CG Power and Industrial Solutions Limited — Q3 FY26

CG Power and Industrial Solutions Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=MKHwhosKTXY Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to CG Power Q3 FI26 earnings conference call hosted by IFL Capital. 0:09 9 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:18 18 seconds during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being 0:26 26 seconds recorded. I now hand the conference over to Miss Reu Bugalia from IFL Capital. Thank you and over to you ma'am. 0:35 35 seconds Thank you Shabbam. Very good afternoon everyone. On behalf of ISL like to invite the management of CG power and industrial solutions uh to discuss the 0:44 44 seconds 3QFI26 uh results. Uh from the management team today we have with us Mr. Amar call managing director, Mr. Sashil Tori, 0:53 53 seconds chief financial officer, Mr. Mr. Marinel A EVP drives and automation and international motors business. Mr. Gorav 1:01 1 minute, 1 second Makija, Vice President switch gears and APD business. Mr. AJ Jen, vice president, transformer business. Mr. 1:08 1 minute, 8 seconds Dhanj Bap, vice president railway business. Mr. Jatendra call EVP motors business and Mr. Shirram Randar Rajan 1:17 1 minute, 17 seconds EVP head consumer products business. I now hand the call to Mr. Amar call for his opening comments after which we can 1:24 1 minute, 24 seconds start for Q&A. Thank you and over to you Amar. Thank you. Thanks Reu and uh team. 1:32 1 minute, 32 seconds Good afternoon everyone and welcome to the CG earnings call. Uh starting with a summary of results. I'm very pleased to 1:40 1 minute, 40 seconds share with you all that uh we have delivered outstanding set of numbers for the quarter and the 9 month ended 1:47 1 minute, 47 seconds December 31st 2025 reflecting operating discipline uh and strategic focus using 1:54 1 minute, 54 seconds our CG edge as a tool. Uh this is yet another quarterly performance with all-time high standalone revenue and BBT after accounting for exceptional items. 2:04 2 minutes, 4 seconds Our quarter 3 sales grew by 22% year-over-year and uh PBT uh before uh 2:12 2 minutes, 12 seconds EI grew by 35% uh year-over-year and we have achieved 148 basis points margin expansion in PBT during quarter 3 2:21 2 minutes, 21 seconds financial year 26. Further, the orders remained [cough and clears throat] excuse me robust with backlogs 2:29 2 minutes, 29 seconds strengthening further to 66% year-over-year to 14,859 crores uh reflecting sustained demand across uh all the businesses. 2:41 2 minutes, 41 seconds Now going deeper into Q3 standalone performance, aggregate sales for the quarter were higher at uh 2,99 2:50 2 minutes, 50 seconds crores, recording a growth of 22% year-over-year and uh PBT was higher at the growth of uh with a 2:59 2 minutes, 59 seconds growth of 35% at 454 uh crores which is 15.6% of sales as against C38 crores uh 3:07 3 minutes, 7 seconds in Q3 previous year. uh and exceptional items include incremental impact due to introduction of uh new labor code 3:15 3 minutes, 15 seconds effective 21st of November 25. Uh return on capital employed uh for the quarter was 23% and the order intake for the 3:24 3 minutes, 24 seconds quarter was 4,96 crores which is about 13% growth year-over-year and unexecuted order backlog as of 31st December was 3:33 3 minutes, 33 seconds 14,859 crores which is 66% up. 3:38 3 minutes, 38 seconds Now if we go deeper into the each of the segments starting with industrials uh while we s saw steady sales growth with 3:46 3 minutes, 46 seconds the margin impact coming uh due to commodity cost uh headwinds aggregate sales for the quarter uh was at 1,584 3:56 3 minutes, 56 seconds 85 crores which is 8% year-over-year and a healthy growth across uh motors and uh 4:02 4 minutes, 2 seconds railway business. PBIT was at 149 crores which is 9.4% 4% of sales as against 184 4:10 4 minutes, 10 seconds uh which is 12 which was 12.5% of the sales in quarter 3 uh last year. Margin change is driven by lower price 4:18 4 minutes, 18 seconds realization and product mix changes in the railway segment as well as uh lower gross margin in motors due to significant commodity inflation that 4:27 4 minutes, 27 seconds could not be passed on entirely to the market. And this adverse moment was uh partially offset through the cost 4:34 4 minutes, 34 seconds optimization, operational productivity and disciplined uh pricing. Uh and the business will continue to focus on margin improvement uh through cost 4:42 4 minutes, 42 seconds optimization initiatives, pricing and improving the product base. 4:48 4 minutes, 48 seconds Order intake for the quarter was 250 which is 9% increase and the unexecuted order backlog as of 31st December 4:55 4 minutes, 55 seconds continues to be sequentially better at 3569 crores which is 20% year-over-year. 5:03 5 minutes, 3 seconds Now if you go deeper into the power system uh it has shown continued growth trajectory with further margin expansion supported by healthy underlying market 5:12 5 minutes, 12 seconds and execution discipline. Uh aggregate sales for the quarter was at 1,326 crores with a sharp rise of 44% 5:20 5 minutes, 20 seconds year-over-year supported by robust uh execution uh disciplines. PBIT was at 5:27 5 minutes, 27 seconds 283 crores which is 21.4% of sales as again 17.6% 6% of sales uh in the 5:33 5 minutes, 33 seconds previous year same quarter 378 basis points margin expansion driven by improved price realization reflecting 5:41 5 minutes, 41 seconds robust demand trend and enhanced operating leverage and order intake for the quarter was 2046 which is 16% growth year-over-year 5:51 5 minutes, 51 seconds and unagregated order backlog as of 31st December was 11,289 crores uh which is 89% higher 5:59 5 minutes, 59 seconds year-over-year providing multi-quarter visibility. 6:03 6 minutes, 3 seconds With this we conclude deep dive into our standalone performance and I'll now move to consolidated performance 6:11 6 minutes, 11 seconds and the consolidated results includes the performance of our operating subsidiaries in Sweden, Germany, Netherlands which is rise and automation 6:19 6 minutes, 19 seconds uh as well as CG Adessia product CG semi uh private limited GGronics and XO semiconductor group that is a 6:27 6 minutes, 27 seconds non-operating subsidiaries. Aggregate sales for the quarter was 3,175 crores at a growth of 26% 6:34 6 minutes, 34 seconds year-over-year. Uh the PBT before extraordinary income was 25% higher at 6:42 6 minutes, 42 seconds uh 420 crores which is 13.2% of sales for the quarter has a gain of 335 crores which is uh 13.3% of the sales. 