Ladies and gentlemen, good day and welcome to Triveni Turbine Limited Q4 and FY 2021 earnings conference call. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar of CDR India. Thank you, and over to you, sir. Thank you. Good day, everyone, and a warm welcome to all of you participating in the Q4 and FY 2021 conference call for Triveni Turbine Limited. We have with us today on this call Mr. Nikhil Sawhney, Vice Chairman and Managing Director, Mr. Arun Mote, Executive Director, Ms. Surabhi Chandna, Investor Relations and Value Creation, along with other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature and a statement to this effect has been included in the invite which was mailed to everybody earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will start this call with opening remarks from the management, following which we will have an interactive question- and- answer session. I now invite Mr. Nikhil Sawhney to share some perspectives with you with regards to the operation and outlook for the business. Over to you, sir. Thank you very much, Rishab. A very good afternoon to everyone, and I trust everyone is well and everyone has had their vaccination or is in the process of getting their vaccinations. To start off with, at Triveni Turbine, we have vaccinated over 1,700 of our employees and employee dependents and subcontractors and contract workers. By July end, we expect that we would have 100% vaccination of all our staff and employees and critical workers. The offices are operating in full swing, though with work at home protocols as well, and our factories are operating at 100%. Having said that, our subcontractors are currently operating in the region between 50%-60%, given certain mobility issues with workers. All of this will be addressed, and I will touch upon this later during my introductory remarks. The turnover for Q4 for Triveni Turbine for the financial year FY 2021 has increased by 16%. EBITDA and PAT has increased by 44% and 78%, respectively, over Q4 FY 2020. The turnover in the financial year is at INR 702 crores, a year-on-year decline of 14%. The decline in product sales is at 19.2%. There is a growth of 3.3% in the customer care business. Despite the lower sales, EBITDA has increased from 20.8% to 24%, and in FY 2021, that stood at INR 168 crores. The PAT percentage for FY 2021 is similar to that of FY 2020 at 14.9%, despite an extraordinary charge of INR 18.5 crores on account of certain employee related VRS expenditures as well as a lower share of profit from the joint venture. The employee cost was also significantly lower for this year by 15.9% at INR 85 crores. Investments have increased to INR 347 crores as against INR 147 crores. That is an addition of INR 200 crores in investments in this year. This is reflective of our strong cash management and earnings visibility. There's been a significant reduction in our working capital as well due to lower trade receivables by 38%. It stands at INR 77 crores as opposed to an earlier figure in excess of INR 120 crores. Inventory is also lower at INR 160 crores. Now on the year itself. Ladies and gentlemen, this has been an extremely difficult year. All of you, I'm sure, have had COVID and this pandemic impact you in some manner or the other. The company's performance has been satisfactory given the backdrop of the restrictions in both the domestic and international markets. The emergence of variants has led to the second wave on the domestic front. During the year, the global market for steam turbines in the range of below 50 megawatts, in which we participate, has shrunk by 32%, and the domestic market has shrunk by 43% in the calendar year FY 2020 in megawatt terms. However, despite that, the company has maintained its leadership position in both the Indian market and internationally. We have attached an international report and the findings of that which tell you about our leadership position in this space globally. The mix of domestic and export sales has remained more or less at similar levels at 54% domestic and 46% export in FY 2021. In line with our outlook last quarter, the company was able to reduce the decline in revenue and profits for FY 2021 to 14% compared to 21% in the nine months FY 2021. The improvement in EBITDA margins for the financial year has been driven by a combination of higher share of aftermarkets in the sale mix, but also on account of the lower raw material cost and value engineering. Further, there has also been a significant reduction in employee expenses due to the realization of VRS benefits and the reduction of manpower. These are sustainable benefits, and the quarterly EBITDA margin of 16.8% does not reflect the longer-term EBITDA margin levels for the company. For the quarter in itself, as you could tell, the raw material percentage at 54% as opposed to the annual figure of 51% is driven by a skewed product dispatched into the domestic market, which carries a lower margin, but also by higher other administrative expenditures, which are non-recurring in nature and we believe do not reflect the longer-term earning potential of the company. There's also been a significant reduction in manufacturing costs in the year due to an increased effort on value engineering as well as streamlining our manufacturing process to look at more standardized measures of manufacturing. Similarly, there have also been certain reductions in travel costs and other administrative expenditures which will come back in this current year. The profit margin has been maintained at 14.8%, and this is after the exceptional expenditure that I've already spoken about. The consolidated outstanding order book position stands at INR 306.39 billion as on the 31st of March, which is lower by 9% as compared to the previous year. The company achieved a total order booking of INR 6.43 billion, which is lower by 19% year-on-year. Finally, the board of directors has recommended a payment of dividend