Please note that this conference is being recorded. I now hand the conference over to Mr. Rishabh Barar from CDR India. Thank you, and over to you, sir. Good day, everyone, and a warm welcome to all of you participating in the Q3 and 9 months FY 2024 earnings conference call of Triveni Turbine Limited. We have with us today on the call Mr. Nikhil Sawhney, Vice Chairman and Managing Director. Mr. Lalit Agarwal, CFO. Mr. S.N. Prasad, President, Global Sales (Product). Mr. Sachin Parab, President, Global Sales (Aftermarket). 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 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 request Mr. Nikhil Sawhney to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir. Thank you very much, Rishabh. A very good afternoon, everyone. Thank you for joining this Q3, FY 2024, as well as nine-month FY 2024 earnings call for Triveni Turbines. I'm extremely pleased to be with you today. Triveni Turbines continues on its robust growth path, as demonstrated in the stellar results during the nine-month period ended December 31, 2023. New benchmarks have been surpassed in key metrics of revenue profitability as well as order booking. The quarterly order booking, revenue and EBITDA has surpassed the INR 5 billion, INR 4 billion and INR 1 billion milestones respectively, and we've had the highest ever revenue in the quarter of INR 4.32 billion, an increase of 33% year-over-year, as well as the highest EBITDA at INR 1.01 billion in Q3, with 35% up 35% and a margin of 23.4%, an increase of 35 basis points. The PAT for the quarter is at INR 683 million, which is an increase of 30% year over year. And the order booking for the quarter is at INR 5.31 billion, which is an increase of 26% year over year. For the nine months, this has translated into a record revenue of INR 11.96 billion, an increase of 36% year-over-year, the highest EBITDA ever at INR 2.74 billion in the nine months, up 39%, with a margin of 22.9%, an increase of 41 basis points year-over-year. The PAT for the nine-month period is at INR 1.93 billion, an increase of 41% year-over-year. Order booking for the nine months is at INR 14.43 billion, which is an increase of 27%, and the closing order book is at INR 15.75 billion, which is an increase of 28%. The investments in cash on the book as of the end of the quarter is at INR 8.82 billion, which is an increase of 31% year-over-year. The board of directors has declared an interim dividend of INR 1.3 and a special dividend of INR 1, totaling INR 2.3, as this interim and special dividend at this past board meeting. The board has also approved the establishment of a subsidiary in the United States, which will be called Triveni Turbines Americas Inc., which will be registered in the state of Texas in the United States. I'll give you more clarity as to growth plans for this subsidiary and our ambition in our international expansions in the coming years. But beyond the highlights mentioned earlier, some of the key indicators to demonstrate our performance in the nine months are that the earnings per share has grown an impressive 43% to 6.08 rupees at the nine-month mark, and order booking during the nine-month FY 2024 grew 27% to INR 14.43 billion, with exports contributing 53% as opposed to 42% in our order book. With customer centricity at the core of everything that we do, it is our endeavor in recent years to expand not only our geographic presence and widen our offerings, both in terms of product and aftermarket solutions. We also continue to strategically allocate investments for sustaining growth and maintaining a competitive edge. The results of these efforts are well demonstrated in our performance, with exports at 46% of sales in the nine months versus 42% last year, and aftermarket as a percentage of sales at 33% in nine months, as opposed to 30% in the nine-month period of the previous year. This is, of course, a reflection of our order book from the product side, but also on the aftermarket side, our strategy to be more geographically dispersed and be closer to our customers, which we aim to do with our subsidiary in the US as well. Our inquiry book is growing, and in the nine-month period is up by 14%. We have both growth in domestic as well as international markets, and we are optimistic going into both Q4 as well as into FY 2025 of an increase in our order booking to possibly the same growth rate that we've seen in the last couple of years, which will allow us to maintain our growth momentum. Manpower continues to be a key focus of the company. We grew our manpower base by about 20% in FY 2023. In FY 2024, we've grown our manpower base by about 15%, and our ambition is to grow it by another 20% in FY 2025.... So therefore, we will be looking at people across the value chain as well as geographically, to be able to add to the growth that Triveni Turbine believes that it will face in the coming years. The outlook for all the segments, be it in terms of renewable energy, industrial markets, aftermarkets, are all quite robust. Our concerted efforts to spend money in R&D and engineering to cater to products in the areas which are best suitable for our clients, be it in the renewable energy field, such as in solid municipal waste incineration or biomass-based IPPs, including, waste heat recovery, are very robust. Equally, in areas of where fixed capital formation is required and which are required for a perspective of running both heat and power solutions, our solutions seem to be extremely appropriate. This includes the oil and gas segment, which is a growing segment for the company. We continue to invest into R&D, and as we come into the new year, we will come up with new CapEx plans to see how best we can ensure that our R&D even surpasses the product development profile that we've had in the last couple of years or in the last decade, to step it up to a even faster pace, and to have even more accuracy and even more robustness in the R&D process itself, much like we've been able to do in our product delivery. Investments, like I said, we will come back to in terms of where the, the company will be investing, but the company has extremely high return on capital invested, and especially if you remove cash as part of the capital employed, the company has an excess of 300% return on capital. So with that, ladies and gentlemen, I'm sure that you have many questions. I'd be happy to answer them in our Q&A. Back to you, moderator. Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ravi Swaminathan from Avendus Spark. Please go ahead. Sir, thanks a lot for taking my question, and congrats on a very good set of numbers this quarter also. My first question is, with respect to the order booking that we have done. Overall, we have seen robust growth during this quarter also, but if you see the domestic, order booking, there was a bit of a decline this quarter, and probably for the first nine months, there was a marginal growth only, compared to the exports, which had seen north of 60% growth. If you can throw more light on what is happening in the domestic market, a bit of outlook also on that, that would be great. Yeah, that's a great question. Thank you. Thank you, Ravi. On the inquiry book, I'll ask Prasad to come in as well and to explain a little bit more on how he sees the domestic product market. Of course, we have vagaries in terms of the aftermarket, which is well, while the spares and service business is more consistent based on our installed base, the refurbishment segment is more opportunistic. But the product market, it gives you a real indication in terms of fixed capital formation in the economy. As we see it, and I think as we pointed out in the last couple of calls as well, firstly, you should view us in a nine-month period. The fact that it's flat for this nine-month period does not take away from the optimism that we are seeing, both in terms of growth of the inquiry book in the domestic market, which is about 57 odd%, and gives us good visibility into order booking