6:52 6 minutes, 52 seconds Margin gain is driven by strong standalone performance were offset by continued investment in the talent pool for semiconductor business and deferred 7:01 7 minutes, 1 second revenue in X0 on account of holiday related timing of customer activity. 7:06 7 minutes, 6 seconds Total semiconductor segment impact of 41 crores which is 130 basis points. 7:13 7 minutes, 13 seconds uh return on capital employed annualized W for the quarter was 21% and the order intake for the quarter was 4372 7:21 7 minutes, 21 seconds crores and the order unexecuted order backlog is the 31st of December was 62% uh up uh year-over-year at 15,753 crores. 7:33 7 minutes, 33 seconds Finally, I would like to share about the major order uh will uh achieved earlier this month. 7:40 7 minutes, 40 seconds Fiji secured a one uh large order of 900 crores which was about $99 billion uh of 7:47 7 minutes, 47 seconds power transformer export order from talrass uh in US. It's a large scale data center project in the United States and this 7:56 7 minutes, 56 seconds order was received on 16th of January as the single largest order ever in in the history of CG power. uh this is uh and 8:04 8 minutes, 4 seconds and this is a direct export uh to us uh for supply of power transformers. Under this contract, CG will supply uh power 8:12 8 minutes, 12 seconds transformers specifically engineered to meet the stringent reliability, efficiency and uptime requirements of hypers scale data center applications 8:21 8 minutes, 21 seconds and this order will be executed over a delivery period of 12 to 20 months. 8:25 8 minutes, 25 seconds While with this I'll conclude my opening remarks. Unodited financial statements with detailed notes are available as part of stock exchange filing and on our 8:34 8 minutes, 34 seconds company website. Thank you for listening in and uh back to you Renu for Q&A. 8:45 8 minutes, 45 seconds Okay, thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask [clears throat] a question may press star and one on the touchstone 8:54 8 minutes, 54 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 9:02 9 minutes, 2 seconds question. Ladies and gentlemen, we will wait for a moment while the question Q assembles. 9:12 9 minutes, 12 seconds The first question comes from the line of Ravi Swami Natan from Aventespa. Please go ahead. 9:19 9 minutes, 19 seconds Hi sir, good afternoon. Uh, thanks a lot for taking my question and congrats on a good set of numbers. Uh my first question is with respect to the order 9:26 9 minutes, 26 seconds intake for the power system segment. Uh so it has seen 16% growth. It's a healthy number but uh in the previous 9:33 9 minutes, 33 seconds quarters we had seen significantly higher kind of growth in the order and flow momentum. So just wanted to check 9:40 9 minutes, 40 seconds with you uh are there are you seeing any signs of the margins slowness in the ordering momentum in the power system 9:48 9 minutes, 48 seconds sector segment especially related to the domestic renewable uh category. 9:53 9 minutes, 53 seconds [clears throat] 9:55 9 minutes, 55 seconds Uh thanks thanks R for the question. Uh see it's a quartertoquarter variation will always happen. So uh we have we are 10:03 10 minutes, 3 seconds not seeing any decline or slowdown in the pipeline of the orders that we have. 10:08 10 minutes, 8 seconds So I think it continues to be as strong as uh it has been and uh and growing as well. 10:15 10 minutes, 15 seconds Understood sir. Um secondly on the motors piece uh if you could call out on 10:21 10 minutes, 21 seconds the uh what is the volume growth in the LT and HD motor. So we had seen a revenue growth of around 8 9%. Uh how 10:31 10 minutes, 31 seconds much would have been contributed by price increases and how much would have been contributed by LT HD motor volume growth. uh and are you seeing recovery 10:40 10 minutes, 40 seconds in the demand for LD motors and how is the price increase uh holding up? 10:47 10 minutes, 47 seconds Yeah. So, so couple of uh answers to you know multiple question that you asked. 10:51 10 minutes, 51 seconds So, uh on the market size side, yes, there's definitely an improvement uh versus the last few quarters that I have 10:59 10 minutes, 59 seconds been talking about where it was negative. If you look at the data uh it has you know crossed the bridge of uh being flat or a little better than that 11:08 11 minutes, 8 seconds but I think the good news as we shared is if you're getting 8% up which means you are either eating from the market share or putting across the uh value proposition in front of the customers. 11:19 11 minutes, 19 seconds So yes it's a combination of uh the price increase that we did the realization has been fairly good. We are satisfied with that. Of course it could 11:27 11 minutes, 27 seconds not completely cover the increase in the commodities but yes we keep working on that and 11:35 11 minutes, 35 seconds second is also you know if you look at the little bit of stress on PBT uh is also you know we are working aggressively on the I2V piece which is 11:43 11 minutes, 43 seconds innovative value. Uh so that activity is also happening in parallel. So both these should be help us to come out of 11:50 11 minutes, 50 seconds these difficult situations. So your question answer is yes a combination of uh volume as well as the top line from the price increase. 12:02 12 minutes, 2 seconds Understood. And uh with respect to the commodity price increase and currency depreciation uh how how much more price 12:10 12 minutes, 10 seconds increases are required say from the four fourth quarter onwards um and how is it 12:17 12 minutes, 17 seconds likely to kind of pan out for both the power and industrial segment. So uh how does it work in the power segment? Uh 12:25 12 minutes, 25 seconds fresh orders are benchmarked to the current commodity prices and passed on to end customers. Uh is it the way of 12:33 12 minutes, 33 seconds understanding and with respect to the industrial segment also with respect to motors? How much more price increase is needed for uh both LT and HD motors? 