of 120%, which is INR 1.2 for the financial year FY 2020/21. Ladies and gentlemen, order booking is at the crux of the performance of Triveni Turbine. The product order booking that we saw for the financial year FY 2021 was at about INR 441 crores, which is the most order booking for products that we have seen in the company for the past, I would say almost a decade. This though has the visibility that we had in Q1 of FY 2022 sitting here right now on order booking is a completely different situation. Our order booking for the entire financial year from product side that we saw in FY 2021 will be something that we will be able to capture before the second half, but before H1 of FY 2022. This visibility is something that I would talk a little bit more once the question and answers are opened up. As you can tell from the performance of the company in the financial year FY 2021, the aftermarket business is a steady rock for the company. That business contributes over INR 200 crore to our order booking as well as revenue, and easily about INR 100 crore in cash flow and similar amount in terms of profitability before tax. This is recurring in nature, and due to the closeness of relationships that we have with the customer, it is a true testament that we've been able to capture and maintain this level of performance in the trying times of COVID. We've been able to reach our customers, and we have been able to ensure that there is a high degree of customer satisfaction so that we could have a lifetime relationship with our customers. This is extremely important as the life of our relationship with the customer for one product stretches in excess of 25 years. Having said that, of course, we leverage that for further sales so that we can build on our product relationship as well. I will talk more about how we are growing this business and what visibility we have on the growth of our aftermarket business during the question- and- answer session as well. The factories have been operating in a normal manner, we have seen an increase in commodity prices which has impacted the company. The company has tried to mitigate this through bulk ordering as well as value rationalization and through expanding our supply relationships on a global basis. A certain percentage of this price increase may not be able to be passed on, so we'll have to see how that develops in the quarters to come. As it currently stands, the margins on which the company operates are stable. The company has also been focusing on its international marketing efforts. We've been considerably constrained over the course of the past year in terms of being able to address our international market, which is extremely creditable to our marketing teams to sell a high technological product virtually. We've been able to secure significant international orders. Of course, not as many as we had gotten in previous years or as much as we would have expected. Despite that, considerable international orders through virtual means and through means by which our customers have been able to derive confidence in our products and our processes and technology. We think that this will lead to a new form of marketing. Having said that, because of the disruptions of lockdown that we've seen in various international markets over the course of last year, we have an inquiry book which reflects that the demand is growing in many different geographies in a variety of different sectors. Therefore, we lead to a certain degree of optimism of an expanded international sales within the current FY 2022. This will also be supplemented with our expansion into different product segments such as the API segment, which we've already spoken about in the quarters of past. The domestic order booking for Triveni Turbine was at INR 4.32 billion, which is a decline of 5% as compared to last year. The domestic outstanding order book stood at INR 4.49 billion, up 14%. During the year, the global market in which the company operated experienced a significant shrinkage of 32%. In FY 2021, the shrinkage in market size has moderated to about 9%. Owing to the restrictions, this has impacted the order booking of the company. This is on the product side. On the aftermarket side, during FY 2021, the aftermarket registered an order booking of INR 2.02 billion, which is lower by 7% when compared with the corresponding period of the previous year. The aftermarket turnover was INR 1.92 billion, a growth of 3% over the previous year, which has been driven by our refurbishment and spares businesses. The aftermarket contributed to 27% of total turnover in FY 2021, up from about 23% in the previous year. Design and development continue to be a key focus of our business, and we have expanded and continue to expand the overhead in this segment so that we could design and select our products, not only in terms of our current product ranges to improve their efficiency and cost structures, but also to expand our services product range to be more solution-oriented. The inquiry generation during FY 2021 and Q4 FY 2021 remains strong in both the domestic and international markets, which is positive for order booking in the coming quarters. During FY 2021, the inquiry generation in the domestic market grew by 35% as compared to the financial year 2020, which we believe is a positive indication of the order finalization in the coming quarters. These have been driven by process cogeneration and waste heat recovery segments. In the International segment, inquiry generation was dominated by thermal renewable-based independent power projects as well as process cogeneration. Global economies in many parts continue to be affected by the pandemic, which continues to affect the company's business. We believe that the vaccination drive and lower COVID-19 cases, that the company prospects will significantly improve in the coming year. The inquiry pipelines are strong, and the international markets are