coming into not only Q4, but into the next financial year. The reason is that, as we pointed out, that we saw a drop in the inquiry book, I think in Q2 it was, which is just indicative of the general investment climate. As we currently sit now in the middle of February, we believe that it picks up, that private sector CapEx is well on track. It's something that is very encouraging. But the absolute level of investment that is going in is also something that we believe is quite sustainable. We're not seeing any sudden huge spurt in investment, which is also very encouraging for us as something that where we want to encourage, where we wish to see a more sustainable growth path. But, Prasad, can you come in and give a little bit more clarity in terms of what you're seeing in the domestic market, both from a perspective of nine months as well as future? Yes, sir. So domestic market-wise, the inquiry pipeline is quite strong. That is a very positive attraction. When we are doing year-on-year comparison, for nine months, so domestic market inquiry pipeline is quite strong, almost over 50% increase is there. But in the same way, in the quarter three, when we are seeing the inquiry generation from domestic market is equally strong inquiry generation there from across the segments. Whereas the order book, nine months-wise, wise, yes, a slightly improvement there, but a particular quarter, we cannot take it quarter-wise, because quarter-wise, sometimes some finalizations because of year-end in December, again, October is festival time, that is Dussehra, Diwali, some customers now postpone their finalization. But, we see that Q4 going to be interesting, that quarter again for the domestic, but in the inquiry pipeline. Got it, sir. My second question is with respect to the exports. Yeah, we have seen some very strong numbers in the first nine months. Can you kind of delve a bit deeper and give a sense on how much of it would have been some of the key sub-segments, like API, say, the large orders, 3,200 orders? ... and if you can do more, so the color on which geographies have contributed to this? Yeah. Yeah. So, Ravi, as you know, we have an install base in about 80 countries globally, and so we get inquiries from over 110 countries. And any given year, we are supplying turbines to anywhere between 25-30 countries. Of course, the larger the economy, the more prevalent investments are going to be, and so therefore, the more impactful it will be for us. Part of the reason that why we're investing into the United States as well is because we see a very robust market there, given the incentives towards energy efficiency. We're seeing that already translating into orders for us. But we also see that as, that's a great way to cater to the Americas, for our already existing install base of over, well, a substantial number of turbines that already exists there. For the quarter in specific, we've seen orders both in the higher range of above 30 megawatts. As you know, we've stopped demarketing the small orders, because ultimately they fit into the industrial range of customized product that we manufacture. But the demand that we've seen is from the Middle East, including from Americas. The one market segment which has been slightly weak for us has been East Asia, but the rest seems to be quite robust. The United States and Americas seem to be doing quite well. Prasad, can you give a little bit more color on the markets which you're seeing activity in? Yes. So, in the quarter, as well as the nine months, our order book is basically from, as you rightly said, except East Asia, all other regions are performing quite well. That will come Middle East and North Africa, then Europe region, Turkey and Americas. These are the regions and from different segments, from biomass industry to oil and gas, about 30 megawatts and even some 30 megawatts. That way, traction is quite good from inquiry pipeline as well as order booking pipeline. Thank you. The next question is from Amit Anwani from PL Capital - Prabhudas Lilladher. Please go ahead. Hi, sir. Thanks for taking my question. My question again pertains to exports. So, we did highlight that there's a robustness across countries, barring East Asia. Just wanted to understand, you did highlight in previous calls that you'll be penetrating new markets. Just wanted to understand any progress on any new markets, you know, which can bring incremental growth. And, second thing is the composition of exports. As you did highlight it, there is a stronger robustness still you're seeing on order booking following this growth, which we had in past two years. So will export be the high growth area versus domestic? And what could be the composition of exports in next two, three years? You, you know, the composition number is very difficult to say, because very frankly, our approach towards the domestic and export markets are slightly distinct. In the domestic market, we see every inquiry cross our desk, and so that's a market share question. So the size of the market in India is something that neither I, that Triveni Turbines can't control. But what we can control is our market share, something that we like to maintain. On the export market, it's more a question of visibility and to get a visibility into orders. And so the strategy there is to build your inquiry pipeline, because our conversion rates on inquiries that hit our desk is actually quite high. But I don't think we said talk about in, about new markets. I think the fact is that we are already present in all the geographies that I've already spoken about. As far as our product specifications go and the applicability into certain markets go, yes, there are newer segments that open up to us. That is more of a technological question, not a geographic question, that we continuously try to invest into to see how we can open up greater and newer markets which allow for our product to be more relevant for our customers. These will include everywhere from on the renewable energy side, everything from geothermal to biomass to waste heat recovery, et cetera, as we've spoken about. On the industrial side, we pretty much cover all the industrial spaces anyway. There will be further push into the API oil and gas segment, both from the drive turbine as well as the power turbine segment. And so we see growth coming. We see appropriateness of our product profile. As we look forward in terms of as we know our exports will be as a percentage, it will definitely be a very strong growth market for us. And that's what we're investing into. We're investing into having physical presence close to our customers, to have a certain degree of proximity to our customers, so we can give them the confidence to not only provide us with orders, but then also for us to cater to their aftermarket needs. This seems to have worked in certain categories, and that therefore led us to this investment that we're going to make into the United States, which will hopefully will be a model that we can replicate. The model in the United States itself is something that we'll flesh out in the next couple of quarters and come back to you, but it will involve a physical infrastructure of a shed. We keep in mind the fact that we have a manufacturing base in Bangalore, so we will be close to customers with the appropriate type of infrastructure that's required. Ultimately, we are very cognizant of our return metrics, and something that we will always maintain, much like we maintain on the PBT side of above 20%. So while exports as a percentage of sales will rise, that gives us more flexibility in our margin structure, because that is a higher margin, these are higher margin orders. But we do have a lot of investment going into people in the next couple of years. And so therefore, just we are cognizant of the costs that will go into helping build a more sustainable enterprise for Triveni Turbines. And we are very fortunate that the order booking and the revenue that we will—and the revenue growth that we