12:43 12 minutes, 43 seconds [music] 12:44 12 minutes, 44 seconds See price increase uh you know the thumb rule for the industry is very clear. you know any inflation has to be passed on to the customers. So that's the way it 12:52 12 minutes, 52 seconds happens. So if commodity still doesn't behave well uh obviously there'll be forthcoming price increases coming in the market that's typical to the 12:59 12 minutes, 59 seconds industrial business that we are in. Uh but if you go to the power most of the business we have the PVC clauses which is price variation clause. So so any 13:09 13 minutes, 9 seconds change in the commodity that happens you know uh we get the compensatory amount on that. So that doesn't amount to change in the pricing but uh yes that 13:17 13 minutes, 17 seconds gets compensated which is a typical industry practice. Okay. And the price variation clock. 13:23 13 minutes, 23 seconds Sorry to interrupt Mr. Ravi. Uh we request you to return to the question queue for the follow-up question. Sure. 13:30 13 minutes, 30 seconds Thank you. 13:32 13 minutes, 32 seconds Ladies and gentlemen, a request to all participants. Please restrict your questions to two per participants. For more questions, please rejoin the queue. 13:41 13 minutes, 41 seconds The next question comes from the line of Ankur Sharma from HDFC Life. Please go ahead. Uh yeah. Hi uh good afternoon. Uh thanks 13:49 13 minutes, 49 seconds for your time. Uh two questions on the power segment. Uh first uh you know obviously there have been some media reports uh saying that the government 13:57 13 minutes, 57 seconds could potentially allow uh Chinese players to bid for PSU uh you know tenders. Uh so just your thoughts on 14:05 14 minutes, 5 seconds this uh you know what are you hearing when you interact with the ministry and you know are you seeing anything in that direction uh is my first question. Yeah. 14:17 14 minutes, 17 seconds So yes a lot lot is going on on that direction and as we interact with the ministries or uh with uh with the 14:25 14 minutes, 25 seconds utility companies and the customers. So honestly as CG we are not really worried about that even if Chinese players come 14:34 14 minutes, 34 seconds in. uh important is level playing field as like I'm a big fan of saying that with the level playing field we have to 14:42 14 minutes, 42 seconds be operationally efficient uh and then we can compete with anybody you know whether it's the Chinese players or Japanese or Indian players yes we have 14:50 14 minutes, 50 seconds to be competitive so that we'll continue to do but I think important thing is uh being having that level playing field which I think as of today what we see I 14:58 14 minutes, 58 seconds don't see a concern on that at all I mean can you just elab elaborate a little more when you say level playing 15:06 15 minutes, 6 seconds field you mean that they need to come and set up shop in India is that what you mean that instead of a blanket import shop in India is not problem that's 15:14 15 minutes, 14 seconds level playing field to me I'm saying uh when I say level playing field means that you don't get any special benefit or special privileges or special 15:22 15 minutes, 22 seconds incentives uh by the respective governments then we cannot then it'll be a problem for the industry not for us only which I don't get that feeler that 15:31 15 minutes, 31 seconds uh that advantage uh people will Okay. So, so you do expect that there could be some relaxation but uh as long 15:40 15 minutes, 40 seconds as there's a level playing field is what you would expect to see. Is that how we should understand? What are you trying to tell us? 15:46 15 minutes, 46 seconds See that the government has to decide whether they allow Chinese companies or not. We don't control that. I'm saying even if it comes with our conversation with the industries that's the only 15:55 15 minutes, 55 seconds thing we have across let it be a level thing. So we control our destiny by being operationally efficient. 16:03 16 minutes, 3 seconds That's all I would say. 16:05 16 minutes, 5 seconds Fair. Okay. Okay. Fair clear. And and just a second one on this large transformer order which you got for this uh data center in the US. Uh if you 16:13 16 minutes, 13 seconds could just talk about uh you know what more could be there in the pipeline. How much of an opportunity does it really open for a company like CG uh in terms of export orders for data centers? 16:25 16 minutes, 25 seconds Thanks. 16:27 16 minutes, 27 seconds See data center you know all of the renewables data center is one of the key vertical for us. So it's not that you know this order has come by fluke or you 16:36 16 minutes, 36 seconds know it just suddenly came up you know we have been working on this uh for last two years uh religiously uh on these uh 16:44 16 minutes, 44 seconds key account management uh the vertical focus of the industry and that has started you know giving us some of these 16:51 16 minutes, 51 seconds results. So we are we are of firm opinion that you know the risking strategy of being domestically strong as 16:58 16 minutes, 58 seconds well as uh keep keep uh you know divesting a bit on the outside India as well so that there's a focus on both the 17:06 17 minutes, 6 seconds sides. So we don't want to put all the eggs in one basket. 17:13 17 minutes, 13 seconds Got that. Okay. Thank you. 17:16 17 minutes, 16 seconds Thank you. The next question comes from the line of Mahesh Bendri from LIC mutual fund. Please go ahead. 17:23 17 minutes, 23 seconds Uh hi sir, thank you so much for the opportunity. I just wanted to understand sir um uh in outlook for domestic uh 17:31 17 minutes, 31 seconds power uh transmission business. uh if we talk about two to five years, do you see a sustained order pipeline because 17:40 17 minutes, 40 seconds government has published recently new NAP where there is uh high amount of capex in power is going to take place. 17:48 17 minutes, 48 seconds So do you think uh we are in a phase where growth could be extended well below five years well above IS? 17:57 17 minutes, 57 seconds Yeah, see I think if you if you would have noticed in last couple of quarters even the earnings call I have always been bullish about it. the last year 18:05 18 minutes, 5 seconds also I said uh next 5 years up to 29 I don't see a concern that this sector will not grow unless something 18:13 18 minutes, 13 seconds catastrophic happens then obviously that's out of control of everybody otherwise the way expansion plans are the way government is expanding 18:20 18 minutes, 20 seconds infrastructure power generation so I don't see anything slowing down you know up to 2029 and of course of it can go 18:28 18 minutes, 28 seconds beyond that as well but it's a combination of uh publicly available data as well as what we uh in the market. 