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Edited Transcript of GET&D.NSE earnings conference call or presentation 24-May-19 10:00am GMT

Q4 2019 Ge T&D India Ltd Earnings Call

New Delhi Jun 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Ge T&D India Ltd earnings conference call or presentation Friday, May 24, 2019 at 10:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Gaurav Manoher Negi

GE T&D India Limited - CFO & Whole Time Director

* Manikkapurath Sivaprasad

GE T&D India Limited - Executive of Business Operations

* Sandeep Zanzaria

GE T&D India Limited - Commercial Leader

* Suneel Mishra

GE T&D India Limited - Head of IR

* Sunil Kumar Wadhwa

GE T&D India Limited - MD & Director

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Conference Call Participants

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* Abhishek Puri

Axis Capital Limited, Research Division - NULL

* Jigar Shroff

* Jonas Hemant Bhutta

PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst

* Renjith Sivaram

ICICI Securities Limited, Research Division - Assistant VP

* Renu Baid

IIFL Research - VP

* Sagar Parekh

Deep Financial Consultants Pvt Ltd - Research Analyst

* Sumit Jain

ASK Investment Managers Limited - Portfolio Manager

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to GE T&D India Limited Q4 FY '19 Earnings Conference Call. (Operator Instructions) Please note, this conference is being recorded.

I now hand the conference over to Mr. Suneel Mishra, Head of Investor Relations. Thank you, and over to you, sir.

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Suneel Mishra, GE T&D India Limited - Head of IR [2]

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Thank you, Vikram. Ladies and gentlemen, good afternoon. My name is Suneel Mishra, and I manage Investor Relations for the company. So welcome to today's conference call with the GE T&D India Limited management team. We have organized this conference call to present financial results for the fourth quarter as well as financial year ended 31st March 2019.

Now let me first introduce my management team available on this call. We have with us Mr. Sunil Wadhwa, Managing Director, GE T&D India Limited; Mr. Gaurav Negi. He is our Whole-time Director and CFO; we have also sitting with us Mr. Sandeep Zanzaria, who is our Commercial Leader; we have Mr. Manikkapurath Sivaprasad, who is our Operations Leader; also, we have with us Mr. Manoj Prasad Singh, company Secretary; and Mr. Anshul Madaan, who is our Communications Leader.

Please note that this conference call is scheduled up to 4:30 p.m. I hope you all have received the investor/analyst presentation and read the disclaimer on Slide #2.

I will now request our operations leader, Mr. Manikkapurath Sivaprasad, to begin this conference call highlighting operation and execution achievements of the quarter. Thereafter, Mr. Wadhwa and Mr. Sandeep Zanzaria will take us through the order end markets, followed by Mr. Negi who is speaking on differentials.

I now invite Sivaprasad to begin. Over to you, Sivaprasad.

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Manikkapurath Sivaprasad, GE T&D India Limited - Executive of Business Operations [3]

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Thank you, Suneel. Happy to start off this presentation. To start, always your company has been focusing on execution, delivering the products and commitment to our customers. And we're happy to say that this quarter again, we also have been able to commission substantial projects across different domains, different technologies and different voltage levels.

So a few highlights I will take you through in this list. We've started with [15] megawatts solar plant from Marine in Tamil Nadu, which is (inaudible) measured it midnight, commissioned in last quarter (inaudible) for the power grid at the (inaudible) and in Assam . We have commissioned also (inaudible) Again for (inaudible) corporation, we have commissioned (inaudible) for their (inaudible) megawatts power protection (inaudible) substation in power gird in Chilakaluripet in Andra Pradesh and Gaya in Bihar. So these are the substation levels based on the 200 (inaudible) substitution of power grid and the best project commissioned in (inaudible) station in power grid (inaudible) Orissa and the biggest one is Chilakaluripet in Andra Pradesh (inaudible). So this is a key highlight of quarter actually when in terms of execution. And also happy to inform you that your company has been able to commission and add on the transmission capacity of [16-gigawatt] in the past financial year into the system.

Thank you, and over to you, Suneel.

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Suneel Mishra, GE T&D India Limited - Head of IR [4]

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Yes. Now I would request Mr. Wadhwa and Mr. Sandeep Zanzaria here to take us through the order.