will see in the coming years will be backed with high margin orders, which will allow us to offset any additional costs that may come from the future planning of the business. ... Sure. So my next question on API turbine. You witnessed a strong growth this quarter. Our sense is that the oil and gas market domestically is slightly, you know, the CapEx is getting, you know, deferred. Just wanted to hear, and from you, how do you sense, and what could be the growth in API Turbine in exports and domestic market, and how has been the contribution past three, six months? Yeah, we don't give the contribution numbers as a split. But I should tell you that from our perspective, as someone who had a relatively low market share in this space, we've had extremely good reception by both domestic and international clients. These are very large clients, as you know, and the registration process and getting part of their purchase preference is a very large and Herculean effort. So once we're able to overcome that, the reception from customers has been very good, and that is translating into orders as well. Oil and gas is a large segment because we are still not transitioning fully. Though having said that, a majority of turbine orders do come from the renewable energy segment. So that is still the mainstay of what we see in terms of the capital investment in the market. Both in the domestic and international market, we see growth in the oil and gas segment. The inquiry levels from this space is higher, and we see both investment in the domestic space by oil and gas, as well as fertilizer majors, and we see this internationally as well. Sure. So lastly, on gross margins, as we can see, past 4 quarters, we have been clocking more than 50, 51% gross margins, all the way picking up from 43%. So just wanted to understand what would be the, could be the sustainable gross margin. And second, on the other expenses, what was the charges for SADC this quarter? And third, you highlighted on the R&D spend going up. So just wanted to understand what was the R&D spend recently as a percentage of sales, and what number we are looking for the upcoming years? Yeah. Okay. Many questions. On the SADC side, we don't give the split, but if you look at the gross margins, the business context, the raw material as a percentage of sales, used to be somewhere in the region of about 52%-53%. It's right now about 56%. Our attempt in terms of value engineering is to get this back down to about 52%-53%. This is partly driven by two factors. One is, certain servicing contracts have slightly lower margin, and that ends up impacting the gross margin levels. Also, it's dependent quarter to quarter on the percentage of exports as a percentage of sales. I would encourage you to look at our numbers on a margin trend on an annual basis. It gives you a better idea. But what we see is there's no margin pressure. The commodity prices, to a large extent, have stabilized. We have larger rate contracts with our subcontractors and vendors. And we don't see volatility in raw material prices in the short term. Medium term may have some raw material variations in items such as copper, but we hedge to that in with long-term contracts. When we break with, it's interestingly that you point out about gross margins, because actually our tax rate for the quarter has also come up quite high, about 27 odd%. But these will all get we give better clarity when you look at it on an annual basis. Sure. So around R&D? Yeah. R&D, so last year we spent about 1, a little bit over a% odd in R&D. Our attempt will be to take this up to 3%+. Now this will be a mixture of CapEx as well as OpEx. I think that this is required not only for our new diversification plans and R&D that we'll be doing, we've touched upon some of these elements in the past. But I think that it is important that the, when the company has, the cash flow and the flexibility to be able to internalize capabilities on R&D, that we end up setting up infrastructure that we would be putting on a variable cost basis otherwise. Thank you very much, sir, and all the best. Thank you. Thank you. The next question is from Abhijit, from YES Securities. Please go ahead. Yeah, good afternoon, sir, and congratulations on a very strong performance again. Thank you. First question is on the API Turbine side. Do we have a technical or technological collaboration with any foreign player or any player on the API Turbines, or do we own the technology in-house? No, the company has no technology collaborations on any product line or any technology with anyone, for any lines, be it API or other. Right. And, sir, the endeavor to increase the R&D expenditure as percentage of revenue to 3%, so where would this expenditure be going, and which product segment are we targeting to increase our capabilities in? You know, the fact is these are capabilities. The capabilities that we have in structural and on fluid dynamics and other aspects of science and engineering are somewhat spread and amortized over a wider set of products. And so the fact is that we, we've been investing into certain capabilities and capacities, and I think ultimately, they will form a part of what we bring to the market. We haven't announced any new product introductions at this current point in time, but the fact is that the company is building a portfolio of new product releases and new technology releases as well. ... Sir, just wanted to understand, I mean, are we going to enter a new segment altogether, or is that something that we are right now outsourcing? No, no, it's partly both. It is partly what we are outsourcing to internalize, and then to spend much more on what we're doing. Right. Sir, and in the U.S., market expansion, now that we are also forming a subsidiary there, so is there any one particular product segment that we are targeting there, or is it a more generic kind of approach that we do as far as our capability is concerned in U.S.? So, you know, I think we've said this in the past, that what our aim with our international expansion is to be closer to customers. Now, we understand that, that as we're closer to customers, that will help bridge certain apprehensions that they may have in terms of placing orders on us. But they really don't want to see servicing office, a marketing office there, because that's really not any capability that they can utilize once, once the product is installed. They want to see some servicing capabilities. So the essence of this entity to be set up is on the aftermarket side. It will start with that enterprise only to be able to cater to our customers, as well as third-party customers from that subsidiary. As you've seen, we've been quite successful in our South African venture. And everything, margins are expanding, everything is looking quite good there. So we seem to think that that's a good model for us to adopt. And the U.S., as you would know, is by far the largest market globally. And given the push that they have for energy efficiency, not only is there a very distinct market for new product sales, but also on the refurbishment and replacement market, possesses a very unique and distinct opportunity. Right. So that's it from my end. Thanks a lot, sir. Thank you. Thank you. Next question is from Harshit Patel from Equirus Securities. Please go ahead. Thank you very much for the opportunity, sir. So my first question is, you have mentioned that the overall domestic inquiry book has grown by around 57%, while the overall inquiry book has grown only 14%. So this would imply a very sharp degrowth in the export inquiry book. Could you explain a little bit on this? It's just the domestic market inquiry book is not as large as the export inquiry book. So the math doesn't work out the same way. The export market has also grown, but yes, it's grown by about 10%, like, about maybe 9%-10%. But having said that, the entire inquiry book is somewhere in the region of about 7.5-8 gigawatts. So it's quite substantial, far more than our order booking