18:37 18 minutes, 37 seconds Sure. Sure. Thank you. Thank you so much, sir. Thank you. 18:44 18 minutes, 44 seconds The next question comes from the line of Mohit Kumar from ICIC Securities. Please go ahead and good afternoon sir and 18:52 18 minutes, 52 seconds thanks for the opportunity. My first question is on the power system. 18:56 18 minutes, 56 seconds Is it fair to say that the price variation clause is present in almost the entire order book? 19:06 19 minutes, 6 seconds Yes, almost. 19:09 19 minutes, 9 seconds Understood. My second question on the of course you have won a very large order of export from US. Uh can you please 19:17 19 minutes, 17 seconds confirm whether this order was not part of the order inflow announced for Q3? Is that right? 19:24 19 minutes, 24 seconds No, this is come I think you see the date is 16th of January. So this is not this is not added in last year as well. 19:32 19 minutes, 32 seconds This is for the current quarter. 19:35 19 minutes, 35 seconds Thank you sir. That's my question. Thank you. Okay. Thank you. 19:39 19 minutes, 39 seconds Thank you. The next question comes from the line of Atul Tari from JP Morgan. Please go ahead. 19:46 19 minutes, 46 seconds Uh yes. Thanks a lot. And sir um on the power systems margins you know which have obviously expanded quite a bit this 19:54 19 minutes, 54 seconds quarter. Again my question is for the new orders that you are getting for the power systems in the domestic market are 20:02 20 minutes, 2 seconds the margins similar or they are even higher than what you're reporting today. 20:10 20 minutes, 10 seconds I would say with the backlog that we have future is bright. 20:17 20 minutes, 17 seconds Okay. So roughly similar margins that you are reporting today I mean we should be able to hold on to these margins. Is that a sorry fair conclusion? 20:25 20 minutes, 25 seconds Yeah, see I not be able to tell you exactly you know what my backlog margins are but uh there's a very disciplined process of uh order intake to uh the 20:34 20 minutes, 34 seconds backlog margin how dividers stand so each of the business leaders for each of the businesses are on top of it the 20:41 20 minutes, 41 seconds quality of incoming orders uh what at what quality we are getting in so I think there's a very disciplined process in place so I think we are very much in 20:50 20 minutes, 50 seconds in control of that okay and sir uh The second question is on the you know OSAD business. So I mean 20:58 20 minutes, 58 seconds could you give some update on you know what is the kind of ramp up we are seeing in the facility that we commissioned a few months ago and when 21:05 21 minutes, 5 seconds is the next bigger facility likely to come online you know any you know updated color on that? 21:12 21 minutes, 12 seconds Uh you mean for transformer or no for the OSAT business the the the semiconductor business. 21:20 21 minutes, 20 seconds Yeah. So OSAT uh as you you would have heard last time the the mini plant which we call M1 has already started commence 21:28 21 minutes, 28 seconds its activity. I think in next two quarters we should start uh sales out of that on a small scale and then it'll keep graduating. I would say next two to 21:36 21 minutes, 36 seconds three quarters you start seeing uh decent amount of sales coming but it's a small plant in any case. uh and the new 21:43 21 minutes, 43 seconds plant which is the bigger plant M2 as we call it that should uh be ready by end of uh end of December 2026 21:52 21 minutes, 52 seconds uh and uh so I would say Q4 of uh next financial year is when we'll start some activity of course uh the lead time for 22:01 22 minutes, 1 second customer approval and validation of these chips uh doesn't take as much time as the mini plant takes so but yes there 22:08 22 minutes, 8 seconds will be some time so I would say another uh one year or So uh it should be operation 22:16 22 minutes, 16 seconds and sir in terms of yields etc that you are getting in the mini plant you know uh will you be able to comment on that you know what kind of etc we are getting 22:24 22 minutes, 24 seconds is this in line with whatever you have anticipated yeah I mean it's much better than what we anticipated uh uh because the 22:32 22 minutes, 32 seconds business case was much lower uh but I think today we are operating at about 98 99% kind of yield so 22:40 22 minutes, 40 seconds which is a good situation Okay. Thank you. Thanks. 22:46 22 minutes, 46 seconds Thank you. The next question comes from the line of Escapor from Jeff. Please go ahead. 22:54 22 minutes, 54 seconds Hi sir. Uh am I audible? Yes sir. 22:58 22 minutes, 58 seconds Hi. Yeah. Thanks. Just wanted to ask you again on the uh potential re-entry of Chinese players. Um so you know assuming 23:06 23 minutes, 6 seconds as you said there is a level playing field but they do come back into the market. Do you see pressure on uh 23:13 23 minutes, 13 seconds potential pressure coming back on pricing and as as a result any pressure on your margins uh going forward in case 23:20 23 minutes, 20 seconds they do come back and it is a level playing field. 23:26 23 minutes, 26 seconds Uh we have not seen anything like that till now for sure. 23:31 23 minutes, 31 seconds Um no I meant like in in case they do start coming back in a year from now um could there be certain pressure on 23:38 23 minutes, 38 seconds pricing that's just directionally if there you could comment on that going see that's what I said the answer is 23:45 23 minutes, 45 seconds very simple uh you know uh nobody can predict what will happen after one year important is how do we flex our muscles 23:52 23 minutes, 52 seconds in the gym to be prepared for the worst case scenario after a year I think that's what we are focusing on uh to me 24:00 24 minutes that's the leading indicator how do we become more operationally efficient and how do we keep expanding not only in 24:06 24 minutes, 6 seconds India outside India as well so with that focus uh I think that that's the only way to me that's a leading indicator so 24:15 24 minutes, 15 seconds that's where we're focusing on Sure and just to carry on with this is it um you know are there any segments where they're more like the Chinese 24:23 24 minutes, 23 seconds players are more likely to come in you know maybe in the extra high voltage or high voltage could you do you have any visibility or clarity on that as to 24:31 24 minutes, 31 seconds which segments they're more likely to enter and where we might potentially see more uh participation from them. 24:37 24 minutes, 37 seconds See even if even if I think your worry is on the Chinese players. So now what are we talking about? I mean there there count if you can count on tips you know 24:45 24 minutes, 45 seconds probably one company that will be in India and they are sold out for next two years. So where is where's the worry? 