gradually showing signs of recovery. While we continue to carry a healthy order book and inquiry pipeline, we do expect some delays and deferment of executing orders in H1 of FY 2022 With respect to dispatch. Order booking will be extremely healthy to the extent that we will have a book and build within this current year, which we were not able to attain in FY 2021. This is what led to a lower turnover and a slightly lower overhead absorption in Q4 FY 2021. We expect both the global market and our market share to remain the same, if not improve, in the coming year. This is going to be backed up by our technology and R&D developments. As the company has been talking about for the last five years, of energy transition and moving towards a low-carbonized economy. The company has made significant efforts in its research and development towards establishing a solution and product pipeline to cater to the segment effectively. This is in two parts. One is through rotating equipment in the steam turbine lines, but also, as we've spoken about in other areas such as concentrated solar thermal, which will lead to a better value proposition for our customers who require both heat and power solutions in an industrial context. This is a significantly large market, and we believe that we are optimally positioned to leverage it. The other thing that we will be working on over the course of the next quarter is to bring increased visibility to our shareholders is a more articulated capital allocation policy. As the company now has over INR 400 odd crores in its bank, we believe that a prudent capital allocation policy which imbibes the values of Triveni Turbine as being a high return and high return on equity company should be maintained. We will be articulating this in more detail in the coming quarters, but it will provide a visibility in terms of how we aim to grow, and it will be closely linked with our research and development, our organic growth opportunities, and possible diversifications. With that, I'd like to introduce you to our new Investor Relations manager. Silvi has joined us recently. She's had an experience with Morgan Stanley as well as with some other public companies, and she would be happy to have a long-term mutual dialogue on the company so that we can both benefit from the engagement. Silvi, would you like to say a few words? Sure. Thanks, Nikhil, for the introduction. It is my absolute pleasure to be part of the Triveni group, and I look forward to interacting with the investor and analyst community. For anyone wanting to reach me, my coordinates are mentioned in the investor brief from yesterday and also listed on our website. Thanks, again. If we are done, then we can pass it on back to the moderator to start the Q&A session. Thank you very much. Yes. Let's start the question and answer. Sure. 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 when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. My first question is with respect to export order inflow. Over the past two years, it has seen a declining trend. Is it attributable purely because of the COVID restrictions which are there? Or in your press release, you had mentioned that global steam turbine market has come up over the past 3-4 years. Is it a combination of the reason because of that also, and are customers moving away from coal-based steam turbine solutions? If you can give a broad outlook as to when we can go back to FY 2019 levels of inflows, it will be really great. Thanks, Ravi. Let me answer this in two ways. We've tried to provide data that there is a macro trend of decarbonization, and that is something that I'm sure all of you are extremely conversant with. Sure. The different segments of markets which we've broken up as in below 30 megawatts, below 100 megawatts, and then above 100 megawatts are impacted by different situations. The decarbonization has very visible impact in all these different segments. The Utility segment has been reasonably disastrous in terms of the amount of new thermal power plants that are coming up. The requirement from the industrial side is slightly distinct because they require both heat and power, which cannot be substituted by renewable energy sources. The demand is following a CapEx cycle rather than the decarbonization stream. Having said that, this market exists within the larger thermal market. There will always be pulls and pushes and strains where banks have funding commitments and objectives which are driven around decarbonization. Having said that, efficiency-based solutions are the name of the game, and those are the ones that are being implemented in the international market as well as in India. When we look at the international market, and this is reflected in our order booking as well and inquiry book, it is dominated by waste to energy, which is thermal renewable as well as process cogeneration. Process cogeneration is a requirement from a variety of different sectors. We actually see from Triveni's side in this coming current year, the fact that over FY 2021, we were not able to cater to a majority of the market due to travel, but still maintained our market share. The market declined by over 30%. That pent-up demand will get realized over the course of the next quarters, I'm going to say next year for sure. Therefore, we would see an increased market available to Triveni, and therefore, what I'm going to presume, but we already have indications of because we're already three months into the current financial year is order booking also. Got it, sir. With respect to the domestic market, it seems like core sectors like steel, a lot of companies are announcing CapEx. Cement also, there seems to be some CapEx activity. If you can give a broad outlook as to domestic market over the next two to three years, how fast can the market expand? That will be great, sir. The domestic market in FY 2020 was somewhere in the region of about 1,400 MW, and this