as well as sales in any given year. In fact, it may be 3-4 times that. Understood. Understood. Sir, my second question is on our EBITDA margin, and I'm talking about margins excluding cash. So if I compare the company's overall trajectory from, let's say, FY17, FY18 to today, so in the last 6-7 years, we have almost doubled our sales. Our gross margins have improved. The employee cost as a percentage of sales, even they have come down. Despite that, we are not at the similar EBITDA margin levels of the past, mainly because the other expenses have grown disproportionately. So while I understand the expansion like SADC and what you would be doing in the US market as of now, but this increase in other expenses seems to be quite disproportionate. So could you think we can go back to those 21%-22% kind of margin in the next 2-3 years? Or are the current margin levels would be a more appropriate extrapolation of the future margins? No, no, I think there are some investments that we're doing in the short term, which have had the impact on the P&L the way that you've expressed it. The intent, of course, is to expand it going forward. There was a certain compromise in terms of how much growth you could take with margin. But I think that if I look two, three years down the line, we should only see expansion of margins. Understood. Thank you very much for answer. No, but this will happen through multiple routes. One is the product configuration itself are quite optimistic that we will have a more lean and value-engineered product, which will which genuinely will have more costs taken out. Then the structure and the cost that we put in would obviously be amortized over a larger turnover, and so you'll have operating leverage also kicking in. And then we believe that that the contribution of O&Ms in aftermarket would also end up, as well as export, would end up aiding and assisting in these matters. So there will be certain costs that we've taken in, in the short term, but that's why in the short term, I think it's that the way that we see it, that our PBT levels, including other income, will be in any manner well above 20%. But to get back to an EBITDA number in excess of 20%, as you're talking about, without other income, is something that our attempt will be on, of course. Understood. Thank you very much for answering my questions. Thank you. Before we take the next question, we'd like to request participants to please limit your questions to two per participant, so that the management is able to address questions from all participants in the conference. Should you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Chirag Muchhala from Centrum Broking. Please go ahead. ... Yeah, thank you, and congrats for a very good set of results. So, so first question is more of a clarification. So the U.S., you know, entity that we are planning and written in the PPT that basically we are in the process of investing for a local facility. So just wanted to get a clarification that this is more like our South African venture, which is geared towards service, repairs, as well as aftermarket, or this is we are planning eventually full-fledged steam turbine manufacturing facility there, like we have in Bangalore. Well, Chirag, you visited our facility in Bangalore also, so you know the, the assets employed in the bus- in the, in the factory. So, very frankly, actually, this, the intent, the intent is very clear, to be able to be close to customers to s- or to cater to their servicing requirements. But if local assembly is required, it doesn't require much CapEx. So it's, it's, it's something that we have to be slightly opportunistic on. But, the point is that the capital employed in that business is going to be relatively low. It will be very-- It will be very high from a manpower perspective. We are going to employ the best of best out there. That is an investment that we've made, which will pay off in the years to come. And I think that this is going to be our true step towards internationalization, of having a predominantly what I would say, non-Indian workforce operating out of there. The infrastructure itself is going to be something that'll be appropriate for what our requirements are. The investment is reasonable. I think that the approach is right. It will be from the aftermarket side as our approach, and that is what we will cater to. We're not... Manufacturing is a relative concept. You know, we only 45% of our purchase order actually enters our factory anyway, you know, so the generator, the lube oil system, the condensation system, panels don't enter our factory. Are we manufacturing that or not? Yeah. Sure. And sir, for the US market, which would be the end user sectors that we will initially be targeting? Because I understand, you know, that geography is also very large oil and gas market. So from an API Turbine point of view. No, we will be approaching what has been our mainstay in our order book, which is renewable energy, and now driven by a little bit into the oil and gas sector. So renewable energy cuts both across industrial installations, which have requirements from an energy efficiency perspective, in terms of. As you know, the United States has had some of the cheapest power globally or cheapest energy globally, and so therefore, capital investment in energy efficiency has never really been a priority. Capacity expansion was always the priority of incremental capital. And now with both the Inflation Reduction Act, as well as a variety of different incentives, as well as a, a corporate, consensus towards moving towards a greater, degree of, decarbonization, there is a substantial amount of investment across the industrial value chain, as well as pure-play renewable energy, companies. So between those as well as APIs, represents a very large market. The United States, as you know, is by far the largest economy in the world, and they have every, industry that, that exists there. We believe that, given the fact that over the last several years, the consolidation in the steam turbine space has meant that the industrial user base has not been adequately serviced, and so we think that there exists opportunity for us to come in and provide a comprehensive degree of offering there. Sure. And so that market is also, you know, very high on product certification. So are we through with all certifications? Yeah, we have. That's why, like I told you, in the last couple of quarters, we've been seeing orders from the market as well, and we've delivered market orders into that space. So, certifications are part and parcel of whatever we do. Nothing is more stringent than the API 611, 612 specifications going to the oil and gas. I mean, we sell everything from our defense forces requirements for steam turbines and those requirements for certification is far higher than anything else. We are also, as you know, AS9100 certified company, which is an aeronautical standard. So we have all the relevant quality parameters as well as documentation that is necessary to sell into any market, both from an application perspective as well as geographically. Sure, sir. And the last question, so we have seen very strong ramp up in FY 2023 and 2024, and probably this year, we will end up with, you know, total order inflow close to around INR 2,000 crore or so. So on this base, you know, considering our global opportunities, inquiries, as well as new growth drivers, over the next 2-3 years, will we still be able to grow at, let's say, a robust 20%+ kind of a number in inflows? You know, actually, a couple of years ago, I gave a, well, I would say, outlook that we would, that we, the company would grow at about a 35% CAGR. And as you've seen, I think we're exceeding that. The capabilities that we're putting in place is to maintain a growth rate of that much. Now, 35% may be high, thirty... But our attempt is to grow rapidly. We think that there's an ample market out there which is untapped and uncatered to, and there's a space for Triveni Turbine to