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Edited Transcript of GET&D.NSE earnings conference call or presentation 29-Jul-19 9:30am GMT

Q1 2020 Ge T&D India Ltd Earnings Call

New Delhi Aug 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Ge T&D India Ltd earnings conference call or presentation Monday, July 29, 2019 at 9:30:00am 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

* Sandeep Zanzaria

GE T&D India Limited - Sales Executive & Chief Commercial Officer

* Shailesh Mishra

GE T&D India Limited - Business Unit Head of Turnkey Solutions South Asia for GE Grid solutions

* 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 - Executive Director of Capital Goods, Infrastructure and Power

* Bhavin Vithlani

* Kunal Sheth

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Renjith Sivaram

ICICI Securities Limited, Research Division - Assistant VP

* Renu Baid

IIFL Research - VP

* 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 the GE T&D India Limited Q1 FY '20 Earnings Conference Call. (Operator Instructions).

Please note that 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, Mr. Mishra

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

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Thank you, Mira. This is Suneel Mishra, and I manage Investor Relations for the company. When it comes to today's conference call with GE T&D India Limited management team, we have organized this conference call to present financial results for the first quarter of the current financial year 30 June, 2019. Now let me first introduce my management team available on this call. We have with us Mr. Sunil Wadhwa, our Managing Director; we have Mr. Gaurav Negi, Full-time Director and Chief Financial Officer; we have also sitting with us Mr. [Salish] Mishra on Project Operations; we have on-call Mr. Sandeep Zanzaria, who is our Commercial Leader; also we have with us Mr. Manoj Prasadh Singh, Company Secretary; as well as Mr. Anshul Madaan, who is our Communications Leader.

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

I will now request Mr. Shailesh Mishra to begin this conference call, highlighting operations and execution achievements of the quarter. Thereafter, Mr. Wadhwa and Mr. Sandeep Zanzaria will take over, who will give you an update on the order and market, followed by Mr. Negi, who will be speaking on financials.

I will now invite Mr. Shailesh Mishra to begin. Over to Shailesh.

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Shailesh Mishra, GE T&D India Limited - Business Unit Head of Turnkey Solutions South Asia for GE Grid solutions [3]

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Thank you, Suneel. Good afternoon, everyone. So some of the key executions which we did in the first quarter were 220 kV GIS substation, which we built for Himachal Pradesh in Wangtu. There was an HVDC transformer charge for Bhadrawati [PGCIL,] which was a private project. 50 megawatt solar project, which we did for Azure Power and a couple of other substations like Saudi Arabia, which we built in Baghdad, Rajasthan and a 66 kV VIA substation which we did for Tata. Tata is a [yearly Delhi Distribution] substation, so this was also key for us. These were some of the key executions for quarter

Over to Sandeep now for commercial activities.

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [4]

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Thank you, Shailesh, and I think the quarter will be from the transmission perspective was quite soft. Primarily we are all aware due to the elections because of modern code of conduct to being in place, a lot of deficiency got deferred in the quarter or after the government responded then. Now we have seen the traction coming back into the market for the transmission sector.

The key orders what we have won is like 400 kV converter transformer for Vindhyachal. So like, Shailesh said that we have already commissioned the one for Bhadrawati. This is a new order what we got from POWERGRID. Then there is upgradation of 420 kV substation at Salakathi, Assam. We've taken orders for GIS substation from [LNP] for the Ranchi Smart City and also from the revamping of the [hotlines] control systems from NALCO in Angul, which is our very own control center and the order has been taken.

If we really look at the order, the softness in the order that we previously explained to you, but against the last year in the same quarter of about INR 612 crores, we have landed at about INR 418 crores. There were various opportunities of about INR 400 crores where we had a merged endpoint, but because of the modern code of conduct, the complete process took more time and these orders have got shifted into this quarter. The notable orders, these are orders that the -- like West Bengal 220 kV GIS project. In J&K, we have emerged as one of the project and network management system. It is to provide control centers for Jammu and Srinagar.