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [5]

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So thanks, Suneel. (inaudible). So the key order, what we have won in the quarter is the (inaudible) 400 x 220 x 66 kg glass insulated substation package. This is the (inaudible) funding package and the substation has been installed in the state of Gujarat, which is renewable heavy teak and wood and also the (inaudible) has the power. And from the substations there will be other parts of Gujarat. POWERGRID, we have been able to secure an order, which is part of the TBCB scheme in the (inaudible) community. It is 400 x 220 kV air insulated switchgear to be build in (inaudible). One of the landmarks orders from last quarter was the level to take the 500 (inaudible) control reactors at Kurukshetra where we are building the attributed (inaudible). This is mainly the -- this will be constructed along with our finished unit (inaudible) the counterparts and will also be a major project in controlling the (inaudible) situations in northern grid.

Continuing the successes of the past quarters in (inaudible), we have been able to get the other for 3 members of different substations, renovation (inaudible) packages in the state of Jharkhand and we planned for a loan by (inaudible) translation was done business projects from (inaudible) to take the order for the (inaudible) extension packages of Gaganpur, which is again (inaudible). So the company has been quite successful in building (inaudible) all those from both government sector and private sector despite the headwinds that we are seeing in the market.

So thank you, and over to Gaurav.

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [6]

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If you go to the next page, in terms of orders, we get close to (inaudible) crores 70% growth year-over-year compared to the same period last year. (inaudible) basis if you'll see we are at 3,750 crores. It's lower than what we had last year, but that is largely driven by Powergen orders close to 800 crores, which were not repeating themselves in this current year.

If you go to the next page, in terms of execution, overall revenue for the [fourth] quarter is 895 crores, up 10% compared to the same period last year, which was 814 crores. Excluding the HVDC, HVDC was the flagship project that we've been executing, the revenue was up close to 20% at 848 crores versus 706 crores last year. And on a total year basis also, as you can see, we closed the year with a revenue of 4,218 crores, down versus last year. But if you exclude the HVDC order, we were up 9% at 3,935 crores. So in summary, despite the HVDC runoff , I think the team had managed to continue to grow the overall portfolio basis that should already shared in terms of the execution that we did this year.

The next is the profit after tax. Again, profit after tax claim at 26 crores versus 38 crores in the same period last year. And on a total year basis, we came in at 213 crores versus 209 crores, so 4 crores better than last year. This is despite the headwinds of declining HVDC backlog. So overall, we maintained better profitability for the portfolio despite some of the challenging environment that we are currently facing.

The last page is to summarize the financial performance. Overall, sales up (inaudible) in the quarter, down 4% year-over-year, but excluding the HVDC, we're up 9%. And operating profit percentage is in line with last year at 7%, and on a total year basis, we are at 9.5% of operating profit, which was close to 400 crores. And overall profitability level, profit after tax for the year was 213 crores.

So with that, I will open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a first question from the line of Renjith Sivaram from ICICI Securities.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [2]

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Congrats on a good set of numbers. Sir, if you can help us with the order book mix in terms of PGCIL, SEB's private.

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Unidentified Company Representative, [3]

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So for the quarter, overall, there is a market share of the private. The private player is close to 50% of the overall (inaudible) token and central utilities will be roughly around 25%, and the remainder has stayed. So 50%, 25%, 25%, that's the way [I'll share it.]

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [4]

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If you can give me the mix of the order book, 6,400 crore order book, how much is PGCIL?

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Unidentified Company Representative, [5]

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So on the order book side, rather than becoming (inaudible) the shift is now towards the private party that will be closer to a 60% of the order book, the 60 -- 6,400 crores that we're talking. And state is going to be (inaudible) central utility of PGCIL will be around 20.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [6]

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Okay. And they were -- last call, you had mentioned Bangladesh HVDC technical bid was expected. And price bid, you are expecting in July. But any action -- did you see any tender opening of the technical bid for this Bangladesh HVDC?

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Unidentified Company Representative, [7]

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So Bangladesh HVDC, the technical bids are open and they are under valuation. So we expect the (inaudible) submission to happen in the next quarter, not in this quarter, because of the (inaudible) they will be closed from some part of the June and from discussions with (inaudible) evaluation. And we expect the project to go on in July.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [8]

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Okay. And the Sri Lanka HVDC, what is the status out there?