participate in that with this current product line. Our expanded product line will allow us greater confidence to be able to to grow and maintain growth. So for the ending order book of, well, of course, Q4, as we're in right now, will be something that we think will be more robust than we've had in this current year already. So that will end the year well, but it will also allow us to... Because the performance of Q4 is completely dependent on the order book that we had in the past. In fact, our order book, as it currently stands, provides us full visibility of growth into at least middle of Q3 of next year. And a bit of order booking in Q4 and Q1 of next year will provide us the growth that is necessary based on our past precedents. So FY 25 also seems to be quite well catered to from a growth perspective. The inquiry book that we have, and the growth in the inquiry book, gives us confidence in the order booking that we will get into in FY 2025, which gives us visibility into FY 2026. Partly driven by the capabilities that we're setting up on the servicing side by being more local, but also, the fact that there is a secular theme in terms of a greater investment into energy efficiency and into from the industrial side, which is for both heating and cooling solutions, as well as renewable energy, but as well as oil and gas. Okay. Okay, sir. Thanks for the answers. Thank you. Thank you. Next question is from Amit Mahawar from UBS. Please go ahead. Hi, Nikhil. I just have two questions. First is, so during the last so many years, the way you've grown, both in product and aftersales, and especially, you know, in the global aftersales market, it's an opportune time that, you know, we understand from you the five-year roadmap on, where do you see Triveni on the global, aftersales market share, and product share? If you can, you know, give that broad, control. That's my first question. Yeah, and, you know, Amit, thank you. That's we don't really provide a five-year outlook, and we try to provide qualitative numbers rather than quantitative numbers. The reason is, we're a pure play steam turbine company, and you have to understand that, that the competitors do look at our earnings call with a much more focused number, in a much more focused manner. But having said that, our approach is to be the most preferred turbine or the heat and power solution provider to our customers. And what do we need to get there? We need to provide the capabilities on the aftermarket side to be able to cater to them. Those infrastructures and capabilities that we put up on the aftermarket side need to be able to validate their investment from a refurbishment side, which is to go after third party work. The market share there is, I think, a little bit difficult to calculate because it's fully dependent on the opportunities that sort of are presented to you. As I look at it going forward, and we've discussed this, I think, in the past, both you and I, that the refurbishment segment presents a very unique opportunity for the company to scale very rapidly with a technological solution. And I think that we're scratching the surface there. This business has the potential to grow very rapidly, but you need to have the infrastructure and the proximity to customers. So I think the constraint to our growth is actually going to be people. It's going to be the physical presence that we have in local geographies. So if we're able to then keep scaling this with on a yearly or bi-yearly basis, every couple of years, a new large presence in certain areas, I think it will allow us to maintain the growth rate in many, for many, many years to come. So market share in India is something that we operate in a largely duopolistic market. There are other people who sell in, but it's a very price competitive market, and we're happy with that type of market share. We have a competitor who we deeply regard. They have a extremely good product range, and they're very aggressive as well. They keep us on our toes and they're someone who we benchmark a lot against. On the global market, they're also our principal competition, but they have a, a near 75% plus market share. So there is room for us to grow in that market. There's room for us to expand our visibility, and so that's the way I'd rather put it, rather than, give you any quantitative numbers. Mm, thanks. We're catering to a substantial growth in the next couple of years. So our plan is to maintain the growth that we've had in the last couple of years into the next couple of years to come. So, Nikhil, at least, I mean, I'll just summarize it, maybe what you said, if I understand, that you still significantly gain market share in 2024 aftersales materially, and there are things that competition cannot copy from you, you know, that you're displaying. So the second question quickly, is actually linked to first. I'm sorry for that, but maybe Prasad and Mr. Mote, if possible, can also chip in and, you know, help you there. What is the kind of setup you are looking to create? You've invested in people five, six years ago. We can see very beautiful benefits of that already, right? And you are now again, going beyond, you know, the normal mandate and, you know, seems that you are still, going to significantly, spend on people and more close to the market, that you've been saying. So maybe next 4-5 years, how will the setup of Triveni both on product and aftersales, you know, transition to? Qualitative assessment is welcome. Thank you, Nikhil. Yeah. I'll let Prasad answer that. That's a very good question. I'd actually like to hear his answer myself. But in terms of split between aftermarket and the product, the fact is, as you know, a steam turbine product lasts with a customer anywhere between 20-40 years. So it presents a yielding opportunity for the company to be able to cater to our customers' aftermarket requirements, which is really a very sweet spot. This is something that if you do a DCF on with whatever cost of capital you can do it, it comes out to be a great annuity for the business. More than that is the fact, so to the extent that we're able to be extremely profitable on product sales, which we know that a lot of our competitors can't, it helps validate the fact that we can grow on the product side to a substantial, and to continue to grow that. We have, right now, in excess of 65% of our sales coming from the product. While we see from our competitors' viewpoint, in excess of 50% of their sales or 70% of their sales come from the aftermarket, and in excess of 100% of their profit comes from the aftermarket. So we think that we are looking at both as distinct growth avenues, which is aftermarket and product. We think that both provide a good opportunity. Prasad, why don't you give your views as to what you believe Triveni would look like? Yes. Yes. So as rightly said, yes, we are seeing both, product and aftermarket, there's huge opportunity there. And, to start with the product side, yes, we have a strong presence in some countries, we have a very strong market share. Some countries, there is a scope for us to improve the market share in, biomass and renewable energy segment. And coming to APIs, because our market shares are minuscule, and there's a huge opportunity for us to grow in, API. So what we see, the product as well as, so followed by aftermarket, because API is the one segment where we are establishing our references. So down the line, after the cycle of aftermarket, starts for the API segment. So what we see, so in aftermarket side, not like a refurbishment opportunities, service opportunities of installed turbines. And our local presence in those countries where we are establishing small workshops to be closer to the customers, that will open the big opportunity for us when it comes to aftermarket. And that facilities or that local service setup acts as a springboard for the products team also to give a comfort to customers. Our local presence will help them when they are taking a final valuation