved from Alchemy Capital Management. Please go ahead. Hi, and thanks for taking my question and for stabilizing your operations this quarter. You know, you mentioned early on that you're being very careful about taking on international projects or bidding for international projects. You know, what is the minimum gross or EBITDA margin below which you will not take a project internationally? So I would say that our threshold is, earlier used to be between 8%-10%, and we are maintaining that, because the market became very, very competitive in Middle East, in between with the interest of Chinese players. So margin levels have dropped down, so you have seen that we have not picked up any project due to drop in margins. So we'll still consider that margins will remain minimum 8%-10% threshold, which we had indicated earlier, and the project which we have won in Europe is in double digits, that we have indicated. So we are trying to be in lower double digits with respect to international projects. Do you still see the same level of Chinese competition in Middle Eastern and other markets? So what we are witnessing in the Middle East market, that the project volume is going to triple, almost like this year we are expecting 10-15 GW, and like from this quarter till end of FY 2025, close to between 10-15, say, 15 GW of mega projects will be there. Chinese have not delivered to the expectation of many IPPs. Project delays have happened, so the big Indian EPC players are getting lot of traction from the IPPs in both Saudi and UAE, Oman, everywhere. So we now expect the rationalization of contract terms and conditions as well as the margin profiles in the Middle East. So we expect it to get better, and we expect that we should be able to complete some of the projects in Middle East in FY 25. Are there any Indian players that compete with you when you bid for these projects, now that the volumes are gonna go up dramatically? Primarily, L&T would be there. L&T? Yeah. Okay. And I think if we were to not look at, you know, this year or next year, but let's say, look out two to three years, is there an aspirational gross or EBITDA margin level that we would want to work towards? And what would that be? So we will try to do where we are right now. You know, what we are maintaining in domestic and international market. Obviously, the aspiration of any management is to optimize the cost, build on economies of scale, make operations more efficient, and improve the, like, gross and EBITDA margin, and that's what we'll be striving for. That's best I can say at this point of time. But with the revenue base broadening our, overhead, the portion, like allocation on, will be on a much wider base, so that itself will take our EBITDA margin up. ... and with other operational efficiencies, we expect both gross margins and EBITDA margins to improve considerably. Would it be fair to assume that from here on, whether international or domestic, business that you would take on would all be negative working capital? Yes, that, that's how has been the business model traditionally, and, and that's what we will be targeting for. The nature of business itself is such that it becomes a negative working capital. Got it. Thanks, and all the best. Thank you. Thank you. Our next question is from the line of Mr. Faisal Hawa from H.G. Hawa & Company. Please go ahead. Sir, my first question is that, you know, are we embarking on any kind of cost reduction? And if at all there is a cost reduction, well, how much can be squeezed out more? That's one. Second is, FY 25, what do we expect our exact, you know, or approximate, interest outgo to be? And second is on that, is there any thought process within the company now to, you know, totally avoid overseas contracts? You know, because that is where, you know, the variables are really too many, and that is where we have faced maximum problems in the company in the past also. So at least probably, you know, we should have a much better margin to balance out the extra risk that is there from such orders. So I'll try to answer the first two questions. As far as the strategy for overseas market, I will let Amit respond. So your first question was on overheads. Yes, definitely there is a lot of work going on internally to reduce overheads. And that is why last year's overheads were a much larger number. We are seeing at least a 15%-20% reduction in overheads in the current year. Next year, the target is to reduce it even further from there. So yes, there is a concentrated effort being made to optimize overheads and to use low-cost overheads in place of front-ending high-cost overheads. So that is definitely an ongoing exercise. Can you give a number to the reduction in overheads that we are targeting for FY25? FY 2024, let me say, while the previous year was close to INR 360, this time it will be somewhere between INR 300-INR 320. Okay. I, I don't want to give anything very disparate, but it will be somewhere there. Next year it will be sub-INR 300. How much we can bring it sub-INR 300, we are just doing the final working, so before we can tell you that. That is as far as the overheads are concerned. As far as interest is concerned, if