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Unidentified Company Representative, [9]

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The Sri Lanka HVDC I think it is still going to take some more time, at least minimum 2 years, because of (inaudible) grid, which is being (inaudible) on the concept which is not formulated, but because that is along with the cable package and things like that, so it will take more time to come. So...

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [10]

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Okay. And of the overall order book, Champa-Kurukshetra was 190 to 200 pending. So now it will be close to 150 crores?

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Unidentified Company Representative, [11]

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Yes. Around 130 crores we kind of created of the balance this quarter that went by.

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Operator [12]

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(Operator Instructions) We have a next question from the line of Renu Baid from IIFL.

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Renu Baid, IIFL Research - VP [13]

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My first question would be to understand that after the momentum picking up on the execution side, fourth quarter, we are seeing some execution headwinds. So how should we read into the headwinds for execution? And how would be the outlook for FY '20 with the current backlog of 6,400 crores when we expect the execution to scale up?

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Unidentified Company Representative, [14]

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So overall, one of the challenges that we had that was the HVDC decline, given it was a substantial portion of the revenue. We've tried to manage that by offsetting the other portfolio projects that we had.

Given that there is some softness that we've called out on the order side, we do see pressure on the execution side largely because of a declining order book in 2020, and that's something that is going to get played out in the second half of this year, depending on the orders that we'll be taking in. But there will be some pressures that we see in the -- going into 2020.

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Renu Baid, IIFL Research - VP [15]

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Sure. But any constraints with respect to liquidity or customer payment issues, which have also resulted in postponement or delayed execution?

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Unidentified Company Representative, [16]

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Just to add to what Gaurav said and to your point, the sale this quarter would have been much higher except for reasons (inaudible) initially. There was a customer who had some financial issues exactly (inaudible) which had led to already (inaudible) postponed by at least a few more months. Okay. So that was within basically the backlog, and it continues to remain. And it's not a model which is getting the (inaudible) but it's work slipped into the next quarter at the request of the customer.

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Renu Baid, IIFL Research - VP [17]

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And what (inaudible) value in the backlog of this particular customer who's having financial statement?

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Unidentified Company Representative, [18]

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Was 200 crores or so.

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Renu Baid, IIFL Research - VP [19]

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Okay. So not settled.

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Unidentified Company Representative, [20]

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Yes. (inaudible) significant portion, significant in terms of shortfall (inaudible) shortfall, the difference between the last quarter and this quarter, this number is (inaudible). Secondly -- but that will come up in the next quarter. Secondly, 1 customer who decide on (inaudible) that kind for a particular project we have. And there were some negotiation of the (inaudible) number of units that are being supplied to whether it should be first (inaudible) last one. So that has taken time. We've resolved that issue (inaudible) so that project will start 3 months later (inaudible) timing issues. So, we haven't lost any margins probably say (inaudible) in the terms of the time we have taken to negotiate with better terms on those projects. So these are definitely the 2 major reasons for that. (inaudible) what sort of customers to whatever will the solution and try to do it this quarter because that would have not been as good as it is today now (inaudible) and shifted it at a later date.

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Renu Baid, IIFL Research - VP [21]

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Sure. So second, our order backlog would have declined approximately 10 percentage Y-o-Y. So how are we looking at the order -- new order pipeline for the next financial year thereafter, which you can expect the good momentum...

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Unidentified Company Representative, [22]