call, whether to buy products from Triveni. That way, we see we are in right market, in the right time, and a huge opportunity there, both the renewable as well as the API segment, based on our current market share. As today, we are addressing over 80-85 countries. Our fleet is there, and our inquiry pipeline is coming over 100 countries. So we see strong growth going to come as the years ahead. Yeah. Thanks, Prasad, and thanks, Nikhil, and good luck. Thank you. Thank you. The next question is from the line of Himanshu Upadhyay from O3 Capital. Please go ahead. Yeah, hi. Congratulations on good set of numbers. This is a follow-up to questions or to replies in previous call and today also, that we are focusing to be more in geographically expansion, okay, and be more near the markets locally. Can you give an idea of what percentage of sales and technical manpower would be outside India currently versus five years back? And also, the number of service centers, how they have increased currently versus five years back. And whatever growth we are seeing currently, is it all orders in-house or directly through our own sales team or in exports, or there is something like some consultants also who play a role in getting the business to- I'll start with the last question. We use a hybrid structure, of course, and all sales technically have to go through us. But we do have an agent structure, which allows us to be a little bit more conservative on overhead costs. And also in our segment, which is a little bit more entrepreneurially driven from a customer purchase perspective, the relationships that agents have do end up, I think, allowing us to make that inroad and break the barriers of Make in India, et cetera, which some customers may, in different geographies, have a hesitation towards. So that was your first question. The other question? People. People. So, how many people are outside India? Well, you know, really, we have offices in UAE, in Dubai, in South Africa, in Johannesburg, in Europe and in Southeast Asia, and now in the United States. In total, in terms of people and personnel placed outside the country, I would say that it's not more than 4% or 5% of the entire workforce. Our attempt would be to be much more an international, and as we go forward. This would be in two, three different areas. Manufacturing, as we see it, will always be based in India, and so that is something that we wish to... That's for a couple of reasons. It's because we think the ecosystem that we've created from both the supply chain basis as well as the capability of manpower is better for us to not spread it in different areas. But the international manpower will consist significantly of servicing personnel, and these are technical servicing personnel. These are people who are revenue earners in their own right. And so the attempt there, like we created in South Africa, where directly we may have 20 people on the books, but we may have maybe 1,000 people employed indirectly in servicing contracts, and that gives us a roadmap in terms of where we wish to go. And as far as you—what I've been talking about in terms of growth of employee costs, it will be driven by hiring in these foreign geographies, which have a higher cost base than we would in India. So, that's something that we catered to, and that's something that we're cognizant of as we go to execute these orders. But the attempt will be to have a greater internationalization, which, which is exactly the point that you made, which is the percentage of employees that are outside the country. Okay. And, any ideal figure you think that, service centers, this many service centers can help us, I don't know the right answer to that. I think we have to take it as it comes. It will be a question as to can our service center, what are the geographies that it can cater to? And that's something that we have to discover going forward. The SADC region is limited in terms of the industrial base that it has. In the U.S., we'll get a better idea. There are significant number of growth opportunities, be it in Latin America, Central America, Europe, North Africa, Middle East, besides all of Southeast Asia, which has its own distinct area. So we were taking it in a way, what we were taking the growth in a way that what we can manage, but there's enough growth opportunities that are open to us geographically. Okay. Okay, thank you for your detailed response. Thank you. The next question is from the line of Teena Virmani from Motilal Oswal Financial Services. Please go ahead. Hi, sir. Congrats on good set of numbers. My question is, once again on, refurbishment, where you've answered a previous participant's question. Who are all your competitors in this refurbishment market? So basically, I want to understand how are Triveni's offerings different in refurbishment for a client to choose Triveni and not choose any other player, or over any other player? And how fast can this aftermarket grow for the company in terms of as a share of sales, the way it is for the global competitors? Well, that's a great question. But there's no one answer to it. Every customer's requirement and their purchasing choice and preferences are different. There are certain things that are somewhat common through, which is that they do want a local presence. They want to know the references that you have in while doing the work. They want to know about the capability that you have on the engineering side, as well as the development side. What are the liabilities that you're going to be able to take? And what is the warranty and your balance sheet to be able to support anything that goes wrong? So, the competition stretches all the way from the OEMs, if they're in business, to local workshops. And so that is a spectrum of competition, and it varies from market to market. Like I said, customers, some customers, would only go with the OEM regardless of what you offer, which is their, their risk aversion. As you can imagine, you can't approach a nuclear power corporation and say that, "You know, I want to provide you spares for someone's turbine." They'll never let you in, you know? And so that's customer preference is customer preference. But on the other side, where there is opportunity for third parties to provide services, we distinguish ourselves as being an OEM. There are not many OEMs that offer refurbishment and third-party solutions. So we think that we operate in that space by having far in excess of the engineering resources and R&D resources than a local workshop may have. But more than that, the quality systems that are also necessary increasingly to provide robustness and reliability of offering for the refurbishment side is something that we consider. Because we've done refurbishment from everything from compressors to gas turbines as well. Having said that, a majority of focus is always on the steam turbine side, but the capabilities are quite common across all rotating equipments. As we move forward, we will try to leverage those, with the focus being on steam turbines, of course. Mm-hmm. Got it. And how much would you target to take this aftermarket share as a percentage of sales going forward over a longer period of time? You know, the constraint, like I said, is on people and proximity to customers for the growth of that business. As far as the product sales go, we are extremely profitable on the product sales, so we would push that to the extent that we can. We see enormous growth opportunities still from the product side. You can see it from our order booking, which we aim to sustain in the coming years. And so very frankly, as we look at it right now, we are at currently maybe 65-35. I would imagine in the next couple of years, despite of the high growth in the product sale category, that refurbishment and aftermarket will be able to pick up market share on a relative basis. So we think that if incrementally that aftermarket as a percentage of sales is growing at 1% or 2% a year, that's something that is fine, that we're