24:53 24 minutes, 53 seconds So even if they start expanding today, you know, to get uh transformer manufacturing up and running is 24 to 36 months. So you're talking about 2 years 25:01 25 minutes, 1 second plus another 2 years or 4 years and we'll talk after 4 years. But that doesn't stop us from being uh you know 25:08 25 minutes, 8 seconds it should not make us complacent. The important for us is how do we keep flexing our muscles to be prepared for the worst uh whatever happens. 25:18 25 minutes, 18 seconds Understood sir. Thank you so much. Thank you. 25:22 25 minutes, 22 seconds Thank you. The next question comes from the line of Adita Mongoya from COTCH Institutional Equities. Please go ahead. 25:32 25 minutes, 32 seconds Good afternoon everyone and thank you for the opportunity. U my first question was more on the outside business. Uh I wanted to check uh u basis our 25:41 25 minutes, 41 seconds discussion with customers. How much of our full capacity already would have a customer? Uh obviously pending clearances but already would having would be having a customer today. 25:54 25 minutes, 54 seconds It's percentage I think about onethird of the capacity is our uh uh the collaboration with renaissance so they 26:02 26 minutes, 2 seconds have uh that's part of agreement so they will pick it up and there are a lot of discussion going on and uh with multiple 26:10 26 minutes, 10 seconds agencies and the I think longest lead time we see is auto industry because it's not easy to get those approvals so 26:17 26 minutes, 17 seconds that takes a bit of time uh so it's a combination of multiple types of customers that we have uh right now going on. 26:25 26 minutes, 25 seconds And just a clarification over here uh when you put a segmental loss um uh when the company looks for segmental loss in 26:32 26 minutes, 32 seconds the semic segment is it all linked to the design business or are some costs linked to Osite also getting expensed out. Um if you can provide a breaker 26:41 26 minutes, 41 seconds would be useful for us to understand the underlying design business better. 26:46 26 minutes, 46 seconds So I think both are separate because design is the ex which I think uh the board meeting already happened. So so 26:54 26 minutes, 54 seconds I'm not worried about ex because that's already uh we committed about 64 million we do for the year how much 50 556 27:02 27 minutes, 2 seconds million I think should do that and I'm very sure with that should be able to break even so we don't have to really fund that. uh CG7 is like a startup so I 27:12 27 minutes, 12 seconds think it's going to take some time till you see that it starts making money so it's it's investment for the future so you cannot expect that from day one 27:19 27 minutes, 19 seconds it'll start making money and and we are prepared for that understood the second question I had uh 27:27 27 minutes, 27 seconds and my final one was uh on the power business as in I recall your comment of a fairly large part of the incremental 27:35 27 minutes, 35 seconds capacities that you add up being focused on exports could you give a sense of what all milestones should one be 27:41 27 minutes, 41 seconds tracking uh for uh gauging the progress over here on the exports side essentially countries that one would be 27:49 27 minutes, 49 seconds focusing on the kind of clearances that are required whether they already there or not direct just trying to get a sense of how fast can be the scale up in exports on the power side that be your 27:58 27 minutes, 58 seconds final question thank you uh you mean exports for power sector right yeah yeah export to power uh sector yeah 28:07 28 minutes, 7 seconds no I think exports for power has already started picking up you know uh if I look at my I I I'll not throw the numbers 28:17 28 minutes, 17 seconds right now but I can give you uh some reference of the order pipeline for exports 28:25 28 minutes, 25 seconds uh has gone up by more than 50%. in the last nine months. So April till December 28:32 28 minutes, 32 seconds last year to April till December this year we are more than 50% on the exports bookings which is orders. So that itself 28:39 28 minutes, 39 seconds you know shows you that uh the wheel has started moving in that direction. 28:46 28 minutes, 46 seconds Understood. I'll get back in for more questions. Thank you. Thank you. 28:52 28 minutes, 52 seconds A request to all participants please restrict your questions to two per participants. For more questions, please rejoin the queue. The next question 29:00 29 minutes comes from the line of s Seph Gujar from ICC Predential AMC. Please go ahead. 29:07 29 minutes, 7 seconds Yeah, thanks for the opportunity. My first question is on the coverage part. 29:11 29 minutes, 11 seconds Uh so on the order with Gatronics from CL uh CLW which got cancelled due to end of the 12 month delivery period. Can you highlight where are you on the product 29:19 29 minutes, 19 seconds development part and how do you expect say future orders from these because we saw some other players receive fresh orders uh in the recent tenders. Your 29:28 29 minutes, 28 seconds thoughts on 29:39 29 minutes, 39 seconds Can you repeat your question exactly on coverage? 