declined to somewhere in the region of about 800 odd MW this past year. We're seeing that this market would rebound to in excess of FY 2019 in the current financial year and driven by a variety of different sectors. We have the Distillery segment, which in the sugar space, which is expanding quite aggressively. You have a different value proposition there for companies moving away from molasses-based distilleries to direct use, which would mean an additional capacity of turbines that will be required. The same infrastructure may not be suitable. The power complex in a distillery would comprise approximately 25% of the entire cost, of which 10% would be the steam turbine. We will gain from that segment growing. As an affiliate company of Triveni Turbine, which is Triveni Engineering, is close to the sugar industry. We have good visibility that there is an expanded CapEx program in that space. Similarly, in the process cogeneration space, there's also good visibility in terms of investments into food processing, paints, pharmaceuticals, et cetera. These are slightly lower in capacity, but higher in value from a per megawatt perspective. The segments of waste heat recovery in cement is growing, but fresh CapEx in terms of new capacity addition in cement side have not been announced. I mean, they may be announced, but they have not realized into orders as yet. Similarly, on the steel side, there's been very muted orders. We are hopeful that given the rise in commodity prices, that CapEx would translate into orders possibly in the next couple of years. Okay. From steel, generally, the ticket sales of orders are pretty large amounts. Can we see? Not in oxide, you have the rolling mills and you have the smaller non-integrated players who require an oxide. The chemical side is growing extremely well, and possibly similarly with pharmaceuticals also. Got it, sir. Thanks. Yeah. Thank you. A reminder to the participants, anyone who wishes to ask a question, may press star and one at this time. The next question is from the line of Sriman Dudoria from Unifi Capital. Please go ahead. Yeah, good afternoon. If I look at the historical trend of your order book mix, the closing order book mix, last at least four or five years, the absolute number from the products has been stagnant. Both exports and domestic put together at nearly about INR 600 odd crores. It's really the Aftermarket, the closing order book, which has actually gone up, I think it has doubled from FY 2018, INR 1,002 crores to about INR 133 crores now. In the past calls, you had mentioned that this Aftermarket is your key driver, and you have some two, three pawn strategies. One among which you said was servicing third-party turbines. What is our penetration level now in this category, both in the domestic as well as export markets? What are we doing differently to service the third-party turbines? What could be the share of this business in the next two years? I think you bring up an extremely good point. Not only is the aftermarket segment at Triveni, as for all capital goods companies, a driver towards profitability and to the lifecycle relationship with the customer. To expand it is a very delicate balance because you cannot push more sales to a customer without losing credibility. Therefore, to expand the growth of this highly profitable segment, we have to look at the refurbishment side, which is exactly what you have spoken about. I'm going to ask our President, Aftermarket, Mr. Sachin Parab, to give you a little bit of visibility on exactly the question that we talked about, what are we doing and what is the visibility that we have for growth in both our spare and service business, but also in terms of refurbishment. You must remember, refurbishment for us is refurbishing rotating equipment. Of course, it includes steam turbines, but it also includes certain other rotating equipment. Sachin, can you give a little bit of insight on this, please? Yeah. Good afternoon, everyone. To answer basically the question posed about the penetration level in domestic and export. To be very honest, we have today only a small penetration in the multi-brand service offering for Triveni. There is a lot of scope for us to grow in the future, and that is why we are going both on the domestic and export front, that there is a good potential for growth. As you rightly mentioned, the order book has been growing and the carry forward order book has also been growing over the years. We are trying to do things differently in terms of improving our reach, our coverage in the international market. We are strengthening our organization and our marketing efforts in both physical and digital. This is helping us and even in the where we were able to manage the good order bookings with our efforts into digital and our strength in marketing. In terms of your question about the share of business going forward, it has historically been, aftermarket business has been about 25%. This year it's about 27% of our revenue. We target to grow it more to around 30% of the revenue in the years to come. Refurbishment business as a part of our aftermarket business has also consistently grown, and the reason for that is basically the diversification that we are doing. As Mr. Nikhil Sawhney mentioned, we are not just focusing on industrial steam turbines, we are diversifying into utility turbines, where there is potential. We are diversifying into new geographies, new industry segments, such as geothermal that we have talked about in the past. Our successful entry into these segments has given us a lot of confidence on our capabilities, and the potential can be tapped very successfully by our company going forward. All of that and the recent successes and the traction in some of the export markets gives us good confidence that we will be able to achieve our plans for the future. Thank you. Thanks, Sachin. In the overall aftermarket order book, what is the mix of