happy with, as long as the product sales also grow. Okay. Okay, so it won't be at the cost of the product sales? No, no, no. I mean, the product sales provide you with a great annuity. You know, the margins that you can get from the aftermarket for spares and service for your own product is far in excess of anything that you can get on the refurbishment side, as you would imagine. Yeah. Yeah, right, sir. And if you are expanding more on the aftermarket side across different other geographies also, the way you are now doing it in, U.S., can it also have an impact on overall other expenditure or the localization costs, in a way, more than, what you would have seen in, SADC? I'm not fully following the question, but, having said that, if I look at it- Sure, sure. On the growth plans of the business in terms of investment of capital, as well as operating expenses, these are all catered to. There will be certain investment costs. The fact is that the entity that we had in the past had in South Africa was smaller both in size and scope, as well as the potential that our market could create. The potential of the U.S. market is higher. We have more confidence going in, so we're ready to sort of upfront the investment cost that may be necessary for a market like that, so because we anticipate very high growth. And but having said that, the entity, we'll come up with some more clarity in the next quarter in terms of what the exact investments will be like. But these are all very manageable in the entire base of the company. Having said that, we are cognizant, like I said in the beginning, of our return metrics, and we wish to maintain those return metrics- Mm. on the return on capital side as well. Got it. Got it, sir. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Aditya Gupta from Tara Capital Partners. Please go ahead. Hi, good afternoon. Thanks for taking my question. First then, what's your capacity utilization right now, both for domestic and exports? You know, largely capacity is not a constraint for us. We've disclosed in the past that we have the capacity to manufacture in excess of 250 odd turbines, and we're well within that capacity. We have the flexibility to expand that capacity on a variable basis by increasing shifts. So capacity is not a constraint and neither is it a large capital cost for us. Okay. So let's say, initially, capacity is not a constraint, and assuming you're saying you are gonna grow or there's an aspiration to grow at the same pace of 30%+ or 35%+ for the next 2 years at least, for that, you're saying there is enough capacity? I haven't said that. Please don't put words in my mouth. No, I thought... Sorry, sorry, maybe, I, I got it wrong. I thought the aspiration was to maintain a healthy or the aspiration to grow at a- Aspiration is to maintain, but, like, you know, you're putting more absolute numbers in my mouth by saying that- No, no, no. I just meant, No, no, no. Sorry about that. I was saying that maintain the growth pace. Yeah, yeah. So for that, there, there's enough capacity, there's enough capacity to take you through? Yes, sir. Yes, yes. And in fact, actually, if you've heard our conference calls in the past, we expanded our capacity by first 50% and then another 50% with a total investment of, I think it was INR 20,000 and INR 30,000. So the capital investment is also not that much, and it took about 9 months for it to come online. Which is well within our order visibility and inquiry visibility. So that's not a constraint for us. We do have to work. Another point which you bring up, which is which is, is very relevant from a capacity utilization perspective, is the capacity of our vendors or subcontractors. That is something that requires work, and that's something that we continuously focus on to be able to enhance their capacity utilization. I mean, not their capacity, to ensure that is well within the capacity utilization figure so that we don't face constraints. This has happened through multiple routes, direct negotiation and conversation. Sometimes there's capital that has to be provided to enhance capacity for certain subcontractors. And lastly is the fact that we have multiple sourcing strategy. So that is something that is the way that we bridge that risk. Got it. Got it. Thanks for the clarification. And second, if I look at the margins, even on a, let's say, nine-month basis, there is a gradual improvement that's come through, right? And this is happening in sync with the higher mix of export orders, even though I think after sales is down a little. So is that, you said commodity costs are benign. Is there a mix element also in there? And with increasing share of export products, do you think this trend is gonna continue? Yeah, so our execution is just a reflection of our order book. So certain order books that were taken in the at COVID times were subject to the vagaries of raw material pricing at those points in time. There's much more stability now, so there's much more visibility into what project margins could be and should be. We actually should have had higher exports as a percentage of sales in this quarter three, but we had too many goods in transit. So these will all get reflected in Q4 and going forward, and our order book kind of reflects our turnover in the years to come. So it's, it's along the lines of what you're talking about. Got it. And since you mentioned longer transit times, is this something to do with the Red Sea issue, or is this something completely different? You know, the Red Sea issue, you know, I think most transporters are providing alternate routes. So that I think is important for us to recognize. At this point in time, the goods in transit is just based on the fact of our planned turnover. As you can see, even in Q3, we had a record turnover. And that's something that we'd like to beat in Q4 again. But I don't think the Red Sea is really the constraint, and those shipping challenges are not what the constraint, it is just production planning and dispatch. Got it. And any cost escalation—I mean, I wouldn't have brought it up, actually. Any cost escalation in Q4 because of shipping routes being changed or higher price, shipping prices right now, which could be worth calling out to? Prasad, you want to answer that question? Yes, sir, yes. So majority of our international contracts, Incoterms are FOB Indian port basis. So whatever these are transportation costs, that is outside our contract values. And when it comes to raw materials, so almost 95%-96% are sourced indigenously. So at this point of time, we don't anticipate any impact of those cost escalation to those. Got it. Thank you for the answers, and have a good day. Thank you. Thank you. The next question is from the line of Vimal Sampat, who's an individual investor. Please go ahead. ... Yeah, good afternoon. Now, most of the questions have been answered. Now, just two things. Now, the new product, what you have, you are doing R&D on, and which will—will it be capital intensive or it will be something similar to what we have in current? You know, our thing is negative net working capital. So new product will be similar or, it is something different, and it is related to our product? Or, and are we going to invest heavily, or it will be like CapEx, like our turbines? No, I think that we very much like our technology-focused approach towards product development as well as catering to customer requirements. What that ends up doing is that when you put technology first, you have limited competition, and therefore payment terms such as bigger advances, et cetera, and payments on dispatch end up helping your entire balance sheet, such as working capital. So I think the intent will be to sell the same way, sell as a technology product and manufacture as well as develop in the same way. But I wouldn't like to put too much focus on the new product development. It's something that we... This is something that we invest in. It will come through in a, in a number of years, but the approach