29:43 29 minutes, 43 seconds Sorry uh yeah on the coverage part. So uh with the order uh with the first order from CLW which got cancelled uh I 29:51 29 minutes, 51 seconds think because of the 12 months period getting over uh where are we on the product development part and do we expect future orders to replace this 29:59 29 minutes, 59 seconds existing outer because we have seen some other players get orders from CAW uh as a replacement after the vendor got lapsed for them. 30:07 30 minutes, 7 seconds Yeah. No I think uh uh the team is progressing. Of course there was a delay in uh initial approval because we are also doing it for the first time. uh but 30:16 30 minutes, 16 seconds I think approval process is almost uh reached the end. The passenger trials are about to start now which should take 30:23 30 minutes, 23 seconds another four to five weeks. uh so I'm expecting that in this quarter uh we should be done with the approvals and 30:29 30 minutes, 29 seconds commence the supplies as well. Uh and there's already a bigger order which we have been shortlisted. So final order should be coming uh very soon. 30:39 30 minutes, 39 seconds Sure. And the second question on the data center 9 billion order on the power systems file. Uh the exchange filing had mentioned 12 to 20 months of execution 30:47 30 minutes, 47 seconds period. So just to understand because this is beyond 12 months of delivery. Is it more to do with the capacities which we have available or there's a product 30:55 30 minutes, 55 seconds development phase involved because this is for us maybe a different type of products it should be involved and these are what Kcast transformers. 31:03 31 minutes, 3 seconds Yeah see these are these are you know none of these transformers standard transformers. They're customized to the customer. So design is a critical piece 31:10 31 minutes, 10 seconds of each of these power transformers. So and that's also what we discuss and negotiate based the customer pool as well. So that is the that's the range 31:19 31 minutes, 19 seconds that we have and AJ you can talk about the capacity or power you know what what KVs are. Yes these are 330 KV transformers. 31:30 31 minutes, 30 seconds Okay. And so beyond 12 months execution is more to do with the product development also because you have customized transaction as I say combination you know each of these 31:38 31 minutes, 38 seconds power transformers are combination of all okay thanks and 31:46 31 minutes, 46 seconds thank you the next question comes from the line of Anubam Gowami from life please go ahead. 31:54 31 minutes, 54 seconds Good afternoon sir. Uh so my first question on the competition uh we see that in the transformer industry uh you as well as some other players of the 32:02 32 minutes, 2 seconds players are putting their capacities and most of them are coming in the next one or two two years. How do we see the 32:09 32 minutes, 9 seconds competition going forward visav the demand and do we see any pricing pressure or any signs which is coming 32:17 32 minutes, 17 seconds right now? Are you seeing that is my first I think Anubam this is this is uh you 32:24 32 minutes, 24 seconds know if you look at the forecasted data up to 2930 also uh the capacity being put in by all the players in this 32:34 32 minutes, 34 seconds industry including CG and the demand even if you compare only with India India uh in 2029 this still will be a 32:41 32 minutes, 41 seconds shortfall so that answers the question that you're asking for and this this is even uh add 32:49 32 minutes, 49 seconds to the the capacity gap that we have outside India as well. So I don't see any concern on that in spite of all the 32:58 32 minutes, 58 seconds companies putting in there there's enough enough room for everybody to be playing in. 33:04 33 minutes, 4 seconds Great. Uh so what is the capacity utilization and uh how do you see the ramp up of the news setup uh going forward? 33:14 33 minutes, 14 seconds So wrap up is going on. Your question is specific transformers, right? Yes. 33:21 33 minutes, 21 seconds Yeah. So I think capacity is going on pretty well. I think uh just three quarters back you were at 20,000 MBA. Uh 33:29 33 minutes, 29 seconds today we are already 40,000 MBA and uh in next one quarter or so we'll be 65,000 MBA. I think that's the kind of 33:35 33 minutes, 35 seconds jump we are making and uh hopefully next two to three quarters we'll be adding another 10 to 20,000 MBA more into that 33:43 33 minutes, 43 seconds from the new facility. So once we get uh better visibility of that we'll of course be announcing. 33:50 33 minutes, 50 seconds So as a result given the order book uh capacity utilation to be also be pretty high and ramp up soon after the uh capacities are in place. 34:00 34 minutes Yes. Okay. Great sir. I'll join the team. Thank you. Thank you. 34:08 34 minutes, 8 seconds Thank you. The next question comes from the line of Subadep Mitra from Nuama. Please go ahead. 34:18 34 minutes, 18 seconds Yes sir. You may proceed with your question. 34:28 34 minutes, 28 seconds As there is no response from the current participants, we will move towards the next question. The next question comes from the line of Sumit Kishor from Access Capital. Please go ahead. 34:39 34 minutes, 39 seconds Um, thanks for the opportunity. I have two questions. Uh, the first question is, uh, in the industrial systems 34:45 34 minutes, 45 seconds business, uh, the 310 basis point or yearon-year drop in PBIT margin. Uh, how 34:53 34 minutes, 53 seconds much of this is, uh, uh, uh, you know, sticky or how much of this is rather temporary factors? So you have 35:01 35 minutes, 1 second identified uh two reasons. One is uh the uh price lower price realization and product mix changes in the railway 35:08 35 minutes, 8 seconds segment. If you could speak about that separately as well as the uh uh impact due to the commodity inflation uh in 35:16 35 minutes, 16 seconds industrial systems. So like you said power systems everything has a price variation clause. If you could also explain how the impact in industrial systems on commodity uh would play out. 35:27 35 minutes, 27 seconds That's my first question. Thanks. Sure. 35:30 35 minutes, 30 seconds I think uh for power is fairly simple you know with the PVC clause which is there but in industrial it's a uh it's a 35:38 35 minutes, 38 seconds race race against uh the commodity inflation that you have but I I think we are we are strengthening our speed of 35:45 35 minutes, 45 seconds response if you would look at last uh uh three quarters 9 months we have increased our price by almost 17%. 