you're saying INR 328 crore is what remains, and if you're taking an average cost of borrowing, which ranges between 9.5%-11.5%, I think it is quite clear what will be the interest cost that will be there for FY 2025. If, however, we get our advances and we are very sure that they are not required for the project purposes, yes, we may deploy that towards reducing some of our overheads, or we may wait to receive some indemnity proceeds by November of this year and then reduce our loans. So we'll see how off most ideally that can be done. I hope I've answered your first two questions, then I'll ask Amit to answer your third. Yes. Yeah. So with respect to international markets, as we are repeatedly saying, that what the international projects, whatever we are booking now, we are carefully examining what is the risk profile of the project, and we have a revised risk matrix which has been developed with due delegation along with the board and Risk Management Committee. If the project fits or meets our risk requirement, or we are able to negotiate that, only then we are taking the project, and we are very careful about the margins also. But having said that, if you see that our majority of the order book is now comprising of the domestic orders, having said that, we cannot ignore international markets as well. So there is a lot of sense and the client relationship we have, and we have executed projects successfully and made money as well as international markets. It's not that we have only lost money. But the problem set, which was there specifically, was due to multiple black swan events happening at that particular point of time when those particular orders were being executed. But now the world is in a different kind of a situation. Supply chain problems and all other execution problems which arose because of the Corona don't exist anymore. Having said that, we are very, very careful, and we will capitalize on only very good opportunities which can strengthen our top line and bottom line, and we are very, very careful about that. But we will continue to be present in all our traditional markets, which we have been addressing. But all the order booking will be done with a lot of caution. So actually, most smaller EPC companies in the solar space totally admit that, you know, they don't even have the ability to, you know, do more than 1 GW projects or more than that. And they say that, you know, except for Sterling and Wilson and L&T, nobody has the ability also. So I mean, with such a kind of opportunity and so many orders all coming in at one time as a tailwind, because the government has also mandated their own PSUs to execute these orders. So, you know, I mean, would it not absolutely make sense to, you know, have lower overheads, lower risk, and do only domestic orders for the next three to four years? Because, I mean, this is definitely looking like, you know, a huge tailwind, which is which will come towards you. And, you know... I mean, even we can see clearly that, you know, you can actually pick and choose your orders. So I really don't see the, you know, the without a better reward, why take a, you know, huge risk with overseas orders? So Mr. Hawa, you, you are saying it, and we are actually implementing it. If If you see for last three years, we have not picked up even a single international order, and the focus has been on domestic market. So wherever the good opportunity, which meets our objectives and company strategy, the strategy will be continuously evolved on that basis. So we cannot, like, take a particular time at a particular point of time, but as you said, like right now, the total focus is on domestic market. And we are going very, very slow on international market. Only some of our marketing clients with very good project, minimum risk profile, opportunist project, and if we are able to pick up those opportunities, only then we are going for it. Otherwise, we are not looking international project. So then this is the first project, this quarter, which we have booked, the first order in last three years, and we'll be fully capitalizing on domestic market. And we'll also see how the project portfolio is to be balanced. If we are fully booked in India and have, like, order book exceeds our expectations, then we might be focusing totally on Indian market. Who knows? So that's also an evolving strategy, and we will address as per the market conditions and, in consultation with the board and the other shareholders. So, and one more thing is, what is the order input that we are targeting for calendar year 2024? And so would it be a right statement to say that now, given that our debt is almost clear, and plus Reliance is backing, that we could actually have a situation in which we could, you know, get as many bank guarantees as we want, you know, as a quantum? Do we have something like a, you know, tap, which is just open for us, unlimited? Or that's not a right statement? Nothing is unlimited, Mr. Hawa. Everything takes efforts. You know the position that we were in, in the last quarter. Things have substantially improved from there, and we are going to continuously work to improving it as much as we can. But