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I believe what basically -- I tell you what basically partly also because of the elections and the (inaudible) over the last almost a few months. Secondly, also you know that just before the elections, there is always the (inaudible) but the (inaudible) point has been that the (inaudible) schemes, which will get approved for implementation by PGCIL or under TBCB had taken some time by at (inaudible) government . So the Power Committee finally decided on the sights (inaudible) where they have to put up depending on the green corridor optimum levels. (inaudible) cleared by the MNRE and the (inaudible) government of India that is CEA (inaudible) September. And then the scheme just cleared then actual scheme detailed and specifications and (inaudible) little and all that which basically should have happened normally over a period of time gradually, but actually, just turned into 1 group, 1 time, for example, there is a 60 gigawatts of green corridor, which has been approved by the power committee for interstate transition of (inaudible) power. About 25 gigawatts of intrastate scheme approved by the states to pick up for tendering. Out of the 60 gigawatt, about 12 gigawatts was given to powergrid corporation on evaluation basis. And the balance are now coming at (inaudible). All that typically is started in last quarter. We've seen (inaudible) million dollars already that has been carried out in the last 2 months (inaudible) for TBCB, which will be powergrid (inaudible) will be participating. It will be coming up in the next 15 days. There will be about a few days back that they will be postponed due to some clarifications. And we see that about $2 billion will be (inaudible) substation. Overall, green corridor numbers will be (inaudible) very close, but what we see is about $2 billion of it, which will come up for the transmission business for 60 gigawatts. Roughly 1 gigawatt, we need around $20 million of station (inaudible) given that we take 10% (inaudible) green field or a brown field project, it is roughly that is kind of number. So that is one good (inaudible) I think most probably decided this year for large part of it will (inaudible). One of the reasons why I'm saying that this will get decided this year because (inaudible) for TBCB which are being built by a private company (inaudible) very short (inaudible) period. So somewhere around 15 months is what they have to deliver the entire project. so they really cannot wait too long (inaudible).

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Renu Baid, IIFL Research - VP [23]

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Right. And for my third question is if you see this financial year, you were able to show a pretty smart reduction in the raw mat to steel, which have the gross margin improved, combination of the mix also (inaudible). So to that extent, can one expect that despite a competitive backlog, good share of this improvement should be maintainable in FY 2021? Or do you think the backlog or the competitive pressure or lower margins will not be able to sustain this kind of margin on the current existing backlog? Hello? Hello? Hello?

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Operator [24]

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Ma'am, please stay connected.

(technical difficulty)

Ladies and gentlemen, kindly stay connected. We seem to have lost the management line. Please stay connected.

(technical difficulty)

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Operator [25]

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Sir, we are back in the conference. Miss Baid, would you like to repeat your question?

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Renu Baid, IIFL Research - VP [26]

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Yes. So my question was that in financial '19, a favorable sales mix had helped us to improve the material margins or the gross margins for the year. Now that the existing backlog is sitting with pretty competitive margins, you think part of the gains that we saw in FY '19 would be given up in FY '20 or a large share of this improvement is obtainable?

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Unidentified Company Representative, [27]

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It will be a little difficult now just given the levels of I think that we've seen one we should pick up some of the orders. But having said that, we typically would have kind of mentioned in the last (inaudible) also. We've got 15 to 24 months to figure out how to further enhance our cost optimization efforts that (inaudible) at the start. So they have added challenge for the team now to further find cost optimization on the product side, on the administrative side. So that's what we are now focused on. But it will be a bit more challenging as we go into FY '20 given levels of (inaudible).

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Renu Baid, IIFL Research - VP [28]

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Sure. And my last question, if I can, after 6,400 crores of the backlog that we have, is 65%, 70% of the backlog executable in the next 12 months? What percent of the backlog you think is executable for the next 12 months based on the execution time lines?

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Unidentified Company Representative, [29]

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So they're close to 70% -- 65% to 70%. And at the same time, we are also looking for convertible orders also. Like Mr. Wadhwa mentioned, we're trying to look at short cycle kind of the projects that will be coming out. So we'll try to see to what extent develop and rather than (inaudible).

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Operator [30]

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(Operator Instructions) We have a next question from the line of (inaudible) from PhillipCapital.

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Unidentified Analyst, [31]

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So basically, just carrying forward the previous question on the opportunities for fiscal '20 or '21, particularly on the Green Energy Corridor. So just wanted to get your views on whether the power generation projects for which these lines are being set, have they already been under construction or these are more prospective in nature, the solar projects or the wind projects that are likely to be linked to the Green Energy Corridor?

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Unidentified Company Representative, [32]

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So the Green Energy Corridor also into (inaudible) which is already, for example, under bidding. The wind projects and the solar projects are obviously under construction, and the transmissions service agreements for these projects would be (inaudible) they are supposed to be available for evacuation by end of 2020. But for the (inaudible) planning, the next wave of the projects. Also, we are planning to put a transmission system slightly ahead of the options which are happening. So that we are able to match the upcoming solar and wind projects would be available to the transmissions business then. So it is like both the cases are there.