35:55 35 minutes, 55 seconds including including this month. So which will show us the impact in the forthcoming uh months uh for the realization. So we have been pretty 36:03 36 minutes, 3 seconds aggressive on that. Uh and the good news is that the market is uh has been absorbing that price fairly well uh much 36:11 36 minutes, 11 seconds better than our expectation. So we don't have to really drop the prices. So yes, it's a it's a catch-up game right now. 36:17 36 minutes, 17 seconds But yes, we'll find a way to stay ahead of the curve uh to make sure we are compensating for this gap. 36:24 36 minutes, 24 seconds And on railways sir, yeah, railways I think there was it uh I would say it'll take a few more months 36:32 36 minutes, 32 seconds to come back on track. Uh because there were a couple of issues in between. Uh if you remember last quarter we had uh you know the supplies were stopped for 36:41 36 minutes, 41 seconds some time and then it started and there was some service issue which got resolved. So there were a bit of leakage on that. uh for our US exports we are 36:49 36 minutes, 49 seconds going a bit slow although the uh number is not very substantial there uh but with the zuty structure we are kind of 36:56 36 minutes, 56 seconds slow down on those uh areas so that also is a bit of impact versus what we had considered uh for our profitability as 37:04 37 minutes, 4 seconds well but I would say each one of these are momentary uh to to compensate for and uh now we are the new leader also we 37:12 37 minutes, 12 seconds uh whatever leadership changes were required we are incorporated so danger is our new leader for railways and he's really looking at uh looking at it this 37:21 37 minutes, 21 seconds business from the fresh pair of eyes. Uh so more to come. 37:26 37 minutes, 26 seconds Got it. My second question is uh you know on exports uh so uh basically in in 37:33 37 minutes, 33 seconds the 9month period so far this fiscal how much have exports been as a percentage of your sales or how have exports grown 37:41 37 minutes, 41 seconds on a year-on-year basis versus your overall sales growth and like you mentioned your power systems prospect pipeline is up almost 50% yearonear uh 37:50 37 minutes, 50 seconds what is the situation on the industrial systems and railway side as well no the number that I gave you is the 37:57 37 minutes, 57 seconds overall number export to power or industrial. So it's the overall number. 38:01 38 minutes, 1 second So the action is across the segments. So so that's why I gave you the overall number. 38:07 38 minutes, 7 seconds Sure. And export revenue is how much for the uh year so far? 38:12 38 minutes, 12 seconds Revenue revenue starts you know first you have to get the order. So that coming so that is under execution. So as we keep going forward you'll see the improvement in revenue as well. 38:23 38 minutes, 23 seconds Sure. Thank you. 38:27 38 minutes, 27 seconds Thank you. The next question comes from the line of Samir Takur from Ambit Capital. Please go ahead. 38:33 38 minutes, 33 seconds Uh hi, thanks. Uh so the order for the data centers uh I just want to check whether we have enough bandwidth to deliver from the existing facilities or 38:42 38 minutes, 42 seconds uh will it be combination of existing and new facilities? 38:47 38 minutes, 47 seconds This can be done in the existing facilities. 38:50 38 minutes, 50 seconds Okay. Okay. Fine. And just on the uh price variation clauses as well. So on the commodities as you said we can pass on the prices. Is is there any cap on 38:58 38 minutes, 58 seconds that or we can pass on the entire inflation for commodities? 39:04 39 minutes, 4 seconds I don't think there's not that I'm aware of if there's any cap on that but I think it's the actuals. So yeah it's on actuals. I don't think there's any cap on that. 39:13 39 minutes, 13 seconds Okay. Okay. That was also my friend. Thank you. Yeah. Thank you. Thank you. 39:19 39 minutes, 19 seconds The next question comes from the line of omera from Namora. Please go ahead. Please. 39:25 39 minutes, 25 seconds Yeah. Hi sir. Uh thank you so much for this opportunity. My first question is on power system side. If I look at revenues on standalone basis, those are 39:34 39 minutes, 34 seconds up by about 66% on quarteron quarter. Uh despite I think commencement of additional 17,000 MBA capacity fully in 39:42 39 minutes, 42 seconds third quarter. So is it fair to assume that uh order backlog conversion into execution is slightly slower uh because 39:50 39 minutes, 50 seconds of longer timelines of uh orders with respect to transformers? 39:57 39 minutes, 57 seconds Not really. I think if you look at the capacity expansion the speed we are doing it I don't think I heard about anybody else doing it. I said just one 40:05 40 minutes, 5 seconds year back we were 17,000 every week capacity today we are already at 40 45,000 and uh next in a quarter's time we will 40:13 40 minutes, 13 seconds be 65,000 so we are progressing much faster but that's a good pressure to have because the order pipeline is stronger and uh that put more pressure 40:22 40 minutes, 22 seconds on us and which is a good good nice pressure so it's it's working in parallel both you know order inflow versus the capacity expansion 40:31 40 minutes, 31 seconds got it and one clarification I think uh last during last calls I think you have mentioned about 85,000 MBA kind of a 40:38 40 minutes, 38 seconds capacity by about FI28 end uh uh now you are saying I think within next couple of quarters we are anticipating 65,000 MPa 40:47 40 minutes, 47 seconds so are there any plans of prepment of CFX with respect to transformers yeah that's that's why I said you know I 40:54 40 minutes, 54 seconds think as we get more clarity uh but yes I think I'm looking at a minimum of one year ahead of the time what we planned 41:01 41 minutes, 1 second for what the board had approved for up to 2028. 41:05 41 minutes, 5 seconds I'm sure that uh our team should be able to do it at least one year before. But yes, the moment we have more clarity, 41:13 41 minutes, 13 seconds we'll keep uh sharing with you as well as with the stock market. 41:18 41 minutes, 18 seconds Understood. Uh second question is on the export markets. If you can help us uh with the uh competition that you observe 41:25 41 minutes, 25 seconds in case of uh uh the orders especially the one which you won in case of uh data center market in US. So how was 41:33 41 minutes, 33 seconds competition uh like and uh is it oneoff order or uh it is more of a collaboration with uh uh prospective 41:40 41 minutes, 40 seconds customer and similarly I think what all other geographies you are targeting with the exports. 