And network management side has emerged as the lowest bidder for Renewable Energy Management Center for on demand. Apart from that for the private sector, we have emerged the lowest for supplying the 400 kV EIS substation in [Tuerdowni, Gahmbot] and also for Tata Power, [we believe] one of the 66 kV GIS projects.

So overall market, if we really look at after the elections, have picked up. There has been a round series of TBCB projects, which have undergone reverse auction for the developer side, which is for revitalization of Green Energy Corridor, and also for some state projects like [Macasa] grid or on the NP project of [Guna] bank. And in continuation to this, there are many projects which are lined up for the reverse auction in the month of August and September. Some part of Green Energy Corridor and some also part of UP state sector, like [the Meera ramp-up] project. So there is a good amount of pipeline which is available. And also to state which -- what we have been putting during the first quarter, some are now opening and will create a good pipeline for the Q2 which we are in today.

So these all from my side.

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [5]

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On the next page, this is just the financial numbers on the orders. We paid INR 418 crores of orders compared to INR 612 crores in the same period last year. But as Sundeep mentioned, we did have close to INR 400 crores of A1 positions, which did not close out in Q1. But nonetheless, we are in A1 position so we going to close out in Q2. And with that, our order books stood at close to INR 5,950 crores, which is still equivalent to around 1.5 years of revenue execution.

If you go to the next page, in terms of sales and execution. This was a soft quarter for us, if you see the trend that we've had over the past many quarters. Our revenue came in at INR 734 crores, which is down versus last year by 37%, which was close to INR 1,160 crores in the same period last year. Now there are largely 3 drivers driving the reduction in the revenue, the big one being the run-off of the HVDC portfolio. So close to INR 60 crores, which is not repeating itself.

We did have some stressed customers in our backlog, which are facing some pressure from a financial constraint time point, for which the -- some of the executions were held back as we did not wanted to take any exposure on those accounts till the things improved with that particular customer. And then, there was some instances where we had some execution that got moved from Q1 to Q2 so those are going to come in Q2 quarter.

So in aggregate, we closed at INR 734 crores, lower than what was last year.

If you go to the next page, which is on the profit. Again, largely because of the softness in the revenue, the profit also came in lower. We had a profit after tax of INR 3.4 crores compared to INR 82 crores in the same period. So given the lower revenue, the leverage didn't come through. So as a result, profits were also low at INR 3 crores.

The last page is a summary of the financials. Like I mentioned, revenue at INR 734 crores, down 37%. EBIT was, or operating profit was INR 22 crores at 3% given the lower leverage due to the lower revenues. And profit after tax was INR 3.4 crores in the current quarter.

So with that, we'll open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is 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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So to start with, last quarter, we had informed that there was some INR 200 crores worth of 1 order, which due to some issues, will get postponed to Q1. So I am unable to understand, like if you add -- if you adjust for that then our overall execution in Q1, it will be kind of very muted. So is there any other issue or is there any particular order? Is that order still pending as a slow-moving order execution?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [3]

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So Renjith, Sandeep here, so in fact you are right. That order which was like last quarter, we had collected for this quarter. Because of certain procedural reasons has again shifted to this quarter, which is like Q2. So this is still a carryforward for us and we are expecting that to come in the month of August.

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

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So this order is under which [had each] is it? Solar order or is it a private order or PGCIL order?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [5]

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It's a government -- it's a state utility order but the procedural time like the time of finance between TFC, the state utility and the approval process is taking some time. So that is why it's got stuck. It's not a private order, it's a government order. And it's -- the process time is bit elongated because of some approvals from financing company TFC also takes time. So we are expecting it to close in August.