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Unidentified Analyst, [33]

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So basically, the initial lot, which is likely to get commissioned or they wanted commission by FY '20 and it's just about 28 gigawatts, right? Or is it the entire 68 gigawatts?

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Unidentified Company Representative, [34]

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No, it is not 68 gigawatts. It's around 28 gigawatts.

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Unidentified Analyst, [35]

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Right. So the ordering for 40 gigawatts would still be sort of back-ended. The 28 gigawatts is something that is more front-ended. And that you said, sir, is $2 billion for the entire 68 gig, is the $2 billion opportunity for (inaudible).

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Unidentified Company Representative, [36]

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Entire, entire.

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Unidentified Analyst, [37]

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Okay. And you expect the 40 gigawatts kind of ordering to come or that will be sort of maybe FY '22. They would first want this particular set of 28 gigawatts to get commissioned. Is that how it is going to work?

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Unidentified Company Representative, [38]

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That will be staggered within next 2 years' time.

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Operator [39]

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(Operator Instructions) We have a next question from the line of Abhishek Puri from Axis Capital.

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Abhishek Puri, Axis Capital Limited, Research Division - NULL [40]

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Two questions. One, could you give us a breakup of your projects versus products revenue?

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Unidentified Company Representative, [41]

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(inaudible) is going to be projects. The remainder is going to be products.

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Abhishek Puri, Axis Capital Limited, Research Division - NULL [42]

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I'm sorry. I didn't get you, sir.

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Unidentified Company Representative, [43]

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40% is going to be projects based revenue.

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Abhishek Puri, Axis Capital Limited, Research Division - NULL [44]

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Okay. And in terms of the order book, how will be the proportion like?

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Unidentified Company Representative, [45]

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Again, similar kind of proportion.

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Unidentified Analyst, [46]

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Okay. And my second question again is on the Green Corridor. You're talking about $2 billion of projects, but yet you are giving a very muted outlook for FY '20. I mean, you've been seeing some pressure on account of lack of your orders or the order book is low. So why would that be? Because I would believe if these orders are coming in, they will -- or do you expect them to be finalized towards the end of the year?

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Unidentified Company Representative, [47]

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Yes, towards the end of the year. That's what we mentioned for them to then get converted into sales. That's why we think FY '20 is going to be very muted. Most of the orders are expected in the latter part of the year.

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Abhishek Puri, Axis Capital Limited, Research Division - NULL [48]

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Okay. And what was the amount that you mentioned is going to POWERGRID -- is going through POWERGRID?

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Unidentified Company Representative, [49]

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Out of this 68 gigawatts, there is variance -- the breakup there basically that -- which we have in (inaudible) [PGCL] (inaudible) from the meeting. Out of the 68 gigawatts, 28 gigawatts are urgency because they are required to off take power and the transfer power from (inaudible) already under commissioning and negotiation. Out of the 28, 12 gigawatts has been given to PGCL. [20 crores] at PGCL basically was (inaudible). Balance of the -- basically going to depend upon the speed at which tenders that included by (inaudible) or [new] sales are basically residing. And the only time that is taken for it [to commission] project for wind and solar is much more than what it takes to commission the line of the substation. So therefore there is no way that they will actually be waiting for the finalization of the bid and then awarding the (inaudible). It has to be in advance.

Since those keys have been approved and CERC have also taken that into their oral plan and these keys are basically for a total of 100 gigawatts. As of today, the [true] return of the commission from wind (inaudible) 25 gigawatts. That's exactly the business commission potentially of solar and wind taken together. The (inaudible) hundred are over a period of 2 years, so I guess the most conservative number that Sandeep just mentioned would be over 2 years the [balance will be]. Realistically, I think some of the [copy] might be actually tendered out this year and the balance should be in the calendar year 2020 allocated, especially with the same parties coming back to power. [This EV volume just continues to accelerate].

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Abhishek Puri, Axis Capital Limited, Research Division - NULL [50]

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Okay. So is there any other report because the report I checked on POWERGRID was on INR 5,720-something crores of project approval, which has come through for Green Corridor?

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Unidentified Company Representative, [51]

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I have a report from [PCL]. I'll just check the whether there is some (inaudible).

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Operator [52]

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(Operator Instructions) We have a next question from the line of Jigar Shroff from Financial Research Technologies.