refurbishment? Sorry, please go ahead. No, continue please, Sachin. Yeah. This has also been growing over the years. About two years ago, our refurb business in the overall order book was about 27%. FY 2021, this has become 31%. FY 2022, we are targeting 35%. There has been a good growth in the refurb business as a part of the overall order book of Triveni Turbine aftermarket. I hope that answers your question. Sure. I guess another maybe a little granular detail I'm checking. You mentioned that it's not just the industrial turbines which you're looking in the aftermarket, but the utility, your turbine, and even the other parts in the system. The driver going forward would be industrial turbine or these other things which you talked about can also contribute? Let me explain it to you. Rather than looking at the product itself in terms of what is the solution you're providing, there are different and varying degrees of solutions that we provide, which could be anything from overhaul to re-engineering. This stretches the value chain of technology. The point is that we want to stick to high value added services, but at the same time, capture it with the liability that we are willing to accept. There's a large value warranty liability question that comes into this, which plays into what is the technology that we are going to be putting in. This varies. For example, the steam turbine line, of course, we would be much more comfortable going into the higher end of value addition, which is upgradation and life extensions, et cetera, which may not be the same in other markets. Having said that, because the profitability of the segment is extremely high and the return on equity and capital in this specific business line is extremely high, we would go after this market in an opportunistic manner in terms of being able to source demand from wherever we find it. In terms of a consistent buildup of demand, we of course, need to work with certain customers and geographies so that they can have confidence in our capabilities and our capacity to be able to deliver because it's obviously already in a running condition in their plants. Under breakdown conditions, most people choose to go back to the OEM because of speed of execution. To bridge the credibility gap with the customer is the first breakthrough, and that happens over a period of time with successful installations. That is something that Sachin was pointing out to you, that it only happens over a period of time in certain geographies. As you have successful installations, your credibility grows, and you're able to then offer it to a wider set of customers in varying degrees of industries and technologies. Great. Thanks for the detailed explanation. In your initial remarks, you, I think, gave a number that out of your profit before tax number, if I noted it right, about INR 100 crores comes from the aftermarket. Is that the number which you said? I said about INR 100 crore of free cash flow comes from the aftermarket. Sorry? 100 crores of free cash flow comes from. Oh, free cash flows. Okay. Got it. I had two questions specifically on the quarter gone by. You had highlighted the margin compression that has happened in the quarter four was driven by, I think you said about a domestic order which was of lower margin. No, can you please repeat your question? Yeah. I just wanted a clarity on that, did I got that point correct? No, you didn't exactly. I said that there are variety of factors that have led to a slightly lower EBITDA margin. One of it is the fact that the product, the turnover mix between domestic and international was skewed more to domestic, which carries a lower margin. That is reflected in the higher material cost or raw material cost percentage of turnover, which is approximately 54%, versus the 51 odd% for the full year. Secondly, there were higher other administrative expenditures, which are non-recurring in nature, which has impacted the quarter. I would encourage you to look at the full year numbers as what we believe is a sustainable number for the company going forward, not only for FY 2022, but for years to come. Yeah, sure. Thanks. I'll get back in the queue. Thank you. Thank you. Before we take the next question, a reminder to the participants, please limit your questions to three per participant. Should you have any follow-up, you may be requested to rejoin the queue. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Thank you for the opportunity. Could you give us an update on the ongoing case with GE? In the last section of your press release, you mentioned that there was a judgment by NCLT. If you could help us understand, that will be useful. Bhavin Vithlani, you're asking me for something which is sub judice, and it really wouldn't be correct. Our lawyers have told us explicitly that this is something that we should not be commenting about in public. I think the information that we have, we've given you and we've given to the board, and this is what the board has mandated us to disclose, not only to the shareholders, but to the exchanges as well. Suffice to say that, as you can see from the performance of the joint venture and performance of the company in FY 2021, that the joint venture is a going concern and there's profitability in it. There is a dispute, and the details of the dispute have been detailed to some extent in the disclosures. There will be more disclosures that will be carried in our annual report. Suffice to say that the company is defending its position. I think that we are on the way to a speedy resolution to all matters, but I think that is more likely going to create a functional time lapse, unfortunately. Sure. Maybe the next question is on the growth part. You did mention about some outlook on the sugar. That's a pretty good question that I'm going to ask Arun, who's our Executive Director and CEO, and he can bring in Prasad, who's our President as well, on the visibility that we're