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

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And also you had mentioned that 65% to 70% of the order book starting is executable within 1 year. So that trajectory and the traction continues, right? There is no risk to that trajectory? You had mentioned that 65% to 70% of the order book is executable within 1 year during last quarter call. So that run rate continues or do you see some risk?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [7]

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Is it -- the trajectory remains the same. In fact going forward, we are looking at even shorter schedules from the customers who are winning the TBCB projects under the Green -- for the Green Corridors, where the delivery schedules are much tighter than what they used to be in the past. So the answer is the trajectory will remain the same or even slightly better.

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

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And there was a Bangladesh HVDC technical bit, which we are expecting the price bids to be open July, August. So is that still what is the standard?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [9]

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The standard I understand was scheduled for today. They are still in the process of asking questions on the technical submissions to all the bidders. And the last discussions that we had about a month back, they are targeting September, by which time, they should be able to finalize. But it might extend to October as it seems.

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

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Okay. And lastly, the order book and order intake mix in PGCIL, SEB and private?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [11]

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So as far as the order book is concerned, the backlog 60% is private, 20%, it's going to be around 20% is going to be central and the remainder is [state] and others.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [12]

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Okay. And order intake?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [13]

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Intake is geared towards more private, so it was at 70% to 75% is towards private.

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Operator [14]

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(Operator Instructions) The next question is from the line of Abhishek Puri from Axis Capital Limited.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [15]

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A couple of questions from my side. So first on -- the material cost has actually declined for you, despite the dropping revenue rate. Could you comment on the pricing in the market, has that become worse or has that become better? Because I'm listening to your annual report where you had mentioned that new Southeast Asian equipment companies have come in and they continue to bid aggressively. So in that context, I would draw your comments on this as well.

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [16]

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I think this is a continuous process, if I may say. And what one would say what the competition is doing is to validate what other finding out.

And we also internally keep looking at cost optimization in response to the market pressures and/or improving our margins. So over the last 2 years, we have seen quite a significant portion of what we thought we would be able to achieve on cost optimization has been achieved. So I mean, there -- if some competitors look at our balance sheet, they would ask the same question that you are asking us. So it's a continuous process of valuing cost outs, design improvements to bring the cost down.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [17]

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Okay. In terms of your first comment, the opening comment was that the execution on orders have been delayed from Q1 and Q2 -- from Q1 to Q2. But the market activity, is it clearly reversing? Are you seeing more amount of tenders because the Green Energy Corridor projects also are yet to be bid out to the private sector guys and then maybe they come to -- for the equipment manufacturers in terms of bidding. So what are the realistic timelines that we should look at in terms of new order inflow?

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Unidentified Company Representative, [18]

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So Abhishek...

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [19]

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Indeed. You're right actually in your assessment. The last quarter was -- in fact, the last 2 quarters were impacted by 2 factors: One of course, the election code of conduct at the central level as well as some states like Rajasthan and others. The other was really the determination of what is the kind of infrastructure required for the remaining 100 gigawatts of -- in fact, remaining 100 gigawatts of schemes that are required to be approved at the central government level, the Empower Committee, for completing the 175-gigawatt [recommendation].

So those approvals -- in principle approvals were actually put in place by the Empower Committee sometime in October last year. And following that, were the specifications of those schemes to make it into a tangible proposition. So the -- in short, the tender activity has picked up tremendously in the last -- post elections and especially the TBCB projects, which have been approved. First phase is about 38 gigawatts, of which 12 gigawatts were nomination basis given to PGCL and the balance are in the market for TBCB bidding.

The remaining projects also, the approval is there. Recently, the minister of power -- Ministry of Power, actually, has exercised that they need powers to request the CRC force speeding of the approval process. So we expect the entire 100 gigawatts of infrastructure-related schemes for interstate to be tendered out, I would guess, in the next 6 months or so. There is no other option because they have to be completed by 2022 and the time it takes to complete those schemes.

The next phase is going to be, in fact it should have been a parallel phase, is to look at the states which will have to absorb this power would have to also set up the infrastructure to the extent they are short of it. So yes, the answer is that there is a, as expected, the trajectory was this way in the current year.