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Jigar Shroff, [53]

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In the footnotes, you mentioned about initiating of a [VRST]. I mean could you let us know something about it in terms of how much would it lead to in terms of savings and employee cost? And sir, another bookkeeping question, what would be the net debt on the books?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [54]

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The net debt is roughly around INR 20 crores.

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Jigar Shroff, [55]

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How much?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [56]

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INR 20 crores, 2-0 crores (inaudible). And then the [VRST rollout] is one of our (inaudible) facility as has been communicated. Again, given that we have to do manufacturing transfer on our facilities, we are trying to see optimization both in terms of cost as well as the [lowering] that needs to be managed across those 2 plants that we have. In terms of -- again, more to optimize what is also reduction in the employee cost/benefit because it's another factor driven by many of the factors that we plan to rightsize (inaudible). So I'm not able to share with you right now the numbers related to (inaudible).

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Jigar Shroff, [57]

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So it won't be a significant reduction in the employee cost, would you like to say?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [58]

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Again, the scheme has been rolled out for where we wait for (inaudible) to play out because depending on the number of people will opt for that, we'll be able to have more formal numbers in. So I'm not able to give you a number right now.

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Jigar Shroff, [59]

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I see. I see. And so again in the balance sheet, sir, I mean there is a significant movement in current assets, in other financial assets and other current assets. Can you explain a bit on that, sir?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [60]

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So again, there is a (inaudible) which we'll see, so you will see a [reclass] that is happening to other financial assets, to other current assets if you compare March '18 and 2019.

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Jigar Shroff, [61]

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So nothing in...

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [62]

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Nothing material. It will aggregate the 2. (inaudible) it depends. So there is nothing substantial. It's just [a reclass] we've implemented.

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Jigar Shroff, [63]

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And the cash and cash equivalent has dropped significantly, sir.

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [64]

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Yes. We kind of shared that in the [pride] what is also -- what you have seen March '18 to where we stand, we have close to INR 400 crores of cash. But given some of the positions we have with some of the customers that we talked about, the receivable balance has gone up. So at the end, the effort is going to get towards electing that and again, a timing factor that is driving the cash position down to a net 0 balance [mark].

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Jigar Shroff, [65]

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And so again, going back to the earlier question, you mentioned you see some pressure on execution on FY '20, but you continue to maintain, as you've mentioned in earlier con calls, that looking at an EBIT margin in the range of 9%-10% of FY '22 -- for the current year.

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Unidentified Company Representative, [66]

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FY '20.

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Jigar Shroff, [67]

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FY '20, would strive to maintain the EBIT margin, 9%-10%, sir?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [68]

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We've always said it's going to be high single digits, and I think for this year, it came out to be high single digits. There is going to be pressure on margins now. As we go into FY '20, there is going to be pressure, reason being both on -- in terms of revenue, there's going to be pressure given the order backlog. So '20 is going to be a little bit of a challenging year for us. But given some of the opportunities that we've spoken about that we expect coming in the second half of this year, '21 is where we see there is going to be, again, uptick -- expected uptick for us. But '20 is going to be a challenging year.

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Operator [69]

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(Operator Instructions) We have the next question from the line of Sumit Jain from ASK Investment Managers.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [70]

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Sir, this INR 7 crore provision on account of IL&FS bonds is in which line item?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [71]

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That's in employee benefits expenses.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [72]

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So just above the OP, the operating profit, right?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [73]

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Yes, yes, it's above the operating profit.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [74]

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Okay. And in the past, you have spoken about digitalization projects that you've undertaken and booked revenues out of it. Is it on the GE products platform that you've utilized for the same?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [75]

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No, it's not under GE products platform, but it's under e-terra platform.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [76]

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Sorry?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [77]

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It's under a different platform.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [78]

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Okay. If you look at your figures, they are utilizing the platforms that are available with their groups and their [parents] in the other companies -- the other 2 MNCs that are there in the POWERGRID space and are now moving out both globally as well as locally in a sense and getting more into digitalization projects. So is there a thought process of utilizing GE products because I believe even that is open source platform?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [79]

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So basically, the platform, which we are using for the smart transmission management system is like e-terra, which has been with us for many years now, and most of the projects have already been delivered on those platforms. So we understand GE products is an open source platform, but still, the customization in the platform for this type of application is still not started. So we are concentrating presently on a platform, which -- where we have a lot of experience of delivering on the projects, so whether it is POWERGRID or (inaudible) others as well.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [80]

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Sure. I missed the name of the platform that you just gave, which you utilize for digitalizing projects.