seeing, and especially, Bhavin, as I pointed out in my introductory remarks, we're pretty much done with Q1 already. We have a firm idea as to the orders that we have secured with advances as well as those that we've secured without advances. Suffice to say that it's a significantly high number, which leads us to have extreme confidence that the product order booking of this INR 440 crore that we achieved in the full financial year of FY 2021 is something that we will exceed within the first half-year of this year itself. Arun, would you like to comment and give a little bit more clarity into the sectors that you're seeing this from, and if you can get Prasad to also comment? Yes. Good afternoon to everyone. As our Vice Chairman, Mr. Nikhil Sawhney has said, we started the year very well off, and we are done for the first quarter. All the budgeted parameters have been met as regards various financial parameters. The market is looking up, as indicated by him. We expect that our order bookings for the half year this year will be well over last year's full order bookings in the product line. On the customer care, the growth that is planned, we are already coming in. As far as the operations of the company are concerned, we are very strong. We have made all the arrangements to meet COVID eventuality. Even if we would have third wave, we are not likely to be affected severely because we have worked out arrangements for all our working staff to be staying together and ensuring that the company runs. That's on the operations side. As regards the market, we are very well poised. Even if the market is shrinking overall, even in the industrial space, which is not much, but due to introduction of new products and new blade designs, we will be able to address the market with certain exceptional efficiencies which are required in some operations. Also the product gap is being closed wherever we find that the portfolio has not been sufficient. Overall, for the company as such, the addressable market would be expanding irrespective of what happens to the overall market, which we expect anyway to come to pre-COVID levels in a year's time. That is the situation. In domestic market, we are looking at good order booking in process cogeneration, which includes pharmaceuticals. As you know, people will be going for bulk drugs production, so we're targeting that. We are also looking at Distillery segment where we already have a good market share, and we expect to improve it further. On cement side, the waste heat recovery market has come up, and we hold a dominant position in that market. All these three segments are giving us good order booking as well as the inquiry generation has been quite good. Overall, as a management, I think we're quite satisfied with what is being done in Q1, and I expect similar things in Q2. H1 hopefully should be a good one as expected. Thank you. Thank you. Just last question from my side is on the margins. As we see a cycle of increased product orders and execution and given that the margin percentage is lower, would it be fair to assume that our underlying margins, which has been in that 20%, 21% range, could trend down as we see growth coming back? Nikhil, what are your? You said it should trend? Arun, you can answer. Yeah. See, it's like this. Margins, what have been indicated are over a fixed turnover. When we are expecting growth in aftermarket as well as the product. It is not that the margins would be suppressed. It could depend on the product mix and the total expenditure that we would go through. When the turnover is increasing, it is both product as well as customer care where we would have turnover. We expect that they would compensate each other along with the value engineering that we are doing. Sure. Just last follow-up, what could be the capacity utilization currently? Currently, our capacity, I don't think we have any problem with capacity utilization. We are operating, it depends on the number of shifts, et cetera, but if you have to look it up in terms of what could be the top potential output, we would probably be operating anywhere in the region of between 45%-55%. Sure. Yeah. Thank you so much. I have to say, Bhavin, on the margin question is that there is a commodity price pressure. I think that it would be remiss of me not to mention that we will try and address it to the extent possible, and to see how best we could pass it on. It may not be possible for us to pass it on in the extremely short term, but over the medium term, of course, it will all be passed on. Again, quarterly execution. I would request you to look at annual numbers for visibility on the numbers and the margins that we have looked at. Thank you. The next question is from the line of Manish Goyal from ENAM Holdings. Please go ahead. Yeah. Thank you so much. Just to carry forward from Bhavin's question on the margins and the reply you gave. The current order book, what we have, is it a fixed price contract, and do we have any escalation clause built to it? These are short duration product contracts, and our scope is only for product supply. We have separate contracts for installation and erection and commissioning. As I indicated to you earlier, the potential from one customer from a life cycle relationship, if we sell him a product worth INR 100, is over the next 7 to 10 years, we're going to derive the same amount of value from the aftermarket from him. Establishing that relationship with them, its credibility is extremely important. Of course, we will try and push as much as we can because these are unique and discrete products, and really you cannot compare one with another in terms of pricing. It all depends. There's nothing uniform in terms of acceptability from customers. Ultimately, we have to do what the customer is happy to accept. I agree, Nikhil. I appreciate that. We leverage a lot on the aftermarket going forward. Just from a shorter term perspective, you did