And also I just wanted to mention that our -- over the last 6 months, when received order intake has been much lower than compared 2 last years, in the first -- and I'm looking at the last 6 months, overall commission. The second quarter is too small a period to be a good pattern. And our order intake has been about 16% of the market, which has been also a market share that actually we had in the previous years.

But if I add to that, the orders which we have won in June but could not get the orders within June and they are now in process partly we have received in July, partly we will probably get in August. If I add that to the market size and I add that to the order intake, for us, it is close to about 19%. So the -- therefore, the overall market size and the trajectory is the -- actually that is reflected in our numbers.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [20]

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And last question is on the order backlog. Have you taken out any orders or canceled any orders of about INR 150-odd crores is the gap that I see in the backlog calculations versus what you have reported?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [21]

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Yes, there was some cancellations related to the [awarded] projects that we had, which were not moving.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [22]

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Largely from the private sector side?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [23]

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It was a private sector customer.

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Operator [24]

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(Operator Instructions) The next question is from the line of Renu Baid from IIFL.

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Renu Baid, IIFL Research - VP [25]

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Sir, my first question would be just to understand a little more in detail. Last year, the way you broadly mentioned that 2/3 of the last year's closing backlog should be executable in the current financial year. So just looking at the execution done and the core T&D revenues itself have declined, and you have highlighted 2 or 3 reasons. Of which, what could be the share of revenues impacted because of stressed clients, as in, clients which are facing financial closure or financing issues? And what would be the exposure to some of these stressed private TBCB clients in the backlog and in the receivables for us?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [26]

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The -- so roughly, INR 200 crores is what we are looking at as something which is stretched right now for us, related to a few customers.

But -- and from our receivables standpoint, we have exposure up to INR 80 crores on those particular customers.

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [27]

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I'd just like to add that of these stressed customers, the one main customer, there were 2 types of projects: One was solar, other one was the TBCB. The solar project has recently got started.

(technical difficulty)

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Renu Baid, IIFL Research - VP [28]

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So basically, are we still broadly on track to try and target flattish revenues for the year, given that the head start for the start of the year has been very weak and the trade tightness across a lot of customers continue? So despite having an executable backlog, that could be further constraints to target of flat revenue? Or do you think [it's irrelevant or seasonal]?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [29]

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We'll have to catch up probably for the loss of revenue -- it's not lost actually, the deferment of revenue. So we are still preparing our plans to how close can we come to the new plan, but it's a tough task and depends on how soon the projects restart, the project which is the -- the one project we talked about restarts.

Then also in one case, some delay from the customer's side, customer's -- end customer being a utility [genco transmission] project, where there were a lot of changes in the -- not specifications but the scope of work, which associated us to stop the work in order to minimize wastage. So that has -- we will be doing communicated to us so that -- this happens. But working which are -- that's the major project for us, which we are executing. So there could be that some impact on overall revenue numbers but the idea is to try and catch up as much as we can.

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Renu Baid, IIFL Research - VP [30]

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Right. And sir, my second question was, we've highlighted that there were new orders coming in from the state as well as from TBCB clients, probably towards second of the year. But given that most of the peers in market have been starved of orders for the last 1 year, on the pricing side, do you perceive the pricing environment to improve? Or broadly, is the reading right that even in these orders that are coming in and the margins will continue to remain fairly competitive?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [31]

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Yes, so that way -- actually you know what happens is that there are some customers who we, sort of, have a strategic, sort of, a tie-up, not new tie-ups where we get a preference similarly from other competitors with some other customers since we are not all L1 tenders as far as we are concerned. So these are new tenders for the customers. So I don't see too much of plus/minus impact on our market share beyond this current scenario because we are also continuously looking at optimization of our costs and designs to really give value to our customers.