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [81]

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It's called e-terra.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [82]

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E-terra.

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [83]

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Yes.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [84]

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Okay. Could you elaborate more on this platform as to who has built this platform and how do this function and in terms of the capabilities, who they have tied up with globally?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [85]

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So this we can discuss offline as well. So...

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Operator [86]

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(Operator Instructions) We have the next question from the line of Renjith Sivaram from ICICI Securities.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [87]

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In your presentation, you had -- in the order intake for last year, you had given this INR 810 crores of Power Gen, so -- and the other's a slow business. So just wanted to understand what does that bifurcation mean?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [88]

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So it's like basically, Power Gen, we had kind of some relatively large packages what we had taken from the thermal power gen segment. And if you look at 2018, '19, this segment was not present because none of the thermal power large projects we've got awarded. If you really look the year before that, then it was Jawaharpur. It was Obra. There were a lot of bigger thermal power plants, which were awarded also for Ramagundam, so we had a one big chunk coming out of thermal power. So the project -- balance of that business line with TBCB power grid, (inaudible) the private sector, the industries, everything is part of [that] business.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [89]

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Okay. So how much of this INR 810 crores of order intake is still in your order book?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [90]

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I think about 50% to 60% is still in the order backlog.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [91]

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So we can assume around INR 400 crores, INR 500 crores of this solar, the Power Gen business is still there, which will be kind of slow moving?

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Sandeep Zanzaria, GE T&D India Limited - Commercial Leader [92]

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It's not slow moving. Actually, the delivery of these projects was more than 12 months, so that is why this is going to be executed in the [after end] quarters.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [93]

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Okay. And what kind of order intake growth we can expect in FY '20 given this Green Energy Corridor [Bangladesh] HVDC and some of these larger opportunities? Will it be kind of 15%, 20% growth?

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Unidentified Company Representative, [94]

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Yes, our target is to always to improve the numbers. Right now, our target definitely is to be much better than we did last year on (inaudible) including others. It all depends on timing, how the competition is and how much is actually -- I mean we continue to have a market leadership last year so we see (inaudible) which is about (inaudible) market continues then we should see. I mean, the overall market size beginning to be higher (inaudible).

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [95]

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Okay. So around 15% kind of an order intake growth is possible given the opportunity for FY '20.

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Unidentified Company Representative, [96]

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The target is definitely to improve it around that number. That's our target. We're working towards that.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [97]

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Okay. And in the substation kind of ordering for this Green Energy Corridor, will we currently have a -- what kind of market share we have?

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Unidentified Company Representative, [98]

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Green Corridor is now coming only. And I said market share is -- overall market share in India, all included. So Green Corridor tenders are yet to be finalized because that will depend upon who wins the tariff-based bidding and (inaudible) the concessionaire for the Green Corridors and how we are placed with that customer. So that is second stage. [First is] won by the company like PGCIL or Sterlite or Adani (inaudible). I noticed by 4, 5 months or (inaudible) what market share we (inaudible).

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [99]

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Okay. But overall, we are confident that given the technology intensity in such kind of projects, we can still be able to get close to at least around 30%, 40% of this substation market in this opportunity. Is that understanding correct?

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Unidentified Company Representative, [100]

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I can only say, in the past, what we had been doing apart from -- we said that the market (inaudible) company overall market. But if you look at the segments, there are -- for example, GIS segment, we have been in the region of 22% to 30% market share in the last 2 years. If that trend wants to continue, there is poor competition. At the same time, there is no work also. So to retain that position, we got something incredible (inaudible). As I said, we are truly targeting to improve around that position.

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Operator [101]

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(Operator Instructions) We have next question from the line of Jonas Bhutta from PhillipCapital.

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Jonas Hemant Bhutta, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [102]

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Yes. Just to follow up, basically just [quotes] for the list of [EPC] projects, most of them are like 400 kV. There's rarely, hardly any 765 kV. So just connecting what Renjith was asking in the previous question. Is there some technology-heavy portion within this? I see what you think that the competition that exists in the typical 400 kV segment would also participate in this? And hence, the strike rate would be lower despite of $2 billion of opportunity. But given that it is going to be like highly competitive, you would choose to sort of restrain your strike rate.