41:48 41 minutes, 48 seconds So I'll only share what I'm allowed to share. Uh this blind recruit order that you have and I gave a statement that our 41:56 41 minutes, 56 seconds exports orders are more than 50% up across all the segments and that does not include this 9 records that's over 42:05 42 minutes, 5 seconds and above because that's for current quarter. All right. So it's not one or case or a fluke that has happened you 42:12 42 minutes, 12 seconds know it's a it's a hard work that the leaders along with their teams have been doing over the past two years and now reaching that stage of reap the benefits 42:20 42 minutes, 20 seconds of it and and I think what we have seen at high level and it's not only that we are dependent on us so it's across different geographies it's a very clear 42:28 42 minutes, 28 seconds laid out go to market strategy with very few markets it's not all over the place you know we are not getting into all over the place which countries that 42:36 42 minutes, 36 seconds obviously I'm not able to [clears throat] share with you at this point of time. But yes, what we have seen is we are selling bases our speed, 42:45 42 minutes, 45 seconds the technology and the reliability of the product that we have. I think these are the three things that uh we have seen that customers are uh willing to partner with us. 42:57 42 minutes, 57 seconds Got it. And last question if you can help us uh with profitability of these export orders uh I mean tentatively uh 43:05 43 minutes, 5 seconds how much higher margin whether these can these orders can give you and uh in terms of uh uh price escalation clause 43:12 43 minutes, 12 seconds as well I think if that is incorporated in export orders or not. 43:18 43 minutes, 18 seconds Yes. Uh on the second question yes I think we have secured uh uh CG's interest for any of these export orders. 43:26 43 minutes, 26 seconds uh it's part of part of a contract and to your first question I would say we just started the game here so as we keep executing and sales will come in you 43:35 43 minutes, 35 seconds will see the margins and the profitability in the P&L got it sir thank you so much all the very best 43:43 43 minutes, 43 seconds thank you thank you a request to all participants please restrict your question to two per participants the next question comes 43:52 43 minutes, 52 seconds from the line of hers Patel from Aquarius security. Please go ahead. 43:58 43 minutes, 58 seconds Uh thank you very much for the opportunity sir. So uh could you uh give us an update on the EV motor development 44:05 44 minutes, 5 seconds and testing? Uh is our product now approved with the three-wheer OEM when it was in the testing phase? Also uh 44:13 44 minutes, 13 seconds status of the motor and controller for the trucks that we were developing. Oh you mean EV motors, right? 44:21 44 minutes, 21 seconds Uh yes sir. 44:23 44 minutes, 23 seconds Okay. Yeah. So, so EV motors and controller that uh confirm is almost done. Uh that is still in progress and 44:32 44 minutes, 32 seconds uh for the trucks uh that discussion is still going on because uh there's some transport technology that we are working 44:39 44 minutes, 39 seconds on uh and as we get uh close to that we'll of course be announcing. 44:46 44 minutes, 46 seconds Understood. Uh secondly uh you had announced a capex of about 750 crores towards the switch gears business in the 44:54 44 minutes, 54 seconds previous quarter. So what could be the potential revenues from this expansion at the full utilization also when do we plan to complete this particular kick? 45:06 45 minutes, 6 seconds Your question was on the switch gear expansion right? 45:09 45 minutes, 9 seconds Yes sir. The last quarter that you have you had announced about 750 k. 45:15 45 minutes, 15 seconds Yeah that's right. So I think we have taken a step in between. I think after today's board meeting we also took the approval for a brown field in between uh 45:23 45 minutes, 23 seconds because a new plant will take more than a year to come up and we can see very strong demand uh not only in India but 45:30 45 minutes, 30 seconds outside India as well. So I think next couple of months we'll be ready with our brown field which is close to our existing facility. Uh that will come up 45:39 45 minutes, 39 seconds and I think that itself should give us uh close to what,000 crores 4. Yeah. So that will give us about 400 crores uh incremental revenue or sales. 45:52 45 minutes, 52 seconds Understood. Uh thank you very much. I'll come back. Thank you. 45:57 45 minutes, 57 seconds Thank you. The last question for the day comes from the line of Subramanyam Yadav from SBL Life Insurance. Please go ahead. 46:05 46 minutes, 5 seconds Uh thank you very much sir. Uh sir, what would be our current risks on our product to EU and how do we benefit out of this FDA? 46:14 46 minutes, 14 seconds Okay. 46:17 46 minutes, 17 seconds Can you sir? Uh sir just wanted to understand what is our current tariff on 46:23 46 minutes, 23 seconds our products maybe uh motors export is bumble 46:35 46 minutes, 35 seconds uh uh sorry sir uh no tariff on our product of now 46:42 46 minutes, 42 seconds that is based on the you know to the Mumbai port and the tariff is gone by the Uh no sir I'm talking about EU not US. 46:53 46 minutes, 53 seconds No EU you just treated sign today right? 46:57 46 minutes, 57 seconds Yeah that come back on this but currently we pay some tariff uh on our products any no 47:06 47 minutes, 6 seconds no okay so not much benefit out of these three. Yes. Okay sir. Thank you sir. Yeah. 47:14 47 minutes, 14 seconds Thank you ladies and gentlemen. That was the last question for the day. I now hand the conference over to Miss Reinu 47:21 47 minutes, 21 seconds Pagalia for closing comments. Thank you and over to you ma'am. Thank you. On behalf of Capital like to thank all 47:28 47 minutes, 28 seconds participants and the management uh for participating. Uh Amar, any closing comments that you would like to make? 47:36 47 minutes, 36 seconds Thank you. Thanks and thanks everybody for joining us. Appreciate all the good questions. So stay tuned with us uh for the exciting times ahead. Uh I love this interaction every quarter. Thank you. 47:48 47 minutes, 48 seconds Thank you. 47:50 47 minutes, 50 seconds Thank you on behalf of Capital. That concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.