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Renu Baid, IIFL Research - VP [32]

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Sure. And my last question would be what is the scenario on the working capital and the debt side at the end of the quarter? Have you seen any of those [matrixes] touching during the first quarter of the year?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [33]

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Yes. We have some -- a little bit of these on the debt side, so it's similar to INR 250 crores of debt. But on a net-cash basis, it's around INR 200 crores because we do have cash. So there is an uptick but again, this is largely because of delays in some payments from some of the customer accounts, which we are hopeful we'll be able to get in Q2 early.

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Renu Baid, IIFL Research - VP [34]

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And the net working capital or DSOs, how would they have moved over the last quarter?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [35]

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So with our company, what we have done is gone up to the same extent by INR 200 crores -- [INR 190 crores] I would say. And this leaves us around INR 1,000 crores of working capital.

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Renu Baid, IIFL Research - VP [36]

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Sir, and if I can ask for one clarification. You mentioned some orders for cancel from the backlog. From which customers were they and what was the quantum of the order?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [37]

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It was around [150]. I can't give you the exact number.

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Operator [38]

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The next question is from the line of Renjith Sivaram from ICICI Securities Limited.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [39]

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Just a clarity. Just wondered the worth of order, was it pertinent to one customer or was it just pertaining to more than one customer?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [40]

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One major customer and then there was smaller one, which are not a material amount but in aggregate adds up.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [41]

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And just to harp on the Green Energy Corridor. So what kind of timeline should we work out in terms of when the orders can be placed for the main guys and subsequently 2 also. Is it realistic to assume that it will take in this quarter Q2 or will it be more towards Q3?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [42]

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The 100 gigawatts of scheme which I've mentioned, they'll take some time. But the 38 to 40 gigawatts of scheme which have come up in the tender stage will not really all be ordered in this quarter. They will definitely get spread at least over 2 quarters. But the process has started, tenders have -- in fact, many PGCIL projects have been closed. And we know where we stand in terms of those projects. And some orders are expected in this quarter, maybe next quarter as well from whatever we -- [where we -- next time moves].

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [43]

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And these will largely use GIS or it will be more of AIS in terms of substations?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [44]

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Both.

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Operator [45]

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The next question is from the line of Sumit Jain, ASK Investment Managers.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [46]

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Sir, sorry I've missed the number on net working capital.

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [47]

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The net working capital went up by close to INR 190 crores to INR 200 crores.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [48]

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Working capital? Yes, okay. And the INR 200 crores of revenue, which last quarter you said, I mean just to understand it clearly, which got pushed to this quarter and again got pushed to the next quarter. Is that the understanding correct so that the quantum remains the same?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [49]

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It was INR 200 crores of orders.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [50]

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Which went into execution. So what is the deferment of revenues that we think got pushed to next few quarters or next quarter?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [51]

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One big portion relates to one particular customer, which you see people financially constrained right now. So we have a contract with them. As a result, we are kind of holding back the execution till the financial position gets more clarity for that particular customer.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [52]

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And that is the quantum of that is INR 200 crores, is that the understanding correct?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [53]

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That will be close to INR 150 crores.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [54]

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Okay. And when you say that the market share of your order wins was 16% and it could have been 19% had the orders that we could have received but did not receive in the quarter. So alone when you include that, then that becomes 19% in the presentation that you have mentioned which got pushed to the second quarter?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [55]

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Yes. So if you add that, and I was talking about the last 6 months, so if you use the orders which are L1, which are on top of the fee which is [about INR 400 crores,] the overall market share comes to a that higher level of about 19%.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [56]

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Okay. And what is the quantum of HVDC that is left in the order book?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [57]

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That will be close to [INR 130 crores].