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Unidentified Company Representative, [103]

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.

Okay. Let me explain to you how the Green Corridors have been (inaudible). The Green Corridor will be -- one part will be in the interstate. The interstate transmission lines would have -- the links would have 765 kV and [full input] because (inaudible). So that $2 billion would have something like, I would say, 50% of (inaudible). When it comes to the state ultimately because this Green Corridor will -- ultimately the power has to flow into the state. In intrastate figures -- is a figure of (inaudible) [in my column], the Green Corridor would actually involve 400 kV and 220 kV (inaudible). That would not have 95% of the cases (inaudible). There will be no (inaudible) in the interest rate. [68] gigawatts and the Leh Ladakh both interstate lines, long distance lines.

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Jonas Hemant Bhutta, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [104]

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Okay. So basically, these are [ISDS] lines, which basically evacuate power out of Bhadla in Rajasthan and Bhuj in Gujarat. So you -- that portion only sort of is the $2 billion opportunity. The ones that [settle that] distribute that power to various states (inaudible) power, which is an (inaudible)

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Unidentified Company Representative, [105]

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All intrastate lines would actually mostly be done by the state (inaudible). Some of them from state were also allowing TBCB for state lines.

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Operator [106]

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(Operator Instructions) We have next question from the line of Sagar Parekh from Deep Finance.

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Sagar Parekh, Deep Financial Consultants Pvt Ltd - Research Analyst [107]

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So you gave us a good idea of (inaudible) on the Green Corridor ordering that is supposed to happen in FY '20 and '21. Besides that, can you give us some color on the base business outlook? How will that pan out for us for FY '20 and '21?

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Unidentified Company Representative, [108]

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So I think normally, when you look at the transmission business, it is like evacuation of power where the generation was coming up and then also in reconnecting the various transmission schemes, which are there. So it's like the base business is now getting converted into the Green Energy Corridor because now instead of thermal power generation, the generation source is seen from thermal to renewable side. So when is it Green Energy Corridors are coming? And whatever the intrastate what [Sandeep] was talking about (inaudible)? Going forward, this will be the base business, which is going to (inaudible).

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Sagar Parekh, Deep Financial Consultants Pvt Ltd - Research Analyst [109]

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Okay. So PGCL for that matter will only be, let's say, 28 -- 12 gigawatts into $30 million, so $360 million would probably be the PGCL opportunity for us. Am I right?

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Unidentified Company Representative, [110]

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Because PGCL, for example, if there are certain critical projects, which needs to be done on an urgent time lines. So PGCL gets awarded those projects directly. But apart from this, whatever comes under TBCB, powergrid it allows to participate there as a concessionaire. So then they participate as concessionaire and whatever they will that will additional power grid business that comes.

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Sagar Parekh, Deep Financial Consultants Pvt Ltd - Research Analyst [111]

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Okay. And any color on the private side ordering? How is that shaping up for us?

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Unidentified Company Representative, [112]

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So private side, I think if you really look at the last quarter, we had one project, which was there with Adani, which we have taken for (inaudible) balance. There are other packages which are still under bidding for TBCB like (inaudible). Once they get decided, this got delayed because of election, then there will be -- this private sector ordering will also pick up.

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Sagar Parekh, Deep Financial Consultants Pvt Ltd - Research Analyst [113]

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Okay. And FY '19 last year, how much -- out of the total order inflow, how would that breakup be in terms of private, PGCL and SEBs. You gave us a Q4 number, right?

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Unidentified Company Representative, [114]

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Yes. So 60% was private and the number was say between the state and the central.

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Operator [115]

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As there are no further questions, I now hand the conference over to Mr. Suneel Mishra, Head, Investor Relations, for closing comments. Sir, over to you.

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Suneel Mishra, GE T&D India Limited - Head of IR [116]

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Thank you, Vikram, and thank you, everyone, for participation. With this, we will conclude today's conference call. And in case if you have any questions or queries, please feel free to contact me or my communication leader, Mr. Anshul Madaan. Thanks again.

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Operator [117]

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Thank you very much. Ladies and gentlemen, on behalf of

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