mention that difficult to pass on in near term. We should probably factor in that in the first half, we may see a fair bit of margin pressure. Look at it this way. The issue is that our material cost as a percentage of turnover is somewhere in the region of about 50%. We don't buy any direct steel. It's always fabricated or value added on it. The percentage of direct raw material in terms of metals, as a percentage of our entire raw material cost, would not be more than 10%-15%. Even if that goes by 10% yearly, we're not looking at very large numbers. Mm-hmm. Okay. On the new products, if you can just provide an update on API drive turbines. How is it progressing? That's a very, very good question. In fact, we have set extremely ambitious targets for ourselves this year, and I think you could remind us of this in the subsequent quarter as well, too. I'd like Prasad, who's our president at Triveni Turbine, to give you a little bit of insight on the API market as well as on international. Prasad, if you could just talk about international from a product side as well as the API market in specific. Yeah. Good afternoon, everyone. Starting with API market, as we informed in previous calls also, this is one of the key segments for us. We have a product readily available, which is developed and well accepted. Our vendor registration process, since the last two years, whatever efforts we put on that, we could able to achieve the desired target. Today, we are accepted as API product suppliers. Over 90% of refineries, consultant, EPCs, OEMs accepted Triveni as a approved vendor. Even our Q1 order booking is as per the budget. We booked quite a good number of orders from API segment. That is again, a mix from international as well as the domestic, like Indian Oil and all these things. International also we picked up from South America and some orders we picked up from North America as well for API segment. That way it is a quite bullish market for us. Based on the inquiry pipeline, if you see on the API segment, there is a huge growth on inquiry pipeline. Today, we are sitting substantially over 1,000 machines inquiry pipeline on APIs. Coming to international, non-API, the inquiry pipeline is quite good. We are seeing some Middle East, North Africa region is one of the key area for us, API as well as the non-API segment. Turkey and Europe, these are the other two areas where we are following up for waste-to-energy inquiry base and waste heat recovery options sort of a thing. The MENA is substantially giving us API inquiry pipeline. That way we see even in international, apart from domestic. Domestic, obviously there is over 30% inquiry pipeline increase is there. Even in international, we are seeing a good traction. Through virtual interactions, there's a good acceptability there, even though last year numbers are not that good. Based on the current inquiry pipeline and the Q1 tractions what we are having, we are quite optimistic we'll be able to meet the desired results, what we are expecting in international market as well. In international, again, we are seeing one of the combined cycle opportunities increasing for us, apart from waste to energy and waste heat recovery cogeneration proposals. This is a new segment where we are entering as a combined cycle. That is, along with gas turbines as well as gas engines and HRSGs. That is the one segment which we are entering into that. Would you be able to give a perspective, like currently in API turbines, out of existing market, how much of it we are able to address and to what megawatt range we have launched the products for API turbines? Based on the current product availability to us, almost 85% of the market we'll be able to address with the product. Because in API, the megawatt ranges are not much because majority of these sizes are some 5 MW, some 6 MW drive turbine application. A megawatt, we have a number of machines, drives out of it. Today we can address 85% of the market, and this market is substantially enough to a good market share. Just to clarify. From a number of units perspective, maybe about 60% from value perspective. Okay. Basically, just to clarify, we are now addressing 85% of the total API market. It is not that the products what we have launched, we are addressing 85%. Just to clarify. Total API market. Our products will be able to address 85% of that technically. This growth has only been in the last 18 months odd. Of course, the last 12 months have been very difficult from a market perspective, and we've already talked of few, but we should be able to have very good penetration there in the current year and moving forward. Okay. Typically the product order size would be similar to what we have in steam turbine. Like if you probably want to look at on a per MW basis or something like that. If you can just give us a perspective, just to get a perspective as to how can our order book look like going forward. We don't really break it down into price per megawatt. Suffice to say that because we have smaller turbines and in a segment which has extremely high environmental safety guidelines, the price per megawatt is higher than normal, but the scope is less. We are not providing the entire scope, so turnover will be less per megawatt because we are not providing other equipment such as generators, et cetera. Okay. Here we will not be taking on a EPC business, but purely product supply. In other we're not doing EPC, we're just doing integration package level. I look at EPC from the perspective of what liability you take forward. Exactly. Sorry about that note. Here we will probably do a product drive turbine supply to the integrator, and we are not doing the integration. No, there will be some integration. For example, the lube oil system, et cetera, will come under us, but the scope of supply is less in this segment. Okay. Thank you so much for that. Just for a housekeeping, if you can provide us a breakup of order inflow