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [58]

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Okay. And is there any now slow-moving orders that are left in the order book after this cancellation of -- or removing out of INR 150 crores from the order book?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [59]

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It's again the same number I mentioned that in the execution so approximately INR 200 crores to fill in the order book. So depending on which way the customer is able to solve the financial issues that they are facing right now, that is what we are classifying as slow-moving right now.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [60]

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Understood. And the 100-gigawatt opportunity that we are talking about overall, that would translate into what kind of order opportunity for the, I mean, overall order opportunity? And within that, what is the addressable opportunity for companies like us?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [61]

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We have analyzed there is another 2 tenders which we have filtered and some idea of the work that is required so I have not calculated the total scheme value of -- for the 2 received years, but what we will address in that I guess will be ranging between $15 million to $25 million per gigawatt, depending on the -- whether it's a bid extension or it's a new bid, a new substation. So I guess somewhere around close to $2 billion would be the substation...

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Suneel Mishra, GE T&D India Limited - Head of IR [62]

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Dollars.

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [63]

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Yes, $2 billion would be the substation or the -- whatever we address in terms of bid automation and substation order to take care of the 100 gigawatts of evacuation.

I don't want to comment on the remaining part but I guess it would be at least overall twice of that because the mine would also be to become substantial. These are all locations which you need to have interstate connectivity and these are meant for interstate transmission so they still need to be quite big.

So that's the proportion that we are talking about, and this excludes the -- this 1 project, which is for evacuation of 23 gigawatts of power from [Nilabock] which will come in 3 phases as for the current schedule of the government, and the first one is under active discussion, the 7.5 gigawatts by [Setwi]. And so last minute adjustments of the specs which you see in our energy mix of wind and solar and all that. But my own assessment is that the 7.5 gigawatts will need another somewhere around $1.5 billion to $2 billion. Lots of opportunity for HVDC projects for companies like us. And an order of that could be, let's say, 6 months from today is my personal assessment looking at this period what the management are doing. I tend to believe it will be 6 months from now that we see those tenders coming up, in addition to the 100 gigawatts of schemes for the interstate.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [64]

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And any update on Bangladesh HVDC? And a few quarters back, we've spoken about digitalization projects. So any opportunity there and how much digitalization projects that we have currently in the order book?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [65]

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The Bangladesh project there, we have submitted our bid. The price bid is not yet submitted, though the technical bids are being submitted and they are under evaluation and the question that we address to all the bidders. And so we have been -- we are being told that there is going to be a meeting of all the qualified bidders. It was scheduled for July, might go into August. There's another tender committee scheduled today. So it's in process and they need it urgently.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [66]

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And what is the quantum likely in that order?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [67]

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I do not really want to comment on this. But the last order of this kind, the last project of this kind, which was there in Bangladesh was somewhere around EUR 130 million to EUR 140 million. And it was a similar project so let's see how that kind of a project adds some value into this scenario.

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Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [68]

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Sure. And digitalization projects, anything that we have in the order book?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [69]

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We are expecting a project -- an order from one of the states for about close to INR 200 crores, INR 178 crores-plus something. And so that is an order which has been won by us, and it's in the process of the final approvals at different stages. And at that stage it was delayed because of the project is now funded by the APB/RP plant from the government of India will get filtered through PFC. And that item will be extended and revalidated so that process has been marked and completed. That's reflected in the [deferred orders] that we had mentioned that others won. There are more states which are coming up with these kinds of tenders for the [other and] related projects for these comments.

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Operator [70]

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The next question is from Kunal Sheth from B&K Securities Limited.

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Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [71]

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Sir, I just wanted one clarification. You mentioned that this [Layla Dot] project is a 23-gigawatt project, right? Sir, the opportunities, sir, you mentioned $2 billion is for the 23 gigawatts or on the first phase?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [72]

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No. That is for the first phase of 7.5 gigawatts.

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Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [73]

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Okay. And this is -- this has HVDC opportunity?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [74]

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Yes. This is basically from [Layla Dot] to some place in Kerala as of now it is [Kettal] and one 1 location in UP. So there will be substation on both sides.

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Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [75]

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And sir, this 100-gigawatts of Green Corridor opportunity that we are talking about, why for the [13 gigawatts] ordering can happen in the next 2 quarters. What is the timeline we mentioned for this 100 gigawatts?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [76]

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As I mentioned to you, the Ministry of Power has written to the CRC to fast track the approval process for the balance. The in-principle approval of the Empower Committee has been given, that's public information so I'm not talking to many persons who already bought it, and as communicated by the officials of the MNRE.