there is nothing like a tap has opened, and everything is available as much as we want. Sufficiently available to execute what we need to do, and we are also looking forward to build up our limits to take care of our future requirements. So would you be able to give a number to the bank guarantees that we can open at the very maximum? No. First of all, are there any outstanding bank guarantees today? There are none. We have opened all the bank guarantees that are required for our projects which are there at the moment. Mm-hmm. So, okay. So, I mean, that itself could be an advantage to us, that bank guarantees are much more freely available. It's always non-fund limits, which is the fuel for this business. The company keeps looking forward to work on enhancement of limits, to take care so that none of the projects suffer. Okay. And, sir, if you could answer on the order book that we are targeting for calendar year 2024. 2024, as, as we have seen, we have already, booked, like INR 5,527 crore of order book. We have roughly six GW of pipeline, which will be closed out in, Q4. So we, we, we are pretty sure that, and it is a significant order book, which is to be addressed in Q4, with pipeline. So Q4, we are expecting maximum orders? Yeah. This year we are expecting it to be quite an exciting quarter. That depends on how many contracts can close. Two of the projects which have already been submitted, we are waiting for reverse auction with our clients. And some of the bids, the huge PSU tenders are to be submitted. And then we have to see how much we are able to close within this quarter. But certainly that we are addressing, and then particularly, bid pipeline from IPPs as well. So total bid pipeline we are addressing is six GW, and we'll see how much we can close within this quarter. Thank you so much, sir. Really appreciate. Thank you. Our next question is from the line of Mr. Kunal from DAM Capital. Please go ahead. Yeah. Hi, sir. Congratulations on a good set of numbers. So just a couple of clarifications. This six GW that you're talking of in the domestic market, now these are largely BOS or these are projects with modules as well, right? What is the sort of mix over here? This is a mix with both. Most of the private IPP pipeline is purely a BOS, but in PSU tender, it's a mix of both BOS and complete EPC, including modules. Understood. And so just as a qualitative, just in the competitive intensity, you know, especially with, you know, 300 MW-plus orders, that could be limited to the three or four players as well, right? I mean, that's what the experience is anecdotally right now. You are right, absolutely correct. Within the order size that exceeds or the bid size exceeds 300 MW plus, the competitive intensity comes down, and there are very few players which are competing in that segment. Understood. Understood. And so just on one comment on this overhead reduction, you know, so about INR 300-INR 320 crore odd, comment, you know, for this year as closing, and early attempts to even optimize that. I'm just trying to understand on one side, we are sort of in the scale-up mode, right? I mean, and I do understand the mix going towards more of domestic, less of international, and obviously the overheads over here are much lower. But, you know, looking at this sort of order book, I'm just trying to understand what's on this INR 320 crore of overhead, you know, what revenue execution can we do just from a bandwidth perspective? So I'll give you a comparative. When we did INR 8,250 crores, our overheads were INR 220 crores. So essentially, it is not all about overheads. Overheads do not exponentially rise nor fall, on the base of what kind of revenue you can achieve. So it is all about your execution strength. Your overhead back-end strength is enough to take care of whatever we foresee in the foreseeable future. Of course, we are still not going to rest at that. We are still working on optimizing, as I answered, to the previous question. Understood. Sir, just one last bit. You know, in terms of these performance bank guarantees, could you just help me, like, what exactly would be the quantum of the, like, percentage of the project size that goes in as a performance bank guarantee? I will just start out. Amit can add. So typically, we see 10% advance and 10% performance bank guarantees. The quantum may vary project to project. Sometimes you do get higher advance bank guarantees. Sometimes if the margin is better, there is a slightly higher performance bank guarantee that is required. But on an average, it would be 20% of bank guarantee split half and half between advance and performance. Amit, if I have missed something, you may please add. No, you are on right path. Understood, sir. Thanks a lot. This is really helpful, and I'll- The advance bank guarantee falls pretty quickly over the execution of the project. Understood. Understood. Thanks a lot, sir. This is really helpful, and all the best. Thank you. Ladies and gentlemen, that was the last question of the day. With that, we conclude today's conference call. On behalf of Sterling and Wilson Renewable Energy Limited, that concludes this conference. We thank you for joining us.