and order book of the aftermarket between domestic and exports. Okay. Manish, maybe we can take this offline. I'm sure whatever numbers we've been giving in the past, we'll be happy to give you. Suffice to say that the order book in the aftermarket side has been consistent in both domestic and aftermarket. Even in this last year, we have used a lot of digital means to maintain and grow our international aftermarket business. Thank you. A reminder to the participants, please limit your questions to two per participant. Should you have any follow-up, may we request you to rejoin the queue. The next question is from the line of Amit from Edelweiss. Please go ahead. Yeah. Hi, Nikhil. I have two questions. First, on the strategy of diversification, can you specify which areas should we look at when we use the balance sheet to expand our opportunity? My second question, once we finish the first, I'll maybe ask you. I wonder, I couldn't follow your question exactly. Are you saying that how would we look at the allocation from a perspective of technology? Yeah, I was just trying to understand the possible diversification route, which segment we'll look at in terms of. The two aspects to this, our competency from engineering perspective and our balance sheet is what we will keep in mind, because we need to ensure that we have sustainable growth in terms of segment that we can look at. We've already talked about us looking at an alternate offering from a technological perspective to providing heat and power, which is through the carbon dioxide. Equally, as we look at the transition from decarbonization away from carbon-based to maybe a potentially more hydrogen-based economy also, which I have an opinion that I think that there will be a certain segment which will definitely move to hydrogen, either it's from a perspective of electrolyzers to future requirements. The heat requirement from that and the combined cycle requirement will still require our offerings, which will come. We will be moving towards looking at both rotating as well as static technological solutions within that space. Thank you. We take the last question from the line of Pranav Tendolkar from Rare Enterprises. Please go ahead. Hi, sir. Thanks a lot for the opportunity. Sir, I have just one question. Can you just elaborate, if any industry decides to put a captive power plant, coal-based, versus it puts various renewable plants like solar or wind? Pranav, can you repeat the question, please? Yes. I'm just saying, if any industry puts up a captive power plant, thermal power plant invest or granted, versus if it puts a captive renewable plant like solar or wind, how does the economics actually compare? Because what I've seen is that there are many industries which are our large customers, like paper, sugar, cement, et cetera. Yeah. No, thank you. I think we have a question that we take for granted that I think we need to explain a little bit better and possibly we'll give a working paper for our next earnings call, which is to explain the cost of heat. When we talk about cogeneration, there'll be requirement of not only power, but also heat in industrial. In residential establishments also, but we're talking about industrial. When you look at sugar, paper, rubber, textiles, et cetera, pharmaceuticals, chemicals, they require steam, that is heat as part of the process, which cannot be generated on a renewable basis. Now, or if it was to be generated, the capital cost as well as the efficiency cost of that is prohibitive. To give you an example, say solar works at an efficiency level on some point in the region of 10%-12%, and it will be the capacity factors, et cetera. A thermal-based plant running off even coal at a small size would be somewhere in the region of about 25% efficient. If you move up the technology curve and actually use even the cheapest technology curve, let's just say that if you have to look at the efficiency, that's a power production. If you were to include heat, you would probably be in the region of utilizing approximately 50%-60% of the thermal energy in the application. I think that until now, the renewable solution hasn't come about for heat, which is as obvious as what exists for the utility power market. The utility power market has a very clear winner, and I think that is quite obvious that renewables has a better cost economics. Right. Okay. Because what happened is that last year, many coal exploration was decolonized, right? There are 150 more private coal licenses and the coal supply in India is going to go through a very high growth phase. It is going to be very easy to put up a coal-based power plant which was not possible previously because you had to import coal under many things. I think that if that is the case, then you could have a very high margin in next few years. I think. Am I wrong? I think if you already look at spot power rates and power grids you do have an increased power consumption in the domestic market in India. I think this is a global phenomenon. We are probably going to see very high spot rates of power going forward, which will lead to a lot of expenditure on short-term power. Okay. Thank you a lot, sir. Thank you. I now hand the conference over to management for their closing comments. Over to you, sir. Thank you very much. Ladies and gentlemen, thank you for attending the financial year 2021 earnings call. We think that Triveni Turbine is in a very steady position, even though our order book for the financial year 2021 was not up to mark due to the COVID pandemic. We have great visibility on FY 2022 from all order book perspectives, and we believe that we are in a steady and stable footing, and we anticipate and look forward to our move on this energy transition path. Thank you very much. Goodbye. Thank you. Ladies and gentlemen on behalf of Triveni Turbine, that concludes this conference. We thank you all for joining us. You may now disconnect your lines.