So what they are trying to target is that all these schemes should convert into orders and execution must happen by 2022 in phases. So if you work backwards, this would actually have to be -- I mean, if you work backwards to meet this schedule, it will have to be the current third quarter plus 2 more quarters that you are billing. I guess all those projects would have been tendered out and decided.

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Operator [77]

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(Operator Instructions) The next question is from the line of [Kardinia N.] from JM Financial Limited.

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Unidentified Analyst, [78]

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So just wanted to understand on the EBITDA margins. I understand that it's only a quarterly thing but where do we see it going maybe by FY '19 or FY '20 -- sorry FY '20 or FY '21? Hello?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [79]

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Yes. So like maintained in the last financial year, it was into the high single-digit side. And continuing to maintain that same position is going to be in the single digit range for us, at least in the current financial year.

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Unidentified Analyst, [80]

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Okay. Sir, on the revenue side, you said that flattish, will it be possible or can we see -- it's hard [following] on that [percent --] on the revenues side, sir?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [81]

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It's going to be -- yes, so it will be a bit challenging given that the direction point HVDC, we didn't have an HVDC execution in the last financial year so we've got a headwind from that. So maintaining the same level will be a challenge.

But nonetheless, we'll -- depending on the new article that is getting better rated and given the shorter time that the new order book will have, we'll see to what extent you can close that in the given financial year. That is going to be a challenge.

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Unidentified Analyst, [82]

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Okay. Sir, on the opportunity side, you spoke of 100 gigawatts of opportunity. But I think there is 166 gigawatts which has been mentioned by the Ministry recently, with 20 gigawatts under Phase I and under balance 20 gigawatts under Phase II. So are they speaking about the same thing or this is something different? Pardon my...

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [83]

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No this is the same thing. All the green corridors collectively are going to be adding up to 100 gigawatts, in addition to the 75 gigawatts which already exist on the ground. So there are very different ways, versions of that but they are totaling up to 100 gigawatts, 100.1 gigawatts to be precise. And -- so that is there. And actually, we've seen in addition to that.

Now obviously, what we come up which we'll see finally come up by then, exactly the question depends on will the appetite of the PGCIL players as well as the capability of the manufacturers and the contractors to be able to complete those jobs but this is mammoth.

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Unidentified Analyst, [84]

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Okay, understood. Sir, and lastly, you spoke of this opportunity side of here. So I'm just trying to understand, can we take the 16% or 19% conversion rate or in there?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [85]

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No, I just told you what it has been and what it has been normally. So while the endeavor will be always to continue to improve but there is no such basis I have can say that we can achieve this kind of an intake.

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Operator [86]

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(Operator Instructions) The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

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Bhavin Vithlani, [87]

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Could you highlight on the HVDC, we understand from POWERGRID that there has been a time overrun vis-à-vis their expectations. So have we got a sign-off from them on the time extension? And what is the part of HVDC on the CK-2 which is pending? Some color on that execution would be helpful.

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [88]

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So this has been under discussion. In fact, there are 2 parts to this project: One is the offshore part, which is not in our books; and the other is the [onshore] part, which is in our books. So -- and there are of course interdependencies also. So that's been discussed and what was agreed was that we complete the project that is going forward, and then we see the opportunity [it is].

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Bhavin Vithlani, [89]

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Okay. So the client has not yet signed off on the extension. Is that correct understanding?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [90]

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Yes. When you say extension without ending, that will be signed in whatever form once we complete the pull forward.

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Bhavin Vithlani, [91]

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Okay. Could you attribute some, like the time overruns also to fall in the margins in the current quarter?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [92]

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You are talking what, sorry?

