Umesh Raut · Nomura
On Railway business price realization challenges - is this because of execution of legacy projects taken few years back or competition impacting margins?
In Railway business, this is a typical tendering business. You take these orders at very thin margin. The PVC clause we have with railways is an average of three different inputs - there's a formula. It takes at least 1 or 2 quarters till it comes back. You may not have that impact in the full quarter. Unlike other businesses where commodity inflation can quickly be adjusted in pricing, in this business it takes a bit more time. It's a patience game, but we are sure about coming out of the situation as soon as possible.
Saif Gujar · ICICI Prudential AMC
On KAVACH - GG Tronics had an order of around INR 500-600 crores from CLW in November '24. Where are we in execution versus the original timeline? Have we received any follow-on orders?
On KAVACH, we are almost on track. There's a delay of about 1 month - 1.5 months. There are only 2 last approvals pending. Hopefully by end of December, we should be in a position to get all this cleared and start shipments. After that, we have received a couple of more orders, INR 150 crores, and I don't have exact numbers. So that's for both Station KAVACH is also what we received orders for.
Saif Gujar · ICICI Prudential AMC
On bookkeeping - in the balance sheet, other intangible assets increased from INR 263 crores to INR 427 crores. What caused this?
We recently did Axiro acquisition, and in that acquisition, this business is relating to more like a design business. So what we got is more about IPs and other things. That's what accounted during that acquisition side.
Atul Tiwari · JPMorgan
On Transformer capacity expansion from 15,000 MVA to 40,000 achieved on 1st October - is it fair to assume this incremental 25,000 MVA is now 100% unutilized and will be utilized over time?
Not really. If you look at the order backlog, you don't wait for capacity to get ready - we have taken the orders, because today the lead time for power transformers, customers are willing to give orders up to 24 months from now. So capacities are getting booked. In fact, the new plant we are setting up, we have started looking at booking orders for that as well, not in a big way but gradually. So from 15,000 to 40,000 MVA, I would say almost most of it is being taken care of.
Atul Tiwari · JPMorgan
So from this month, we can see an annualized output of 40,000 MVA? And the next phase of expansion is from 40,000 to 65,000 - when does that come online?
Yes, from 1st October onwards at proration capacity - it will be at 40,000 prorated for the year. The next one - this is 40,000 and the new plant coming up is 45,000 MVA. As per the plan, that is '27-'28, but the way we are executing, we will be much ahead of the target. The moment we have better visibility, we will let you guys know.
Sumit Kishore · Axis Capital
On Power Systems - award of interstate TBCB project to transmission utilities in H1 FY '26 has been slower than previous year. Does this pose risk of slowdown in award of transformer HV switchgear contracts in coming quarters?
Regarding the inquiry pipeline, the pipeline is strong. The decisions have been slow. Lot of projects now are getting awarded or allocated to the states. So decision-making is slow. As far as we are concerned, we don't see any slowdown in order booking because PSUs are still placing orders at a very fast pace - power grid, and this power generation sector is also opening up. So we don't foresee any slowdown in this area. If there is a slowdown in transmission projects, the power generation projects are picking up at a very fast pace in the thermal space.
Ravi Swaminathan · Avendus Spark
On capacity utilization of switchgear facility - power transformer facility is running at full capacity, what is the number for switchgear capacity?
Switchgear is also at about 85% to 88% right now. But again, the expansion that we had undertaken last couple of quarters back is also getting executed in parallel. So I would say, as we progress in the next few quarters, we will come down to probably 75% - 80% and again bounce back to 80% - 85%. So that's where we are operating at.
Harshit Patel · Equirus Securities
On association with Flanders for expanding U.S. business - can you explain the nature of agreement, whether this is contract manufacturing agreement or something else?
This agreement is - in U.S. we see a big opportunity. To get into local U.S. market, most OEMs first ask what happens tomorrow if I have a problem in my motor. You have to ask somebody right now if there's an issue or repair is required, somebody is there to service it at the drop of a hat. If we start organically today to set it up, it will take us a couple of years to have that infrastructure. The first step is to have a partner who is reliable and can do a lot of it. They are pretty equipped across North America. It's a win-win situation - they get business in repair and remanufacturing, and we get warehouses when we send motors from here.
Renu Baid Pugalia · IIFL Capital
On Power Systems - strategically, from perspective of building capabilities and expanding portfolio, what are thoughts on broad basing product mix beyond switchgears and transformers into new product segments, next generation beyond current cycle? Also on GIS portfolio and STATCOMs?
It's a mix of the existing portfolio. Today, beyond only switchgears and circuit breakers, we are also into larger 765 kV bushings, both OIP as well as RAP - that's a homegrown solution from CG. Also power electronics, and green solutions - moving from SF6 to SF6-free is critical work the teams have been doing across factories of Nashik and Aurangabad from an innovation standpoint. On GIS - we should be probably coming out with a complete Make in India solution for our 400 kV GIS in the next fiscal year. We should be playing very strongly in the GIS segment in future growth years as well. On STATCOMs - there is always an eye on looking at both organic as well as inorganic conversations around technology acquisitions.
Jay Negandhi · AMBIT Capital
As per CEA's data, India has missed power transformer installations materially for H1 of this year. Does this pose risk for us as it will take longer for orders to convert from backlog to sales? And with power transformation capacity coming online to 85 GVA, what would be expected mix of sales from global and local markets?
For the increased added capacity in our new plant, we are planning around 35% to 40% of revenues coming from exports - important for business sustainability. From current capacities also, exports are around 10%, it will grow to around 20% because we cannot vacate domestic segments as of now. On execution delays - all developers are taking the supplies, even with delays in their projects they are supporting us by taking deliveries and storing transformers near locations because of supply constraints. They know if they don't take deliveries, these transformers can get diverted because of standard CS specifications. In the long run, with government focus on right-of-way and land acquisition, both will catch up - won't be any delays. Heavy rains caused some delays this year.
Aditya Mongia · Kotak Securities
Bookkeeping on Power Systems - of the INR 10,000 crores of backlog, what would be the average execution period? 1.5 years or 2?
Total backlog - the last order I would say will get executed even after 24 months. Doesn't mean we have to wait for 24 months - we can do it before. Customers are placing orders up to that duration. One of the orders is going up to 24 months. We are filling up in between as well as opening capacity. Something will be 12 months, something will be 18 months, something will be 6 months depending on if it's a distribution transformer (can go in 6 months) or 765 kind of transformer (will take 18 months). Along the portfolio it will keep varying.
Priyesh Babariya · Mahindra Manulife Mutual Fund
Two questions on Semicon - we are expecting $50 million in FY '26 on Axiro, while previously it used to do around $56-57 million. Is this business taking time to scale up or are we waiting for CG Semi for synergy? And we reported INR 22 crores EBIT loss in same segment - can you break down between CG Semi loss and Axiro profits?
If I remember the numbers, they are almost same level. Last year was about $55 million, $56 million. This year if we are doing $50 million with the acquisition, getting people up and running, getting the whole infrastructure done and you are reaching that stage, I would say the team would have done a fantastic job. Susheel Todi added: Axiro is at breakeven level. So they are not making any loss at this point of time.