will be very similar to the way that we'd like to approach this current our current business. Right. And, second thing, U.S. thing also, it will not be very capital intensive, you are saying, correct? So it will be very manpower intensive. The capital investment, we'll come up with the exact numbers to give you in the next quarter, but it's something that is very manageable for Triveni. Of course, you'll have to keep in mind that the costs in the United States are higher than they would be in India. Right. But it will- But, I think, it will be a huge market for you. I mean, it will be more than what we are doing in all countries put together, something like that? Yes, hopefully. Yeah. Okay. Thank you very much. Thank you. We take the last question from the line of Ronil Landu, who's an individual investor. Please go ahead. Yeah. Hi, management. Thank you. Thank you all for taking my question. A few questions from my side. While you mentioned in the last answer itself that not to give much focus to the new product, but if I look at the journey of Triveni, right? I mean, how we started was we were leaders in 0-30, then we moved to 30-100, then we also added API capabilities. So when it comes to the aspirational target market that we want to cater to, in, let's say, 3-5 years' time, where are we right now? And how big can that aspirational target market be in the context of what we are currently catering to? Can it be 1.5-2x of the existing size? Or, I mean, what, what is the kind of aspirational target market that we want to get to in 3-5 years' time? You see, the market is changing quite rapidly. That is, that is, it's benefiting us also, but it's changing quite rapidly. Ultimately, what is it that we're providing? We're providing solutions for industrial heating and cooling, as well as distinct renewable energy proposition, power generation solutions. So each of those will have different applications from a product development and technology development, perspective. It doesn't mean suddenly that we're going to start making air conditioners. That's not, that's not the objective of any product development. But the industrial heating and cooling market and requirements are quite distinct. Renewable energy has greater play in terms of the possibility that may come about. But having said that, the markets are quite large, as you can imagine. You know, these are very, very large, undefinable type of markets. I think it's better for us to just take it as what's applicable right now for steam turbines. Is they, there may be a certain degree of cannibalization in the products that we develop. But the aspirational level will be to firstly, from the customer side, to be the most preferred vendor, to be able to. So that means product quality, its reliability, robustness, have to be quite consistent. Of course, efficiency levels have to be benchmarked globally. At the same point in time, is to keep expanding the growth potential and opportunities to be able to be more impactful on the industries and communities that we serve. And I think that we will end up doing that in time to come. Sure. So, if I understand it correctly, you know, there would be some cannibalization out of because of the new product. But is it also fair to say that maybe we are moving out of just being a steam turbine player to more of a turbine player in few years' time? Is that a fair way to look at things? No, no, no. We're a rotary, we're a steam turbine manufacturer, and I would encourage you to look at us as a predominantly steam turbine manufacturer for the next several years. Actually, it's not next several years. So whatever new products that we will start will happen at an incremental level. Sure. I wouldn't think that you should. We find ample growth opportunity in our current market. We don't want to lose any focus on what is present in front of us, both from product side as well as aftermarket. Aftermarket, including refurbishment. Understood. Understood. Because from where we are, where I'm coming from, is that from an investor point of view, it looks like you have covered most of the bases, right? In terms of the steam market opportunity, so to say. API was something we added few years back. In terms of capacity also, we have pretty much, you know, now we have the full range of turbines from 0-100, so to say. So, I mean, we were not very sure if there are decent, you know, wide spaces, which are still left to be catered to by our products. So that's where I'm coming from, but I take your point. We'll focus- Oh, one is our product development, but the market itself is much larger. We see, like, like the previous caller had also mentioned, we see ample growth opportunity to sustain the growth that we've had in the last couple of years. So... There's no reason for us to lose focus on that. Fair point. On this, you mentioned that there is an inquiry book of 7.5-6 gigawatts, right? I mean, if I heard it correctly. Could you help us understand that in last few years' time, how has our conversion rate moved, like, and what is it right now? Are we looking at somewhere close to where, I mean, just to understand the quality of inquiry, is it like a 70-80% kind of a conversion success that we have, or is it far- No, no, no. For one, it's conversion success within a year. Firstly, the con- regardless if it converts to us or not, I think that that would be somewhere in the region of about 40, 40, 50%. But then conversion within that to us is quite unique and distinct based on inquiry to inquiry. I don't think you can really read too much into that conversion directly to us, because it, because different levels of inquiry come at different stages of their ordering cycle. It provides us a more macro number in terms of opportunities to, to target. It provides us focus in terms of where to dedicate manpower and, and it also talks a little bit about our relevance in the market movements. So that's how we track inquiries. But having said that, to extrapolate and take data for our conversion success, we have certain numbers that we have, which unfortunately I don't want to share with you, which is in terms of the success that we have once we are in front of the customer, which are all very encouraging. We find that that competition, there is competition, but there is enough space for us to enter once we're in front of the customer. Sure. And lastly, on this U.S. subsidiary that you have set up, you mentioned that in next quarter you will come up with a detailed plan in terms of, CapEx and some of the other expenses, and it would be, more manpower kind of and heavy. Does this mean that we rule out any acquisition that we did in South Africa of that nature in U.S. market? Does it mean that, or that route is still open? No, we are not ruling out organic opportunity that we're evaluating. Okay. No, I was thinking that from the point of view of after sales, right? I mean, what you have done in South Africa, maybe is that kind of an approach? We think organic is a better way to go right now, you know, and we take every opportunity as it comes, but this is something that the team spent a lot of time on. Sachin and team have spent good amount of time in being able to do this. We've already transferred manpower, and we're looking for sales to come in, in FY 2025 itself. But of course, it's going to be more investment heavy. Sure. Great. Thanks a lot, and all the best. Thank you very much. Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments. Thank you very much. Thank you, ladies and gentlemen, for joining our call. We're very optimistic about the prospects of our company. We have a great management and management team in place, and we're looking to enhance our capabilities. If you, if you do spread the word that we're looking for good, able people and, you know, getting good people is always the best part. So, we look at you as stakeholders in our growth. Thank you. Thank you very much. On behalf of Triveni Turbine Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.