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Bhavin Vithlani, [93]

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Time overruns?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [94]

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No. The discussion related to UP has got to happen post the commissioning of Q4. There's early dialogue, I think the focus right now is to commission pull forward first. But the discussions do continue in parallel. As of now, there is nothing which is planned for the current quarter.

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Bhavin Vithlani, [95]

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Okay. Sure. Lastly, on a full-year revenue basis, would it be possible to highlight what is the share of GIS as a percentage of revenue? And are we seeing a mix improvement or deterioration going forward?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [96]

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Full-year revenue basis.

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Bhavin Vithlani, [97]

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Full year (inaudible)?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [98]

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Somewhere around 15% to 20% is the range that you can calculate that.

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [99]

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There is only one indication I can give you is that the order intake last year for GIS was at a market share of 32%, 30% to 32%. So I think this conversion of this number in execution will be again -- is that what would be more precise?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [100]

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[Be around the same, the 15%]. It's around -- we can get back to you but 15% to 20% of the total revenue would be the GIS.

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Bhavin Vithlani, [101]

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Sure. And what would be the contribution of the automation-related projects?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [102]

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Again, around 15% to 18% is the grid automation for us.

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Bhavin Vithlani, [103]

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Okay. And what would be the market share in grid automation?

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Gaurav Manoher Negi, GE T&D India Limited - CFO & Whole Time Director [104]

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We don't have that handy.

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Bhavin Vithlani, [105]

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No problem. And the SVC that PGCIL was speaking about, do you see that any possibility that could be revived in future as the share of renewables is rising, the share of inform power is rising?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [106]

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No, I don't think there was many [critical discussions] there that were materializing. Few -- 1 or 2 were talking about from Gujarat and they are also not materialized. So we think future not really.

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [107]

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So Sandeep here. So there is a renewable rising. Yes, you are right that there is a talk of share of rising of HVDC projects. And there is a progression which is going on in one of the states. So the result of that in terms of opportunity pipeline will get realized the next year but not this year.

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Bhavin Vithlani, [108]

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Okay. And on a steady-state basis, how large could be the grid automation market? Any color on that will be helpful, very rough cut.

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [109]

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Exact will be less close to about $300-plus million.

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Operator [110]

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The next question is from the line of Renjith Sivaram from ICICI Securities Limited.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [111]

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Just a small clarification. This $1.5 billion to $2 billion of HVDC opportunity you had shared for the total 23 gigawatt or is it for the 7.5 gigawatt?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [112]

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That will be for the 7.5 gigawatt.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [113]

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So this will be $1.5 billion to $2 billion of HVDC?

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Sunil Kumar Wadhwa, GE T&D India Limited - MD & Director [114]

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Yes.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [115]

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When this capacity increases some 7.5 gigawatts will there arise another opportunity or the same thing only there will be some augmentation?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [116]

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So it will be like probably some part of the transmission lines could be used as the common. When it goes from 7.5 gigawatts will be higher. But for the conductor station part, definitely the new capacity needs to be built in. So like the HVDC part will be new and will be implemented but transmission lines may not be fully new but there might be some new and some implemented.

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Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [117]

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So probably when that 7.5 gigawatts increases to 23 gigawatts, the opportunity size can be a bit lower because of the transmission line, which can be -- which will be required?

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Sandeep Zanzaria, GE T&D India Limited - Sales Executive & Chief Commercial Officer [118]

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But when we are talking about this $1.5 billion, it is for the HVDC part and transmission lines are not included in that.

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Operator [119]

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As there are no further questions, I will now hand the conference over to Mr. Suneel Mishra for closing comments.

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Suneel Mishra, GE T&D India Limited - Head of IR [120]

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Thanks, Mira, and thanks, everyone, for your participation. With this, we conclude today's conference call. In case if you have any other question to be asked, then please feel free to contact me or our Communication Leader, Mr. Anshul Madaan, on the e-mail ID given at our website. So thanks again.

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Operator [121]

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Thank you. On behalf of GE T&D India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.